The retirement gap is placing a significant strain on individuals’ finances. If you’re concerned you may outlive your retirement savings, here are a few ways to help bridge the gap and secure a nest egg that will last throughout your golden years. 

Think you won’t have enough saved for retirement? If so, you’re not alone: 46% of U.S. non-retirees fear they won’t have enough money saved to retire comfortably.

But it gets worse; The average American has only saved 7% of their targeted retirement fund in their 401(k) accounts.

Planning and saving for retirement can be overwhelming; many are still determining if they are on track to achieve their desired retirement lifestyle. One effective way to help ensure a comfortable retirement is by working with a financial advisor with a strong focus on retirement planning.

In this blog, we will highlight the importance of financial planning with a retirement income advisor and how they can help you bridge the retirement gap. Here’s what you need to know.

How much do you need to retire? A recent nationwide study showed Americans think they need $1.3 Million for a comfortable retired life. Your answer can vary depending on your lifestyle, health, and expected lifespan. You’ll need 70-80% of your pre-retirement income to maintain your standard of living. However, this might be higher if you plan to travel extensively or face significant healthcare costs.

To bridge the retirement gap, thoroughly assessing your expenses is crucial. Consider housing, healthcare, food, personal care, transportation, entertainment costs, and other relevant factors. Planning for these expenses can significantly alleviate financial strain during your retirement years. In addition to your expenses, consider any outstanding debt, such as mortgage or car loans. Paying off these debts should be factored into your retirement plan, contributing to your overall financial security.

Lastly, long-term planning is essential for your retirement needs. This includes investment strategies, tax and estate planning, and other aspects of a well-rounded financial plan. Seeking guidance from a financial advisor can significantly assist you in navigating these considerations and ensuring a secure future. Often the retirement gap can be bridged by looking at the reality and current state of your savings.

The retirement gap signifies the disparity between the funds individuals think they need for a comfortable retirement and their accumulated savings. Despite Americans thinking they need $1.3 million, on average, Americans would need around $1.7 million to retire comfortably. However, the average balance in their 401(k) accounts is a meager $60,000.

The current state of retirement savings indicates that most Americans need to be better prepared. Their 401(k) accounts hold only a tiny fraction of their target retirement savings. This significant difference between retirement expectations and savings can be attributed to rising living costs, financial illiteracy, and the challenge of planning for a distant future.

Bridging this retirement gap is possible but requires careful planning, wise investments, and a thorough understanding of your financial needs and goals. This is where a financial advisor with experience in retirement planning can play a crucial role. A seasoned financial advisor can help you assess your retirement needs. Let’s take a look at what this entails.

Retirement dreams can vary significantly, from leading a modest lifestyle in a paid-off home to traveling the world. Such aspirations require a substantial retirement nest egg. But how do these dreams stack up against reality for the average American? The numbers reveal a concerning truth if we break down retirement savings goals by age group. 

According to data, the average 30-year-old hopes to retire with a nest egg of $500,000. By 40, the goal increases to $1 million; by 50, the aspiration jumps to $2 million. Despite these ambitions, the average savings in 401(K) plans for these age groups are significantly lower, underscoring the retirement gap. 

The good news is that there is always time, and time, to start retirement planning. Starting early allows the power of compounding to work in your favor. Even if you’re starting late, making catch-up contributions and prioritizing retirement savings can make a substantial difference. There are further steps you can take now to bridge the gap, increase your savings and ensure you can sustain yourself throughout retirement:

• Start by taking a look at your budget, then reduce your spending on extras like restaurant meals and vacations.
• Transfer high-interest credit card balances to a card with a more competitive rate to pay down balances faster.
• Max out catch-up contributions to your 401(k), supplemental retirement plan or IRA.
• If you’ll be short on income at the time of your predicted retirement, you may want to wait to retire. Waiting means your Social Security benefits increase by a certain percentage if you delay retirement at least until full retirement age, up to age 70.
• If you don’t want to wait to fully retire, adjust your retirement expectations by employing a semi-retirement strategy. Working part-time and transitioning slowly can give you a little more time to pursue new hobbies or extended time with family while still earning the income you need to bridge the gap.
• Reconsider your investment strategy. Rather than moving all your money to more conservative options as you age, talk to a financial professional to help you find a mix of investments that can grow your retirement funds in a shorter timeframe.

At CKS Summit Group, we aim to guide you through this process with personalized, comprehensive financial planning. Our dedicated team of financial advisors can help you define your retirement goals, assess your current financial situation, and devise a roadmap to bridge your retirement gap.

Retirement planning involves far more than just saving money. It includes investment strategies, tax planning, estate planning, and risk management, to name a few. A skilled financial planner can guide you through these intricate details, making the journey less overwhelming.

Financial advisors can provide valuable assistance across various financial and lifestyle concerns. Whether you need help with retirement income planning, debt management, wealth preservation, or tax and estate planning, they offer expertise and guidance to address your needs. Here are some areas where financial advisors can be particularly valuable:

1. Retirement Income Planning
2. Wealth Management
3. Investment Strategies
4. Legacy Planning
5. Asset Protection
6. Tax-efficient Strategies

Engaging a retirement income advisor is a significant and exciting step. While not everyone requires an ongoing relationship with a financial planner, there are situations where seeking professional input can prove extremely beneficial.

Retirement should be a time of relaxation and enjoyment after decades of hard work. It should not be a period marked by financial stress and uncertainty. By understanding the retirement gap and taking steps towards effective financial planning, you can strive towards your retirement dreams with more confidence and peace of mind.

Start your journey towards a secure and fruitful retirement today. Contact us today to help you navigate your path toward financial freedom in your golden years.