Americans are facing retirement unprepared. Over 30% have saved nothing at all, while an additional 23% having under $10,000 in the bank, according to a survey by GoBankingRates. Enjoying your golden years doesn’t have to be financially straining. Many baby boomers are worried that they won’t be able to afford retirement, and end up remaining in their jobs instead, for much longer than they originally intended to. Others are looking for part-time work to make ends meet once they leave their careers.
There’s nothing wrong with either of these options, as long as you enjoy what you do and don’t mind continuing. However, it shouldn’t be the automatic default setting for those over 65. You are ultimately in charge of your retirement fund. Even if you start saving late, it is better than not having any plan at all.
The traditional age to retire is 65. Full Social Security benefits can be collected at 66. For people who were born in 1960 or later, the age will be increased to 67. However, the average American currently retires at 63. That means they start accessing both their savings and SS payments early, which reduces the amount they’re able to receive each month.
Dipping into savings too early isn’t the only problem, either. Remember that a third of Americans have no retirement plan at all. This means they’re going to have to rely exclusively on Social Security, which is meager even at the full payment amount. Not to mention the fact that the fund will likely be depleted in less than 20 years, reducing benefits even further. The money can make a good supplement, but it should not be considered an alternative to a retirement savings account.
Saving for retirement is even more difficult for women. The gender pay gap makes them reluctant to put anything away. As a result, while men have an average of $115,000 put away in their nest egg, women have a mere $34,000.
Tips to Help You Prepare for Retirement
With a little pre-planning, there are a number of ways to start saving for your retirement while remaining financially comfortable in the present. First, look at your spending. Don’t waste money on things that are unnecessary. Instead, map out a budget and keep track of what your income is going towards. Then take the money you save and put it into an IRA/401(k).
Once you’ve got your retirement account set up, keep careful track of your investments. Are they performing the way they should? If having your money in the markets isn’t yielding a good enough return, look for something better, which can help you build up your savings over time.
If you don’t have some sort of retirement account in place, it’s important that you start saving as soon as possible. You shouldn’t feel forced to keep working longer than you want to, just to make ends meet. With the right preparations and a little bit of financial advice and planning, you can clear up your existing debts and focus on saving up for the future.