According to the 2018 Retirement Confidence Survey, conducted by the Employee Benefit Research Institute, only 17% of respondents reported feeling very confident in their ability to live comfortably in retirement. If you share that sentiment, the good news is that there are a number of things you can do now to boost your preparedness, no matter how behind you think you are on saving for retirement.
Strategies for Success
The first step is to put a sound retirement plan in place, regardless of how many working years you have ahead of you. Speaking to your Fiduciary First retirement advisor is a great place to start. Together, you can look at the status of your savings and your retirement goals and make prudent decisions about how best to meet your objectives.
First, you want to max out your allowable contributions to your 401(k) retirement plan ($18,500 for 2018), including any catch-up contributions you may be eligible for. You can make catch-up contributions to a number of retirement plans including 401(k) and 403(b) plans. For 2018, the catch-up contribution limit for each plan for participants 50 and over is $6,000. Consider using a tax refund or bonus to fund the catch-up contribution.
If you’ve maxed out your 401(k) contributions, a Health Savings Account (HSA) can let you put away some extra retirement cash from pre-tax earnings. To qualify, you must be covered by a High Deductible Health Plan (HDHP) with a deductible of at least $1,350 ($2,700 for a family). Money in an HSA account grows tax-free and travels with you if you change jobs. Up to age 65, funds for qualified medical expenses can be withdrawn tax free. After 65, you can also use the money for other purposes by paying tax on it as income as you would for an Individual Retirement Account (IRA).
In 2018, HSA contribution limits increased to $3,450 for individuals and $6,190 for a couple. Individuals 55 an over can make an additional $1,000 catch-up contribution. For those already maxing out 401(k), an HSA can be a great way to stash some extra cash when saving for retirement.
More Drastic Measures
One thing to avoid when trying to catch up is taking excessive risk too close to retirement. Talk to your advisor about the appropriate level of risk-taking given your current age and tolerance.
Without a sound plan, you may be forced to take more drastic steps to afford your retirement. You may need to:
• Delay retirement and keep working.
• Downsize your home.
• Move to a state with a lower cost of living.
• Take out a reverse mortgage.
The Bottom Line
If you’re worried about saving for retirement, you’re not alone. Your Fiduciary First advisor can assist you in putting a prudent plan in place to help you get retirement ready. Remember, the earlier you start, the more options you’ll have to live the retirement you want.
Reference:
https://www.ebri.org/pdf/surveys/rcs/2018/2018RCS_Report_V5MGAchecked.pdf
Perhaps you’ve lost a job, faced an illness or have been delt a family crisis that emptied out your emergency fund. What are your next steps?
You’re eyeing center-hall colonials in your neighborhood and dreaming about the garden you want to plant in the backyard and all the holiday celebrations you’ll host. You’ve saved toward this goal and think you’re ready to pull the trigger. But the real question is: How much house can I afford?
Or is it?
Social Security’s financial cliff is coming closer into view. Experts project that the fund that pays for government retirement benefits through FICA taxes will be depleted within the next 15 years.
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