After a lifetime of hard work, you deserve a retirement that is meaningful, relaxing and free of financial stress. Unfortunately, the latter is never guaranteed.
In fact, many savers today worry that they don’t have enough money to make it through the entire retirement. And in a recent BlackRock survey, 64% of savers said they were afraid their nest eggs wouldn’t last. If you have similar concerns, here are a few key steps to take.
1. Pump 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 is driving 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 can increase your savings rate even just a little bit, it can go a long way over time. Plus, it pays to put as much money as possible into a tax-advantaged savings plan, such as an IRA, 401(k), or even an HSA. That way, you may be able to get a tax break on the money you put in, and your money will grow in a tax-efficient way too.
2. Aggressively Invest Your Savings Until Retirement Approaches
The past seven months have been extremely volatile for the stock market. You may feel uncomfortable with the idea of going heavy on stock in your retirement plan for fear of losing money. But while piling up stocks comes with some risk, investing too conservatively comes with its own risk — the risk of running short on funds later on.
It is therefore a good bet to invest your savings aggressively for most of your career, but then switch to a more conservative investment mix as retirement approaches. That could mean starting off some stock around age 60 if your goal is to finish your career at age 67.
3. Work as long as possible
The more time you spend in the workplace, the more opportunities you have to continue earning, saving and investing. But extending your career also serves the very important purpose of keeping your nest egg untouched for longer.
If you don’t want to work full-time well into your late 60s or 70s, try switching to part-time work. In the wake of the pandemic, employers have become increasingly flexible when it comes to employee rosters. And so it pays to see what options you have with which you can continue to earn money.
You can also do the trendy stuff and join the gig economy once you feel like you’re done with your career. That could mean doing something that you’re really passionate about and that pays off.
It’s normal to worry about running out of money in retirement, and it’s clearly a concern many people have. But if you do your best to increase your savings rate, invest aggressively, and leave your nest egg untouched for as long as possible, you’re less likely to end up in a scenario where your hard-earned cash runs out.
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