Listen up, baby boomers. More than half of adults 55 and older have less than $50,000 in retirement savings, and about one-third haven't even started saving for retirement. That means many of you have a lot of catching up to do before you punch the clock for the last time.
Some boomers are fortunate to have a job with a pension. Those without that guaranteed source of income or any savings will be forced to survive on Social Security benefits or the support of their children. In some cases, baby boomers simply might not be able to retire at all.
If those scenarios don't seem appealing to you, follow these expert tips to catch up on retirement savings.
HAVE A PICTURE OF THE RETIREMENT YOU WANT
Adults 50 and older can take advantage of IRS provisions to make catch-up contributions to retirement accounts _ an extra $6,000 annually to a 401(k) and an extra $1,000 to an IRA. Such contributions are a great way for boomers to save more for retirement if they have fallen behind. But all of the provisions in the world won't help unless you're motivated to save.
Because the future is murky, many people find it difficult to get excited about saving for retirement, said Joe Sicchitano, head of wealth planning and advice delivery at SunTrust Bank. It's easy to delay setting aside money today when you don't have a clear picture of how you're going to benefit down the road.
Figure out what you want in retirement. Don't just rely on a rule of thumb for how much money you need to set aside or some number from a retirement calculator, as it's difficult to emotionally invest in a number, Sicchitano said. Instead, imagine your retirement lifestyle, and then find an actual picture that represents it.
Put the picture in your wallet, credit card sleeve or somewhere else where it will be a constant reminder that the more money you spend today, the more difficult it will be to realize your vision of retirement. "The whole point of that is to bring the future into the present to make better decisions today," Sicchitano said.
A visual reminder can help you get excited about what's important and motivate you to save more for retirement, he said.
REINFORCE YOUR SAVINGS HABIT THROUGH AUTOMATION
Once you find motivation to save, make saving a habit. Don't rely solely on good intentions because life gets busy and it's hard to maintain focus, Sicchitano said. To reinforce the savings habit, you need to automate it, he said.
Maximize contributions to your 401(k) or workplace retirement plan. If you don't have access to a workplace plan, save on your own with an IRA or other individual account. Schedule automatic transfers from your checking account on payday so you fund a retirement account before you can spend the money.
If you're already contributing to a workplace or individual retirement plan, increase your contribution. "If you get a raise, bank the raise," Sicchitano said. "Take whatever the difference your raise is and send it to a savings or investment account."
Set a reminder on your smartphone or scribble a note to yourself right now to automate your savings.
FIND ROOM IN YOUR BUDGET TO SAVE MORE
You can't put more into retirement savings if you don't control spending. "Finding space in your budget is key," Sicchitano said.
According to a recent GOBankingRates survey, 55 percent of Americans spend most of their money on guilty pleasures, such as fast food, alcohol, tobacco and gambling. Your discretionary spending is the area over which you have most control, Sicchitano said. When you reduce your spending on guilty pleasures, you can boost your health and accumulate more money to stash in retirement savings.
You also should tackle debt before retirement. "Debt is an expensive real problem you have on a monthly basis," said Terry Dunne, managing director of automatic rollovers at Millennium Trust, a financial services company based in Oak Brook, Ill. By eliminating debt quickly, you free up more room in your budget to save for retirement. Plus, you'll need less money in retirement to cover those monthly debt payments.
If you need more motivation, think about how much your money would grow if you put it into retirement savings instead of spending it. Sicchitano said he created a spreadsheet for a client to show him that the $1,000 he wanted to spend on a new TV would grow to $3,500 by the time he retired if he invested it. "All of the sudden, that TV doesn't look so good anymore," Sicchitano said.
GO PUBLIC ABOUT YOUR SAVINGS GOAL
Need even more motivation to save? Go public with your savings goal, Sicchitano said. You don't have to announce to the world that you're trying to save a certain amount. But if you challenge a few friends or family members to see who can squirrel away the most cash each month, the competition might motivate you to save more for retirement.
In other words, add a little fun to the otherwise boring task of setting aside money for the future. "Saving is like eating Brussels sprouts," Sicchitano said. "Even Brussels sprouts are delicious if smothered in butter and bacon."
Turning saving into a game not only makes it more enticing but also makes you accountable to others. "If you're public about it, that pressure can be positive," Sicchitano said. "You feel the pressure to deliver on what you've gone public about."
