Not having enough money for retirement is a problem that plagues a lot of older Americans. Baby boomers have been especially affected by the elimination of pension plans and the drop in retirement benefits. According to a study performed by CNN Money, 47% of baby boomers will not have enough cash to meet their retirement needs. These seniors are scrambling to find ways to make ends meet after their working years are over. So, how can you avoid this predicament? Here are 4 ways to ensure that you have enough money for retirement:
Save more money
The best way to make sure that you have enough money in retirement is by overfunding your retirement plan. Younger investors have time on their side so they should start early and save often. Max out your 401(k) and Roth IRA. Save more than you think you will need. The federal government is debating pushing the age to qualify for Social Security back to 70. Don’t count on government services! The more money that you have saved, the less you will need to rely on government services to make ends meet.
Buy long term care insurance
The biggest reason that most people do not have enough money in retirement is medical costs. A quality nursing home can easily run $50,000 to $100,000 per year. You can see how nursing home costs can quickly deplete a retirement plan. To avoid this problem, you can buy long term care insurance. Long term care insurance will cover the costs of a nursing home, hospice care, assisted living, and home day care. Pick a plan that covers roughly $200/day to meet your healthcare needs. You can buy a long term care insurance plan from any major insurance company. It’s much cheaper to buy a plan before retirement age.
Decrease your living expenses
If you are close to retirement age and are not able to retire due to insufficient funds, one option that you have is to decrease your living expenses. Decreasing your expenses involves reducing your bills so that they are manageable on your current income. You can downsize to a smaller home or a more affordable automobile. Eliminating your mortgage would remove much of the stress off of your finances. You want to cut back on all extra expenses. This is a difficult option because it changes your standard of living, but it’s one from which you can reap huge, long-term rewards.
Keep working longer
The stock market crash of 2008 changed the retirement plans of many American workers. Many individuals have seen their portfolios drop substantially over the past two years. So, what can these people do? Individuals without enough money to retire can always work a few more years. We are all living longer so working another 3 to 5 years may enable you to save enough money for permanent retirement. If you still want to retire in the next few years, you can always take a part-time job for supplemental income.
Do you think that you will have enough money to retire by 65? Are you on pace to reach your retirement goals?
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