Ah, retirement. That once far-off phase of life may be sneaking up on you. Perhaps you’ve stashed away some retirement savings – a 401(k) account here, some mutual funds there. But if you’re reading this, you may be thinking you don’t have enough for a comfortable, worry-free retirement. And you’re not alone.
According to AARP you will want to have 80% of your yearly income saved for every year of retirement. However, a recent study by PricewaterhouseCoopers revealed the median retirement savings for individuals aged 55-64 is just $120,000. Even more sobering, according to financial-researcher Raddon, barely four in 10 people who plan to retire in the next five years have $250,000 in retirement investments, such as an IRA, 401(k) or other tax-advantaged product.
But that doesn’t need to be you. With the right advice– and plan – there’s still time to overcome the anxiety and confusion with a few carefully chosen retirement savings products. It’s true. It’s not too late to put your retirement dream back on track. Start here:
Ask yourself, “How much is enough?”
The answer depends on your intended lifestyle in retirement – and an estimate of what it will cost to sustain it. Obviously, caviar and ocean cruises require a bigger stash than the occasional night out for dinner and a movie. Making sure you plan for the right lifestyle will make you happier now and later. And, if you don’t already have a savings budget, it’s really time to create one.
One last thought on this topic: Federal Reserve data from 2019-2020 reveals Americans aged 50-54 had $146,068 earmarked for retirement, while those age 55-59 had $223,493 set aside. Would those totals put you on track to meet your lifestyle aspirations?
Then, take stock of your assets
Maybe you have a decent amount of equity in your home – the difference between how much you owe and its market value. That, plus the value of personal and household belongings, automobiles, checking, savings and securities accounts, and other real estate, get added together to estimate your net worth. But don’t forget that while your house is likely to appreciate, cars, furniture, and other belongings will lose value unless they’re antiques or otherwise collectible. Be realistic about their value because this is about doing the right thing for future-you.
Don’t forget to consider alternate sources of income in retirement: Social Security, a pension or other annuitized payments, rental-property income, and other things like that. Also factor in the possibility of any part-time or freelance income. Oh, and here’s one of the perks of getting older: wage income for retirees 65 and older is usually taxed at lower rates than younger workers. Nice, right?
Max out your 401(k)
If you’re not enrolled in your employer’s 401(k), consider it – especially if it’s one that matches employee contributions. If you are enrolled, consider increasing your contribution as much as your income and household budget will allow.
Expecting a raise or bonus? Consider sliding some of it into your 401(k) if you aren’t already maxed out. The extra tax savings from your higher contributions will save you money now – and earn more for later. Workers 50 and older who are behind on their retirement saving are allowed to make catch-up contributions and put more money into their 401(k) than younger workers, so the limits may be higher than you realize.
If you are maxing out your 401(k), consider opening a traditional or Roth Individual Retirement Account as well. They offer the same tax advantages as a 401(k), but the prime benefit is that you own them, and they stay with you – no matter where you work. 2
Plan the future of your business
If you’re a business owner, a leadership succession plan and/or estate plan2 specifying future ownership should be on your to-do list. If your aim is to sell or liquidate the enterprise upon your retirement, work with professionals who can give you an accurate assessment of the value of your business to ensure you plan appropriately.
While a late start to planning and saving for retirement means you’ll have to work harder to meet your goals, you’re not out of options. Middlesex Savings Bank can help you craft a financial retirement package that’s a true benefit at any age. Get in touch with us or stop by any of our neighborhood locations today.
Middlesex Savings Bank:
1All accounts subject to approval. This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Individuals should consult with a tax or legal professional regarding their individual situation.
Middlesex Financial Group:
2Check the background of this investment professional on FINRA's BrokerCheck »
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Investors should consult with a tax or legal professional regarding their individual situation.
Strictly intended for individuals in: CT, FL, MA, MD, ME, NC, NH, RI, TX, VT. No offers may be made or accepted from any resident outside these states due to various state and registration requirements regarding investment products and services.
Not FDIC Insured | Not Bank Guaranteed | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank Deposit
The financial advisors of Middlesex Financial Group offer securities and advisory services through Commonwealth Financial Network®, member FINRA/SIPC, a Registered Investment Adviser.
Middlesex Financial Group is not a registered broker-dealer or Registered Investment Adviser. Middlesex Financial Group and Commonwealth are separate and unaffiliated entities of one another. Fixed insurance products and services offered by Middlesex Financial Group are separate and unrelated to Commonwealth Financial Network.