A new study conducted by Financial Finesse, a financial education company, reports that there is a growing problem among all generations that may someday keep many Americans from being able to head into retirement with a financial “safety net”.
The study found, for example, that more than 50% of employees between the ages of 55 and 64 have not even taken the time to run an estimate on their retirement plans. This number was based on the study group of 20,575 responses that were given to Financial Finesse.
One of the best ways to calculate the dollar amount that a person will need to be able to “survive” during retirement is a Plan Estimate. If you haven’t done that yet, and you’re approaching retirement sometime in the next few years, now is the time to do it. While you’re crunching the numbers, there are 2 things that you can do, no matter what your age happens to be, that will help you beef up your 401(k) retirement plan.
Downgrading Your Home
The first is reducing your housing costs and one of the best ways to do that is to sell your existing, larger home and head to a smaller home, one that’s possibly even located in another state where taxes are “better”.
For example, if you live in a three-bedroom ranch home in New Jersey that’s worth $1 million and you pack up and move to Charleston, South Carolina and a two-bedroom ranch there, your savings could be significant and your lifestyle will probably increase as well, but definitely won’t go down.
In the above hypothetical move from New Jersey to South Carolina, a prospective retiree would be able to add $500,000 dollars to his or her retirement nest egg, an amount capable of upgrading a seemingly hopeless retirement projection into a comfortable one.
Moving to a new state is not always practical, obviously, and if it’s not possible for you another option could be to sell your existing home and move into a much smaller home or even a moderately priced apartment. Doing this will allow you to still get the benefits of adding a dollar balance to your retirement account while also greatly reducing the homeownership costs that you have going forward.
Seeking Out Alternative Investments
While every investment comes with a risk, diversifying is the best way to protect yourself. The fact is that even big endowments with tens of billions of dollars in assets had their money with alternative investments. For real estate investment trusts to master limited partnership, what you are looking for is steady and consistent dividends.
While there are a huge amount of investment options available that would be qualified as “alternative”, they do exist. The typical 401(k) plan, for example, offers approximately 12 alternative investment options according to the Financial Industry Regulatory Authority.
If you’re worried that you don’t have enough to retire comfortably, or you want to make sure that you do, please let us know by dropping us a note, sending us an email or leaving a comment. We’ll be sure to get back to you ASAP with information, advice and tips that you can use to do just that.