Americans nearing retirement are receiving a reality check on how much they may actually need to live comfortably. A recent study by Schroders reveals that many have accumulated less than the projected $1.2 million required for a financially secure retirement. The study’s findings are causing a “pre-retirement panic” among many individuals over the state of their savings.
With expectations often not matching reality, the anxiety surrounding financial preparedness for retirement is palpable. A senior columnist has weighed in on this issue, explaining that the gap between expectations and actual savings can be attributed to various factors such as inadequate savings plans, rising living costs, and longer life expectancies. It’s natural to be concerned about your future finances, especially when it comes to retirement.
Recent Gallup data shows that only 45% of non-retirees expect to have enough money to cover their senior living costs without worry. This means that more than half fear they’ll fall short. However, that same set of data paints a generally positive picture from the perspective of actual retirees: 79% of retirees say they have enough money to live comfortably.
Some tips for boosting your senior income if you’re nearing retirement and worried that your savings won’t be sufficient include staying invested, delaying Social Security, and embracing the gig economy.
Pre-retirement financial anxiety explained
Maintaining a portion of your portfolio in stocks is important for continued growth.
Dividend stocks, in particular, could provide a steady source of supplemental retirement income. If you delay your Social Security claim past your full retirement age, you can boost your monthly benefit by 8% for each year you delay, up until you turn 70. For example, by delaying your Social Security claim from age 67 to 70, you can increase your monthly benefit by 24%.
As a near-retiree, picking up a side gig can provide extra money that you can save for the future. Moreover, if you get used to working a side gig before retirement, you may be well-positioned to continue that work during retirement. This not only gives you a productive way to spend your time but also provides additional income.
It’s encouraging to see that today’s retirees seem to be managing well financially. However, it’s important to note that roughly 20% of retirees report that they don’t have enough income to cover their expenses comfortably. Therefore, it pays to ramp up your savings in the years leading up to retirement.
Whether by spending carefully, earning extra from a side job, or both, and making strategic investment and Social Security claims, you can boost your overall senior income.
