Several personal financial advisors will tell you the most beneficial way to save for retirement is to begin young and consistently put away a percentage of your earnings in a retirement savings plan such as an Individual Retirement Account. You have certainly seen the retirement calculators that show how even a $2,000 a month investment grows to a large retirement nest egg if you start saving at age 25. And some people surely do this. But if you're like several of us, your retirement planning was not so judicious, and now you're trying to find some last minute possibilities for a comfy retirement.
On one hand, you could save much more and try and build your retirement nest egg. But that isn't always viable for some. A lot more pressing objectives, like paying your home loan and health care bills, or helping out your youngsters and grandchildren, may possibly be stretching your budget. Around 58% of Americans age 55 and older have saved less than $100,000 for retirement, according to the Employee Benefit Research Institute's newest Retirement Confidence Survey. Just 19% have saved $250,000 plus. So you see, retirement planning failures are common.
That means you may need to adjust your expectations for retirement. And one method to do that is to contemplate not retiring - or retiring later. It might sound depressing, but it doesn't mean giving up laid back days with the grandchildren or on the greens. You could merely delay your retirement-or work part-time in retirement.
Of course, it's essential that you eliminate any wasted expenditures:
- Does one need the $100 per month health club or will the $19/month health and fitness center allow you to stay just as fit?
- Should you even now be giving your 38 year old son money?
- Would you enjoy holidays any less if you stay in the $150 per night inn and not the $250 per night accommodation?
- Does one actually need that lasik procedure or tummy tuck or hair replacement?
- Isn't that bistro where you can get a good meal for two for $35 just as satisfying as the place where you shell out $120?
- Does one use 2000 minutes on your cellular plan or need to view 240 channels on your cable TV?
You get the idea that there are likely hundreds if not thousands of dollars a month that are thrown away and this waste can make retirement seem to be an impossibility. Look over the credit card statements from the last three months and see how much "retirement gold" you can find.
Putting off your retirement can significantly affect your retirement finances - not just because each year is an additional year to save income, but simply because there's also one less year that you have to live off your retirement fund. According to a March 2006 report from the Center for Retirement Research at Boston College, Americans who delay retirement by just one year would boost their annual income in retirement by $1,317 to $2,402 annually. Those who delay retirement by 5 years would experience their annual retirement income increase by $14,888.
To consider this in more basic terms: the $1 from your retirement pot that you don't shell out today grows to $1.05 at 5% interest over the next year. So by doing work that extra year and not spending that $1 from your retirement nest egg, you have permanently increased your standard of living from your portfolio by 5 percent.
Working part of the time in retirement also doesn't have to be an experience you dread. You could take part-time work hours as a consultant in an company you know well, or you can pursue a profession you always dreamed of - for instance, working with children in a library, or helping out at the club house on a golf course (which may also bring about free of charge tee times!).
How much can you save by postponing your retirement? Our retirement calculator can show you.