Connect with us

NEWS LINE

Half of Americans with incomes over $100,000 fear they’ll never retire. Here are some changes you can make, if you have the same concern.

Published

on

By Maurie Backman The Motley Fool

Falling short financially in retirement is a major concern among working Americans, and often, it’s an issue that comes into play for lower earners who don’t have the means to max out an IRA or 401(k) plan year after year.

But wealthier Americans are worried, too. In fact, in a recent survey of U.S. adults aged 40 to 65 with annual household incomes of at least $100,000, a surprising 50% said they’re worried they won’t ever be able to retire, according to Edelman Financial Engines.

If you share that fear, here are some changes to make.

Save better, send better:We’ll tell you how and send money tips, advice delivered right to your inbox. Sign up here

1. Identify one expense to cut back on

If you’re earning $100,000 a year or more and can’t manage to squeeze out retirement plan contributions, it could be that your budget is failing you, or you’re just not following a budget at all.

Figure out where all of your money goes each month, and then choose one specific expense to cut back on so you can free up money for your IRA or 401(k). That could mean scaling back your $5,000 annual vacation to a $2,000 trip. Or, if you normally spend $800 a month on leisure and dining out, cut that amount in half.

2. Invest aggressively

You don’t need to invest a ton of money each month in a retirement plan to grow wealth. Rather, you need to give yourself as long a savings window as possible while investing aggressively. That mostly means loading up on stocks, especially when you’re at least a decade away from retirement or longer. In fact, you should still hold some stocks in your portfolio as you inch closer to retirement so your savings keep growing.

Older person with serious expression sitting in front of a laptop on a table.

Imagine you’re 40 years old and you want to retire at 67, which would be full retirement age for Social Security purposes. If you contribute $300 a month to a retirement plan over the next 27 years, and you also invest your savings largely in stocks, you could see an average annual 8% return, which is just below the market’s average. All told, that will leave you with close to $315,000. Make it $500 a month, and you’ll be looking at $524,000 instead.

Investing apps make it easy for beginners:Here’s how I started.

Savings account:Around 53% of Americans are saving for retirement in a savings account. Is that optimal?

3. Alter your retirement plans

If you’ve been earning $100,000 or more per year for quite some time, you may have a hard time imagining what it would be like to live on $40,000 or $50,000 a year instead.

It can be done, though. Rather than assuming you’ll never retire, rethink what your senior years will look like. You may not manage to travel extensively or retain the large, expensive home you enjoy living in now. If you’re willing to downsize and maintain a more frugal lifestyle, you may find that retirement is absolutely within reach.

Retirement insecurity is clearly a problem even for higher earners. Don’t give up on retirement. Instead, change your spending habits, invest wisely, and be open to different versions of what your senior years look like. You’ll eventually be able to bring your time in the workforce to a close.

The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content partner offering financial news, analysis, and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

Offer from the Motley Fool: The $16,728 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example, one easy trick could pay you as much as $16,728 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

Reference: https://bit.ly/3qJhCSn

Follow us, amazing media here for you!
Continue Reading
RSS
Follow by Email
YouTube
YouTube
Pinterest
Pinterest
fb-share-icon
Instagram