Approaching retirement should be when you plan what to do with all that leisure time. Yet, ensuring your retirement savings can sustain your lifestyle is more important than ever.
Experts often recommend saving enough to cover at least 80% of your pre-retirement income annually, but many individuals fall short of this target.
If your retirement fund falls short, how can you get back on track before it’s too late?
1. You’re Not Contributing Enough to Your 401(k)
If you’re not maxing out your 401(k) contributions, you could leave tax advantages and significant growth opportunities on the table. Those over 50 can contribute up to $30,500 in 2024, thanks to catch-up contributions.
What you can do: Increase your contribution percentage to get closer to the limit, especially if your employer offers a match. This “free money” can turbocharge your savings.
Pro Tip: If you’ve got more than $100,000 in savings, get some advice from a pro. SmartAsset offers a free service that matches you to a vetted, fiduciary advisor in less than 5 minutes.
2. You Don’t Have a Diverse Investment Portfolio
Relying on one type of investment—like stocks or bonds—leaves you vulnerable to market volatility. A balanced portfolio of stocks, bonds, and other assets is critical for weathering economic changes.
What you can do: Consult with a financial advisor to rebalance your portfolio to include a mix of low-risk and high-growth investments that align with your age and risk tolerance.
Pro Tip: Explore automated investing platforms like Acorns to diversify easily.
3. You’re Counting on Someone Else to Fund Your Retirement
Relying on an inheritance or help from children can be risky. Circumstances change, and plans you’ve counted on may not come to fruition.
What you can do: Create your own retirement plan as though no outside help will come. Any inheritance or support you receive can be considered a bonus, not a guarantee.
Pro Tip: Want to save time, money, and stress while protecting your family? Where there's a will, there's a way.
4. You’re Still Carrying High-Interest Debt
Entering retirement with significant credit card or personal loan debt can quickly waste your savings. Interest rates are often much higher than the growth rate of your investments.
What you can do: Focus on aggressively paying down high-interest debt, starting with the highest rates first. Freeing yourself from debt will allow you to redirect those payments into savings.
Pro Tip: If you have more than $20,000 in unsecured debt, get some professional help. National Debt Relief is a trusted source for free advice and assistance.
5. Your Emergency Fund Is Running on Empty
Without a sufficient emergency fund, unexpected expenses—like medical bills or home repairs—can force you to dip into your retirement accounts, derailing your savings progress.
What you can do: Aim to save three to six months’ worth of living expenses in a separate, easily accessible account. Build it gradually by setting up automatic transfers.
Pro Tip: Earn as much as possible on your emergency savings. For example, SoFi Checking is offering 4% interest, plus a potential $300 signup bonus. (May change without notice.)
6. You Don’t Have a Budget
If you spend without tracking your expenses, you may not know where your money is going or how much you can save for retirement.
What you can do: Create a detailed budget that accounts for your income, expenses, and savings goals. Apps like Mint or YNAB (You Need A Budget) can simplify this process.
Pro Tip: Never pay for an unwanted subscription again. Quicken Simplifi instantly finds and tracks your subscriptions and cancels unwanted subscriptions.
7. You’re Depending Too Much on Your Home’s Equity
Counting on your home to fund your retirement is risky. The housing market is unpredictable, and selling or downsizing might not yield as much money as you expect.
What you can do: Treat home equity as a backup plan, not your primary source of income. Instead, focus on building liquid assets for more flexibility.
Pro Tip: A home equity loan is a great way to access fast cash. Take a minute right now and see how much you can get, how fast you can get it and how little you'll pay.
8. You Haven’t Reassessed Your Retirement Goals
Your financial needs change as you age. What seemed like a realistic goal in your 30s or 40s might not hold up as retirement gets closer.
What you can do: Regularly review your retirement goals and savings plan. Adjust for inflation, medical costs, and potential lifestyle changes.
Pro Tip: Secure your financial future – explore annuities for high income now and lifetime income down the road.
9. You’re Spending More Than You Earn
Living beyond your means is one of your biggest retirement savings threats. Overspending now leaves you less to contribute toward your future.
What you can do: Identify areas where you can cut back, like dining out or subscription services. Reallocate that money directly into your savings or retirement account.
Pro Tip: When you spend on anything, always pay with a top-ranked cash-back card.
It’s Never Too Late to Course-Correct
Retirement may feel overwhelming, but identifying and addressing these red flags can help you regain control. Whether boosting your savings rate, diversifying your investments, or paying off debt, every step brings you closer to financial security.
The sooner you act, the more significant the impact. Start making changes today to ensure a comfortable retirement tomorrow.
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