More than a third of the country's workforce don't have nearly
enough retirement savings: 36% say they and their spouse have less than $1,000
saved for retirement, according to a 2014 survey from the Employee Benefit
Research Institute, which was based on telephone interviews with 1,000 U.S.
workers. But you can get on track and prepare for retirement in just a few
years. Here's how.
Create a retirement
plan. If you haven't already, sit down with your spouse and a financial
adviser and outline a retirement savings plan. Take stock of the savings you
already have, including employer contribution plans, personal savings and other
investments. Estimate your retirement age and how much you'll spend during
those years. Then, identify ways that you can save the rest of the money you
Start saving now. You
can't put it off any longer: Start saving right now. Find places in your budget
to trim discretionary expenses and put that money toward retirement. Open an
individual retirement account (IRA) and a 401(k) if you haven't already, and
start paying catch-up contributions. If you're 50 or older, you can contribute
an additional $1,000 to the $5,500 IRA limit and $6,000 above the $18,000
401(k) contribution limit for 2015.
You may be tempted to increase the risk in your retirement
portfolio to maximize returns, but higher risk means a higher potential for
loss. If you're already behind on your retirement savings, you can't afford to
take on that danger.
Pay down debt. You
want to pay as few bills as possible during retirement, so pay down as much
debt as you can now. Pay off your credit card debt first, especially if you have
a high annual percentage rate (APR), to avoid paying more in interest.
Social Security. Wait to start collecting Social Security checks until you
are at least full retirement age, which is 65 to 67, depending on the year you
were born. Wait even longer if possible. For every year you delay Social
Security beyond your full retirement age, you'll receive an extra 8% in
benefits, says Curt Sheldon, a financial advisor from Alexandria, Virginia.
Delayed retirement benefits increase until age 70, so don't collect your
benefits until then if possible.
Find new income
streams. Any extra income you can get will help you pay down debt and save
more each month. Consider selling valuable assets like jewelry, an extra car,
or furniture. If you have a spare bedroom, rent it out on Airbnb, HomeAway or
Roomorama. Another option is to find a part-time job or freelance work during
retirement, so you can maintain some income to supplement your savings.
Downsize your home. Mortgage
payments and property taxes likely account for a large portion of your bills
each month. Think about relocating to a
less-expensive city, or if you can, moving in with family members to save on
rent. Also consider downsizing or refinancing your mortgage.
Delay retirement. When
push comes to shove, you may end up having to retire later than you'd hoped.
Once you decide to delay retirement, make another plan for ways to continue
saving so that when you eventually do retire, you'll be able to live
The bottom line. There's
no doubt that saving for retirement is stressful, but even if you're starting
late in the game, there's still hope. If you're 50 now, you have 20 years to
save to retire at age 70.
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