Our brains can only process so much negative news before it really starts to take a toll. Given the events of the past year -- the coronavirus outbreak, rampant unemployment, and general tensions running high -- it's easy to land in a very dark place when, in reality, things may not be all that bad.
Such may be the case when it comes to your retirement. Sure, you may be midway through your career without so much as a dollar in savings. Or maybe you're worried that near-term stock market volatility will destroy your chances of retiring on time. Throw in the fact that there are so many negative retirement articles out there, and it's clear why you'd feel anxious about the future.
But here's some good news -- your retirement isn't doomed off the bat. It's true that Social Security may have to cut benefits in the future. It's true that a lot of people haven't saved as much for their senior years as they probably should have. But if you do the following things, you'll be in a great position to salvage your retirement -- and set yourself up to enjoy it.
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1. Boost your savings rate immediately
Maybe you're in your late 40s or 50s with only a few thousand dollars socked away for your senior years. Don't panic. As long as you still have a steady paycheck, you have an opportunity to build savings. Look at your expenses closely and find some to cut back on, and then stash the difference in an IRA or 401(k) plan. Or, pick up some work on the side if you can't slash your living costs and use your extra earnings to build savings.
If you're 58 years old with $4,000 set aside for retirement, you may not end your career with $1 million saved -- but remember, you also don't have to. There's no single savings figure that guarantees happiness later in life. Rather than lamenting the fact that you're behind, work on catching up or simply doing your best.
2. Invest wisely
The money you stash in your IRA or 401(k) could grow into a sizable sum if you invest it efficiently. Say you're 48 years old with no savings, but over the next 20 years, you pledge to sock away $250 a month in your IRA. In the absence of any investment growth whatsoever, you'll accumulate $60,000. But if you go heavy on stocks so that your IRA generates an average annual 7% return, which is a few percentage points below the stock market's average, you'll end up with more than double that amount -- nearly $123,000.
3. Work longer
Maybe retiring in your early 60s won't work out for you because you'll need to put in more time in the labor force to boost your savings. Don't assume that's a bad thing. Americans are living longer these days. If you leave your job five years later than planned, you may still be in line for quite a lengthy retirement. Besides, working longer means you'll stretch whatever existing savings you have. It may be a good thing for your mental and physical health. Some studies, in fact, have linked working longer to living a longer life.
4. Reset some expectations
If you haven't saved as much money for retirement as you planned to, you may not get to spend your senior years traveling extensively or living in a major city where housing is expensive. That's not necessarily a terrible thing. If it's too late to make a meaningful dent in your savings (say, you're already well into your 60s and can only delay retirement so long), embrace the idea of working with what you have. You may be surprised at how much you enjoy a simpler retirement -- one where you spend your time volunteering, exploring local attractions, and taking classes.
It's easy to take a doom-and-gloom approach to retirement, especially when life itself is far from normal. But during these unsettling times, it's more important than ever to maintain a positive attitude. Contrary to what you may read, there's no need to write off the idea of a happy retirement, even if your savings aren't where they should be. If you take these key steps, you may find that your senior years are more fulfilling than you ever could have imagined.
