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If you think or are sure that you’re behind in your retirement savings, know that you’re not alone. Per a 2024 AARP survey, fully 20% of Americans aged 50 and above have no retirement savings. Jeepers.
Whether you have some money or no money socked away, take heart, because there are multiple things you can do, starting now, to boost your future financial security. Here are nine.
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Image source: Getty Images.
1. Gather information
Start by gathering information and thinking through some topics — such as:
- How much income do you expect to need in retirement? Think of all the things you’ll expect to be paying for — food, shelter, utilities, taxes, travel, entertainment, etc.
- How much might healthcare cost you in retirement? How might you keep healthcare costs down?
- How much money is your household bringing in now? Might it be increased somehow?
- What are you spending your money on now? (A budgeting exercise can help a lot here.)
- How might you adjust your spending to allow for more retirement savings?
2. Have a plan
With the information that you gathered above, you can come up with a retirement plan. It should include how much income you need or want in retirement and how you’ll attain it. Ideally, aim for multiple income streams. Your goal might look something like this:
|
Income Source |
Annual Income |
|---|---|
|
Social Security |
$30,000 |
|
Dividends from stocks |
$20,000 |
|
IRA and 401(k) withdrawals |
$10,000 |
|
$20,000 |
|
|
TOTAL |
$80,000 |
3. Save aggressively
Clearly, you’ll need to save and invest as much as you can. Whatever you’re saving and investing now, see if you can increase it. The table below might inspire you, showing you what’s possible — and how much more you might amass when investing bigger sums:
|
Growing at 8% For: |
$7,500 Invested Annually |
$15,000 Invested Annually |
|---|---|---|
|
5 years |
$47,519 |
$95,039 |
|
10 years |
$117,341 |
$234,682 |
|
15 years |
$219,932 |
$439,864 |
|
20 years |
$370,672 |
$741,344 |
|
25 years |
$592,158 |
$1,184,316 |
|
30 years |
$917,594 |
$1,835,188 |
|
35 years |
$1,395,766 |
$2,791,532 |
|
40 years |
$2,098,358 |
$4,196,716 |
Data source: author.
4. Invest effectively
For building wealth over long periods, it’s hard to beat the stock market. Since the stock market has averaged annual returns of close to 10% over many decades, be a little conservative and assume perhaps 8% average annual growth over your investing period — though might average more, or less. That’s why I used an 8% growth rate in the table above.
Investing in the stock market can be as simple as investing in one or more simple, low-fee index funds — such as:
- Vanguard S&P 500 ETF (NYSEMKT: VOO)
- Vanguard Total Stock Market ETF (NYSEMKT: VTI)
- Vanguard Total World Stock ETF (NYSEMKT: VT)
The first will invest you in 500 of America’s biggest and best companies, making up about 80% of the U.S. stock market’s value. The second offers pretty much the entire U.S. stock market, and the third offers the world’s stock market.
Making good use of tax-advantaged retirement accounts such as IRAs and 401(k)s is another smart move.
5. Delay retiring
A particularly powerful strategy is to delay retiring for a few years. For each year you do so, you can save and invest more money — and your portfolio will have another year in which to grow. On top of that, your nest egg will need to support you for fewer years, and you may be able to stay on your employer’s health plan longer, saving more money.
6. Delay claiming Social Security benefits
You can start collecting Social Security benefits as early as age 62 or you can delay, up to age 70. Starting early means smaller benefit checks — though you’ll collect many more of them. Delaying will make your benefit checks bigger. For a majority of retirees, the best strategy is to wait until age 70. And there are other ways to increase your Social Security benefits, too.
7. Consider relocating for retirement
Here’s a strategy that might or might not appeal to you, but it could make a big difference: Relocating for retirement. Depending on where you live now, you may be able to spend far less living in a less costly region. That can help your nest egg to support you for longer.
8. Explore all options
Spend some time searching for more strategies, because there are more, such as getting a reverse mortgage, cashing out a life insurance policy, taking in a boarder for a few years, and even simply working part-time in your early years of retirement.
9. Consult a financial planner
Finally, don’t be afraid to consult a financial advisor. You may find one or more who offer a free initial consultation, but even paying something can be worth it if you end up with some peace of mind that you’ve got a solid retirement plan in place. Consider favoring fee-only advisors such as those you’ll find through the National Association of Personal Financial Advisors or the Garrett Planning Network.
However you go about it, don’t leave your future financial security up to chance or on shaky ground. Take steps now to strengthen it.
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Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF and Vanguard Total Stock Market ETF. The Motley Fool has a disclosure policy.
