(MoneyWise) - If you’re planning on putting your feet up by the coast and sipping margaritas in your golden years, make sure you’ve got the funds for it. These days, even a seven-figure net worth may not be enough to pay for the retirement you’ve been dreaming of.
More than a third of millionaires say it “will take a miracle” to retire securely, according to a recent survey from asset management company Natixis Investment Managers.
About 58% expect they’ll have to keep working longer, while 36% worry that retirement may not even be an option. But before you toss in the towel, it’s never too late to find a second wind and get your retirement savings in fighting form.
How much do you need to retire comfortably?
Unfortunately, now may not be the ideal time to figure out exactly how much you’ll need in retirement. When inflation runs as hot as it has for the better part of the last year, Americans tend to believe they need to jack up their retirement savings to meet future day-to-day expenses.
A study from financial services company Northwestern Mutual found that adults 18 and older expect to need about 20% more in retirement savings than they thought they’d need in 2021 — coming in at a cool $1.25 million.
And with the future of Social Security at risk, retirees may not be able to count on a robust benefit check to serve as their safety net in later years. Fortunately, there’s a few simple ways.
Pay down your debt
Before you think about bolstering your retirement savings, you’ll want to get any debt cleared. Whether it’s your mortgage, student loans or credit card debt, do your best to pay your bills on time and in full each month.
If you’re dealing with a larger load, there are few strategies about how to prioritize paying down debt, but most advisers will suggest tackling your highest interest loans first, as those interest charges can really add up.
But if you’re struggling to keep track of multiple credit accounts or it seems like you’re stuck in an endless cycle of debt, you might then consider rolling all your balances into a single loan with a lower interest rate.
Make a plan
As you plan for your ideal retirement, don’t underestimate what you might need for health and long-term care — and don’t forget to make good use of your retirement accounts as you work toward your savings goal.
If your employer offers 401(k) matching, keep in mind that this is about as close as it gets to free money.
As for those saving on their own, you might consider setting up an automatic monthly transfer to keep you accountable. Even if it’s a small amount, when it comes to saving for retirement, slow and steady wins the race.
And even if you’re sure you’ve got everything on lock, it might also help to chat with a financial adviser to get some expert advice.
Start investing
The market took quite the hit last year, and experts are forecasting an economic slowdown for 2023.
But there’s a silver lining for strategic investors: a downturn is a great time to buy stocks on the cheap to take advantage of long-term growth.
Set realistic expectations and be mindful of your risk tolerance. If you’re closer to retirement age, it might be safer to stay conservative. But if you’re just starting out, you might consider taking more risks to maximize your potential returns.
Create a diversified portfolio with assets that traditionally fare well over economic cycles, like consumer staples and health care.
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By Serah Louis
January 5, 2023
