More than half (54%) of near-retirees say they’re concerned about having enough money to last through retirement. Forty-five percent say they’ll need to work at some point during retirement.* But this doesn’t have to be your retirement story. Following these tips may give you a better retirement outlook.
Retiring before you’re financially or psychologically ready can put a damper on your retirement. From a financial standpoint, if you retire too soon, you risk running out of money. Periodically review your retirement investments with your financial professional to see if you’re on track for your desired retirement date. If not, you may have to work a year or two longer, which could make a surprising difference in retirement readiness. Or, if you’re able to, increase contributions to your retirement account by enough now to meet your desired retirement date.
If you haven’t thought about what you’re going to do with your time, you may be at loose ends when you retire. Explore paying and nonpaying options for keeping active before you retire. The Employee Benefit Research Institute found that many retirement-aged people have nonfinancial reasons for continuing to work full- or part-time.**
Have multiple resources
It’s good to have a fixed income source, such as Social Security benefits and/or an employer sponsored pension plan, to help cover basic expenses and variable income sources, such as a 401(k) account, an individual retirement account (IRA) and personal investments. Because these accounts have the potential to increase in value, they may help cushion inflationary price increases. You can use the funds to help cover unexpected expenses and/or pay for retirement living expenses.
Be realistic about retirement expenses
Your expenses may or may not decrease at retirement, depending on the activities you intend to pursue. Ask your financial professional to help you realistically project your future retirement expenses based on your individual needs and wants so you can judge if you’re financially ready to retire.
* Maritz Research Retirement Study, 2013, surveying individuals with less than $500,000 in retirement resources
** ebri.org Issue Brief, March 2013, No. 384