According to a recent Gallup survey, more than half of Americans are worried they won’t have enough money for retirement.1 There may be good reason for concern, especially among baby boomers. A study from the Insured Retirement Institute found that 42 percent of baby boomers have no retirement savings, and of those who do, 38 percent have less than $100,000.2
Are you a baby boomer who feels like you’re not prepared for retirement? The good news is you can still get back on track if you implement a plan and take action. Below are three tips to help you do just that. You may also want to consult with a financial professional to help you develop a customized plan.
Contribute to your qualified accounts.
Qualified plans such as 401(k) accounts and IRAs can be effective savings vehicles because they offer tax-deferred growth. That means you don’t pay taxes on growth as long as the funds stay in the account. Tax deferral may help you accumulate assets faster than you would in a taxable account. Additionally, your 401(k) may offer matching employer contributions, which could boost your savings.
Look for ways to maximize your contributions to these accounts. In 2018 you can contribute as much as $18,500 to a 401(k) and up to $6,000 to an IRA.3 If you’re age 50 or older, however, you can make something called catch-up contributions. These are additional contribution amounts above and beyond the normal limits. You can contribute an additional $5,500 to a 401(k) and $1,000 to an IRA.
Increase your sources of guaranteed* lifetime income.
Longevity is a difficult challenge for many retirees. People are living longer, but it’s impossible to predict just how long you might live. A 65-year-old couple today has a 73 percent chance that one will live to age 90 and a 47 percent chance that one will live to 95.2 That means you and your spouse could live several decades in retirement.
You can reduce the longevity risk by creating income that’s guaranteed to last for life. You’ll likely have some level of guaranteed income from Social Security and possibly a pension. However, annuities can help you convert a portion of your savings into a guaranteed stream of lifetime cash flow. A financial professional can help you determine which type of annuity is right for you.
Make adjustments to your retirement plans.
Finally, if you maximize your savings and still feel you’re short, it may be time to re-evaluate your retirement plans. With some simple changes, you can reduce your funding needs and eliminate your savings gap. For example, you may want to consider working a few extra years to give yourself an opportunity to save more money. Or you could downsize to a smaller home to minimize your living expenses.
Also, don’t ignore the idea of working in retirement. Many retirees find that they have too much time on their hands. Even a part-time or seasonal job can help you fill your empty schedule and give you a stream of income so you can reduce withdrawals from your savings.
Ready to get your retirement back on track? Let’s talk about it. Contact us at Trinity Financial. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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