Although retirement is a stage of life many people look forward to, there's one persistent fear that tends to hold them back -- the fear of not having enough money to enjoy their post-working years. It's a fear you might have whether you kick off retirement with $400,000 in savings or $2 million.
But no matter what your retirement account balance looks like, there are steps you can take to set yourself up with more income for your senior years. Here are three worth looking at.
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1. Save in a Roth retirement plan
The nice thing about saving for retirement in a traditional IRA or 401(k) plan is that your contributions go in on a pre-tax basis. With a Roth IRA or 401(k), you don't get that up-front tax break.
But what a Roth account gives you instead is tax-free gains as well as tax-free withdrawals in retirement. And both are huge.
Not having to pay taxes on your withdrawals, though, puts more money in your pocket each month. That's a good way to reassure yourself that you won't end up facing an income shortfall.
2. Contribute to an HSA and reserve your balance for later
If you're enrolled in a high-deductible health insurance plan, it pays to contribute to a health savings account (HSA) every year you're eligible. HSAs give you the benefit of tax-free contributions, tax-free gains on the money you invest, and tax-free withdrawals when your money is used to cover qualifying healthcare expenses.
While you're able to take an HSA withdrawal at any time to cover medical bills, if you're worried about not having enough retirement income, it pays to reserve those funds for your senior years specifically. Not only might that allow your money to enjoy more growth, but it also means having a dedicated source of funds for healthcare spending.
Fidelity says that the average 65-year-old today can expect to spend $172,500 on healthcare during retirement. Having money in an HSA for healthcare spending purposes could eliminate a huge source of financial stress.
3. Delay your Social Security claim
Ideally, you'll be bringing a nice amount of savings with you into retirement. But Social Security might also end up being an important source of income for you. If you're worried it won't be enough, one solution may be to delay your Social Security claim past full retirement age.
Social Security's full retirement age is 67 for anyone born in 1960 or later. But if you delay your claim until age 70, you can score a 24% boost to your benefits, leaving you with a lot more guaranteed income to fall back on.
Plus, Social Security benefits are eligible for an annual cost-of-living adjustment (COLA). The larger your benefit payment is to begin with, the more money every single COLA is apt to be worth to you.
It's natural to worry about not having enough income to pull of the retirement you've always imagined. But the fact that you're worried about that means retirement is on your radar. And that alone gives you an opportunity to make strategic moves that improve your income picture.
