If you're in your 50s and beginning to worry about your financial security in retirement, you're not alone. One of the biggest concerns ahead of retirement is that retirement savings will fall short of retirement expenses. While everyone's situation is different, preparing properly for retirement can be key to overcoming your retirement jitters. Here are three things you can begin doing now to make sure that your golden years live up to your expectations.

Capitalizing on catch-ups

If you're behind on saving for retirement, catch-up contributions are the closest thing you get to a do-over. 

A businessman in shirt and tie sits behind his desk in an office.

Image source: Getty Images.

Recognizing that most Americans retirement savings are small, and that Social Security income is unlikely to cover all of the average retirees expenses, Congress created catch-up contributions so that older Americans can contribute more money to retirement accounts.

Specifically, workers age 50 and up can contribute an extra $1,000 per year to either a traditional IRA or a Roth IRA, and they can contribute up to $6,000 more per year to an employer-sponsored 401(k) or 403(b) plan. In 2017, catch-up contributions allow those who qualify for them to contribute a total of $6,500 to a Roth IRA or traditional IRA, or a combination of the two, and $24,000 to a 401(k) or 403(b) plan. 

That extra money can put you back on track to hitting your retirement savings target quicker than you may realize. Contributing an additional $6,000 per year between age 50 to age 65 will net you an additional $139,655.82 for retirement, assuming a 6% annual return. Contributing the extra $1,000 to a traditional IRA or Roth IRA will get you another $23,275.04 too.

A burlap sack overflowing with money

Image source: Getty Images.

Embracing escalators

It can be tough to find the money in your budget to contribute to employer-sponsored 401(k) plans and 403(b) plans, but there's an easy way to force yourself to do it: auto-escalation. Auto-escalation options are increasingly being included in employer-sponsored retirement plans, and they allow you to effortlessly increase the amount you set aside in retirement accounts every year.

Generally, the default contribution rate of workers participating in a 401(k) or 403(b) plan is 3%, a rate that isn't likely to produce an envy-inspiring retirement savings balance. 

Instead, you should be aiming for a contribution rate that's between 10% to 15%, which is more likely to help you achieve the retirement lifestyle you want. Getting from 3% to 10%, or more, however, can seem daunting; especially if you're in your 50s and you haven't been steadily increasing your contribution rate in the past.

Fortunately, you don't have to jump up to a 10% plus contribution rate all at once. Instead, an auto-escalator can be used to increase your annual contribution by 1% (or ideally more) per year. This strategy can significantly close the gap between your current savings and your savings goal.

For example, a 50-year old earning $50,000 annually and contributing 5% per year to a retirement plan would end up with $58,188.99 at age 65, if their average annual investment returns were 6%. However, if that same 50-year old increased their contribution rate by just 1% per year they'd end up with $134,786. Pretty good, huh? Even better, that total doesn't include the potential positive impact of annual pay raises on auto-escalation. If you assume a 2% annual pay increase between age 50 and age 65, then auto-escalation produces a retirement portfolio worth $157,117. 

Pumping up payments

The size of your retirement account isn't the only thing that will help you achieve financial security in retirement. Eliminating as many expenses as possible will help too.

According to the Bureau of Labor Statistics, the average 65-plus household spent $44,664 in 2015, and the two biggest expenses were housing and transportation, which averaged $15,529 and $6,846, respectively. Many retirees have paid off their mortgage by retirement, but that's not the case for a growing proportion of retirees, more than one-third of whom are heading into their golden years owing money on their home.

Now's the time to commit to not being one of them.

The quickest, and perhaps, easiest way, to get out from underneath your mortgage is to add one extra payment to your mortgage per year. You can make the extra payment as small increases to your monthly payments, or in a lump sum at year's end. Either way, driving down the amount of principal owed on your home will save you interest, and lop years off the length of your mortgage. For instance, a 50-year old with 20 years remaining on a 30-year mortgage who still owes $200,000 can shave more than 2.5 years off their mortgage simply by paying an extra $100 per month. Increase the extra payment to $150 per month, and you're mortgage will be paid off 3.9 years sooner. 

Since someone who turns 50 years old this year can begin receiving 100% of their Social Security at age 67, this strategy can make them mortgage-free by the time Social Security checks begin rolling in. Using a similar accelerated-payment approach for credit card balances and auto loan balances can remove those expenses ahead of retirement too, putting you in a perfect position for a stress-free retirement.

 

The Motley Fool has a disclosure policy.