Not having enough saved when you are nearing your retirement can be a stressful situation.
A research study conducted by Northwestern Mutual found that 22% of adults in the United States have saved less than $5,000 for retirement. 15% have no savings. This is astonishing.
In the same research study, participants were asked if they would be able to outlive their retirement savings. The results were shocking. 45% of the participants agreed that they will outlive their retirement funds. This is not an ideal scenario for anyone nearing retirement.
Retirement will last 20 years or longer, which is why saving for it is important.
But if you are late to save for retirement and currently don’t have enough funds to live on. Don’t lose hope!
Here are 5 tips that may help you earn more money now for retirement.
Collect All Your Financial Documents
Collect All Your Financial Documents
The most important step in determining what your retirement income will look like.
This should include:
- Bank statements – Collect statements from all your bank accounts. Your bank account statements should show you how much money you have in the bank.
- IRA Statements – If you set up an Individual Retirement Accounts (IRA) gather those.
- 401k Statements – Hopefully, along with your career, you had a 401k. If you were afforded this wondering retirement savings opportunity. You should have the statement.
- Social Security Administration – All the deductions that were coming out of your paycheck are part of your government-issued retirement account. Your salary and contributions will dictate how much you will receive. If you don’t have a statement, you can check online at ssa.gov.
- Whole life insurance policies – Whole life insurance policies allow you to cash out the policy. Though your loved ones may lose out on the benefit of having a life insurance policy to cover your funeral expenses. It may be a perfect opportunity for you to have income for yourself.
Live Within Your Means
If you’re at the point now where you may not have a retirement income. This may be an indicator that you lived outside of your means.
What this means is that you spent more on expenses than the income that was derived from working.
It’s never too late to start making sacrifices.
Going forward you cannot spend more than what you budgeted. Consider cutting back on wants and focusing more on paying off the needs.
How do you do this?
Cut off shopping for pleasure and focus more on shopping for essentials. If you have dinner in the refrigerator, eat-in. Not out. Avoiding buying items on impulse.
A personal spending budget will help you get back on track.
Immediately Setup a Personal Spending Budget
If you don’t have a personal spending budget setup. You should set one as soon as possible. This is because knowing where your money comes from and knowing where it goes is essential to learning how much to save for retirement.
A personal spending budget also gives you feedback based on your financial situation. It helps you keep track of daily, weekly, or monthly spending. Giving you the data you need to make better financial decisions.
Determine If your Employer Has a 401k Plan
Your company’s retirement plan is one of the best tools to help you build financial stability in the future. So, asking if your employer has a 401K Plan is the first step to start saving for retirement.
When asking your employer for a 401K Plan. Make sure to ask these important questions
- What plans and features are in your employer’s 401K Plan?
- When are you able to start?
- Does the contribution of your company match with yours?
- Do you reduce your taxable income by your contributions?
- What is the highest contribution per year?
Check How Much Your Social Security Withdrawls Will Be
The average Social Security Retirement benefit is at $1,526 as of 2021. You will be shocked that a lot of people are claiming benefits twice as large as the average.
But, you can also do the same if you figure out how much your current Social Security Withdrawals will be and maximizing it. But, acknowledge that living solely or mostly off Social Security will simply not work, so don’t rely on it.
You’re probably asking. “How do I check my social security income online?” The SSA now allows you to see what your SSA income will be upon retirement. They have a neat financial tool so you can see your withdrawals at different retirement ages.
On the SSA website, just click Online Services. There you will register for an account and get access to your financial information.
Social Security benefits are an essential part of anyone’s retirement plan. This is why you need to educate yourself about the benefits you are entitled to. This means asking a Social Security Administration (SSA) representative for advice. Or, asking a financial advisor who specializes in retirement planning. It is also important to run through various scenarios with your financial advisor. As well as running it through a Social Security Calculator before filing to get the most benefits for your household.
Use A Calculator to Determine How Much You Will Need for Retirement
Using a retirement calculator to determine how much you’ll need for retirement is crucial. Because many people save too much money for retirement when they don’t need to, they end up sacrificing lots of things for no benefit.
This is also true for people who save too little, thus suffering when they reach their retirement. You can find many calculators online but, working through it alone is not recommended. It is best if you can work with a financial advisor who specializes in retirement.