If you’ve got close to a million dollars socked away for retirement, you’re in pretty good shape, right? Well, it depends.
In a recent survey by Charles Schwab, respondents indicated that they had an average savings of $920,400. To be fair, the survey included only people who had at least $100,000 saved for retirement.
You’re probably thinking that $920,400 is such a large sum and that surely it will go a long way, right? The Schwab survey goes on to show why that amount is not nearly enough to live on for the long haul.
Here’s How Long $920,400 May Last You in Retirement
The study participants projected that they planned to spend about $135,000 a year. At that rate, their retirement funds would run out in less than seven years.
If your living expenses aren’t as high, obviously you can make that money last longer.
To help forecast how much money you’ll have in retirement, Schwab has a nifty Retirement Savings Calculator that shows you whether you’re saving enough. You’ll have to enter such information as:
- The age you plan on retiring
- How much money you plan to spend annually in retirement
- How much you’ve saved so far for retirement
- How much you expect to get from Social Security
If you find that you aren’t putting enough money away, the good news is that you may be able to change that. And no, I’m not talking about using your Social Security, because the reality is that it may not be enough to fund your retirement either.
At Clark.com, we want you to take active steps now to save money for the future.
3 Financial Strategies to Fund Your Retirement Now
Here are three ways you can take hold of your financial future by funding your retirement.
1. Enroll in Your Employer’s Retirement Account
Money expert Clark Howard says one of the best ways to save for the future is to enroll in your employer’s retirement plan.
When it comes to saving, he says, “Most of us just aren’t going to get around to it with the best of intentions, but if you set up with your employer’s 401(K) or equivalent plan to put money in every pay period, it happens on automatic pilot!”
2. Make Catch-Up Contributions
If you’re age 50 or over, the IRS lets you play catch up by making extra contributions to your retirement accounts. How much extra you can save here each year depends on what kind of account it is, but here are the accounts that are eligible.
- 401(k) (other than a SIMPLE 401(k))
- SARSEP (a type of simplified employee pension)
- Governmental 457(b)
- Standard and Roth IRAs
If you think it’s too late to save enough for retirement because you’re already in your 50s, check out these strategies that could help improve your savings strategy.
3. Start a Side Hustle
Want to bring in some extra money every month? See if any of these side hustles work for you.
If you take anything away from this, it’s that the best time to plan for the future is now.
“The reality is over a working lifetime if you start in your 20s, in order to have comfort in retirement, you need to put a dime of every dollar you make into a retirement account,” Clark says. “If you’re not putting that dime in, you’re not going to have saved enough money.”
That age/savings equation only increases the later you start, according to Clark. “If you start in your 30s, you’re going to have to put in more than a dime. If you start in your 40s, you’ll have to put in more than that and so on.”
But that doesn’t mean that you should give up if you’ve already reached middle age. When it comes to saving for retirement, the old adage rings true: There’s no time like the present.