A secure retirement is in your hands — and nobody else’s.
For better or worse, we all have to finance our own retirement. Sure, Social Security and Medicare will help. But workplace pensions are rare, and few will inherit fortunes from their parents, or anyone else.
Fortunately, many Americans understand and accept this reality. They are taking steps long before retirement to make sure they will not struggle financially during their post-work years.
Recently, the National Institute on Retirement Security asked 1,200 people 25 and older what they are doing to ensure a financially secure retirement. Below are the methods they cited most often.
7. Seek work in retirement
Respondents who plan to do this to ensure a financially secure retirement: 39%
When the chips are down and you need more cash, nothing tops working and earning a regular income. It is the single most effective way to quickly add to your bottom line.
The survey respondents clearly understand that fact. Few of us want to work a full-time job in retirement — we gave up the 9-to-5 for a reason, after all. But there are plenty of opportunities to earn part-time income that can make a crucial difference in retirement.
For more, check out “20 Great Part-Time Jobs for Retirees.”
6. Save about 5% more than you currently do
Respondents who plan to do this to ensure a financially secure retirement: 40%
Most of us find it difficult to save as much as we do now, let alone 5% more. But saving just a bit extra can make an enormous difference, especially if you do it for many years and invest the money well.
If the thought of saving more scares you, we can relate. Maybe it’s time to sit down with a financial pro who can help you craft a savings and investment strategy that will pay a lifetime of dividends. Stop by Money Talks News’ Solutions Center and search for a fee-only financial planner who can offer expert advice.
5. Delay claiming Social Security
Respondents who plan to do this to ensure a financially secure retirement: 41%
As we have pointed out, sometimes it does not pay to delay applying for Social Security benefits. But in other cases, waiting to file can be one of the smartest financial decisions you will ever make.
For every year you wait to claim past your full retirement age, your benefit will grow by as much as 8%. That is tough to beat.
For many people, this decision — to delay or not to delay — is a vexing one. If you need help, stop by Money Talks News’ Solutions Center and check into working with Social Security Choices, a company that can help you determine when is the best time to claim given your personal situation.
3. Save about 1% to 4% more than currently (tie)
Respondents who plan to do this to ensure a financially secure retirement: 48%
Remember that notion of saving 5% more? If that is too intimidating a challenge, don’t be afraid to take a more modest approach, like saving 1% to 4% more.
At Money Talks News, we believe that saving a little over a long period of time can add up to big things. It’s a gospel we preach because many of us have lived it out and have seen the power of this strategy up close. The survey respondents apparently agree.
For more tips on getting started saving, read “The 7 Fastest Ways to Catch Up on Retirement Savings.”
3. Cut back spending once retired (tie)
Respondents who plan to do this to ensure a financially secure retirement: 48%
Those who need more cash but don’t want to work have one option left: to spend less.
This is often easier said than done. But if you find ways to trim back expenses, you open up more breathing room in your budget.
One way to spend less during your golden years is to retire in a place where the cost of living is lower. Money Talks News founder Stacy Johnson discussed some options in a recent podcast, “5 Countries Where You Can Retire on $ 2,000 a Month or Less.”
2. Cut back current spending
Respondents who plan to do this to ensure a financially secure retirement: 55%
Cutting back on spending in retirement can be painful. It’s a lot easier to trim your budget now, while you are still working and have a steady income.
Trim your sails today, and you will have more money to invest in a nest egg that will see you through your golden years. Creating a budget can help you find places to cut expenses.
Some people find budgeting to be a pain, but Money Talks News partner YNAB (short for “You Need A Budget”) makes the process easy. The YNAB app helps you track day-to-day expenses, prepare for unexpected costs and build savings.
You can even connect the program directly to your bank and credit card accounts, which allows you to download transactions to YNAB automatically so you don’t have to manually enter them one by one.
For more, check out “An Easy Way to Track Your Spending and Build Your Savings.”
1. Stay in your current job as long as possible
Respondents who plan to do this to ensure a financially secure retirement: 60%
Even if you really want to retire soon — like yesterday — sometimes it simply makes more sense to stick with that job a little longer.
The survey respondents are clearly a tough-minded, clear-eyed bunch. A full 60% say they plan to work as long as possible to ensure they have a secure retirement.
It is a great idea — tough to beat, actually. But it is not always practical. Gallup polling has found that the average age at which workers retire is a fairly young 61. Sometimes unexpected life changes or health problems can prevent you from working as long as you planned.
So, if you are working today, remember that now is the best time to save and to create a plan for that dream retirement down the road.
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