Work longer.

It’s not easy to hear, but that’s probably the single thing you can do at a later age in your working years which will have the most impact on your retirement.

Let’s suppose you’re 64, and you had always planned to retire at 67. If you retire at 67, perhaps your “full” Social Security is $1,800 per month. But you expect to have monthly expenses of $2,200 per month during retirement and you haven’t saved enough money on your own to make up the difference.

Retiring just three years later makes a difference in a couple of ways.

More Years to Save

First, if you’re still working then you’re not yet withdrawing money from whatever you do have saved for retirement. That means your money has three additional years to earn interest and grow to a larger amount. And your employer will still be providing you with matching funds for your 401(k) contributions. All of that means more income for you during retirement.

If you’re older than 50, the government allows you to contribute up to $24,500 per year to your 401(k) plan. Younger workers have an annual limit of $18,500.

Let’s say you contribute the maximum amount while you’re working those three additional years. If you earn just 5 percent on your contributions during that time, you’ll end up with $77,211 more in your 401(k) savings. If you earn only 3.5% interest after you begin retirement (you need to move to more conservative investments during retirement), those three extra years of contributions will earn you an additional $225 per month in income, along with providing you that extra $77,211 in principal from which you can withdraw if needed.

More Social Security

Second, if you wait until you’re 70 and take “late” retirement from Social Security, they will increase your monthly benefits.

If you were born in 1943 or later, Social Security increases your benefit by 8 percent for each year you delay receiving it – up until age 70. So, if your “full” retirement age would have been at age 67, with a benefit of $1,800 per month, then your “late” retirement at 70 becomes $1,800 times 1.24 ($2,232) by waiting those three extra years. That’s an increase of $432 per month during your retirement, and it might make a big difference in whether or not you have enough money for those years.

Most people entering retirement now can expect around 20 years of retirement. That varies, of course, but let’s use that as an average. By delaying until age 70 to begin receiving Social Security benefits, you have an extra 20 years times 12 months times $432/month = $103,680.

Enough Money

Sadly, we can’t get a “do over,” and turn back the clock to our youth to begin saving more. What we can do is wait a bit longer to retire and let our money work for us during those few extra years.

Financial planners like James Holloway, Sr. and the rest of the team at Texas Financial and Retirement devote themselves to helping people make the most of their retirement. We begin by analyzing where a person is in their working years and how much they’ve accumulated for retirement. Then we learn what that person’s goals are for their retirement years – what it is that particular individual and family want. Only then can we make suggestions on how best to reach the achievable goals. We can’t make everyone become a multi-millionaire, but we work to help people maximize their income during retirement and minimize the tax burden on their heirs.

Contact us today at bestclients@texasfinancialandretirement.com or (903) 534-5477 to apply for a free initial consultation. We’ll learn a bit about you and tell you if and how we can help you realize your financial dreams for your retirement years. We’re here to help.