This story originally appeared on NewRetirement.
The last few months have been an emotional roller coaster for everyone, and you may feel constantly stressed about your finances. You’re probably asking yourself, do I have enough money for retirement?
If you are worried, you’re not alone. The majority of Americans are concerned that they will run out of savings during their retirement. According to findings from Northwestern Mutual’s Planning & Progress Study, 1 in 3 people say the likelihood of outliving their savings in retirement is 51% or better — and that was before the pandemic.
But worrying does not fix the problem.
Here are several real steps you can take that will enable you to worry less about retirement.
1. Take care of debt
Eliminating debt is what most survey respondents believe would have the most significant impact on their financial situation — even more so than earning a lot more income.
Most experts would agree that eliminating or reducing debt is a great way to improve your financial outlook.
Depending on your situation, you can reduce debt by:
- Adjusting your budget so you can make bigger payments against your debt
- Securing a reverse mortgage to eliminate ongoing mortgage payments
- Consolidating debt into a lower interest credit card or a home equity line of credit
- Downsizing your home to reduce the size of or eliminate your mortgage
2. Save more
Even though most people are carrying a lot of debt and are extremely stressed out about their finances, nearly half of those surveyed are expecting their finances to improve.
Optimism can help make you feel more secure about your own situation in the moment, but unfortunately, that optimism won’t help you get of a tough financial situation on its own.
The trick is to turn your optimism into real savings. In fact, no matter whether you are optimistic or pessimistic, the trick is to save more.
Most Americans are not doing that. Only 21% of people say that they’ve increased their retirement savings to account for the years they can expect in retirement, and 44% say they haven’t taken any steps whatsoever, the study found.
Here are 22 tricks for saving.
3. Ignore the financial markets
The S&P 500, an index of 500 of the biggest companies trading stock in the U.S., lost a third of its value in March of 2020. And in early September, it hit an all-time high. The stock market’s wild swings can make your stomach churn.
The only thing we know for sure, however, is that the financial markets are unpredictable. That is why you should set an investment strategy — preferably a diversified portfolio, then forget about it except for once every quarter or half-year when you rebalance to maintain your asset allocation strategy.
Experts say to set your strategy and stick to it.
4. Maintain a detailed retirement plan
Most Americans lack a real retirement plan. Only 34% of those surveyed would consider themselves “disciplined” planners and an additional 34% consider themselves “informal” planners.
However, if you want a secure retirement, you probably need to become a planner. A good retirement plan means that you know how much you have now, how much you will have at retirement and how much you will have near the end of your life.
You also need to know how much you will need at those different time periods.
This information can really help you make adjustments and set attainable goals. This knowledge can give you the motivation to save more, work longer and spend a little less.
Best of all, retirement planning does not need to be difficult. Good online calculators can help you set up a detailed plan and enable you to maintain it over time.
The NewRetirement retirement planning calculator is a unique tool that is easy to use while offering a lot of detail. It should only take five minutes to set up and then you can spend as much time as you like making adjustments until you find a plan that is going to work for you. It was recently named a best retirement calculator by the American Association of Individual Investors.
5. Create a backup plan
One of the underlying worries in retirement is that you don’t know what will happen, and without the security of a job, you need to rely on what you have. While you can’t exactly plan for unknown unknowns, you can have a backup plan.
- Homeowners are particularly lucky to have home equity that can be used in a crisis, either through downsizing or securing a reverse mortgage.
- It is also a good idea to have an emergency fund.
- Be sure to plan for the things that you think might need, like a new car or roof.
- Have adequate insurance.
6. Flip your perspective
Retirement is an entirely different way of life from the working grind. As such, you may need to shift your perspective in different ways to adjust to the new paradigms.
Looking at your life from a different vantage point can help you find happiness about your future. Here are eight ways to flip your perspective on retirement.
7. To be happy, focus on happiness
Financial stress is not good for you. The majority of those surveyed by Northwestern Mutual said financial anxiety is negatively impacting their health, happiness, home life, mood, social life and ability to pursue dreams, passions and interests.
Six out of 10 people now define the American dream as having a happy family life and being financially secure, and two-thirds of U.S. adults believe they can attain it, according to the survey.
The view of what the American dream is in today’s world has shifted drastically. Very few people are interested in “keeping up with the Joneses” anymore. Financial security and having a happy family life are now more important than wealth and social class.
If you want to be happy and have a secure retirement, try to:
- Prioritize — Know what is important to you and forget the rest.
- Get rid of stuff — Accumulating stuff does not bring happiness. Psychologists have found that downsizing and paring possessions can increase happiness.
- Think about experiences — Social psychologists have suggested that if you want to spend money on happiness, you should spend it on experiences. Getting more stuff probably doesn’t make you happy. Doing interesting things probably does.
- Express gratitude — We can always find something to be grateful for. No matter what your retirement looks like, focus on what is meaningful to you, be it grandchildren, health, a garden, a network of friends, a cozy bed, money in the bank, a cherished animal companion or a hobby.
If you don’t try to do it all and instead focus on what is important to you, you might be able to better achieve financial independence and you’re sure to be happy.
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