Retirement confidence surveys remind me of Chicken Little. You remember her. She gathered a long line of followers who believed her warning that the sky is falling. Ultimately, she and her followers were so distracted by their fears that the fox led them to his den and something far worse than something falling out of the sky happened to them.
Today's survey from Employee Benefit Research Institute (EBRI) points out that a record number of people -- 27% -- think they won't have enough money to live comfortably in retirement. If you do the math, that leaves 73% of people who are at least modestly confident that they will be able to retire and avoid eating Kibbles & Bits.If you are among the one-quarter or so of people who are very concerned that you won't be able to retire and live comfortably, here are six steps to take right now while you still have time to do something about your situation.
1. Start saving
If you are already saving, save more. Earmark at least 10% of your paycheck for a 401(k) or if you don't have one available to you, open an IRA -- preferably a Roth IRA so that when you start to take money out of the account, the taxes will have already been paid.
2. Understand your Social Security Options
Each year, a month or two before their birthday, Social Security sends everybody who works or has worked under Social Security a statement that estimates how much money they are entitled to when they retire at 62, 65 or 70. If you do a little math, you'll see that if you wait until you're 70, you'll get more than double what you will get at age 62. There are other things to consider as well. For instance, you can claim Social Security based on your ex-spouses account -- as long as you haven't remarried. With this statement in hand, plug in your information here and see how you can maximize what you're entitled to.
3. Estimate your Total Resources
Do you have a small pension from a former employer? Are you likely to inherit when your parents pass on? Do you have a life insurance policy that you could turn into a life settlement?
4. Pay off the House
If you have a mortgage, aim to get rid of it before you retire. The easiest way is to pay the mortgage every two weeks instead of once a month. Generally, you don't have to make any commitments, just do it. Steadily expediting payments like this will pay off a 30-year mortgage in about 20 years and save thousands of dollars.
5. Get a Second Job
You say you can't afford to save and pay off the house. Figure out how to earn some extra money and devote it to increasing your retirement nest egg. It doesn't have to be a boring job. Start your own small business doing something you enjoy. Selling used golf balls can be profitable.
6. Make a Plan
You don't have to opt for a conventional retirement. Some people have found they can live well on very little by thinking creatively about where they live and how they manage their money. An RV parked by the lake could be a very low-cost and pleasant lifestyle.
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