Saving for retirement can be stressful, especially if you’re feeling as if you didn’t plan the right way. According to a Schwab Retirement Plans survey[1], saving enough money for retirement was the highest inducer of stress among all ages. What does this mean, and how can you reduce the sinking feeling of stress when saving? We have a few suggestions:  

‍

Know Your Current Situation

How can you properly save for retirement when you don’t know what you already have? Knowing where you stand in terms of saving for retirement can help develop a plan that will point you in the right direction. Lay out all your savings plans, investments, and balances and see how things look. This will help paint the picture of where you are and where you need to be.

‍

Think Toward the Future

It’s easy to sit and beat yourself up about not having enough saved. Things happen, and life can often get in the way, but it’s never too late to start somewhere. Now that you have a pretty fair assessment of what needs to be done, it’s time to get to it. The key is in focusing on what you can do now to move forward. Even if your funds are tight, small contributions eventually add up.

‍

Focus on Your Progress

Once you create a plan, channel your fears into the progress you are making. Don’t pressure yourself into thinking you have to contribute large amounts every month. Again, little steps go a very long way. Being able to say you contributed something should give you a reason to smile. You’re building discipline to contribute larger amounts in the future.

‍

Don’t Forget an Emergency Plan

Ensure your emergency fund is where it needs to be. A recent GoBankingRates study revealed some troubling findings:[2]

1. A whopping 69% of Americans have less than $1,000 saved.  
2. Only 37% of seniors 65 and older reported they had $1,000 in savings.
3. A measly 23% of seniors have accumulated $10,000 or more in savings.

For most Americans the lack of emergency savings is problematic at any age. For older Americans that lack of additional security is particularly alarming. Conventional wisdom is that everyone should have 6 to 12 months of money set aside to cover emergencies. Retirees, on the other hand, need to have emergency savings up at least 12 to 18 months of cash in zero-risk savings accounts.

Retirees should avoid tapping into their investments at all costs. The tax implications alone could further the financial snowball. So, what are your options?  You have tapped out your savings and are unwilling to liquidate your investments. Without resorting to bank loans and second (or reverse) mortgages, you can move forward without sinking deeper in debt by taking stock of your finances and cutting back. U.S. News and World Report shares their top five suggestions:[3]

1. Use your emergency savings or accounts that have no tax impact, such as a Roth IRA.
2. Look at your monthly expense listing and cut back on nonessentials like entertainment, dining out, and travel.
3. Economize on your monthly bills. Look for better deals in items like car insurance, cellphone and cable coverage.
4. Inventory your belongings and consider selling off some big-ticket items like jewelry and your second car.
5. Talk to your insurance broker. Do you still need those whole life insurance policies that you bought decades ago? It may make sense to replace those policies with less costly term insurance.

‍

Give Yourself a Yearly Goal

One of the best ways to save like you mean it is to give yourself a yearly goal. Nothing beats being able to look back at when you started the goal, and how far you’ve come. Considering a target-date fund is also a choice that could get you closer to where you want to be when you retire.

‍

Consider Automatic Withdrawals

You can’t spend what you don’t have. If you have direct deposit, see if you can divert those funds you want to save directly from your paycheck. Once it’s gone and in your fund, you can’t touch it. This is a good option for those who like to see their money but like to spend what they can.

‍

Start Reducing Your Expenses

Take yourself on a trial run to see if you can start working on your retirement. By reducing your expenses now, the shock factor won’t be as prevalent when you do decide to retire. Start paying off those debts. If you are planning to have a new car when you retire, start planning to pay for it in cash. If you have a home, add an extra payment or two to pay off your home prior to retirement to put yourself in a better position. You’re working now to reduce any unnecessary retirement expenses you could have later.

‍

Consider Taking Some Risk

If you’re in a position to take some risks with your portfolio, do it. You may find that you’ll have bigger gains than you realized, which will be beneficial in the long run. If you’re feeling that it’s risky, start with one option and see how it performs. This will help lay the foundation for future planning and could help you get closer to your ultimate goal in saving or retirement.

Practicing before you retire can help alleviate the stresses that you may be feeling. To help ease your mind, know that you’re not alone and everyone has to start somewhere.

‍

Final Word

Saving for retirement is inherently stressful. The point of retirement planning is to alleviate the feeling of stress when retirement is finally here. If you take only one thing from this piece let this be it: Deal with a little stress now, create a plan, and relax along the way knowing all you have to do is follow that plan.

‍

Schedule A Discussion

‍

[1] https://www.aboutschwab.com/schwab-401k-participant-survey-2020

[2] https://www.gobankingrates.com/saving-money/savings-advice/minimum-emergency-savings-needed-state/

[3] https://money.usnews.com/money/retirement/articles/2018-07-11/how-to-deal-with-a-financial-emergency-in-retirement