Saving for retirement can be incredibly challenging, and the pandemic has only made it harder. Millions of Americans have lost their jobs or experienced financial setbacks, which have forced many workers to tap their retirement savings or stop saving altogether.
As a result, more people than ever believe retirement is out of reach. In fact, 44% of Americans (a record high) don't think they'll be able to retire at all, according to a recent survey from retirement planning site SimplyWise.
But even if you're falling behind on your savings, you may be able to catch up. With these three steps, you can jump-start your savings and get your retirement plans back on track.
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1. Set a savings goal
Before you can create a plan to save more for retirement, you'll need to set a goal. It's important to come up with a relatively accurate target, too. It's easy to focus on simple, round numbers like $500,000 or $1 million, but those numbers may be too high or low depending on your situation.
Rather than simply guessing at your savings goal, use a retirement calculator for a more accurate estimate of how much you should save. Keep in mind that your results will only be as accurate as your input, so be honest with yourself when thinking about factors like how much you expect to spend each year in retirement or how many years you think you may live.
2. Consider delaying retirement by a few years
A retirement calculator will give you an idea of how much you need to save each month to reach your savings goal. But if you're behind on your savings, you may find that monthly target is out of reach.
If you're struggling to save as much as you should, one option is to delay retirement by a few years. Although this may not be your ideal choice, the benefits are twofold: You'll have more time to save, and because you won't be spending as many years in retirement, you won't need to save as much.
Sometimes delaying retirement by even a year or two can make a significant difference. Depending on how much you're saving, you could add tens of thousands of dollars to your retirement fund in just a couple of years. That may not sound like much in the grand scheme of things, but that money will continue to grow even after you retire, meaning it can amount to more than you may think.
3. Think about making major life changes
To better prepare for retirement, you can also consider reducing your expenses to help your money go further. Cutting costs now can boost your savings and beef up your retirement fund, but reducing your expenses in retirement will also help your savings last longer.
While every dollar counts, in order to maximize your money, you may focus on making major life changes that can dramatically lower your spending. These changes may include downsizing to a smaller home, moving to a more affordable neighborhood, or selling your car.
These life-changing decisions aren't easy, so be sure to weigh the pros and cons carefully. But for some people, these big moves could help save hundreds of dollars more per month.
Preparing for retirement is rarely easy, but it's even more challenging when you're behind on your savings. However, that doesn't mean it's impossible to retire comfortably. By taking action now and creating a strategy, you can give your savings the boost they need.
