Most Americans are worried that they are not doing enough to save money in retirement. According to the 2017 Retirement Confidence Survey, 39% of them admitted that they are not too confident or not at all optimistic that they will have enough retirement savings to give them a comfortable retirement.
But, How Much Do You Really Need in Retirement?
Well, there’s no magic number when it comes to retirement savings. It’s not a one-size-fits-all after all. Good thing, you can boost your odds of having comfortable retirement quickly by considering these strategies.
Pay Your Debt
Entering retirement with debt will put more financial pressure on you since you’re living on a fixed-retirement income. Paying for your debt during retirement can limit your ability to pay for your other financial responsibilities, putting you in a precarious situation.
You can boost your income in retirement by paying most of your debt. You can start by paying for your credit card balance in full instead of paying for the minimum payment each month. This is the worst financial mistake you can do while saving money for retirement.
One trick worth trying is negotiating your credit card interest rate if you have a good credit card standing with them. There’s no harm in asking your credit card company to lower your interest rate. Making light threats might do wonders for you too by telling your credit card company that you’re considering an alternative because companies will most likely do everything just to keep you as their customer.
Plan for Long Term Care & Health Care Costs
Long term care and health care costs are two of the most overlooked factors when planning for retirement. Many Americans fail to plan for their potential care needs because they think Medicare will cover everything or they’re confident that their retirement savings will be enough to pay for their care needs.
Will your savings be enough to pay for long term care and health care in retirement?
Well, you be the judge by looking at the current cost of long term care and health care.
According to ALTCP, the average annual cost of a private room stay in a nursing home is $97, 455 while a semi-private room costs. Here’s the table for the complete list of long term care facilities and their cost estimates.
As for health care cost, Fidelity Investments published a new study showing that a couple needs $280,000 to pay for health care in retirement.
Protecting your assets from this expensive care costs is a must nowadays. You can do it by purchasing long-term care insurance and health insurance, which covers all your care expenses and at the same time gives you the liberty to spend your retirement savings in other ways.
Maximize Your Retirement Contributions
Enroll in 401(k) or other voluntary contribution retirement plan and try to make maximum contributions if you haven’t enrolled yet. But it’s fine if you can’t max your contributions since you can always increase it based on your capacity. A 2% or 3% increase from your usual contribution will pay dividends in the long run and much better than not doing anything to boost your retirement savings.
Making catch-up contributions is also a great option if you’re 50 years old and up. The IRS updated their rules to encourage older Americans to make more contributions.
Continue Working in Retirement
Working after retirement is a sure way to boost your retirement income. The pay might not be as lucrative like before but earning a few hundred dollars in a month can provide you with a big lift. You can work for your former employer, work as a consultant, start a small business, work as a temp or work part-time. Your options are endless.
This will also prevent loneliness from creeping in since your work can keep you busy and provide you with lots of opportunities for social interaction.
Consider Downsizing or Relocating
If you live in a big house and an area with a high cost of living, it’s wise to move to a smaller house or in a less expensive location. This can make a big difference in your retirement income since you’ll be saving on a mortgage payment, property taxes, and other household expenses.
Consider areas that are not just affordable but also provide extensive support for retirees like easy access to transportation. Also, choose a home that is senior-friendly so you don’t have to spend more money in modifying your home to make it safe for you to age in place.
The earlier you start saving for retirement – doubling your savings and buying smart insurance products, the more significant your retirement savings will be. Never doubt your potential to enjoy financial stability in the future because you are surrounded with tools and proven strategies that can help boost your retirement income, and all you have to do is try them one by one.