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The road to retirement has been a rocky one for many individuals in the generation now approaching their golden years.

They lived through the tech bubble crash of 2000-2002 and slogged through the Great Recession of 2008-2009, which forced thousands of small companies out of business,1 doubled the unemployment rate,2  decimated equity-based retirement savings plans, and wiped out trillions of dollars in home and property values.3

In addition, many parents have also faced sky-high education costs for their college-age children. So its little wonder many individuals and couples approaching retirement are seriously underfunded.

Lagging on retirement savings

About 48% of households headed by someone age 55 and over have no retirement savings, according to the Government Accountability Office.4 Although most of the households in this age group do have some other resources or benefits from a defined benefit plan, about 29% of these individuals have neither retirement savings nor a defined benefit plan.

If you’ve fallen behind on your retirement savings goals,  there are steps that can help build up your savings:

  • Tighten your budget. Decrease spending and put that saved income toward retirement savings. This may mean cutting back small luxuries, like a dinner out, but you’ll be glad you did once you’re in retirement.
  • Contribute the max to tax-advantaged retirement plans. If you have a 401(k), all of the qualified contributions you allocate to your plan may decrease your taxable income. Bump your annual savings to the max level, or consider signing up to have your company automatically raise your contribution at regular intervals (if your firm offers this). If you have a traditional IRA,  the money may be deductible from your taxable gross income for the current year as it grows tax-deferred, and you can contribute up to $6,000 in 2019 ($7,000 if you’re 50 or over). View contribution limits and rules at IRS Retirement Plan Rules.
  • Take advantage of “catch up contribution” limits on your 401(k) or IRA. Once you turn 50, you’re allowed to contribute more to retirement savings plans.  If you can afford to contribute more to your traditional IRA or 401(k) plan, you can build up savings faster while possibly enjoying the benefits of a greater reduction in your gross taxable income for the current year. For traditional and Roth IRAs in 2019, the contribution limit for those 50 and over is $7,000 versus $6,000 for those under 50. For 401(k) plans, those 50 and over may contribute an extra $6,000 a year above the normal $19,000 limit. Certain restrictions may apply. For more information, go to IRS Retirement Plan Rules.
  • Consider holding investments focused on long-term growth. Often, individuals become more conservative in their investment approaches as they enter retirement. But since people are living longer, consider keeping a portion of your portfolio invested for long-term growth rather than putting all your money in low-yielding investments, such as money market funds. This will allow your portfolio the potential to continue to grow as you start to draw from it in retirement. This approach may not be appropriate for everyone, so it is important to consider your own risk tolerance and specific objectives in determining the appropriate asset mix for you.
  • Get the full employer match. Many firms with 401(k) plans will match all or part of your contributions up to a certain percentage. Contribute enough to get the full match — it’s free money and it grows tax-deferred! For instance, if your company matches 100% of your contribution  up to 5% of your pay, that’s the equivalent of a 5% raise.
  • Try to stick around until you’re vested. You may have to stay with a company for five or six years to receive your full 401(k) match, but that extra match – which often adds up to 5% to 6% of your annual salary – may be worth your time if you’re close to the mark.
  • Review your high-interest debts. If you can transfer your credit card balance and any other high yielding debt to a low interest account – or, better yet, pay it off – you’ll have more cash available to add to your retirement savings.
  • Look for another source of income. If you can work a second job or start a business that brings in some additional income, that will help bolster your savings. You may even decide to hold onto that part-time gig or continue to operate your business after you retire from your full-time career. The longer you can put off tapping into your retirement nest egg, the larger it should grow. Unfortunately, not everyone is healthy enough to work after a certain age, so it’s not something you can necessarily depend on, but if you can work part-time or run a business after you retire from your career, it could make your retirement life a lot more financially palatable.
  • Think about staying on your job longer. Not everyone has the option of working longer, but if your employer allows you to stay on the job until your late 60s or 70s, that would make a dramatic difference in your retirement savings plan. It means you would be able to live off your salary for a few more years while continuing to invest more into your retirement account plan.
  • Consider downsizing. If you had children, once they leave, you may be able to sell your home and buy a smaller one in order to cut your expenses and, possibly, get some additional cash in the sale of your larger home to add to your retirement nest egg.
  • Temper your retirement expectations. Once you’re facing your retirement budget, you may find that you can’t afford to fund all the things you’d hoped for, but you may still be able to experience an active life with a variety of enjoyable activities.

Tightening your budget, saving more, working longer, downsizing your living quarters, and modifying your lifestyle expectations may not sound appealing, but once your real retirement begins, you’ll be happy to have the funds available to fuel a more fulfilling lifestyle.

This website is not intended as a source for legal, accounting or tax advice or services. Work with your attorney and/or tax professional for additional information.


U.S. Census Bureau  

2 The Labor Force and the Great Recession,

3 Housing and the Great Recession,

4 U.S. Government Accountability Office, March 2019

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