If you’re falling short when it comes to saving for retirement, there are a few ways that you can play catch up. The steps that you take greatly depend on how far you are from retirement, your risk tolerance, and your personal financial situation, so it helps to talk through your circumstances with a financial professional.
Get To The Bottom Of The Issue
First, the most important thing is to determine what is causing the issue when it comes to your retirement savings so that you can course correct. It may be that you’re lacking income, or you could be overspending. Or, you may have encountered financial hardships that have impacted your retirement savings. Whatever the reason is, you need to determine the hit to your retirement savings so that you can fix the issue and avoid what you can in the future.
Cut Down Spending
If spending is part of the problem, it’s time to buckle down and take a look at your budget – or make a budget if you don’t have one. You need a good grasp of how much you’re spending compared to how much income you’re bringing in each month. When it comes to expenses, you likely have categories where you can cut without even feeling it. Often, we’re signed up for multiple services we aren’t using that are just recurring fees in our bank accounts, and these can be dropped to get you those dollars back. Small changes can add up, and you can make bigger changes as well, such as potentially downsizing a home or changing how you vacation.
Increase Your Income
If you’re still working, now might be a good time to ask for a raise. Alternatively, you could work part-time or start a side business, or try consulting for additional income. With the additional income that you bring in, put it all toward your retirement savings so that you can bulk up those funds again.
Reassess Your Retirement Goals
If you’re in a situation where you have less saved for retirement than you had initially planned, it’s a good time to reassess your retirement goals. Think about when you had wanted to retire, and see if that still holds true – do you want to work a few more years, or potentially retire sooner but change your lifestyle habits? Your risk tolerance may have also changed with any financial changes, so how you invest may need to change. It may help with your planning if you talk with a financial advisor that can help you sift through your goals and your current situation to help you find the best solution.
See the article here.
By Andrew Rosen, Contributor at Forbes
Published January 11, 2024