NDSU Extension Service - Ramsey County


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A More Secure Retirement

A More Secure Retirement

It can be difficult to figure out how much you need to save for retirement. Americans are living longer – Great! – and using more dollars during that longer retirement time – Not great!  If you start retirement early plus live longer than your life expectancy, you're in greater danger of running out of money – scary!

Many people use online retirement calculators to help them determine how likely they are to reach their goals. While these tools can help you gauge whether, and what extent, you’re making good progress towards those retirement goals, they can also provide a useful warning if you’re not making progress quickly enough.

Fortunately, there are steps you can take to help make your retirement future more secure. Following are a few of the ways you can boost your retirement savings to make up for any shortfalls in your current level of savings.

- Retire Later. One way you can boost your retirement savings so that it lasts longer is to give your accounts more time to grow. This means waiting longer before you retire, or perhaps continuing to work part-time into your retirement.

- Consider Annuities. One of the difficulties with determining your financial needs for retirement is the fact that it’s based on your expected life expectancy. But your life expectancy number is simply an estimate; you may very well live for many years beyond that date. By purchasing an annuity – some of which pay a certain amount to you each month for as long as you live – you’ll be sure not to outlive your income.

- Tap Your Home Equity. Even if you haven’t saved enough in your IRA and 401(k) accounts, chances are you still have a significant retirement asset that you might not have fully considered – your home. If you’ve owned your home for many years, then you’ve probably paid down a significant portion of your mortgage (or perhaps paid it off entirely) and experienced some appreciation in home value. There are a number of different ways to tap into your home, including selling it and moving to a smaller home, or taking out a reverse mortgage.

- Wait Before Taking Social Security. You might have been planning to start taking your Social Security benefits before you reach full retirement age. This will give you an additional source of monthly income earlier in your retirement, but if you wait longer before starting to take your benefits, you’ll receive a larger amount each month for the rest of your life. Consider waiting as long as possible before taking Social Security so that you can receive a larger benefit check each month.

- Adjust Your Expectations. Finally, if you don’t have enough saved for your retirement, then perhaps you need to reevaluate the type of retirement you’ll be able to have. For example, your prior calculations may indicate that you’ll need to have a certain amount saved for retirement in order for you to be able to draw a specific level of income each month. If you now determine that you won’t be able to reach that amount, you may have to recalculate to determine how much your forecasted savings will be able to provide you each month, and then adjust your retirement expectations to be closer to that monthly amount.

-Save more. Set savings goals you can reach, step by step. If you're still working, allocate any money from raises to retirement savings. Increase your 401(k) contribution by 1 percent increments every few months so you adjust better to having less to spend.

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