Baby Boomers who near retirement might balk at the figures experts give when suggesting savings amounts. Jean Setzfand, writing for AARP, suggests when you reach 60 years of age, you should have nine times your annual salary saved in a retirement account. Boomers who fall short of that figure can take actions to remedy the situation.
Create a Plan
The pain of facing a retirement shortfall now does not compare with the pain of living off of a retirement shortfall later. Review your actual figures now, and decide what income you will need when you retire. Write down what income you would like to have when you retire. Note the difference between what you want and what you will probably have.
Raise Your Contributions
Increase your 401(k) contributions by 1 percent each quarter. This will allow you to adjust to slight decreases in your take-home pay gradually. The increased contributions will grow your retirement funds more quickly, and you might find the lower paycheck doesn’t hurt as much as you anticipated.
Cut Your Current Expenses
Initiate significant cutbacks in your current lifestyle. Sacrifice that second car or learn to live in smaller quarters. Resolve not to spend the cash you save. Instead, put it in retirement savings. The Internal Revenue Service published guidelines on how much you can save tax-free each year. If you exceed that, file the appropriate forms with the IRS each tax season to indicate money you put in a retirement account that you already paid tax on. You will not have to pay tax on that portion of your savings when you withdraw it in retirement.
Delay Social Security
You can claim your Social Security benefits at age 62, but if you do, you will receive about 30 percent less than you would if you wait until full retirement age. Review the Social Security Administration guidelines to determine your full retirement age, but it will be either 66 or 67. You can wait additional years, up to age 70, and increase your Social Security benefits by 8 percent for each year you wait.
- SSA.gov Retirement Chart
- AARP.org: How Much Do You Need to Retire?
- FoxBusines.com: Scary Retirement Numbers No Matter How You Calculate Them
- JSOnlin.com: 5 Ways Boomers Can Reduce Retirement Shortfall
- Singularity2050.com: Why Baby Boomers Will Have a Troubled Retirement
- IRS.gov: IRS Announces Pension Plan Limitations for 2012
Kevin Johnston writes for Ameriprise Financial, the Rutgers University MBA Program and Evan Carmichael. He has written about business, marketing, finance, sales and investing for publications such as "The New York Daily News," "Business Age" and "Nation's Business." He is an instructional designer with credits for companies such as ADP, Standard and Poor's and Bank of America.