Not Feeling Retirement Ready? 6 Painless Ways to Beef Up Your Account

Posted by Lory Weisensee on Feb 10, 2019 2:33:01 PM
    

Worried about retirement? You’re not alone.

Nearly half of all of Americans (46%) don’t expect they will be financially comfortable when they retire, according to a recent report by the Gallup analytics and advice firm. When Gallup first began tracking retirement preparedness in 2002 to 2004, the percentage of respondents who didn’t expect to live comfortably in retirement was only 32% to 36%.

One in three Americans have less than $5,000 saved for retirement, and one in five have no savings at all, according to the 2018 Planning & Progress Study by Northwestern Mutual. The study also found that a third of baby boomers, the generation nearest to retirement, has between $0 and $25,000 set aside.

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So, how can you boost your retirement savings? There may be as many answers to that question as there are financial advisors. Here some tips they can pretty much all agree on:

1. Reduce, or eliminate, debt.

The absence of substantial debt can be a blessing if you’re on a fixed or limited income. Debt payments in retirement can make necessary payments more difficult as they reduce your retirement income.

A big part of reducing debt is reducing expenses, even the small ones. Forbes business writer Stephanie Taylor Christensen says saving just $25 week in this manner adds up to an extra $100 a month for your retirement account.

“That may be accomplished by swapping your latte for a more boring brew, checking out a library book instead of buying at the bookstore, passing on that impulse buy while you wait in a checkout line, or walking a few blocks instead of hopping into that Uber,” Christensen writes.

2. Enhance retirement savings accounts.

If you’re still working, you should have an IRA or 401(k), both of which grow based on the more you contribute. A 401(k) plan is a qualified employer-sponsored retirement plan that eligible employees may make salary-deferral contributions to on a post-tax and/or pretax basis.

An IRA (individual retirement account) is an investing tool that can consist of a range of financial products such as stocks, bonds or mutual funds. There are several types of IRAs as of 2018: traditional IRAs, Roth IRAs, SIMPLE IRAs and SEP IRAs.

The difference is that your company can set up a matching program for your 401(k), but not for an IRA. Your employer may deduct contributions from your paycheck and deposit them into your IRA, but a payroll IRA doesn’t allow an employer to contribute additional matching funds.

In addition, the  contribution limit is higher with a 401(k) – $18,500 in 2018, $24,500 if you are 50 or older. The limit for IRA contributions is $5,500 for most people and $6,500 for those 50 and older.

In either case, it is imperative that you establish automatic contributions that will dedicate a specific amount of money from each paycheck to go into an employer-sponsored retirement account or an individual retirement account you’ve established on your own.

Ready for some peace of mind?

 

Renowned behavioral economist Richard H. Thaler, author of “Misbehaving: The Making of Behavioral Economics,” calls automation a “nudge” of sorts. He explains that it can help even the most financially savvy resist their most basic (and irrational) human impulses, like spending when they should save, or procrastinating on when or how much they put into retirement savings.

3. Invest unexpected windfalls

If you’re lucky enough to come into some unexpected cash, direct at least a portion of it to your retirement savings accounts. It could be a tax refund, bonus, or inheritance. Maybe you’ve followed the advice about reducing or eliminating debt, and now have extra cash. You’d be wise to invest it in your future.

4. Keep working and retire later

“If you delay retirement, benefits will be higher, and you’ve deferred eating into that nest egg for more years,” says Olivia Mitchell, executive director of the Pension Research Council at the University of Pennsylvania.

If you can work two or three more years after your planned retirement, you can grow your savings instead of depleting it. If you continue your full-time job, you can also use your employer-sponsored health insurance for a few more years and collect some more matching funds in your 401(k).

5. Consider downsizing

This would mean moving into a smaller home or moving to a state with lower taxes or a lower cost of living. You can save on property taxes, insurance costs, home maintenance expenses, utility costs, landscaping bills, living expenses, and more.

6. Get some good advice and do your homework

This would mean moving into a smaller home or moving to a state with lower taxes or a lower cost of living. You can save on property taxes, insurance costs, home maintenance expenses, utility costs, landscaping bills, living expenses, and more.

 

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Posted by Lory Weisensee

Executive Vice President
Lory manages the daily operations of Trust and Investment Management Services division to help coordinate the diverse services provided. She has more than 33 years of banking and financial experience, the last 20 of which have been with Charlotte State Bank & Trust. During this time, she has served in a variety of capacities with advancing responsibilities. Her knowledge of operations provides the resources necessary to lead a team of professionals to offer banking and trust products and services with a high degree of personal attention.
Lory is a graduate of:
Florida Bankers Association’s Graduate School of Banking, University of Florida, Gainesville, FL
Florida Bankers Association’s Trust School, University of South Florida, Tampa, FL
Leadership Charlotte Class of 2003, sponsored by the Charlotte County Chamber Of Commerce
In addition, Lory has earned both the Florida Certification and National Certified Guardian designations
Lory serves on the Executive Committee for the Florida Bankers Association’s Trust and Wealth Management Division, volunteers with Tidewell Hospice and has served as a member of the Board of Directors of United Way of Charlotte County.

Topics: Retirement