For many adults who are nearing their 60’s (and even some adults much younger than that), one of their biggest financial concerns is being able to save enough for retirement. The average American who reaches age 65 can expect to live for about another 20 years, so if that individual plans to stop working once they retire, they will need to have accumulated a significant nest egg to cover their ongoing living expenses. Many adults find that they haven’t save enough.
So what happens if you find yourself in this position? What do you do if you believe that you’ve saved too little for your retirement?
Don’t Assume it’s Too Late. The first step is to evaluate your situation again. Don’t assume that it’s too late for you to meet your retirement goals. It may be helpful for you to get a second opinion from a trusted financial advisor – they may be able to help you realize that the situation is not quite as dire as you may have assumed.
Readjust Your Expectations. One thing that can lead some to conclude they haven’t saved enough for retirement is that their expectations for the lifestyle they hope to have during retirement may be unrealistic. When you began saving for retirement, for example, you may have envisioned yourself spending the last 20 years of your life in a luxury home located on a championship golf course.
You might not have saved enough to be able to make that plan come to life (and it might not be due to lack of effort or planning on your part – the cost of your desired retirement lifestyle may have increased at a much faster rate than your investments have grown). But that doesn’t mean your chance for a comfortable retirement is gone; you may just need to readjust your expectations of what your retirement lifestyle will look like.
Reevaluate Your Other Expenses. Even though you likely saved for retirement in dedicated accounts such as IRAs and 401(k)s, you shouldn’t evaluate your retirement options nearly by looking at the balances in those accounts. Consider all of your wealth when making retirement decisions, even if you may have previously earmarked other assets for different purposes. For example, one reason that some new retirees find that they haven’t saved enough for retirement is that they’ve over-extended themselves in other areas.
These days, one of the most common is paying for all of the child’s higher education expenses. The cost of a college or university education has skyrocketed over the past two decades, so you may need to re-examine how much of your child’s education you’ll be able to pay for. Don’t deplete your other savings just to cover the tuition bill in its entirety. Instead, consider a less expensive school and or having your child borrow or otherwise be responsible for a greater portion of their own education expenses.
Wait Until Age 70 Before Taking Social Security. Finally, you can maximize the amount of Social Security benefits you receive by delaying your decision to receive benefits until age 70. By waiting this long, you may be able to almost double your monthly income (and that’s income you receive for the rest of your life) as compared to taking Social Security at the earliest possible time.