1 in 5 workers say their retirement savings are off track. Here’s how to get yours back on track. | Smart Change: Personal Finance

(Kailey Hagen)

We’ve all been through a lot in recent years, first with the pandemic, now with record inflation and talk of a looming recession. So it’s no surprise that people aren’t optimistic about their chances of retiring comfortably right now. According to BlackRock, nearly one in five workers don’t feel they can afford the retirement lifestyle they want, and another fifth aren’t sure they can save enough.

If you belong to one of the two groups, it is natural to feel stressed. But there may be a way to get things back on track. Try the following.

Image source: Getty Images.

Find out what it means to be “on track”.

There are a few reasons why you might feel like you aren’t on your way to your retirement plans. You may have a monthly savings goal that you know you won’t reach. Or you may not know exactly how much you need for retirement.

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In the latter case, the first step is to create a retirement plan so you know exactly how much you need to save. There are a few ways you can do this. One strategy is to save 25 times your annual income. This should help your money last at least 30 years. You can also create a personalized retirement plan based on how long you expect to live, how much you plan to spend per year, and how fast you think your investments will grow. A retirement calculator can take all of this information and help you figure out a good savings goal.

Take stock of what you have

The next step is to make a note of what you already have. This includes retirement savings in workplace retirement plans, IRAs, health savings accounts (HSAs), and everywhere else. Don’t forget retirement accounts with former employers either. Take note of all their balances and what you have invested in.

Also note how much time you have until your planned retirement date and keep track of how much money you are regularly contributing to your retirement. If you earn a 401 (k) match from your employer, register that too. You will need this information to create your new retirement plan.

Review your retirement savings strategy

Review all of the information you’ve gathered to see if there are any obvious changes that might help you. For example, you could transfer the money into an old 401 (k) in an IRA, where you could invest it in an affordable index fund rather than the expensive mutual fund it is currently in. This could save you money on fees and potentially improve your returns.

Or you could put more money into your 401 (k) instead of your IRA if you haven’t claimed enough in the past to get your full employer match. If you don’t have access to a 401 (k), you may want to consider opening an HSA and throwing a portion of your retirement savings there to top up your IRA funds.

Of course, sometimes the only solution is to get more money in your retirement accounts. If so, you might want to try cutting some other expenses or negotiating a raise on the job. Look for other, better-paying job opportunities as well.

When all else fails, postpone your retirement

If you can’t get your current retirement plan to work, then it’s time to switch plans. You may not want to delay retirement, but it’s a better option than retiring anyway and pinching a few pennies until your savings run out.

It may not even be necessary to delay retirement for long. Even a few months can make a difference. It gives you more time to save, but it also shortens the length of your retirement and reduces its costs.

Everyone’s situation is unique, so it’s up to you to decide how long you want to work. But try to hold on until you feel confident enough that you have the money to cover your basic expenses.

The $ 18,984 Social Security Bonus that most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “social security secrets” could help ensure a rise in your retirement income. For example: a simple trick could make you pay up to $ 18,984 more … every year! Once you learn how to maximize your Social Security benefits, we think you could safely retire with the peace of mind we all seek. Just click here to find out how to learn more about these strategies.

The Motley Fool has a disclosure policy.


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