KEY POINTS
- Having a retirement fund of less than $100,000 is not considered a substantial amount of money.
- You might have additional sources of income available, such as Social Security benefits and money earned from working part-time.
- Another possibility is to convert the equity in your home into a source of funds that you can access.
The Federal Reserve reports that the typical retirement savings amount for Americans aged 65 to 74 is $200,000. While this may not seem like a substantial sum, having less than $100,000 saved up as you approach retirement could pose a challenge. IRA If you have a 401(k) account, you might be feeling a bit anxious.
Having a retirement savings of less than $100,000 is not ideal. It is a challenging situation, but it does not necessarily mean that all hope is lost. Let’s explore why the outlook may not be as dire as it appears.
You are still eligible for Social Security.
If you have been employed throughout your life and contributed to Social Security, you are eligible to receive monthly benefits when you turn 62 years old. While you can choose not to enroll at that time and receive a larger benefit by waiting, 62 is the earliest age at which you can start receiving benefits.
Today, the typical retired individual receiving Social Security benefits receives a monthly payment of $1,918, equivalent to an annual income of approximately $23,000. If you had a higher income throughout your working years compared to the average worker, your monthly benefit amount should be greater. Additionally, delaying your Social Security claims until you reach the age of 70 can further increase your benefit amount.
Moreover, although there is discussion about Social Security potentially reducing benefits, policymakers have consistently prevented such action. It should be noted that the program has encountered financial difficulties in the past as well. Therefore, it is advisable not to presume that you will not receive the monthly benefit you deserve according to your earnings record.
You have the option to work part-time in order to increase your earnings.
It is possible to transition from a full-time job to part-time work after retirement without any issues from the Social Security Administration. You have the flexibility to receive benefits while also generating income from employment, but it’s important to be aware of potential income restrictions based on your age.
Regardless, it is wise to enhance your retirement income by taking on part-time work not only for the additional income but also for the enjoyment it brings.
One challenging aspect of retirement is the potential for boredom. Shifting from a busy full-time work routine to having a lot of free time can be difficult. Engaging in part-time work can offer both financial benefits and personal fulfillment, particularly if you find a role that you find enjoyable.
It is possible to build a bigger savings by reducing your expenses.
Not all retirees own a home with equity. However, if you are retiring with a fully paid-off home or one that has equity, mortgage If you are nearing the end of your payments, you might be able to leverage the equity in your assets to add to your savings.
According to the National Council on Aging, the average American who is 65 years old or older possesses around $250,000 in home equity. For instance, if you have a mortgage-free house valued at $400,000 and decide to sell it to buy a $300,000 home, you would have $100,000 in cash available. This essentially results in your nest egg increasing twofold.
It is recommended to have over $100,000 saved up for retirement if possible. However, if you haven’t reached that goal, don’t despair about having a poor retirement ahead. By being conscious of your expenses and making smart decisions, you can increase your earnings and make your savings last longer.
