Tips On How To Play Retirement Catch-Up
With the economic woes of our country, many people are finding themselves trying to play catch up to their retirement savings in their 50’s and 60’s. While it may be hard to get back everything that has been lost with the recession and economic hardships, there are ways to improve retirement prospects. However, the sooner you get back on track, the better off your financial future will be.
The unemployment rate was nearly 5% for those over 55 years of age. That is higher than it was before the recession hit. Studies show that the baby boomer generations have lost almost 30% of their net worth during this volatile time in our country. While we cannot change yesterday, we must live in the new reality and play catch up. By running a retirement calculator and seeing what kind of savings is needed, it is easy to put a plan in motion. It is hard to recover, but here are some tips to help get your retirement on track.
1. Save As Much As Possible
Even if you have went from a salary of $200,000 down to $100,000 you can still save. While it may not be as much as before, you can still put something away. Some people give up in desperation and say they have nothing to save. Save what you can and don’t even fall into the mentality that it is not enough. Pennies make dollars and these dollars can mean everything during retirement.
2. Change Your Lifestyle
If you are on a lower salary than before, you need to adjust your living and spending accordingly. This could mean moving to a smaller and less expensive home or it could mean getting rid of a car. When heading toward retirement, make sure that financially you are set. Make changes today and avoid heartache in the future.
3. Don’t Make Loans To Family Or Friends
Some people have a very giving heart and if you are one of them, stop! Children are our financial responsibilities until they reach 18, after that they are on their own. Many kids never fully cut the apron strings and expect their parents to be the welfare cash shop. Endless it is an emergency, don’t loan money to anyone, especially your kids.
4. Prolong Retirement
If you had plans to retire at the age of 65, you may want to work till 70. While it may be difficult to work that addition 5 years, it could mean everything to your financial stability. A financial portfolio that would be at $170,000 at the age of 65, could inflate to nearly $230,000 by continuing to work till 68. If that person worked till 70, it would be around $265,000.
5. Wait To Draw Social Security
Some people get anxious to draw their social security as soon as they hit 62. However, if a person can wait till their 70 years of age, they could be hundreds more on the month. If a person got $1,600 when they were 62, they could get over $2,200 a month when they are 70. Check the social security website and see how much more you can get by simply waiting a few more years
6. Learn A New Reality
Everyone thinks retirement will be a time for jet setting around the world and having a good time. Reality says something totally different. Most couples, on retirement, live on a fixed income and can’t afford to take lavish vacations. Those who don’t save properly will live off of social security’s meager income. If you are used to living in a big house overlooking the beach, retirement living may have you with a two bedroom apartment on the sound side, or with a slight view. Adjusting living and arrangements are necessity for retirement.
7. Live Simple
To save money, do things you don’t normally do. Rather than eating out, try cooking at home. Instead of buying your lunch, pack it instead. This can be a substantial savings that can go straight into the bank each month. Carpool if possible and try to save one day for running errands to save on gas money. There are ways to cut spending by simply altering the current lifestyle to make retirement better.
8. Set Goals
If you have credit card debt or other loans looming over your head, make goals to pay these off. Even if it means skipping that coffee and sand witch on the way to work, put that money on your credit card. You will be surprised how much this will save you in a weeks’ time, let alone a year or two. One option may be to sell your larger house and get a smaller one. By having smaller payments, you may be able to pay off some of those smaller loans.
9. Contribute As Much As Possible
Make as many contributions to your 401K and IRA accounts as you can. After you have hit bottom, you are not going to bounce back, rather you will probably crawl. However, as long as you are moving toward a goal, any movement is progress. While it may be a fight to get back to your current standing, and it may not even be possible, any money you squirrel away for retirement is going to mean something when that time comes.