Retirement Savings Strategies for Today's Seniors
Approximately 55% of Americans are behind on their retirement savings. They haven't been able to contribute as much to their accounts as last year.
The primary reason is skyrocketing inflation. It rose from 1.2% in 2020 to 4.7% in 2021.
There are ways to fight against this and keep your financial plan on track. Read on to learn the best retirement savings strategies for today's seniors.
Develop a Plan
Start financial security planning as soon as possible. Envision your ideal life after retirement. How much will you need to go where you want to go and do what you want to do?
Consider all the income streams you'll have. Two of the most common options for retirees include traditional pensions and Social Security. How much will they give you?
Create a budget based on your income and expenses. Think about how often you'll need to withdraw from and contribute to your retirement fund.
Try to put numbers behind everything. Come up with a percentage of the retirement fund to withdraw and deposit each month.
Maximize Retirement Fund Contributions
Most jobs offer some form of retirement fund, whether it's a:
- 401(K)
- Roth 401(K)
- 403(B)
- 457
Contribute as much as you can to the fund for as long as you keep working. The goal should be to at least match your employer's contribution. Put in the maximum amount you're allowed to if and when you can.
These contributions allow for tax-free retirement fund growth. You won't have to pay any taxes on the money until you withdraw it after retirement.
Try Other Retirement Fund Savings Strategies
Does your company not offer a 401(K)? Have you already contributed the maximum to the one they offer? There are other effective methods of saving for retirement.
You can get an IRA or individual retirement account. They're available through most banks or brokerage firms and offer many of the same benefits, such as tax-deferred contributions. A Roth IRA also allows for tax-free withdrawals.
The one drawback is that IRAs tend to have lower withdrawal maximums. However, you should still try to contribute as much as you can to them.
An annuity is like a savings policy that protects your income, so it's ready for you when you retire. You'll get a monthly payment.
There are several types of annuities to choose from. Some begin paying you immediately, while others defer payments to a later date. Look into them all to find the best one for your goals.
Optimize Your Social Security Benefits
One of the most obvious retirement planning tips is to leave your fund alone as much as possible. That applies to social security as well.
It's the main source of income for most retirees, but you don't need to draw from it right away. Delaying social security payments until you're 70 years or older will get you the maximum benefits.
A social security calculator can help you determine the best age to start withdrawals. Discuss it with your spouse or family members to decide what to do with your benefits and when.
Eliminate Debt Where Possible
Don't let the majority of your retirement savings go towards debt. Eliminate as much of it as you can as early as you can.
One useful strategy is to tackle the ones with the highest interest rates first. These include:
- Credit cards
- Payday loans
- Personal loans
They'll be some of the biggest obstacles to your ideal life in retirement.
You may also be able to get yourself out by consolidating your debts. Ask your creditors to combine them into one manageable payment.
Adjust Investment Allocations
You may want to change investment strategies when retirement comes knocking. Try to focus on conservative and less volatile markets such as bonds and less on risky ones such as stocks.
Don't only invest in one asset. Protect yourself from changes in one market by diversifying your portfolio. Ensure it has the right mix of assets such as:
- Stocks
- Bonds
- Cash
Avoid emotional investing. Don't treat your investments like you're at a casino where you have to keep going if an asset is on a hot streak. Think about how they'll fare long-term instead.
Plan for Healthcare and Other Expenses
Healthcare is one of the most important expenses you'll face. Keeping yourself healthy helps, but it can't save you from emergencies or high deductibles.
You also need to include the cost of assisted living in your budget. It's a long-term expense but an important one.
Don't just assume it couldn't happen to you. The US Department of Health and Services says approximately 56% of those 65 years or older will require long-term care.
Talk with your family about what you can afford. Balance quality with the cost of the services you need.
Find the right community before you need it. You'll be able to live comfortably after retirement without derailing your retirement savings.
Review and Adjust Your Retirement Savings Strategies Regularly
Reassess your retirement savings strategies at least once a year. Do they still meet your goals? Are you still saving, withdrawing, and investing the way you want and need to?
Check your expenses and income again. If these change, you might need to adjust how much you can put in and take out. You can also look for ways to reduce your expenses and increase your income.
Keep up with the latest retirement and tax laws. Changing regulations may mean it's time to change your plan.
Plan for Our Assisted Living Community
Using the right retirement savings strategies allows you to maximize the amount you'll have available. Make a careful plan and review it regularly to make sure it meets your needs and follows current regulations.
Contribute the maximum amount to your retirement fund while paying down debts. Optimize your social security and investment portfolio. Prepare for expenses such as healthcare.
Addington Place of Carroll is more than a senior living community. It's an ideal space to spend your retirement.
We offer high-quality health services in a tight-knit community with small-town charm. Contact us for a tour of the community today.