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Worried You Won’t Have Enough Saved for Retirement? 6 Ways to Fill the Gap

By Stephen Sellner | Citizens Bank Staff

Think you won’t have enough saved for retirement? If so, you’re not alone: 46% of U.S. non-retirees fear they won’t have enough money saved to retire comfortably.

Panic starts to set in. You look at the trajectory of your retirement plan and notice a gap between that and how much you think you’ll need to retire.

Now what?

First, the simple solutions: Working in retirement — even if only part-time — means you can still draw from your retirement funds, while maintaining an income. Plus, there’s a possibility of receiving health insurance from your employer, which always helps. Or you could adjust your retirement expectations so you won’t need as much money to retire.

However, don’t waive the white flag just yet. Your window for accumulating retirement assets is still ajar (and it doesn’t close when you retire). Consider trying the ideas below to supplement your nest egg:

1. Maxing out your 401k

In 2019, the annual contribution limit for 401(k)s is $19,000 for those younger than 50. The limit increases to $25,000 for people ages 50 and above. How much have you contributed this year? Can you do more?

2019 Annual Contribution Limit for 401(k)s

Age range

Contribution Limit

35-40

$19,000

41-45

$19,000

46-49

$19,000

50+

$25,000

Maxing out your 401(k) contributions could force you to cut back in other areas. However, if living out your dream retirement is a top priority, then these sacrifices should be easy to rationalize.

2. Open an IRA

An Individual Retirement Account (IRA) is another avenue for supplementing your retirement assets. There are two main types: Traditional and Roth.

Traditional IRAs allow you to contribute pre-tax money to the account, and any earnings are tax-deferred. Your money is taxed when you withdraw your assets in retirement.

Roth IRAs are the opposite. Your contributions are made after taxes, so earnings and withdrawals are tax-free.

No matter the type, IRAs have a $6,000 annual contribution limit for 2019 for those younger than 50. The limit jumps to $7,000 for those 50 and older. However, Roth IRA contribution limits may be reduced depending on your income.

3. Invest In ETFs or mutual funds?

If you have to look beyond your current retirement accounts to fill the gap, then exchange-traded funds (ETFs) a good place to start. These pooled investment vehicles consist of securities bundled together within a certain index.

You can buy shares in ETFs directly, or you could open a digital investing account. These low-cost, automated investing platforms — also known as robo-advisors — generally allocate funds across multiple ETFs. They allow investors to passively manage their funds, which is appealing if you want to invest but don’t trust yourself to make trades and pick the right funds. All you do is answer a series of questions so the platform knows your age, risk tolerance, and goals. Then, the platform builds a recommended personalized portfolio.

Mutual funds can also be useful, but they involve active management by a portfolio manager in an attempt to outperform the market. This leads to higher management fees than ETFs.

4. Go with a brokerage account

Maybe you want to have more ownership in your investments. If so, look into a brokerage account. You could manage the account on your own or with the help of a financial advisor.

Brokerage accounts involve buying and selling securities — stocks, bonds, and more — facilitated by a stock broker. For their services, a broker is paid on commission.

5. Rent out a second home

Do you own a vacation home? If so, renting it out could be a valuable source of income. Those funds could be allocated to any of the accounts mentioned above.

6. Delay Social Security

If you’re above the age of 50, this is particularly relevant to you. Develop a plan for when you’ll begin receiving Social Security benefits.

Generally speaking, the longer you wait to receive Social Security benefits, the larger your benefit will be each month. You can begin taking benefits at age 62, but, if you do, you won’t receive full monthly benefits. You have to delay receiving Social Security until your “full retirement age” to receive your full monthly benefit. The retirement age is 67 on the dot for those born 1960 and later.

What does this mean for you? If you’re worried about having enough saved for retirement, wait until age 67 to start receiving Social Security so you’ll receive your full monthly benefit throughout retirement.

If you can wait beyond 67, even better. Your monthly benefit will increase every year you wait, up until you turn 70. Then your monthly benefit remains the same, so there’s no benefit to waiting beyond age 70 to begin receiving benefits.

What to remember

Do you have a retirement gap? If so, you’ve got two choices: contribute more or downsize your dream retirement into something you can afford.

If you chose “contribute more,” then you’ll need to evaluate your current contributions, see what more can be done, pick a vehicle that’ll position you for success, and then set your plan in motion.

More information

Click here to learn how a digital investing account could help you bridge your retirement gap and keep your retirement goals on track.

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