A blue-sky outlook gets you through some tough times, but when it comes to retirement, it’s dollars and cents that count. The single biggest mistake 90 percent of retirees make is not having enough savings in the first place. In fact, over a third of Americans have less than $1,000 saved for retirement. Where are you in terms of saving for the future? Don’t plan on Social Security payments to carry you through your golden years unless you don’t mind living just above the poverty line.
No one wants to retire to a life of poverty. It doesn’t matter if you’re planning to retire five years from now or 50, making sure you have a nest egg is crucial.
Establishing a strict budget for your retirement spending is a good place to start, but should you become ill or injured, all your meticulous calculations become moot. Although financial analysts advise people to start saving for retirement early on, it’s not too late to start saving for the future.
Following a few radical last-minute savings strategies before bidding your day job adieu can set you up for a more affluent and enjoyable future.
Top Strategies for Last-Minute Retirement Savings
Whether you have to play catch-up with retirement savings or have been working on your financial plan for some time, you can take several steps to pump up your funds. Top strategies include:
- Maximizing your savings with IRA contributions
- Staying as healthy as possible
- Moving to a less expensive location
Saving with Larger IRA Deposits
The IRS limits annual savings in tax-deferred IRA accounts. For 2013-2014, the limit for those under the age of 50 is $5,500. If you are age 50 or above, you can save $6,500 a year. That $1000 extra may seem small, but when combined with your 401(k) contributions through your job, which have a same-year limit of $23,000, it adds up quickly.
Putting additional funds into CDs or market interest rate savings accounts is always a good plan, and the closer you get to retirement, the more focused you should be on saving whatever you can. Trust me, you’ll thank yourself later.
Take Care of Yourself
The American Heart Association journal Circulation reports that scientific evidence conclusively shows active people experience fewer heart problems than sedentary individuals. If they do develop coronary disease later in life, it is typically less severe than those who are inactive. Research also affirms that regular exercise reduces your risk of developing diabetes, high blood pressure, some types of cancer, and osteoporosis. Staying fit is a low-cost hedge against costly medical care that could quickly devour your retirement fund.
Consider Relocating to a Lower Cost Area
If you do find out after retiring that your funds are not stretching as far as you anticipated, consider moving to a place where the cost of living is lower. For example, you could save by moving from Oregon to Louisiana, according to the Cost of Living Index.
Although planning financially from a young age ensures a robust retirement, it is never too late to strategize. If possible, extend your retirement date a few years into the future to facilitate a more financially comfortable transition. Working toward a better tomorrow starts by planning today. In addition to taking advantage of the strategies above, take a look at our Money Management advice to see how you can better manage your money.
Are you looking to retire in the not-so-distant future? What saving tips are you employing to help you save? Let us know in the comments below.
