Posts Tagged ‘retirement savings’

Warning Signs that Your Retirement Savings are off Track

Monday, April 16th, 2018

warning signs

You know that little voice in your head that’s been bothering you lately? It’s telling you that you may not have enough for retirement, right? Well, you’re not alone. Here in America, 75% of us that are over 40 actually are significantly behind on our retirement savings. So how can you tell that you’re off course? We’ve got you covered.

1. You’re only saving through a 401K

If you’re lucky enough to have an employer that offers a 401K, and even luckier to be able to make monthly contributions, then you’d think you’d be in the clear, right? Unfortunately, that’s not the case. A 401K is not meant to be your only means of retirement saving, it’s only meant to be one tool for savers. Opening an IRA may be the right option for you in order to be fully prepared for your retirement, it allows your money to grow tax-deferred if in a traditional IRA, and tax-free if in a Roth.

2. You aren’t matching contributions

Now, if you have a 401K, and your employer has a match program, but you’re not taking full advantage of it, you have to reevaluate your contributions. That’s free money that you’re missing out on. The average employer contribution is around 6%, up to a certain amount. Get in touch with your company’s HR team, and make sure that you’re contributing enough.

3. You’re unsure of how much to save

One reason this is such an issue is that the amount that one person will need at retirement is different from another person, and also depends on when you start saving. If you started saving in your 20’s, 10% of your gross income is standard, but if you’re 30+, 15%-25% is ideal. Calculate the end total of what you will need based on your income with the Social Security Quick Calculator.

The most important thing to remember when it comes to saving for retirement is just to save. Save. Save. And Save. And contact us today if you want to open an IRA.

What to do if your Retirement Savings Falls Short

Monday, February 26th, 2018

With so many older workers approaching their retirement years with meager savings, the big question is: What can they do to improve their financial security in retirement?

If you’re in your 50s or older, working longer — even by a few months — has a much greater impact on your ultimate retirement income than saving more or achieving a higher net rate of return on your savings. Of course, ideally, older workers would take all these steps — the paper just helps you focus on the most important one.

The report offers several examples that illustrate the power of working longer, using hypothetical workers of various ages. For example:

  • Workers age 66 who earn at the national average wage could increase their ultimate retirement income by 7.75 percent by working one more year and retiring at age 67.
  • For these workers, the total value of the additional lifetime retirement income generated by working for one more year is equal to getting a bonus of over 40 percent (43.27 percent) of this average wage earner’s annual salary.
  • Workers age 62 who earn average wages could increase their ultimate retirement income by almost one-third (32.7 percent) by working four more years until age 66 and by almost three-fourths (74.6 percent) by working eight more years until age 70.

(The report estimates that average annual wages for workers age 55 to 64 are about $52,350.)

Here are three reasons working longer increases your retirement income:

  • Your Social Security income will increase significantly — by 8 percent for each year beyond the full retirement age that you start benefits.
  • Your savings have more years to grow with investment returns.
  • Your savings need to last for a shorter number of years in retirement.

The paper shows that delaying Social Security accounts for most of the total increase in your retirement income — roughly three-fourths of it.

For low-wage earners, delaying Social Security benefits is particularly powerful. For example, consider such an earner at age 56: Delaying retirement by seven months has roughly the same impact as saving an additional 10 percent of pay for 10 years.

Many older workers aren’t willing or able to keep working at their current rate of pay or for the same number of hours. But you may not need to do either. For instance, you could pursue a “downshifting” strategy during which you reduce your hours and responsibilities, and earn just enough to cover your current living expenses while you let your Social Security and savings grow until you ultimately retire.

This strategy might free some time to enjoy life more and take care of yourself, and you’ll still reap most of the benefits of working longer described above.

It’s important to acknowledge that working longer may be “easier said than done” for many older workers. They’ll need to be resilient and creative to find work opportunities, and working longer will most likely take some planning. While working longer may not be the ideal solution, it may be the best option that many older workers have.

Get Yourself Caught up on Retirement Savings

Monday, May 15th, 2017

 

If you’re struggling to get that retirement savings tucked away, don’t stress. It’s unfortunately not uncommon for Americans to have trouble in this department. Or for Americans to have trouble saving at all. Whether it’s low-wages to blame or pressure to keep-up-with-the-Joneses, we’re flat out bad at it. The good news is that there are a handful of tactics you’re able to do in your later years to get caught up.

Get invested in real estate

When you start your retirement savings late, traditional investments like stocks and bonds have less time to accumulate returns. If you were to, however, put that money into buying a rental property, you can have a steady stream of income for as long as you can keep tenants in the building. Whether or not this is a strategy for you will depend on your situation and income. Before you start any investments, seek out a trusted financial planner. Pursuing real estate as an investment option isn’t for the passive investor, but it’s well worth it.

Use your own home for income

If you own your own home, it can potentially be an excellent source to tap into for retirement savings. Here you have a few options. Homeowners can directly get into the equity that’s been poured into the house through either a home equity line of credit or, more drastically, a reverse mortgage. You can also sell your house outright and move into a smaller/cheaper house, putting the funds from the sale aside in savings. Or you can simply rent out a room and earn money that way. Renting out is a great option if you live near a college, students make good tenants.

Eliminate standing debt

 Some financial experts would say that step one in retirement savings is to eliminate current debt. Makes sense, right? In order to fully focus on saving for retirement, you first have to clear away your credit card debt, medical debt, etc. Monthly payments on debt only detract from you being able to save for retirement, plus the potential monthly interest only eats into your income. Make your debt your priority, take it seriously, tackle it, and move on. Once you’ve offloaded the most dangerous debt, eliminate less expensive debt like mortgages, car payments, and any remaining student loans. Getting rid of those monthly payments will allow you to redirect your money where you want.