Are you a member of Generation X? Generally defined as those born between the mid-1960s and early 1980s, today’s Gen Xers are in their 40s and 50s. In fact, retirement is approaching on the horizon for the oldest members of the generation.
According to a new study from Transamerica, many Gen Xers aren’t confident about their chances in retirement. The study found that only 12 percent of those in Generation X feel comfortable about being able to retire. The average Generation X household had only $69,000 in retirement savings.1
Are you a Gen Xer who’s behind on retirement? The good news is there’s still time to get back on track. Depending on your age, you may have 20 years or more to save. That’s plenty of time to prepare as long as you stay disciplined and take action quickly. Below are a few questions to ask yourself as you plan your retirement strategy?
What is your retirement savings goal?
How much do you need to save for retirement? If you don’t know the answer, that’s a good starting point for your catch-up strategy. Think of your retirement savings goal as the destination at the end of a long road trip. You have to know where you’re going so you can track your progress along the way.
You can estimate your retirement savings number by developing a projected retirement budget. Obviously, you can’t predict all your spending in retirement, but you can create an informed estimate based on your current spending and inflation.
Then project your sources of retirement income, like Social Security or your pension. Do those sources cover all your estimated expenses? If not, you’ll have to fund the rest out of your savings. Assume that you’ll be retired for several decades, and multiply your shortfall by the amount of years you’ll live in retirement. The result is a ballpark savings goal.
Keep in mind that this is a very simple way to approach the calculation. Your financial professional can help you develop a more precise goal that includes factors such as inflation, investment returns, long-term care costs and more.
What expenses can you cut so you can save more?
Perhaps the most effective way to catch up on retirement is simply to spend less and save more. A budget can help you accomplish just that, as it helps you manage your spending and track your progress toward large financial goals such as retirement. Unfortunately, nearly 60 percent of Americans don’t use a budget.2
If you’re among that group, now may be the time to make a change. You can use an online budgeting program or a simple spreadsheet, or even a pencil and paper. Look for areas to cut back, like on entertainment and dining out. Perhaps you could consolidate debt and reduce your interest costs. Every dollar in spending you can cut is a dollar you can allocate toward retirement.
What risks could threaten your retirement?
Nothing can derail a retirement strategy like an unexpected emergency. It could be a costly medical procedure or a loss of employment. The market could take a sudden downturn. Any number of risks could throw you off track.
Fortunately, you can take pre-emptive steps to minimize your risk. Disability insurance can help you cover financial challenges should you become unable to work because of injury or illness. Life insurance protects your spouse’s retirement should you unexpectedly pass away. You can also use tools such as annuities to protect you from market downturns and to guarantee* your future retirement income.
Ready to develop your retirement strategy? Let’s talk about it. Contact us today at Binversie and Associates. We can help you analyze your needs and goals and develop a plan. Let’s connect soon and start the conversation.
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