Recent data indicate that the average baby boomer holds approximately $249,300 in their 401(k) and $257,002 in their IRA accounts. These amounts, while substantial, may not be ample to ensure financial security throughout retirement. For those contemplating retirement within the next few years, this realization can trigger anxiety about meeting future financial needs.
Fortunately, individuals still have opportunities to enhance their retirement portfolios. Even those who are close to concluding their professional careers can implement specific measures to increase their savings. Here are four viable tactics to consider:
1. Ensure Full Utilization of Employer 401(k) Match
Many employers provide a matching contribution to employee 401(k) plans. Fully capitalizing on this benefit is crucial for boosting retirement savings efficiently. It's advisable to verify the current match percentage offered by your employer, which may have increased recently. If your contributions have not met the threshold for full matching, consider incrementally raising your savings rate each month to maximize this advantage without overwhelming your budget.
2. Consider Extending Your Working Years
Planning to retire at a predetermined age can be compelling, yet deferring retirement by even a couple of years can substantially augment your financial position. Continuing employment not only allows additional contributions to retirement accounts but also delays the commencement of Social Security benefits. This postponement can result in significantly larger monthly disbursements once benefits begin, enhancing long-term financial stability.
3. Explore Additional Income Streams Through Side Jobs
For those reluctant to prolong their primary careers, increasing earnings in the existing working years is another option. Pursuing side gigs compatible with one's schedule can generate extra income which can be directed toward retirement savings. Additionally, engaging in a manageable and possibly enjoyable side occupation may open opportunities to continue this income source into retirement, providing an auxiliary financial cushion.
4. Assess and Adjust Spending Habits
Reducing current expenditures can free up resources to boost retirement contributions. Importantly, adjustments need not entail dramatic lifestyle changes such as downsizing housing or eliminating vehicle ownership. Instead, targeting smaller recurring expenses that add little value—such as seldom-used subscription services or gym memberships—can yield meaningful savings. Minimizing such costs can make increasing retirement contributions more feasible and sustainable.
Anxiety regarding insufficient retirement savings as the career end approaches is understandable. However, employing these carefully considered steps can facilitate meaningful improvements in financial readiness, providing a stronger foundation for the years ahead.