Here’s what to do if you’ve fallen behind on saving
Worried about having enough money for your golden years? You’re not alone. It’s our top financial fear. According to a recent Gallup poll, 59 percent of Americans polled are “very” or “moderately” worried about saving for retirement, and many have nothing saved at all. Nevertheless, even if you fall into the “nothing saved now” category, there are steps you can take to make sure you won’t have to work forever—unless you want to.
Figure out when you want to retire. If you were born in 1960 or later, your full retirement age is 67. You can collect a reduced Social Security benefit beginning at age 62. (Visit the Social Security Administration). Retire later and you’ll receive a larger benefit.
Estimate how much income you’ll need to live in retirement. Experts say about eight times your annual salary is the number to shoot for, but there are calculators out there to help you with a more exact figure. AARP’s website has a calculator that will give you an estimate based on the type of lifestyle you want to lead. You can even include an estimated Social Security benefit and any current savings.
Cut back to save. If you haven’t done well at saving so far, you’ll probably have to make some changes to begin catching up. Find extra cash by cutting back on spending and making a few lifestyle changes. For example, try making your morning cup of joe at home instead of spending $4 on a latte, or try bundling phone and Internet services.
Max out savings. Contribute to your 401(k) or 403(b) to the maximum of your employer’s match. Then, consider opening an IRA or a Roth IRA if you’ve managed to come up with more to save. Currently, those younger than 50 can contribute up to $5,500 a year to IRAs and Roth IRAs. (Roths have income limits.)
Even if you’re feeling behind in saving for retirement, the most important thing to remember is that it’s never too late to start—and better now than next year! To learn more about investments, contact an IB Wealth Management representative at 800.300.0459.
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