There’s no time like the present to work to secure your future.
The double whammy of inflation and roiled markets may be prompting a growing number of Americans to see retirement moving further out, or out of reach entirely.
An Axios/Ipsos poll conducted in July had a lot of interesting findings about Americans and their retirement plans, including that about one in five don’t think they ever will. And of that 20%, 70% say it’s because they don’t think they’ll ever be able to afford to.
Among Americans over 55 who haven’t retired, the polling found, 40% say now they’re not sure if they can retire at the point when they had expected to. About a quarter say their retirement plans have been delayed, and only about a third say their timeline remains intact.
Want to be in that latter category? Then follow these five steps to help ensure you have the nest egg to call it quits when you’d like.
1. Save early and often and max out retirement account contributions when you can
The earlier you start, the more you’re likely to have at the end. If you can, start contributing to 401(k) and IRA accounts as soon as you enter the workforce. Automating the contributions can make it easier, of course. Be sure to at least contribute up to any company match you might have, and to take advantage of the make-up contributions when you reach the half-century mark yourself.
2. Consider delaying collecting Social Security
You can start claiming Social Security benefits as early as age 62, but delaying until your full retirement age substantially increases your monthly benefit. A recent study put that figure as high as an inflation-adjusted 77% if retirement is delayed from age 62 to age 70, when benefits stop growing whether you start drawing them or not.
Evaluate your expected income and expenses to see if waiting works for you. How long you expect to live, not to be morbid, is less certain — but that, too, should be a factor in considering when to go ahead and start drawing what you’ve earned.
But it’s worth noting here that the average monthly benefit for retired workers was $1,838.58 in September, according to the Social Security Administration. Indeed, in that aforementioned Axios/Ipsos poll, 62% of unretired Americans say Social Security will probably cover less than half their expenses when the time comes. Only 37% of current retirees say the same.
That highlights the importance of saving and investing wisely and early.
3. Invest wisely, with an eye on asset diversity and low account fees
Your retirement will be significantly affected by how you invest heading into it. Diversify your investments across stocks, bonds, mutual funds, and other assets. And as you get closer to leaving the work world, adjust your asset allocation to reduce investment risk, since you won’t have that long window to make up for market losses that exist only on paper until you have to sell the assets.
A trusted, qualified financial advisor might well be one of your best investments here, but keep an eye on fees.
4. Reduce your debt load and pay off the high-interest stuff first
Entering retirement with a pile of credit card and other consumer debt, not to mention mortgages, can make it hard for many retirement budgets to meet those monthly bills and wish-list spending goals.
Focus on paying as much as you can on your higher-interest obligations first. You might also want to consider downsizing your home, or refinancing if and when mortgage rates dip enough to make that worth it again.
5. Reduce spending, boost income
You can also look for ways to reduce discretionary and other household spending, or earn additional income closer to retirement if you are falling behind or just want to get further ahead.
Stay on track. Your nest egg will thank you.
Staying on track with retirement savings and investing, both by contributing regularly and limiting withdrawals, can give your nest egg the best chance of meeting your retirement needs.
