In the United States, there’s something of a crisis brewing, and it’s happening in plain sight. The crisis is that the Baby Boomer Generation is reaching retirement age, and a huge chunk of them are nowhere near financially ready for it. In fact, the picture is about as grim as it gets. At last count, 40% of Americans aged 55 and older had less than $50,000 saved to carry them through retirement, which is only one-twentieth the amount most experts think they’ll need. At the same time, the Social Security benefits that many seniors expect to rely on will be on shaky financial ground by 2034, further adding to the looming crisis.
The good news, if there is any, is that it isn’t too late for the majority of Americans heading towards retirement to make some changes that could dramatically improve their chances of retiring on time and in comfort. Here’s a look at four of the best options they can pursue that require minimal sacrifice and effort.
Making Catch-Up Retirement Contributions
Many people fall victim to the thinking that they are past the point of no return when it comes to saving for retirement. They look back on the decisions they have made regarding contributions to tax-advantaged retirement accounts throughout their working lives and think they missed their chance. What many don’t realize, however, is that it is possible for individuals over 50 years old to make additional contributions to 401k and IRA accounts beyond their normal annual limits each year. According to the IRS, those over 50 can add up to an extra $6,000 to their 401k accounts and $1,000 to their IRA accounts each year to help grow their savings as they approach retirement.
Break Old Habits With Automation
One of the biggest reasons that many people fail to save enough for retirement is that they fall into poor habits and don’t transfer money into savings or investment accounts on a regular basis, even when, not faced with having to spend on things like baby and child accessories, they have the ability to do so. Today, however, there’s no excuse for that. That’s because anyone with a smartphone (and that includes 73% of the 50-64 set) can make use of automated savings apps that handle the hard parts for them. With a variety of approaches ranging from rounding off the dollar value of each purchase to an AI-powered system that figures out how much money you can spare based on spending activity – there’s a suitable tool for anyone who wants to build up their savings account without lifting a finger.
Free Up Assets to Invest
Given the nature of the US economy, it is all too common for people to fail to save money for retirement not because they don’t want to, but because they’re barely getting by as it is. For them, saving for retirement seems like an unattainable goal, so they let things slide and hope to catch a break down the road. More often than not, however, there are some things people in that situation can do to make a difference in their retirement savings prospects. One thing they can do is to consider downsizing their home (or apartment) to free up some cash to invest each month. If possible, they can consider a life settlement to cash out life insurance policies that are otherwise illiquid. Once they’ve got some principal to work with, a world of investment opportunities will open up to help grow their money as they approach retirement.
Turn to a Robo-Advisor
For those with some money set aside but that are unsure of how to make the best use of it, there’s never been a better time to take the plunge into investing. That’s because a whole industry of robo-advisors has sprung up to allow everyday investors to set financial goals and leave the driving to them. These AI-powered investment advisors cost a fraction of their human counterparts and deliver solid results through mixed portfolios designed to suit the individual’s tolerance for risk, desired gains, and ability to reinvest proceeds. It’s that last part that should pique the interest of those nearing retirement – since they can fund an investment account, and allow it to grow for several years without the need to draw down the initial funds.
Don’t Wait Any Longer
The bottom line for Americans glancing nervously at their retirement account balances as the clock continues to tick is that there is hope – as long as they act right away. Although there’s no way to make up for earlier years of not saving money for the future, there’s plenty of ways to soften the blow when the time comes to leave the workforce. The key, as with anything else, is to make the decision to get moving toward a goal as soon as possible and to not look back. Once they do, there’s a good chance they’ll face a future retirement that’s quite a bit brighter than they had once imagined.
