Real Simple How To Retire With Enough Money

Natixis found that, while less than half of those surveyed get professional financial advice about their money for retirement, those who did get advice contribute more to their plans—7.2% of. Planning for retirement can be a topic that causes anxiety for many people, even long before your golden years are on the horizon. While working, you want to make sure you invest enough so that.

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Real Simple How To Retire With Enough Money To Be
Real Simple How To Retire With Enough Money

If you want to retire in 10 years, it might be possible. But it’ll require some work.

Getting your finances in order now can help you meet your goal later. While everyone has a different budget and circumstances, it might be possible to retire comfortably sooner than you think. However, it might take more time than 10 years, depending on your starting point.

Whenever you want to retire — whether at typical retirement age in your 60s, or much earlier — these four suggestions can help you work towards that goal.

1. Cut your living expenses

If you’re able to downsize your living expenses, it could allow you to save more. While this may mean moving from one home to another, it could also be as simple as slashing your spending and revisiting your budget to see where you can cut back.

Early retiree and blogger A Purple Life (who is anonymous online) cut her costs by moving from New York City to Seattle. Retiring just five years after she started saving, the move helped her progress. “I cut my living costs in half just by moving out of Manhattan,” she told Insider.

By cutting her expenses, she was able to retire quickly. Doing something similar to lower your expenses might help your retirement journey, too.

2. Pay off any debt

If it’s possible for you to pay off debt, it will benefit your retirement goals twofold.

You’ll be able to save more money each month with one less responsibility. Freeing up several hundred dollars each month means you’ll have more cash to save and invest.

And, there’s a long-term benefit. Going into retirement without debt can help to keep costs low, and stretch the money you already have saved. The combination can put you years ahead on your retirement journey.

3. Earn more income

Whether you’re thinking about asking for a raise at work or starting a side hustle, earning more means saving more.

High school teacher Brian Weitzel found ways to earn more with a side hustle on his journey to early retirement, Insider’s Tanza Loudenback reports. Starting a side photography business and investing in real estate helped boost his income enough to max out six retirement accounts, and save for early retirement in another investment account.

Earning more could help you boost your income and save more now, and help establish a side hustle you can continue after you’ve left work.

4. Downsize your lifestyle and make a budget

Spending less means saving more, and that could be the key to retiring earlier than you anticipated.

Simply paying attention to your spending can make a big difference. Avoiding lifestyle creep, or spending more when you earn more, can make a significant difference. Additionally, living below your means can help you save more and create a lifestyle now that will be sustainable in retirement later.

Making a budget can be a good place to start, and it will give you an idea of where to cut back. List out all of your spending, and categorize things into essential and non-essential costs. Look at the non-essential spending, and see if you’re able to cut back in any specific area. Investing the difference could help you save more and get closer to your goal.

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Not having enough saved for retirement is a very common fear, and when that's indeed the case, it likely means you won't be able to retire when or how you want.

But if you're behind on your savings goals, all hope is not lost. There are four things you can do in the years leading up to your retirement that can help you catch up and close any gaps.

Assessing your situation

As scary as it may seem, getting to the place you want with your retirement savings will involve taking off the blindfold and honestly evaluating where you are relative to where you should be. This starts by thinking about what retirement will look like for you. How old will you be? What expenses and income sources will you have?

Next, you should look at where you are now. How much do you have saved? How much are you currently saving each month toward your goals? What type of rate of return are you earning? You can then project how much your accounts could grow using your historic average rate of return. For example, if you currently have $15,000 saved, earn 8% on average, and plan on retiring in 25 years, your account would grow to $102,727 (without making any additional contributions).

Create a budget

Once you've done this, you can figure out how well you can meet your retirement needs if you make no changes. Taking 4% or less from your savings every year is a common strategy to avoid running out of money. So if your accounts grow to $100,000 by the time you retire, you can withdraw $4,000 each year. If you determine that your income needs after accounting for your income sources, like Social Security, total $20,000, you will have a shortfall of $16,000 each year. You can help close this gap by creating a strict budget.

An account balance of $500,000 would get you the $20,000 you want to spend annually. This means that you would need an additional $400,000 saved by the time you retire. It may seem like an impossible goal, but if you can save $5,000 every year, it can be done -- assuming you can earn the same 8% rate of return on average over the same period of time.

Video: How to Save for Retirement in Your 20s—Or Even Earlier (Real Simple)

How to Save for Retirement in Your 20s—Or Even Earlier

If you are having a hard time coming up with an extra $5,000 each year, you should start examining your expenses -- making sure that you distinguish between which are needs and which are wants. Finding extra money by cutting out some of your discretionary spending is possible, but eliminating things like your rent or mortgage is probably not feasible. You may also free up extra money that you can redirect to your savings by reducing monthly bills and high-interest debt.

Re-envision what retirement looks like

It's possible that even after doing all this, you still have a shortfall -- but that does not mean you can't retire. One possible solution you can consider is working longer so you have more time to save and take advantage of potential stock market appreciation. If you have 30 years instead of 25, you can grow your accounts to the $500,000 needed with only $2,850 in contributions each year earning an average rate of return of 8%.

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If the thought of working a nine-to-five past a certain age is out of the question, you can think about working part-time -- just enough to cover the gap in your income. So if you can only grow your accounts to $300,000, you could generate $12,000 in income with a 4% withdrawal rate and earn the last $8,000 from part-time work.

You can also work toward reducing your expenses even more. For example, if your monthly housing costs are expensive, you can potentially downsize or consider moving to a city with a lower cost of living. Or if you have a high travel budget in retirement annually, cutting it in half can free up money for essential bills and other spending.

Shut out the noise

How Much Money To Retire

Everyone's situation is different and using blanket numbers of what you should have for retirement is not the best approach. You could be someone who didn't save a lot when you were younger but are making up for it now by contributing large sums to both retirement and non-retirement accounts. In this case, maybe you don't have a lot saved as of this moment, but you're on track to reach your goals within 10 years.

Real Simple How To Retire With Enough Money To Be

You could also be someone who has another guaranteed income source like a pension, which would make your retirement savings needs lower than those of someone who doesn't have one. Or maybe you have or are working toward having very low expenses and know you won't need a lot saved. This is why rules of thumb are suggestions rather than hard rules and should be taken with a grain of salt.

You may not have enough saved for your retirement, but that doesn't mean you can't get there eventually. Taking these steps now will get you on track and one step closer to reaching your goals.