Not Enough Money to Retire? 8 Moves To Make
With inflation at a 40-year high and the Federal Reserve announcing the highest interest rate hike since 1994, these economic factors are impacting retirement savings and investments.
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Meet With a Financial Advisor
Whether you feel financially secure or insecure, it's recommended that you speak to a financial advisor about your financial situation.
Meeting with a financial advisor allows you to put together a financial plan that aligns with your goals. This plan will factor in your financial well-being and the well-being of your loved ones. A financial professional will be able to answer any questions you may have about how much you would like to have saved for retirement, share steps one can take to be secure and experience financial freedom as they phase into retirement and act as a partner to help you plan your unique retirement journey.
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Create a Written Budget
If you are concerned you won't have enough money for retirement, Emily Irwin, managing director at Wells Fargo Wealth & Investment Management, recommends creating a written budget.
Your written budget should include three categories -- musts, wants and dreams -- that allow you to examine where there may be opportunities to get creative with your finances.
"Set a corresponding timeline for extending your career or accepting potential compromises to meet your current retirement goal," Irwin said. "This will help you make an informed decision about exiting the workforce."
Consider Ways You Can Grow Your Income
While the first signs of cooling have begun, the job market is still strong and there is a wide range of opportunities available in certain industries. If you are unhappy in your career, now is the time to find a new role that makes you happier while you save, said Gabe Krajicek, CEO of Kasasa.
Depending on your age and situation, now also may be a good time to consider working in a part-time role or embracing a side hustle.
"A part-time job that you enjoy can help increase your retirement savings while also cutting down on your workload," Krajicek said. "This will help ease digging into your savings and make a big impact in the long run."
Review Your Balance Sheet
Once you have a written budget, it's time to take a broad view of your balance sheet. This will allow you to see what kind of money is coming in and any outstanding financial obligations. Reviewing your balance sheet will help you determine whether your debt is fixed or revolving.
It also allows you to analyze your risk tolerance through the lens of what you hope to achieve in your financial goals.
"Take a holistic view with risk and how it can help you reach your lifetime goals," Irwin said. "A simple way of thinking about this is: How do you feel about growing $100? Losing $50?"
Split Your Direct Deposit
If you receive your pay via direct deposit, Krajicek recommends splitting this direct deposit pay between your checking and savings accounts. Doing so will ensure you automatically have money going into your savings and don't have to think twice about it.
In addition to splitting your deposit, consider seeking accounts that offer the best interest rates. Krajicek said these accounts are often found at community banks and credit unions. Switching to these accounts will help cut down on any unnecessary costs and keep you on track to save optimally.
Take Advantage of Catching Up With Your 401(k)
Once you hit age 50, the government allows extra contributions to your 401(k) to increase savings. If you have a 401(k) through your employer and are still working, Krajicek recommends connecting with your HR department to determine the best approach for maximizing the account.
Don't forget about any 401(k) accounts you may have with previous employers either, as these can contribute greatly to what you already have saved in your current position.
If you have a partner, Krajicek said to encourage them to take these steps as well, to provide maximum benefit for the both of you with a stronger combined 401(k).
Communicate Your Retirement Plan With Loved Ones
No matter what your vision for retirement looks like, Irwin said to communicate your retirement plan and goals with your loved ones. You may decide to start working remotely or consider moving to another city or state where your money can go a lot further with lower taxes, cost of living and healthcare.
Communicating your vision for retirement, specifically, means considering telling your children that you will not be able to pay for their tuition, wedding or other expenses that you're currently paying that could compromise your retirement.
"Just as in the event of an emergency on an airplane," Irwin said, "we need to put the oxygen mask on ourselves first before we can help our children."
Consider Working Longer and Delaying Retirement
Americans can start claiming Social Security benefits at age 62. However, many decide to delay retirement until age 70. Those who delay will be covered under Medicare and receive the maximum Social Security payout.
Delaying retirement is a personal decision and one that depends on your financial comfort level and age in your given financial situation.
"Taking into consideration the average retirement savings is a good baseline for figuring out where you should stand before retiring," Krajicek said. "Age is also important when it comes to these considerations. If you are trying to retire early, this must be taken into consideration as you will need a larger retirement fund. Life expectancies are increasing, meaning retirement savings need to increase. Consider where you expect to be 10 years from now and make sure your retirement savings align."
If you decide to delay retirement, use the remaining years to focus on savings. Continue elevating your 401(k), cut costs elsewhere, evaluate expenses and utilize automatic bill payments.
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This article originally appeared on GOBankingRates.com: Not Enough Money to Retire? 8 Moves To Make
