Importance of retirement savings
A rule of thumb – you’ll need an amount at least 8-10 times your current salary in retirement savings. For example, that’s $400,000-$500,000+ in retirement savings if you earn $50,000 today.
While many people nearing retirement may have a savings shortfall, it’s not too late to try to close the gap. Remember that you will need to live on these savings for 20 to 30 years in retirement!
As you near retirement...
If you are over 50 years old, you can make catch-up contributions. With catch-up contributions, you can save an additional $6,000 over the regular government limit ($18,000 in 2017).
If you are behind on your savings goals, you may also consider delaying retirement. This extends the number of years you can save and benefit from tax-advantaged retirement plans, while reducing the financial burden of your retirement years.
Delaying retirement can also increase your social security benefit
You can start taking social security benefits at age 62. The longer you wait, however, the more you will get paid.
For example, at age 62 you will get 75% of the monthly Social Security benefit. That's because at age 62, you will be getting benefits for an additional four years compared to someone who starts taking benefits at age 66. If you start taking money from social security at age 66, you will get 100%, or the maximum benefit. Check out the Social Security Administration's page on this for more information.
Delaying retirement, maximizing catch up contributions, and waiting until you're 66 to take social security benefits can help you get back on track for retirement.
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