After a lifetime of hard work, you deserve a retirement that is meaningful, relaxing, and free of financial stress. But unfortunately, the latter is never guaranteed.
In fact, many savers today are concerned that they won’t have enough money to support themselves in retirement. And in a recent BlackRock survey, 64% of savers said they worry their savings won’t last. If you have similar concerns, here are some important steps you can take.
1. Invest as much money as you can in a tax-advantaged savings plan
These days, it’s not so easy to maximize a 401(k) or even an IRA. Inflation is driving up the cost of living, and that’s forcing more people to cut back. retirement plan contributions so they can pay their essential bills.
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But if you can increase your savings rate even a little bit, it could go a long way over time. Plus, it pays to put as much money as you can into a tax-advantaged savings plan like an IRA, 401(k), or even a HSA. That way, you could get a tax exemption on the funds you invest, and your money will grow tax-advantaged, too.
2. Invest your savings aggressively until retirement approaches
The last seven months have been extremely volatile for the stock market. You may be uneasy about investing heavily in stocks in your retirement plan for fear of losing money. But while accumulating stocks carries some risk, investing too conservatively carries its own risk: the risk of coming up short on funds in the future.
A good bet, therefore, is to invest your savings aggressively for most of your career, but then begin to shift toward a more conservative investment mix as retirement approaches. That might mean starting to dump some stock around age 60 if his goal is to finish his career at age 67.
3. Work as long as possible
The more time you spend in the workforce, the more opportunities you have to continue earning, saving, and investing. But extending your career also serves the very important purpose of keeping your savings untapped longer.
If you don’t want to work full-time until well into your 60s or 70s, try switching to a part-time job. In the wake of the pandemic, employers have become increasingly flexible when it comes to employee schedules. And that is why it is worth seeing what options you have that allow you to continue earning money.
You can also do what’s hot and join the gig economy once you feel like you’re done with your career. That could mean doing something you’re really passionate about that also pays off.
It’s natural to be worried about running out of money in retirement, and clearly it’s a concern that many people have. But if you do everything you can to increase your savings rate, invest aggressively, and leave your savings intact for as long as possible, you’ll be less likely to land in a scenario where you’ve run out of your hard-earned money.
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