Have Enough To Retire? 5 Must Do Strategies When You’re Behind

How is your retirement nest egg looking? Do you have enough to retire? If you have yet to start saving for retirement, or you are way behind, keep reading to find ways to catch up on your retirement nest egg.

Do you know how much you need to retire? Do you know when you can retire? Use this free retirement calculator to find out. You may be alarmed when you find out these answers.

If you are woefully behind on making your retirement payments and don’t have enough to retire, you need to act fast and act now to change course. It is not too late to start saving for retirement, no matter your age.

Are you going to start getting serious with your retirement planning? If so, here are several tips for adding catch-up funds to your retirement.

1. Fully Maximize Your Retirement Contributions

If your work has a company match, you seriously need to put in the maximum amount. This is perhaps one of the only ways on this earth to make free money.

If your company has a retirement match, they are literally paying you more than what your hourly salary is – if you take advantage of it.

Sure, some companies may only offer a 3% match (see the list here for the companies with the best retirement match). But that’s better than nothing because most companies do not offer a company match at all.

The amount of money, percentage-wise, that you can put into retirement from each check is a personal and unique decision. It depends on your budget, your income, and how close you are to retirement. It also depends on things like your life expectancy and your way of life.

What percentage of your salary should you be putting in? The short answer is: as much as you can. But here’s a chart that shows your age and the amount you should be putting into your retirement.

  • In your 30’s, you should have 1 year’s salary saved in retirement.
  • In your 40’s, you should have 3 year’s salary saved in retirement.
  • In your 50’s, you should have 5 year’s salary saved in retirement.
  • In your 60’s, you should have 8 year’s salary saved in retirement.

As far as percentages are concerned, a good rule of thumb is to put 15% of your income into retirement. The good news is that if your company has a 5% match, you can put in 10% of your salary toward retirement, and your employer will add 5%.

If you have not done this and are already in your 40’s and beyond, you need to adjust and perhaps double the percentage to catch up.

2. Invest Any Extra Money Into Your Retirement

If you’ve used a retirement calculator and are not close to having enough to retire, you will need to put more money into retirement. Well, where is this extra money going to come from other than your salary?

There is such a thing as extra money. We all get unexpected funds from a variety of sources from time to time. Make sure to invest every last dime of this money directly into your retirement. Make it a game to start, then make it a strict rule.

What is extra money? Extra money can be any amount of money you make outside of your salary, such as:

  • a yearly bonus from work
  • your tax refund
  • you get paid back from a loan you made to a family member
  • check from a class-action lawsuit
  • sale of personal items on eBay or Craigslist

You will need to put this money into your retirement account immediately. Don’t just save it up for a year and add it later because the odds are that money will be gone and spent on personal items by then.

3. Continue To Work Past Retirement Age

The best way to have a large retirement nest egg and have enough to retire is to invest early. This gives your money more time to grow. But if you’ve made it this far in this post, it’s probably because you’re late to the game and need to catch up.

Unfortunately, when you’ve delayed saving for retirement, it can be not easy to catch up fully. All of the options are going to be financially painful.

This tip is equally as painful as the others I’ve outlined in this article. If you want to catch up on your retirement savings, you need to work longer.

Working longer delays you from dipping into your nest egg for some years and helps you build it up simultaneously.

Another advantage of delaying retirement is that you can earn a larger monthly check from Social Security. You only get the full amount of Social Security when you reach your full retirement age.

4. Pay Off All Your Debt To Have Enough To Retire

Even though this article is about saving for retirement, debt rears its ugly head again.

If you want to save for retirement, you first need to pay off all of your debt. Saving for retirement while you have debt is the same thing as adding water to a leaky bucket!

Attack that high-interest debt first and get rid of it as fast as you can. Then, and only then, can you start building your nest egg without the weight of debt keeping you down.

One of the reasons I recommend paying down your debt quickly is because debt oftentimes is charged at a high percent, such as the typical credit card interest rate of 10% or 15%. The amount of interest you can make in a retirement account is typically less than that. So it doesn’t make much sense to earn 7% interest in stocks while you’re paying 15% interest to someone else.

5. Get Money From Your House – Wisely

Your house, if you already own it, can help you with your retirement plans – if you do it wisely.

Get a home equity loan

If you’ve already paid off your mortgage, one method of funding your retirement is to get a loan from your house. When you borrow off your equity, you’ll get a lump sum of money upfront and a reasonable monthly payment to make. This amount can give you enough to retire and live comfortably in retirement.

While this sounds like a good solution, realize that you will lose your house if you miss a payment. Therefore, this should only be done as a last resort.

Rent a spare bedroom

Maybe your kids have already moved out, and you’ve got an empty nest. Consider renting a room to generate some extra funds.

Sell your house to a relative and rent-back

If one of your relatives is looking to invest in a property, you can offer your home for sale at a reasonable price. This will give you money upfront and will give them a rent payment every month.

6. Open A Roth IRA

A Roth IRA offers unique advantages compared to a 401k retirement plan, namely, that the interest you earn from your Roth IRA will never be taxed! This is truly a gift that you need to be taking advantage of.

There is a max of $6,000 to contribute annually ($6,500 limit for those over 50).

And because a Roth IRA has smaller limits than a 401k plan ($6,000 vs. $18,000), a Roth IRA should not be your only retirement account as it won’t alone give you enough to retire.

My advice is first to put as much money into your 401k as your company will match. Then, fully fund your Roth IRA with $6,000 yearly. Any extra money after that goes into your 401k account.

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