Key Points
By the time you turn 60, you may be starting to think about ending your career and embracing retirement. And with a solid IRA or 401(k) balance, that may be possible. But if you’re not happy with the amount you’ve saved by age 60, you may be less than optimistic about your retirement prospects.
That’s understandable. But it also doesn’t have to be a deal-breaker. Here are some steps you can take if you’re behind on retirement savings and aren’t sure you have so much time to catch up.
1. Boost your savings rate as much as you can
At 60, you may be earning a higher paycheck than you were 10 or 20 years ago. Even if most of that paycheck is eaten up by ongoing expenses, a close examination of your spending may reveal that you have some wiggle room to cut back in key areas. Doing so could help you boost your savings rate substantially.
Remember, too, that if you’re 60 years old and have a 401(k), you can make a catch-up contribution of $11,250 instead of the standard $8,000 catch-up for people 50 and over. If you’re willing to make some bigger changes, like forgoing a vacation for a staycation, you may find that you’re able to boost your retirement savings nicely before your career ends.
2. Consider a later retirement date
Maybe your goal is to retire at 65, which is when Medicare eligibility begins. Or maybe you’re holding off until 67, when you can claim Social Security without a reduction if you’re 60 today.
If your savings aren’t as robust as you’d hoped and you don’t see yourself reaching your target number, one option is to work a bit longer than planned. If you’re able to extend your career by two or three years, that allows you to make a few more last-minute IRA or 401(k) contributions while giving your money a bit more time to grow.
Plus, if you retire later, you won’t need your savings to last as long. And if you’re able to delay your Social Security claim past full retirement age, you could lock in much larger monthly checks.
Each year you delay your Social Security claim past age 67 (full retirement age), your monthly checks increase by 8%. That incentive runs out once you turn 70, but if you can hold off on Social Security for even a single year past full retirement age, it could make a big difference in your finances.
3. Rethink what retirement looks like
You may have imagined retirement as a time to spend your days pursuing hobbies and traveling the globe. If your savings can’t support that lifestyle, you may need to get on board with a compromise.
That doesn’t necessarily mean you have to work another four or five or 10 years to get to the level of savings you want. Rather, you may need to be more flexible with your plans.
That could mean taking one trip per year in retirement instead of several, or limiting your travel to low-cost destinations or cities where you can stay with family and friends. It could also mean being willing to work part-time, whether at a steady job or through the gig economy.
Finding yourself behind on retirement savings at age 60 can be stressful and upsetting. But it doesn’t mean you’re doomed to a cash-strapped retirement. If you try your best to give your IRA or 401(k) a last-minute boost and tweak your plans, you may find that you’re able to enjoy your senior years despite not necessarily having met your ultimate savings goal.
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