Retirement planning has taken a backseat for many Americans lately. Inflation, combined with exploding rates have taken a toll on savings and left little for retirement.
And the numbers speak for themselves: According to a recent Prudential Financial, 2024 Pulse of the American Retiree Survey, 55-year-olds have median retirement savings of less than $50,000, which is “significantly short of the recommended goal of having eight times one’s annual income saved by this age.”
Yet, despite this huge savings shortfall and with just a decade until retirement, some experts said that this might also represent a 10-year opportunity for this cohort.
“Although America’s 55-year-olds reported feeling less financially secure than 65- and 75-year-olds, there’s still a great opportunity to turn things around,” said Dylan Tyson, president, retirement strategies at Prudential. “It all starts with sitting down to make a full retirement plan, to ensure they have enough protected lifetime income to cover basic essential expenses. We need to ensure people are prepared to not only live longer, but live better, to help protect their life’s work.“
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With Just a Decade until Retirement, How Can This Cohort “Right the Ship”?
The Prudential survey also identifies the “rise of the silver squatters.” That is, the older adults who will need financial help from their children.
In fact, 24% of 55-year-olds expect to need financial support from family or friends in retirement, while one in five expects to need to move back in with their kids.
“With 10 years or so left to take control of their retirement planning, the opportunity is there and the time is now to have honest conversations with their families about their financial needs and expectations,” said Tyson.
According to Tyson, with the right planning and strategy to protect their life’s work, these individuals can turn a challenge into an opportunity.
“By understanding the role that protected lifetime income strategies like Social Security and annuities can play, Americans can take control of their financial futures to ensure they are well-prepared to live not only longer, but better,” he said.
Tyson also noted that the first steps include getting a clearer picture of what essential expenses they’ll have in retirement, then assessing all sources of retirement savings and income at their disposal.
“And, if they need some advice, connect with a financial professional to build a full retirement plan,” he said.
Consumer finance expert Kyle Enright, president of Achieve Lending also noted that while upping retirement savings dramatically at age 55 isn’t optimal, it’s doable and necessary – and every bit matters.
“Don’t give up entirely just because you don’t already have a million dollars saved,” said Enright.
He recommended several steps, including: evaluating all assets and debts, then getting a simple budget in place, evaluating life insurance needs, and “really working at getting out of debt.”
Time to Get Aggressive
If you’re in your 50s and not prepared for retirement, it’s time to adopt some new strategies and money habits that will take you out of your comfort zone, according to Steve Sexton, CEO of Sexton Advisory Group.
And if you haven’t already mastered the basics, the time is now, he added.
“Prudent financial habits like budgeting and living below your means and implementing a plan to pay down your debts ahead of retirement are critical,” said Sexton.
You may also consider tactics such as downsizing, taking on a second job or gig work to boost your income, or possibly selling an investment property to pad your nest egg, he added.
Additional steps could include moving to a lower-cost state so that your retirement savings last longer in your golden years, said Sexton.
“For example, one of my clients left Idaho to retire in California. Everything from property taxes, water, electricity, gas, insurance to cable are far more expensive in California than Idaho. In fact, his cost of living in California was 38% more than in Idaho. They moved back to Idaho two years later, fearing they would run out of money in retirement,” he said.
Sexton said that if you’re lucky enough to have a 401(k), it is critical to contribute the maximum amount every year until you retire, especially if your employer offers 401(k) matching.
Finally, don’t overlook estate planning.
“Most people neglect this critical part of retirement planning because it’s simply uncomfortable to think about,” he said. “Conserve your legacy and alleviate this burden from your loved ones by ensuring your insurance contracts and payments are up-to-date and paid – this includes health insurance, life insurance, and long-term care insurance. If you haven’t factored these into your budget for retirement preparation, do so as soon as you can.”
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This article originally appeared on GOBankingRates.com: Average Retirement Savings for 55-Year-Olds Only $50K – Investors Say There’s Still Time to Catch Up
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