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20% of baby boomers make this huge financial mistake



<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Boomers of today" are now on the verge of retirement or are already there But many are at risk of going into debt the next time additional expenses or unplanned bills fall on their knees, which is why 20% are afraid of having less than $ 5,000 in personal savings, according to Northwestern Mutual 2019 Planning & amp; Progress study. In most cases, this is not enough to cover the minimum three months of living expenses necessary for a solid stay. emergency funds. "data-reactid =" 11 "> Today's baby boomers are fast approaching retirement or are already there, but many are at risk of going into debt the next time Unforeseen bills fall on their knees.The reason? A 20% fear personal savings of less than $ 5,000, according to the 2019 Northwestern Mutual study on planning and progress made, which is not enough, in most cases, to cover the minimum three months of living expenses necessary to build a strong emergency fund.

The fact that 17% of baby boomers have less than $ 5,000 for their retirement is another problem, the study said. This is problematic because at age 59 and up, savers can access funds from an IRA or 401 (k) without incurring a penalty. This means that seniors who have little personal savings could, in theory, tap into their nest boxes to access money in an approximate way rather than going into debt. Not having a lot of savings for retirement, however, eliminates this option.

Elderly man in the kitchen looking at a tablet

Source of the image: Getty Images.

Without a more robust savings account, it is easy to accumulate debts later in life, which increases the risk of having them during retirement and has a hard time paying them back. If you are an older American without too much savings, it is imperative to build cash reserves as soon as you can, ideally before retirement announces.

<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Establishing your emergency fund"data-reactid =" 26 ">Establishing your emergency fund

Financial surprises can surprise you at any age, but the older you are when you incur an expense that you can not pay directly, the more embarrassing the debt becomes. If your lack of savings requires you to go into debt in your late fifties or early sixties, chances are they will always be with you once you retire, and at that point your monthly debt payments could end up monopolizing an unhealthy situation. piece of your limited monthly income. This is especially true if you retire with low savings – something like 17% of baby boomers are clearly at risk.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Rather than run this risk, it is worth work to build savings.You can start with create a budget& nbsp; to better understand where your money is going, month after month. From there, you will be able to identify ways to reduce costs and make a difference in an emergency. For example, if you set a budget and find that you are currently spending $ 300 a month on restaurant foods, cooking more at home could easily reduce that total to $ 100. At this point, you would have the option to bank $ 200 a month, or $ 2,400 a year. And if you have less than $ 5,000 in savings, it's a good thing to do. "Data-reactid =" 28 "> Rather than run this risk, it is profitable to work towards the realization of savings.You can start by creating a budget to better understand where your money goes, month after month, to From there, you will be able to find ways to reduce costs and make a difference in an emergency, for example if you are budgeting and find that you are currently spending $ 300 a month on meals. at the restaurant, cooking more at home could easily bring that total down to $ 100. At that point, you would have the option to withdraw $ 200 a month, or $ 2,400 a year. it's a good thing to do.

<p class = "canvas-atom-text-canvas Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Another option: get a second job in addition to your main work. Chances are, you will need one to retire if your nest egg is under $ 5,000, since Social Security will only take you to this point. You can use the earnings of your business to generate emergency savings, and once you feel more comfortable there, you can use that money to improve your IRA or 401 (k) balance. Another option: Get a second job in addition to your main job.It is very likely that you will need one in retirement if your nest egg is under $ 5,000. because social security will only get you so far.You can use the income from your secondary business to save money, and once you're comfortable, you can use that money for improve your IRA balance or 401 (k)

You need money at the bank at any time of life, whether you are new to the job market or about to leave it. If you are one of those who have less than $ 5,000 in savings, try to increase your cash reserves – especially if your nest egg is in such a deplorable state.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " More from The Motley Fool "data-reactid =" 31 "> More from The Motley Fool

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The Motley Fool has a disclosure policy."data-reactid =" 39 ">Motley Fool has a disclosure policy.


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