How to catch up on retirement savings

We often hear that the earlier we start saving for the future, the better off we'll be when retirement arrives. But what if our savings aren't where we'd like them to be? Many people wonder if they're doing enough to ensure a comfortable retirement. By being mindful and proactive about retirement planning, it's possible to improve one's financial situation and be better prepared for both planned and unexpected expenses. No matter your age, it's never too late to take steps toward a more secure financial future.

How to Tell if Your Retirement Savings Are on Track

Over half of Americans feel they are falling short in their retirement savings. If this sounds familiar, it's a good idea to assess your current savings strategy by considering your existing savings, estimated income and expenses, and overall retirement timeline. Generally, experts suggest that retirees aim for about 70 to 80% of their pre-retirement income to maintain a comfortable lifestyle, although this can vary depending on individual circumstances and goals. Even if your savings aren't where they need to be, there are practical steps you can take to enhance your financial resources for the future.

To set a savings goal, keep in mind that many households tend to spend less in retirement, so even if your savings don't match your current lifestyle, they could still be sufficient for the future. Consider these questions to help determine whether your retirement savings are on track or if it's time to focus on catching up:

•  How many years until retirement?
•  How much monthly income can you expect?
•  How many years do you anticipate being in retirement?
•  How much do you plan to spend each year during retirement?

Imagine your ideal retirement and consider if your savings could support that vision. Working with a financial professional can help you analyze your finances, explore options, and identify the most effective strategy for your situation.

What if You Haven't Started Saving for Retirement?

Without retirement savings, Social Security benefits are typically available, but these benefits often don’t fully replace pre-retirement income, which can leave a significant gap between income and expenses. As retirement age approaches, lacking a savings plan can jeopardize long-term financial stability. It's crucial to take proactive steps now to pave the way for a more secure and comfortable retirement.

No Retirement Savings at Age 40

For individuals in their 40s who haven't started saving for retirement, there's still time to make up lost ground. With approximately two decades left until retirement, it's important to begin building a diversified financial portfolio. At this stage, you may consider options that involve higher risk for potentially higher returns. Additionally, diversifying your retirement income plan with a mix of stocks, bonds, and other assets can help balance risk while working toward growth.

Adding an annuity to your financial plan can provide guaranteed income throughout retirement. This is also a good time to maximize contributions to retirement accounts like a 401(k) or IRA to significantly boost your savings. The key is to start now and build a robust strategy that aligns with your personal financial goals.

No Retirement Savings at Age 50

For those in their 50s, retirement is approaching, making it essential to develop a solid savings strategy that can help secure sufficient income for the future. Consider opening a 401(k) or IRA and taking advantage of catch-up contributions, while maximizing annual limits. Additionally, reassessing and diversifying your investment choices can help balance growth and risk as retirement nears. This may also be a good time to pay down debt, downsize your home, or consider other lifestyle changes to help boost your financial readiness for retirement.

No Retirement Savings at Age 60

As retirement approaches, the window for building a substantial nest egg narrows, but there are still actionable steps to help enhance your financial stability. You might want to start by closely examining your budget to identify current expenses and adjust your spending to allocate more funds toward savings. It may make sense to continue working, allowing for additional contributions to retirement accounts until you reach a more comfortable income level.

Additionally, consider part-time or freelance opportunities to help increase your earnings while saving for the future. Consulting a financial professional can also provide valuable insights and help create a targeted plan to optimize your resources for a more secure retirement.

Taking proactive measures now, no matter how small, can lead to significant improvements down the road.

Ways to Catch Up on Retirement Savings

Whether you're just starting your retirement savings journey or reassessing your existing income strategy, there are options available to enhance your savings and work toward a rewarding retirement.

• Increase contribution amount: Gradually raise the percentage of your income contributed to retirement accounts to accelerate savings growth and take advantage of compounding interest.
• Maximize company match: Take full advantage of employer-sponsored retirement plans by contributing enough to receive the maximum match, effectively boosting your savings without additional out-of-pocket costs. 
• Automate savings: Set up automatic transfers from your checking account to your retirement or savings accounts to ensure consistent saving habits, making it easier to build savings over time without extra effort.
• Use cash value from life insurance: Permanent life insurance policies with cash value can be used to supplement retirement income while still keeping the death benefit for loved ones secure.
• Secure guaranteed income: Consider options like annuities that can provide a steady stream of guaranteed income during retirement, helping to ensure financial stability. Some fixed index annuities can even provide guaranteed income for the rest of your life.

It's completely normal to feel stressed if you're behind schedule on retirement savings, but remember that it's never too late to take action. By staying proactive and dedicated to creating a plan that fits your individual financial goals, you can help ensure you have the income needed to live the retirement of your dreams. If you're not sure where to begin, consider meeting with a financial professional who can provide clarity and direction, setting you on the path to a more secure retirement.

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

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