The prospect of retirement should be exciting. Maybe you’ve been working toward this goal since you took your first job and it’s finally on the horizon. But what happens if you don’t have enough money saved to retire?
You don’t want to be stuck working forever, but do you have a choice if the investments in your portfolio aren’t enough to support you? The good news is, there are things you can do if you are in this situation, but you need to act now. You need to explore your options, understand what you can do to make a positive impact to your financial situation, and focus on what you can control.
1. Change your retirement timeline. It might not be ideal, but you can still have the retirement you want if you’re willing to work a little longer for it. Working an extra five years can have a massive impact on your nest egg. Since the last years of your career are also usually your highest-earning years, this could help you make the catch-up contributions you need to make your nest egg large enough to fund your retirement.
If the thought of five more years of your existing job is unbearable, consider how you could improve the situation. Could you reduce your hours? Request flex time? Work from home some (or all) days each week? Talk to your supervisor about your options, and get creative to make a few extra years feel a little less like work.
You don’t necessarily need to work an extra decade or more, and you can still enjoy a long retirement after you give your nest egg a little boost. Plus, those extra years could help your retirement planning in other ways, like increasing your Social Security benefit, too.
2. Double down on your savings and reconsider your investment strategy. You can still retire when you want if you’re willing to make the most of your final working years. Review your budget, and find places to tighten your belt so you can save more. Consider pursuing potential pay raises, job promotions or even working a few overtime hours to boost your income (and therefore, your savings). You could even land a side job, like driving for Uber, or find a way to utilize an idling asset.
Then, make the most of your savings by taking advantage of catch-up contributions in your retirement plans. People 50 and older are allowed to contribute $1,000 more per year to individual retirement accounts, up to $6,500. They can also contribute an extra $6,000, up to $24,500, toward 401(k) plans. The tax benefits of these plans will help close the gap to your goals more quickly.
In addition to simply trying to save more, take a moment to review your investments. You want to make sure you invest in such a way that you can take advantage of potential returns without taking too much risk. This is a tricky balance to strike, so consider talking to an experienced financial advisor who knows how to create appropriate portfolios for preretirees to help you get to the goals you want, not by working yourself to the bone, but by making sure your money is working as hard as it can for you.