Yahoo Finance Worried You Won’t Have Enough Savings To Retire? Here’s What To Do in 2024
Once upon a time, saving for retirement wasn’t as mighty a challenge as it is today. The struggle has been amplified by factors such as the vast vanishing of pensions, rising costs of living and less competitive retirement plans offered by companies — if they offer any in the first place.
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The majority of Americans are duly concerned and worried that they won’t have a big enough nest egg to enjoy their golden years. According to a recent CNBC Your Money survey conducted by SurveyMonkey, 56% of Americans say they’re not on track to retire comfortably.
It’s somewhat consoling to know that so many are in the same boat when it comes to anxieties around not having enough for a good retirement, but that consolation doesn’t do anything towards solving the problem at hand. If you are worried that you won’t have enough savings to comfortably retire, what can you do about it in 2024?
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Know How Much You’ll Need To Retire Comfortably
Though there is no specific magical retirement number you can pin down, you can get a pretty good idea of how much you’ll need.
“It’s about creating a retirement plan with a financial advisor and making sure you have the resources to retire on your own terms,” said Evan Potash, wealth management advisor at TIAA. “If your living expenses and other retirement goals are met by your accumulated investments, Social Security and other income sources, then you’re on track.”
But you might not be on track. If that’s the case, you need to work on how to get on track, ideally with a financial advisor. And, regardless, you should check in with your financial advisor on a regular basis.
“It’s important that you do an annual assessment of your retirement financial plan to make sure you’re still on track,” Potash said.
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Get to Know Your Company’s Retirement Plan Options Inside and Out
If you’re a salaried employee, you may have access to a retirement savings plan through your work. Familiarize yourself deeply with this plan, if/when it’s available.
“Take the time to go through the retirement plans your company offers, research your options and reach out to your HR department if you have any questions,” said Doug Sabella, CEO at Payroll Integrations. “Make sure to look into any matching contributions your employer will make towards your plan and contribute the amount that will get you the maximum amount of match, at minimum. It’s essentially free money from your employer that goes right to your future.”
If Your Employer Doesn’t Offer Retirement Plans, Ask for One
Not all employers are created equal when it comes to retirement plans — some don’t offer any. If that’s the case for you, it’s worth speaking up with your employer about how essential a retirement plan is.
“Employers will sometimes stray away from offering 401(k) plans because of the administrative work required on the back end,” Sabella said. “This is especially true for smaller employers who simply don’t have the capacity for their team.
“While it’s not up to you to present them with options, it doesn’t hurt to start a conversation with your employer about why a retirement plan is important to you and why you think it would benefit the company — e.g. employee retention and attracting prospective employees. Employers do have options, like offering a starter 401(k) or implementing technology that automates everything on the backend. A simple conversation might be the push they need to get started.”
Set Small Routine Savings Goals
It can be so hard to save money, especially in a climate still impacted by lingering inflation, but every little bit matters. Make a habit of stashing away even a little bit on a regular basis.
“Successfully saving for retirement isn’t about making huge strides each year,” said Paul Tyler, CMO at Nassau Financial Group. “It’s really about taking small steps in the right direction every day each year over a long period of time. The power of compounding growth is bigger than we often imagine.”
Set Up Automatic Transfers To Save for Retirement
A strategy Rebecca Awram, mortgage advisor at Seniors’ Lending Centre, recommends is setting up automatic transfers to your savings.
“Saving money is more difficult if you need to go into your banking app manually and transfer funds,” Awram said. “You can remove that step by setting up automatic paycheck deposits through your bank, where a certain percentage of your income is automatically funneled into your retirement savings account before the pay even hits your account. This is helpful in saving you time and effort while also holding you to a specific savings goal.”
Pay Close Attention to Mutual and Exchange-Traded Fund Fees
No matter which type of account your investments are held in, you need to pay close attention to the expense ratio of the mutual funds and/or exchange-traded funds (ETFs) within them.
“If you are not looking for them, you likely will not even notice how much they can impact your savings,” said Chris Urban, CFP, RICP, founder at Discovery Wealth Planning. “This could impact your retirement nest egg by tens of thousands of dollars over many years.
“In my opinion, reasonable expense ratios for funds are 30 bps or less (0.30%). Anything higher than that, you should check the fund lineup within your employer plan to see if there are less expensive fund options. Of course, you want to make sure you have a properly diversified account, based on your age, goals, etc.”
Consider Planning for the 2026 Reversion of Tax Laws
News alert: The Tax Cuts and Jobs Act of 2017 (TCJA), which created the current tax rates and rules in place, is due to revert to the previous tax laws on Jan. 1, 2026 — unless Congress does something about it. This is important to think about if you’re saving for retirement.
“Should the laws revert, there will be notable changes to standard deductions, tax rates, deduction rules and estate exclusions, just to name a few,” said Theresa Fry, manager of IRAs and retirement planning at Benjamin F. Edwards.
“The tax rates will generally increase for everyone. The ‘middle’ bracket will increase from 24% to 28%, and the top tax bracket will increase from 37% to 39.6%,” Fry said. “Consider whether it may be more advantageous to accelerate income or defer deductions to address these tax increases.
“For example, Roth conversions may be more attractive over the next few years, because income tax on the converted amounts would be taxable at current, lower tax rates, while future qualified withdrawals in retirement would be income tax free when tax rates could be higher,” Fry said.
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This article originally appeared on GOBankingRates.com: Worried You Won’t Have Enough Savings To Retire? Here’s What To Do in 2024
