According to a recent report, the typical American family only has “a few thousand dollars” saved for retirement. The median savings for those 10 years away from retirement is $12,000, with one-third of them having no savings at all. Currently, there are 38 million working-age households that do not have any retirement assets. Given that 90 percent of Americans will not be able to retire on Social Security and savings, it is important to start saving for retirement as soon as possible. Here are some strategies to follow!
- Save more and spend less! This is an obvious commonsense solution, but it’s surprisingly not followed as much. Saving more and spending less has twice the impact of just doing one of them. Saving helps build your nest egg, and cutting spending helps you lower your standard of living. Creating a financial plan is important to get an honest assessment of your current financial situation, determine your retirement goals and what you need to do to achieve those goals. This will help guide you on how much to save and cut. According to Daniel Peters, vice president of WealthBridge Inc., “It is important to see that the life you live while you are working may not be the life you are set up to live in retirement. Downsizing to a smaller house, moving in with family or even changing hobbies is something to consider in cutting costs in retirement. You don’t want to sacrifice long-term goals for short-term gains.”
- Delay retirement. Setting up a financial plan also will help you determine if delaying retirement is right for you. Since people are living longer, one of the greatest financial risks is outliving your money. Delaying retirement can add to your nest egg and help you postpone using your savings and taking Social Security. Many people take Social Security at age 62, but if they are able to wait until 70, they will get 30 percent more!
- Maximize Social Security benefits. If you are a married couple and ready to take Social Security, there are 81 different strategies on how to claim it! See a financial professional about which of those 81 will maximize your Social Security benefits. The difference between the worst and best strategy can be close to $150,000 over a lifetime.
- Consider a part-time job in retirement. Based on your skill set, it may be wise to work part time. It can help supplement retirement income or add to your savings. Time can be more important than money, so look at strategies to save and defer from taking retirement savings as long as possible.
- Get out and stay out of debt. While working, there are more chances to pay down debt, but in retirement there may not be additional sources of income to pay it down. In many cases, retirement income is less than your working income, so having to pay off debts will take up a larger percentage of income.