There is a reason why we are supposed to save independently for retirement: most older people need 70% to 80% of their previous income to live comfortably and social security will only provide. about half of this income to average workers. Without savings, it is quite difficult to close this gap.
How much savings should you aim for? Retirement costs Americans an average of $ 46,000 a year, but you may need more or less money depending on your expenses and the lifestyle you want to maintain. Meanwhile, social security pays only about $ 17,500 a year to the average senior, that is, if you plan to take advantage of this type of benefit and you do not have savings. for the moment, you are facing a considerable gap.
Now, if you are in your twenties, thirties, or even forties, you have a decent window of time to start setting aside cash for retirement. But if you are already in your fifties, this window is much narrower. Here's what you need to do if you are faced with this latest scenario and want to save your golden years.
1. Do not panic
I will not lie: being in your 50s without money for the future, this is not a great place, but it is not a disaster either. So, rather than panic or resign yourself to an impoverished retirement, make immediate changes that free up money in your budget. You can reduce your living space, move from a family of two cars to a single vehicle, or reduce the luxury you eat, such as restaurant meals and non-professional clothes. If you manage to save $ 500 a month over the next 15 years to save and your investments generate an average annual return of 7%, you will accumulate about $ 150,000.
Does this represent a huge saving for retirement? Honestly no. But it's better than nothing and it's a good place to start.
2. Get a kick from the side
You can only reduce so much living expenses before making you miserable. You can make some significant changes that bring you back several hundred dollars a month, but if you are under 50 years old with no savings to prove, you will have to do better than that.
Enter the side crush. The advantage of getting a second job in addition to your main job is that the money you earn will not be allocated to existing expenses, which will give you the opportunity to save everything. In fact, of the millions of Americans who oppose it, 14% do so for the sole purpose of building retirement savings.
Imagine that you can earn $ 500 a month in addition to the $ 500 you release by reducing your expenses. If you save $ 1,000 a month for 15 years with an average annual return of 7%, you will have just over $ 300,000 for retirement. Suddenly, things look much more promising, is not it?
3. Make plans to work a little longer
It is difficult to stay in the work force when you plan to retire at a certain age. But extending your career can do wonders for your retirement in many ways. First, if you are able to defer your social security benefits beyond the retirement age (67 for those born in 1960 or later), you will increase them by 8% per year until you reach retirement age. at the age of 70. offset a small savings balance.
Working longer will also provide you with an additional opportunity to contribute to your retirement plan. Imagine saving $ 1,000 a month, but instead of doing it for 15 years, you do it for 20 years. All of a sudden, you expect a nest egg of almost $ 500,000, assuming the 7% return we've seen from the beginning. Now c & # 39; a nice sum of money.
Remember that Americans are living longer these days, with a 65-year-old who is expected to live beyond 90 years. Therefore, extending your career will not necessarily leave you without retirement. will give you more money to enjoy your golden age once you start them.
The last thing you want to do is run out of money and fight as a senior. If you are under age 50 without retirement savings, make a commitment to do better now. The longer you wait, the more you finally put your golden years at risk.