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  • Nancy Webb

What to do if you haven’t saved enough for Retirement?

Updated: Jul 4, 2022

Saving for retirement is something a lot of people put on the backburner. Retirement experts recommend that to retire by age 67, you should have a minimum of 10 times your annual salary. With the financial crisis in 2008 and COVID-related market dips, many people find that they are behind on savings for their retirement. And for those Americans who struggle to live paycheck to paycheck – there hasn’t been much to put aside.


What About Social Security?


According to U.S. Labor Statistics, the average 65-74-year-old household in 2019 spent $4,640 a month. However, the Social Security Administration states that the average benefit was $1,461 per month. Even if both members of a household receive the average monthly benefit, that’s still less than $3,000 a month.


So, what now?


If you haven’t been saving for your retirement, the first thing to do is to start playing catch-up as soon as possible. Pre-tax contributions for employees that are 50 years and older can contribute up to $27,000 per year.


You can also contribute $6,000 per year to an Individual Retirement Account, and for those over 50 – up to $7,000 per year. Placing $30,000 a year into a retirement fund for those living paycheck to paycheck is not realistic. You have to work with what you’ve got, so save what you can.


What about my Children?


So many parents feel a responsibility to pay for their children’s education, but sometimes, there just isn’t enough for both college and retirement. There are multiple resources for financing an education. Working with your children to find out what sources work best for them may be of even more value than being their piggy bank. Borrowing isn’t perfect, but at least they have time to pay it back.

Parents are not just paying for children’s education. The Publication Money delves into this issue and based on a study from the University of Arizona - states that only about half of adults ages 23 to 26 and at least one year out of college have a full-time job. According to a Money survey conducted in 2016, parents who help an adult child most commonly spend $1,000 to $5,000 a year, often for everyday expenses such as cellphones, utilities, internet bills, and car and health insurance.


Most kids don’t realize how much the support they receive is costing you because you have probably never told them. Parents are still the primary source of financial information and you can introduce them to tools that can help them manage their money at sites like Personal Capital, Tiller Money, Count About, Simplifi, and Pocket Smith. Go to robberger.com for an in-depth discussion of online budgeting apps.


Should I Delay Retirement?


This can make a massive difference, as you will have more time to build up your savings. Your savings will also last longer as you will be drawing on them for a shorter period, so you will need less in total.


Delaying your retirement will also allow you to defer your Social Security benefits. The longer you defer, the larger your monthly benefit will be. You can choose to receive reduced early Social Security benefits at age 62, full benefits at your normal retirement between 65 and 67, (depending upon when you were born), or increased benefits as late as 70.

The longer your life expectancy, the greater the reward. If your health is poor or you don’t expect to live a long time, deferral might not be the right option. Before making this decision, you should talk to a financial professional or the Social Security Administration.


What if you just can’t/don’t want to work anymore?


You may have faced the reality that due to finances – you can’t retire. You also know that you dread working in the same job day after day year after year. Why not change your job/career? The current unemployment rate is the lowest it has been in years – so there are more choices and employers are looking for responsible employees. If you like to travel and are adventurous – check out cooljobs.com for resort and national park jobs all over the country. If you love to take cruises – there are land-based opportunities with Cruise Ship Lines with great cruise perks. We have all heard the adage “Do what you love and you will never have to work a day in your life.”

Move somewhere more affordable


According to a 2019 report from UMass Boston’s Center for Social and Demographic Research on Aging, there is nowhere in the U.S. is the cost of living low enough for retirees to make ends meet on Social Security alone. If your budget is limited and you are adventurous - it is possible to retire abroad comfortably for a fraction of the cost of staying in the U.S. Please Note: Your social security and civil service benefits follow you anywhere. If this is something you might consider, it should be a decision based on research and talking to others. A trip or two abroad to test the waters should also be factored into the decision. I have found a lot of good information in International Living’s Monthly Magazine. I do a deeper dive on this topic in another post.


Conclusion


There is governmental support to help seniors make ends meet, including help with such things as cell phones, food, housing and transportation. The National Council on Aging website is a good place to see what you may be eligible for, go to benefitscheckup.org.

For a lot of us, the most important part of planning for retirement is not financial at all. It is behavioral. Most of us have little formal training to draw upon in making the relevant decisions in planning for our retirement. Luckily there is a Pandora Chest of information waiting for us online to find solutions. Because, not having a plan – is a plan (and maybe not the best one.)

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