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Sometimes life can get in the way of saving for retirement. A retirement readiness study by the Indexed Annuity Leadership Council (IALC) found that 40 percent of Americans reaching retirement age are worried about having enough saved for retirement and nearly 14 percent of pre-retirees have multiple jobs to support their retirement savings goals. Fortunately, you may be able to catch up to your retirement savings goals to help you retire when and how you want.
Look for Saving Opportunities
When starting the journey of catching up on retirement savings there are various opportunities that may help you build your retirement savings. Some of these opportunities to build savings include:
- Setting a reachable savings goal. This goal can be based on what is currently saved in retirement accounts and what will be needed in the future.
- Utilizing retirement calculators can help determine the income goals needed to help sustain a comfortable lifestyle in retirement.
- Downsizing your home. This may cut costs like property taxes and mortgage costs and free up room in your budget for saving more.
- Saving extra cash like tax returns or bonuses may give your retirement savings a boost.
- Setting up recurring automatic savings through an employer. If available, employers can have part of your paycheck automatically deposited into a savings or 401k account.
Invest the Extras
Pre-retirees 50 or older are eligible for catch-up contributions with various retirement accounts like 401ks and IRAs. Current contribution limits for individuals under 50 are $5,500 for IRAs and $18,500 for 401K plans. Different retirement accounts have various catch-up contribution limits. 401K participants can contribute an additional $6,000 annually and IRA owners can contribute an additional $1,000 annually, depending on the owner’s age. Catch-up contributions may help build a solid nest egg and can present an opportunity for economic growth. For more information about catch-up contributions visit the IRS’s website.
According to a CareerBuilder study, 53 percent of workers aged 60 or older say they are delaying retirement— which could indicate that more retirees are postponing retirement to build their nest egg.A study by the National Bureau of Economic Research found that delaying retirement 3-6 months had the same impact as saving an additional one-percent of earnings for 30 years.
Researching when to collect retirement benefits like Social Security may help sustain a retirement lifestyle. Workers can start collecting Social Security benefits at 62. Social Security benefits however grow by 8 percent every year until you reach the age of 70, which may assist you in preserving your assets.For more information about how Social Security benefits are calculated visit the SSA retirement benefits planner.
Retirement income sources like 401(k)s, social security and fixed index annuities can provide long-term benefits, such as reliable income and potential growth opportunities along with principal protection from index decreases.
When building a nest egg in retirement, getting creative may help identify additional sources of income. The gig economy has helped create opportunities where individuals can generate extra cash both before and after retirement.
- Finding a side job like driving for a ride-share company or part time work
- Selling your crafts/talents online
- Doing seasonal work
Looking at options to catch up from not saving earlier or saving enough may help invest in your future and help ensure you have the income you need to retire when and how you want.
American Equity Investment Life Insurance Company® does not offer legal, investment, or tax advice. Please consult a qualified professional. The content provided is for informational purposes only and does not constitute advice.
For specific details on how this may apply to your personal situation, contact your personal financial advisor or insurance agent for more details. American Equity contracts are only sold through independent agents. Please contact our home office Agency Services department at (888) 221-1234 option 3, or your state insurance department, to see if there is an independent insurance agent in your area appointed to sell American Equity annuity contracts.
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