This could be related to the market downturn that hurt the value of many people’s retirement portfolios, or it could reflect some early withdrawals made to help cover living expenses when some of those people couldn’t work. Whatever the cause, the result is the same. These people will find it difficult to retire comfortably with what they have, so they need to come up with a new strategy.
Here’s a look at the reach of $ 100,000 in retirement, as well as what you can do to get more money in your retirement account and help what you have to last longer.
Why $ 100,000 is far from enough for retirement
The average household headed by an adult 65 or older spends just over $ 50,000 per year, according to the Bureau of Labor Statistics. Based on these numbers, a nest egg of $ 100,000 would last less than two years in retirement if you were to rely on that alone. You’ll likely have Social Security benefits to help you out, and you could be spending less than average, so you could stretch your savings a few more years than that.
But unless you expect your retirement to be short, you will likely outlive your $ 100,000 in savings. Doing so may cause you to rely on family members for help or risk falling behind on your bills. If this worries you, you should take immediate steps to reconsider your retirement plan.
How to design a more secure retirement
Delaying your retirement is one of the best ways to fight off a small nest egg, as it gives you more time to save while reducing the number of years of savings you need. It can also give your retirement portfolio more time to bounce back from the losses it has suffered in recent months.
You can also consider a side business to generate additional cash. There are a lot of things you can do at home if you are worried about being exposed to others. Consider virtual assistance, online tutoring, or even starting your own course or blog. There are side hustles that don’t require a lot of work on your part either, like renting an additional property or an additional parking space. If you are starting a secondary business, you must remember to set aside taxes to pay the IRS. Have a designated savings account where you can keep these funds.
The main disadvantage of planning to work longer is that you cannot guarantee that you will be able to do it. An injury or illness could force you to retire earlier than expected. Even if you stay healthy, a family member may not be and you may end up staying home to take care of them. Have a backup plan for what you would do in any of these scenarios so you don’t get caught off guard if this happens.
Reducing your spending now and in retirement can also help you increase your savings. Eliminating unnecessary purchases today can allow you to put more money into retirement – although, admittedly, in today’s climate, saving for retirement may not be possible if you still struggle to pay. your bills. Removing unnecessary expenses, such as travel, from your retirement budget can also lower your costs.
You can also consider delaying Social Security if you think you will live longer. Every month you delay benefits your check increases until you hit your maximum benefit at 70. You may not be able to afford to delay benefits that long, but every little bit helps. Once you start claiming, your larger Social Security checks will go deeper, so you can rely less on your personal savings.
There are no easy solutions for those who are dangerously behind on retirement savings. But it is better to try some of the tips above than to let your money run out after a few years. Do what you can and check in with yourself at least once a year to see if you can make any additional changes to meet your savings goals.