BOSTON (CBS) – The mother of all birthdays has come and gone and the first of the Boomers are now getting senior discounts when they go to the movies.
Retirement is so close but you have not saved enough and you know unless you win the lottery there will never be a million dollars in your bank account. What are you going to do?
How much will you need to save if you want $1 million in 7 years? A lot! $112,000 a year. Okay so that’s not going to happen. What do you do?
Let’s start with putting money into the retirement plan for the next seven years. Despite what you think it’s not hopeless. A couple may be able to tighten their collective belts and contribute $10,000 a year to their retirement plans. Assuming an 8% return in seven years you could have close to $100,000 in the nest egg. That’s not chicken feed!
Here are things you can do if the extra $100,000 is not enough. You can choose to work longer and continue to contribute to your retirement plan. Start collecting your Social Security benefits at 66 and continue to work. New Social Security rules now allow you to work and collect Social Security benefits without losing any of your future benefits. And those extra years of paying into Social Security will also increase your benefit.
Plan on working part-time in retirement. But the jobs available may not be as rewarding financially as the one you have now.
You can review the family budget and make some changes by lowering your standard of living. Maybe you only do one trip a year or play golf once a week. The dream of never cooking in retirement because you were going to eat out every day gets tucked into the memory bank. Gotta be practical here.
Downsize! You probably no longer need a 4-bedroom, 3-bath house to care for. Consider something smaller, more affordable. Remember, you could always move in with one of your kids if things really become desperate!
It truly is never too late to start saving for your retirement even if you are planning to retire in seven years or less. The reasoning behind that statement is that you are not going to use all of your retirement nest egg the day you retire. You will be drawing upon it over your retirement years and if you have contributed the money to a qualified retirement plan such as a 401(k) or an IRA those dollars are still working for you tax deferred until you begin to withdraw them.