Ten years is still enough time to reach a solid financial position
Creating a comfortable retirement is probably the single biggest financial challenge that anyone can face. Unfortunately, it’s a challenge for which many working people are ill-prepared.A 2019 GOBankingRates study found that 64% of workers surveyed had less than $10,000 saved toward retirement. Worse yet, nearly 40% of workers surveyed age 55 and older reported no retirement savings.1 Some of the folks in that group may have a pension to rely on, but most are financially unprepared to exit the workforce.
Social Security is only designed to replace a portion of income in retirement, so those who find themselves roughly 10 years away from retiring, regardless of how much money they have saved, need to develop a plan for hitting the finish line successfully.
- It’s possible to increase your savings significantly if you still have 10 years until you retire.
- Take the time to assess where you are—how much you have saved and your sources of income, your retirement goals, your budget for retirement, and the age at which you want to stop working.
- If there’s a gap between your savings and what you need, take steps to save more—increase 401(k) and IRA contributions, set up automatic payroll deductions to savings accounts—and spend less.
- It may be useful to hire a financial planner to help you stay on track and suggest additional ways to grow your retirement savings.
Ten years is still enough time to reach a solid financial position. “It’s never too late! During the next 10 years, you may be able to accumulate a small fortune with proper planning,” says Patrick Traverse, CFP, financial advisor, at MoneyC, Mt. Pleasant, S.C.
People who have not saved a lot of money need to make an honest assessment of where they are and what sacrifices they are willing to make. Taking 7 steps now can make a world of difference down the road.
1. Assess Your Current Situation
2. Identify Sources of Income
3. Consider Your Retirement Goals
4. Set a Target Retirement Age
5. Confront Any Shortfall
6. Assess Your Risk Tolerance
7. Consult a Financial Advisor
Money management is an area of expertise for relatively few individuals. Consulting a financial advisor or planner may be a wise course of action for those who want a professional overseeing their personal situation. A good planner ensures that a retirement portfolio maintains a risk-appropriate asset allocation and, in some cases, can provide advice on broader estate planning issues as well.