Worried About a Retirement Income Shortfall? 15 Steps to Take

Although many people look forward to retirement, it can be an intimidating period of life. In fact, seniors routinely experience their share of stress once their regular paychecks go away. If you're concerned about not having enough money in retirement, here are some key moves to make.

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The more time you give your nest egg to grow, the more retirement income you're likely to wind up with. Ideally, you should start funding an IRA or 401(k) plan from the moment you start collecting a steady paycheck.

Your IRA or 401(k) isn't something you should fund when it works out. Rather, you should commit to contributing to that account every month, and your budget should account for that. You may need to cut back in other spending categories to make that possible, but those are sacrifices worth making.

Some IRAs let you transfer funds from your checking account to your retirement plan automatically every month. Going this route is a great way to stay on track with your savings goals.

Many companies that offer 401(k) plans also match worker contributions to varying degrees. Claiming your full employer match will leave you with a lot more money in time.

ALSO READ: 21% of People Who Recently Quit a Job Made This Huge 401(k) Mistake

Your Social Security benefits are calculated based on your wages during your 35 highest-paid years in the labor force. If you don't work a full 35 years, you'll have a $0 factored into your benefits equation for each year you're without an income, resulting in a lower benefit. But if you work at least 35 years, you can get more from Social Security.

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Each year, the Social Security Administration issues a summary of your wages. Be sure to check those earnings statements for errors, because if your income is underreported, it could result in lower Social Security benefits.

You're entitled to your full monthly Social Security benefit based on your wage history at full retirement age, which kicks in at 67 if you were born in 1960 or later. But for each year you delay your filing past that point, your benefits grow 8%. This incentive happens to run out at age 70. But if your full retirement age is 67, you could snag a 24% boost to your Social Security benefits -- for life.

ALSO READ: Is Social Security's Full Retirement Age the Same for Everyone?

While steadily contributing to an IRA or 401(k) is a smart bet for building retirement wealth, you're not limited to those savings plans alone. If you're enrolled in a high-deductible health insurance plan, you may be eligible to fund a health savings account, which has a balance you can carry forward and use during retirement.

The more you manage to grow your retirement plan, the more income you'll be privy to down the line. To this end, it pays to invest your IRA or 401(k) in stocks. Though there's risk involved, stocks tend to generate much higher returns than safer investments, like bonds.

Investment fees can eat away at your retirement balance, so it's best to minimize them. That generally means investing your savings in index funds, which are passively managed and don't charge the same hefty fees as actively managed mutual funds.

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Withdrawing funds from your IRA or 401(k) before age 59 1/2 could trigger a 10% early withdrawal penalty. Plus, the more money you remove from your retirement savings before wrapping up your career, the less you'll have down the line. That's why it pays to leave your nest egg alone and find other ways to cope with unplanned expenses. Building an emergency fund could make it so you have cash to cover surprise bills.

ALSO READ: How to Grow Your Emergency Fund From $1,000 to $5,000 in a Year

If you're concerned about not having enough retirement income, consider delaying that milestone. Holding off even a couple of years could make it so you're able to add to your IRA or 401(k), all the while leaving your existing balance untapped for longer.

Working a side gig could make it possible to contribute more money to your IRA or 401(k). Better yet, try finding a gig you can keep doing once you retire. Not only will that help you stay busy, but it'll be a good way to score an income boost.

Housing can be a huge expense in retirement, even if your mortgage is paid off. It pays to look at downsizing as you approach retirement. Doing so could not only lower your housing costs but potentially leave you with a pile of cash from the sale of a larger home that can serve as another income source.

ALSO READ: Is 2022 a Good Year to Downsize?

You may have a limited amount of income to enjoy once you retire. But if you prioritize how you spend it, you'll be less likely to run out or end up forced to deny yourself the things you've always dreamed of doing. If travel is very important to you, for example, you can allocate more money to taking trips and aim to keep your remaining costs low.

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The last thing you deserve is to spend your senior years perpetually worried about money. Make these moves, and you'll be less likely to be plagued by financial concerns.

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