Are You Behind on Planning for Retirement? How to Get Back on Track
Another year is upon us, and every year the time seems to go by more quickly. If you’re at retirement age or nearing it, you may be starting to feel that your time for making preparations is running out. Maybe you haven’t been saving as much as you would have liked or haven’t started saving yet at all. The good news is that although you may be behind on saving for retirement, it’s never too late to start. Here are some top tips from the professionals at Phelps LaClair to help you get back on track.
How Much Should I Be Saving for Retirement?
If you’re behind on saving for retirement, you’re certainly not alone. A recent survey from Bankrate found that about 52% of American workers are behind on retirement savings.
To determine how much money you should be saving for retirement, we suggest looking at your retirement savings by age. According to a survey conducted by the Transamerica Center for Retirement Studies, the average retirement savings for each age group is:
- $16,000 for workers in their 20s
- $45,000 for workers in their 30s
- $63,000 for workers in their 40s
- $117,000 for workers in their 50s
- $172,000+ for workers in the 60s and older
How to Catch Up on Retirement Savings
If you have not yet started saving for retirement or your savings are not where you would like them to be, there are ways to fix that problem. Your options may include catch-up contributions, maxing out your 401(k) and IRA accounts, and coming up with a savings plan.
Take Advantage of Catch-Up Contributions
If you are 50 or older, the IRS allows you to make catch-up contributions. You can make these contributions to a 401(k), 403(b) Tax-Sheltered Annuity Plan, SARSEP, and governmental 457(b) Deferred Compensation Plan. You can also make catch-up contributions to your Roth IRA up to $1,000 from 2015 to 2022.
Max Fund Your 401(k)
As we just mentioned, the IRS allows catch-up contributions for those 50 and over of $6,500 max per year for 2022. If you’re younger than 50, the max contribution is $20,500 in 2022. And if your employer matches your annual contributions, that number is in addition to the max you can put in.
Use Your IRA Accounts
Your IRA accounts can be of help when you’re behind on retirement savings. You can contribute $6,000 in 2022—or $7,000 if you are 50 or older—to either a traditional or Roth IRA. These savings are in addition to a 401(k), so you can have both a 401(k) and an IRA to help speed up your retirement savings process.
Create a Savings Plan
Outside of your 401(k) and IRAs, create and follow a savings plan to help minimize debt, cut down on extraneous expenses, and start building your nest egg. Take a hard look at your expenses—everything from your current mortgage or rent down to how many times you’re eating out a week and how many television subscription services you really need. Come up with a plan for trimming expenses and eliminating any high-interest debt. And consider any other options you may have for bringing in extra cash each month, like adding a “side hustle” to your work life or paying off your home.
Estate Planning Attorney in Phoenix, AZ
No matter how close you are to stopping working, there is always time to start saving for retirement. With a bit of know-how and the proper guidance, you can quickly put a plan in action that will have you amassing what you need to live comfortably throughout your golden years. If you need help catching up on your retirement savings, contact Phelps LaClair today. Our professional staff can help guide you through the process and explain the role retirement savings plays in your estate plan.
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