Recent retirement planning surveys conclude that more than half of retirees have retirement planning regrets. The main regret: Not saving enough. The second runner-up: Not saving sooner.
But hindsight is 20/20 and you can’t change the past. The reality is that all we can do is look forward to the future and with a little motivation and planning, there are ways to accelerate savings now. So, if you’re nearing retirement and feel like you want to beef up your nest egg, you may need to utilize some or all of the following strategies to get caught up. Don’t worry. It isn’t too late. The years leading up to retirement can still be key savings years.
Take Advantage of Higher Earning Years
Aging gets a bad rap, but there are some distinct advantages to growing older and wiser. One of those is typically earning a higher income. Individuals in their forties and fifties are generally in their peak earning years, which means they have more income they can dedicate to retirement contributions.
As you enter your fifties and sixties, your dependents may be on their own (or close to it), freeing up some of your financial responsibilities. You may also have fewer debts or have paid off your home, making it easier to prioritize savings goals.
Take advantage of this time by contributing as much as you can to both your tax-advantaged retirement accounts and taxable investment accounts. Make sure to also utilize “catch-up” contributions where applicable. New contributions still have time to grow even if you’re retiring soon.
Cut Back to Save More
No one likes to hear the words, “cut back.” But, there may be ways to trim expenses that can be turned into savings without changing much about your lifestyle. These include canceling unnecessary memberships or subscriptions, shopping for cheaper home and auto insurance policies, or even renegotiating the terms of certain debts.
Once you have freed up some income, automate that amount to be withdrawn from your paycheck before you even see it. Sure, you may feel like you’re bringing home less pay, but it should bring you peace of mind that you’ll be getting on track to eventually leave the workforce comfortably.
With the shift to a digital marketplace, many pre-retirees are finding that they are able to offer their goods or services online while still working their full-time jobs. They earn an extra income as self-employed individuals and are able to take tax deductions they wouldn’t otherwise be eligible for. They then use this income to maximize their traditional or non-traditional IRAs or investment accounts to increase their savings rate.
These second careers and home-based businesses also work nicely in transitioning individuals into a gradual retirement. As they provide additional income, they also allow you to pursue something you are passionate about and can be personally rewarding. It’s also a great way to stay engaged, in a routine, and active on a daily basis.
Invest Raises and Bonuses
Everyone likes getting a bonus, and getting a raise is even better. But, rather than falling prey to lifestyle inflation—spending more as you earn more—consider living on the same budget and banking the excess funds for retirement. This allows funds you wouldn’t otherwise be accustomed to using anyway to go to work for you in the time you have left. Your future self will thank you when the financial struggle isn’t even a blip on your retirement radar.
It’s Never Too Late
Luckily, it doesn’t matter how old you are or how much or little you have saved so far, it’s never too late to try and improve your financial situation. Even in the final years before retirement, there are a number of small changes that can yield significant results.
If you feel like you’ve done a good job saving but want to maximize your final accumulation years, we encourage you to reach out to us. Call us today to schedule an initial 15-minute conversation.