Do you have enough retirement savings?

Do you have enough retirement savings?  It should be no surprise than too many Americans have not saved enough for retirement.  So much has been written about baby boomers and retirement, but a Los Angeles Times  article shows how it is not limited to them.  10,000 baby boomers turn 65 years old every day and will for the next nineteen years!  Will you have enough savings for retirement?

Reality

Pew Charitable Trust says Generation X (38-47 year olds.) lost almost half their wealth in the great recession between 2007 and 2010.  Young baby boomers (48-57 year olds) lost nearly 28% of their wealth. It seems that that it is entirely generational, if you have enough savings for retirement.  Late baby boomers (58-67 year olds) lost 25% of their wealth.  Generation Xers and baby boomers are approaching retirement with more debt than ever before

If you do not defer retirement, you will face a lower standard of living in retirement.  As a rule of thumb, you want 70-75% of your pre-retirement earnings.  Some may argue the arbitrary percentage up or down, but it is just a rule of thumb.  It is up to you how you want to retire.  Personally, I want to do more things in retirement and my target is 100+%.  Do you have enough savings to retire?  If not, what do you do?  One solution is to put off retirement.

What can you do?

If you are too young to retire and too old to get a job, what can you do?  Your only choice is to cut expenses!  You can downsize, refinance your mortgage, sell your home, move in with family, roommates, or a reverse mortgage.  What other expenses can you reduce or eliminate?  You can move to a less expensive area of the country or even move to a foreign country with a lower standard of living.  Before I would consider moving to a foreign country, I would reduce my standard of living  in my present location.  All difficult decisions, but necessary if you have to retire.

Additional income is another choice.  Part time work, side business or selling assets are all ways to generate additional income.  Which one works for you?  As a former consultant and entrepreneur, I can generate some income on a part time basis.  As a retired teacher,  I can be a substitute teacher.  Everyone has different skills and experience which you can turn into extra income.  If I downsized more, I could sell antiques, furniture and other collectibles.

When you eat too much and start to gain weight, you realize you need to do something.  You can just buy larger clothes or lose weight.  Typically, you try to lose weight by figuring out what you are doing wrong.  One way is to write down what you eat every day which makes you aware of the cause of the weight gain.  Starting a diary of what you spend every day will show you what you are spending your money.  It is the first step to make changes.

Change or work longer?

Making changes and taking control of your spending are important parts of retirement. Especially, if you do not have enough savings to support the retirement you would like to have.  The next step is to have a budget!  Remember, a budget is a structure to help you reach your financial goals.  In this case , your financial goal is a reasonable retirement.  It helps you confront your expenses and makes you do something.  Don’t avoid this step because you need to control your spending.

If you can postpone retirement so you will have enough savings is the best choice.  Your investments need time to grow.  The stock market is reaching new highs and restoring some of the money lost in the recession.  Don’t get caught up in the bull market without taking steps to ensure your future.  If you are eligible for Social Security, delaying retirement means a better retirement. Take steps to pay down debt, refinance or eliminate debt.  Planning your future is not just limited to when you are young, it is a continuing process.

Final thoughts

The best choice is always to retire when you have enough savings to live the way you want to.  Sometimes you do not have a choice and you have to work with the situation you have versus the one you would like.  You can look for more income or reduce expenses and realistically, you have to do both.  You don’t stop budgeting when you retire because life is choices.  You cannot make up for years of not saving enough, but you can make the difficult choices to live within your means.  How is your retirement savings?

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