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Help, I haven’t saved enough for retirement!

April 22, 2024 4 mins

In 2022, 54% of U.S. households reported having savings in retirement accounts such as individual retirement accounts (IRAs), Keogh accounts, and employer-sponsored plans, such as 401(k) and 403(b) savings plans.1 Just 40% of Americans believe their retirement savings are on track.2

If you’re getting close to retirement (or even if you’re far away from it) and you’re worried about your retirement savings, it’s never too late to start putting money aside for the future. Learn how to estimate how long your retirement savings will last and how to maximize your nest egg.

How long will my retirement savings last?

While Social Security is intended to support retirees, it’s meant to replace only 40% of the average salary after retirement. You’ll also need to rely on your own savings to maintain your current lifestyle. While more than half of the American workforce contributes to a 401(k)-type plan or an IRA, it can be hard to estimate how much you need to retire.

While the “retirement equation” isn’t precise — experts suggest you’ll need between 70% and 80% of your pre-retirement income — here are some factors to consider:

  1. Your expenses. You won’t be contributing to a retirement plan or paying payroll taxes for Social Security anymore, but you will need to think about medical expenses, including the cost of your Medicare plan.
  2. Your life expectancy. The average life expectancy for an American male is nearly 84, while the average woman’s is 86. In general, if you’re healthy and have a family history of longevity, it’s smart to plan for at least 25 years of retirement.
  3. Your savings. Any money you invest — and its rates of return — play a big part in your retirement portfolio. If you use a retirement calculator, use caution if you adjust the rate of return. You don’t want to overestimate your skill or luck.
  4. Your goals. Maybe you expect to travel your first years of retirement or buy a home closer to your grandkids. If you haven’t incorporated those plans into your retirement plan, they might not be realistic. In fact, if you haven’t saved enough for retirement, you may need to consider downsizing and finding ways to scale back on your expenses.
Tips & Facts

Good to know

If you’re getting close to retirement age and you’re worried about your retirement savings, it’s never too late to start putting money aside for the future.

Maximize IRA contributions

While you see greater returns if you start saving for retirement sooner, it’s never too late to start saving. If you’re over the age of 50, you can invest $7,000 in your IRA each year. Depending on how you invest and the rate of growth on those investments, you’ll see your savings add up.

Here’s an example: if you’re 60 and start saving $7,000 per year until you stop working at age 70, you’ll have $70,000 in savings. Depending on your investments and their rate of growth, those savings could grow even more. Using an annual growth rate of 3% on your investment (compounded monthly), you could have $80,401 in your account when you retire. With a 6% rate of return (also compounded monthly), you’d have $92,996 in your savings.

Tax incentives to catch up on retirement savings

You might also qualify for certain tax incentives3 to help you save for retirement.

Saver’s Credit

The Saver’s Credit is a tax credit for eligible taxpayers who save in a qualified retirement account, including a 401(k), 403(b), or IRA. Adults age 18 or older are eligible if they are not claimed as a dependent and not a student. The amount of the credit varies — either 50%, 20%, or 10% of your contribution, depending on your adjusted gross income.

Catch-Up Contributions

Meanwhile, the Internal Revenue Service allows workers who are 50 or older to make annual catch-up contributions to their qualified retirement plans: an additional $7,500 annually for your qualified 401(k) or $1,000 annually for a qualified IRA.

Consider part-time work

You also might consider working part-time before you retire or as part of a nontraditional retirement. Not only will it bolster your income — and ideally your savings — but you’ll get the added benefit of social interaction, too.

You can collect Social Security retirement benefits and work at the same time, but there may be some implications based on your age and your earnings. If you haven’t reached the full retirement age, your benefits will be reduced. Meanwhile, you will pay federal income taxes on your benefits if your combined income — 50% of your benefit amount plus any other earned income — is greater than $25,000 per year if you file as an individual, or $32,000 annually if you file jointly.

Consult a financial advisor

Understanding your retirement needs can be overwhelming, but it’s never too late to start saving — and help is out there. Financial advisors can work with you to create a retirement plan that considers your age and your needs, and help you understand what tax incentives may be available to you.

Patelco offers its members a free consultation with a CFS Financial Advisor4 to help put you on the right track toward accomplishing your retirement goals. Schedule an appointment now to start your retirement plan!

1 Board of Governors of the Federal Reserve System, “Changes in U.S. Family Finances from 2019 to 2022 Evidence from the Survey of Consumer Finances,” published October 2023

2 Board of Governors of the Federal Reserve System, “Report on the Economic Well-Being of U.S. Households in 2021 – May 2022,” accessed December 26, 2023

3 CFS and Patelco do not provide tax or legal advice. For such guidance, please consult a tax and/or legal advisor.

4 Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Patelco Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.


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