64% of savers worry that their money won’t last through retirement. Do These Things If You Feel The Same | Smart Change: Personal Finances
After a lifetime of hard work, you deserve a meaningful, relaxing, and financially stress-free retirement. But unfortunately, the latter is never guaranteed.
In fact, many savers today worry that they won’t have enough money to last through retirement. And in a recent BlackRock survey, 64% of savers said they fear their nest egg won’t last. If you have similar concerns, here are some important steps to take.
1. Inject as much money as possible into a tax-efficient savings plan
These days, it’s not that easy to max out a 401(k) or even an IRA. Inflation drives up the cost of living, forcing more people to cut their pension contributions so they can pay their essential bills.
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But if you’re able to increase your savings rate even a little, it could go a long way over time. Plus, it pays to put as much money as possible into a tax-efficient savings plan like an IRA, 401(k), or even an HSA. This way, you could potentially get tax relief on the funds you invest, and your money can also grow in a tax-efficient way.
2. Invest your savings aggressively until near retirement
The past seven months have been extremely volatile for the stock market. You may be uncomfortable investing heavily in stocks in your retirement plan for fear of losing money. But while loading into stocks carries some risk, investing too conservatively carries its own risk – the risk of running out of funds down the line.
A good bet, therefore, is to invest your savings aggressively throughout your career, but then start to adopt a more conservative investment mix as you approach retirement. This could mean starting to unload some stocks around age 60 if your goal is to end your career at age 67.
3. Work as long as possible
The longer you spend in the workforce, the more opportunity you have to continue earning, saving and investing. But extending your career also serves the very important purpose of keeping your nest egg sitting idle longer.
If you don’t want to work full-time until your late 60s or late 70s, try switching to part-time work. In the wake of the pandemic, employers have become increasingly flexible when it comes to employee schedules. And so it pays to see which options allow you to keep making money.
You can also do the trendy thing and join the gig economy once you feel like you’re done with your career. It could mean doing something that you are truly passionate about and also pays off.
It’s natural to worry about running out of money during retirement, and it’s clearly a concern for many people. But if you do your best to increase your savings rate, invest aggressively, and leave your nest egg intact for as long as possible, you’ll be less likely to land in a scenario where your hard-earned money runs out.
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