If you’re a baby boomer with very little to retire on, you may want to consider a Deerfield advisor’s perspective on how to strengthen your retirement savings. Consider this—a recent statistic given by the Employee Benefit Research Institute cites that 28 percent of workers have less than $1,000 in retirement savings while 57 percent have less than $25,000 in savings. Among baby boomers, in fact, another statistic from the National Institute on Retirement Security found that 80 percent of people have less than one time their income saved, sums that are, on average, impossible to stretch out over 25 or 30 years.
If you find yourself in this situation, with the help of an investment advisor and some diligence, you can still confidently work towards the retirement you’ve often dreamed of. Of course, the first thing you need to do is come up with a plan. To address your goal, you’ll need to understand how much you need to save, and what it will take to get you there. Where and how you plan to retire, the sort of lifestyle you hope to live will depend on your willingness to sacrifice and cut corners to achieve your goals now.
For people in their 40s and 50s, playing catch up requires saving between 10 and 20 percent of their earnings. Saving early gives you the benefits of compounding interest, which over time can have a big impact on your nest egg. If you’re just now starting to save mid-life, the momentum you have behind you faithfully saving 5% of your earnings at a much younger age is lost.
Not to worry. Using a 401(k) is a sound catch-up strategy, and one of the best places to sock away retirement money. If your company has one, at the very least take advantage of corporate matching. Over 50 years of age, and you can make catch-up contributions, allowing you to invest an additional $6,000 annually on top of the contribution limit for 2016. This option is specifically designed to help older Americans catch up on their retirement savings.
There are plenty of steps you can take to recover from financial hardship and pursue the retirement of your dreams. For sound strategies and realistic expectations for your retirement savings plan, visit us at moonylyons.com.
Borykowski, Bryan. Playing Catch-Up on Retirement — The Best Ways For Older Americans To Save.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stock investing involves risk including loss of principal. No strategy assures success or protects against loss.