You may have plans to retire in your mid-60s. Or maybe you have a different time frame in mind. It's ideal to go into retirement feeling confident in your ability to cover your expenses. But many Americans feel differently.
Only 64% of workers today feel at least somewhat confident they'll have enough money to live comfortably throughout retirement, according to the Employee Benefit Research Institute 2023 Retirement Confidence Survey. What's even more notable is that retirement confidence levels have declined over the past few years, and are now on par with 2018 levels.
If you're not feeling great about retirement, the good news is that there are steps you can take to change your mindset. Here are some worth focusing on.
Image source: Getty Images.
1. Ramp up your savings rate
If you're concerned that your IRA or 401(k) plan balance won't suffice in covering all of your financial needs in retirement, ramp up your contributions now, while you're still working. Of course, doing so is easier said than done. And if money is tight, you may need to make some sacrifices to free up the cash for your nest egg. That could mean slashing expenses or even going out and getting a second job.
But once you start filling your IRA or 401(k) with more cash, you might start to feel better about the idea of having to tap it later on. And remember, every dollar you put into your retirement account is money you can invest so that ideally, it grows into a larger sum over time.
2. Map out a retirement budget
If you're still years away from retirement, you may not have a complete handle on your future expenses. But it could help you to set up a budget based on the income you think you'll have available and see how you can make it work. You may be encouraged to see that if you're willing to make some spending cutbacks, your nest egg and Social Security benefits combined will allow for enough income for a decent lifestyle.
3. Make plans to keep working
The longer you work, the more opportunity you'll have to generate income. So if you're willing to extend your career and shorten your retirement, you might feel better about the idea of stopping to work once that becomes necessary.
Another option is to set yourself up to continue working in retirement. That could mean scaling back your hours but continuing to do whatever it is you do now, perhaps on a consulting basis.
Or, try your hand at something new if your work is tedious or not so meaningful to you. If you've always wondered what it would be like to work in a creative field because you spend your days crunching numbers, see what's out there.
You should be able to afford a pay cut in retirement because you'll have outside income to live on (at the very least, Social Security). That could make it so you're able to look forward to working.
It's unfortunate that many workers today lack retirement confidence. If you fall into that boat, do your best to change your outlook so that retirement becomes something you get excited about rather than fear.
