I’ve counseled hundreds of clients as they think about retirement and I guarantee there are three statements no one wants to hear me say as they plan for retirement.
- You won’t have enough.
- You need to keep working.
- You will have to spend less in retirement.
These three statements are what makes up the biggest fear in retirement according to every survey of pre-retirees I’ve read. Simply, the biggest fear in retirement is running out of money.
Technically, no one who has worked enough to receive a Social Security statement will literally run out of money in retirement because Social Security pays a benefit for your lifetime. But that’s nit picking. The fear that drives every retirement decision is the need to reduce lifestyle so much that a person is forced to rent a room in a run-down apartment house and eat poor food.
And many Americans are right to have this fear. For example, did you know that according to a study done by NerdWallet:
- For households 35 to 44, the median amount saved for retirement is $60,000;
- The median retirement savings for households 45 to 64 is $100,000;
- The median retirement savings for households 65 to 74 is $164,000?
That’s not much for any of these groups and for anyone age 45 and older especially, this is bad news. A person who wants to retire at age 65 needs to have way more than $164,000 saved for retirement.
What can you do to quiet this fear and avoid this fate? Here are five actions to take if you’re behind in your retirement savings:
- Save as much as you can which means control your spending.
- Invest wisely.
- Pay off debt selectively.
- Plan to work longer.
- Delay taking Social Security to age 70.
If you need help with any of these five actions, consider hiring a fee-only financial advisor to help you create a plan you can follow. If you want to avoid hearing me say any of the above three statements, you need to start taking action now.