What to Do When Retirement Savings Fall Short?

Dear Brian: How to Boost Your Retirement Savings

Dear Brian, at 58 years old and with concerns about your retirement savings, you are not alone. It’s common for many Americans to worry about not having enough funds saved for retirement. However, there are steps you can take to boost your savings even at this point. Let’s assess your current situation and explore some strategies to improve your retirement outlook.

Given your spouse will begin collecting $1,900 per month in Social Security benefits, your household income will receive a significant boost starting in September. And with your annual income of $85,000, you are in a good position to continue working and saving for retirement. While you may feel behind in your savings, it’s important to remember that there are ways to catch up and secure your financial future.

First, let’s evaluate your retirement savings. You have approximately $300,000 saved up, along with $50,000 in cash. In addition, you own a home in Philadelphia, estimated to be worth around $200,000. With these assets, you are in a decent position to continue building your retirement nest egg.

However, to ensure a comfortable retirement, it’s crucial to determine how much you need to have saved. Considering your current expenses, aim to replace at least 80% of your annual salary in retirement. With a goal of $68,000 annually in retirement income, you may need to increase your savings to achieve this target.

One strategy to boost your retirement savings is to fully maximize your 401(k) contributions. As you are over 50 years old, you can contribute up to $20,500 annually, with additional catch-up contributions allowed up to $6,500 per year. By increasing your contributions and potentially exploring other retirement accounts like an IRA, you can significantly enhance your retirement savings.

Remember to reassess your investment strategy and make any necessary adjustments to ensure you are comfortable with your risk level. By taking proactive steps to increase your savings and strategically invest your funds, you can improve your retirement prospects and alleviate some of the anxiety about your financial future.

Ultimately, with careful planning and prudent financial decisions, you can boost your retirement savings and enjoy a secure and comfortable retirement. Best of luck on your journey to financial security!

Sincerely, Kristin