Are you on track to achieve your retirement savings goals? It’s important to establish a target savings amount and regularly make retirement plan contributions. It’s also vital to regularly check your progress so you know if you are on the right track. Should you determine that you are falling behind on your savings goals, it’s time to try to rectify the situation.
Any or all of the following solutions can help you overcome a retirement savings gap:
1. Boost your savingsThe first option to make up for a retirement shortfall is to boost your savings. For example, if you set aside $200 more per month in your retirement accounts, that could add up to more than $63,000 in 15 years (assuming a 7% average annual return before fees and taxes). Find that money by reducing current living costs, particularly discretionary expenses. You may want to refinance your mortgage to reduce house payments or transfer balances on high interest credit cards to lower your monthly payouts. Be sure to take full advantage of an employer’s matching contribution to a workplace retirement plan if you have access to one.
2. Upgrade your investments For most people, time is on their side when investing retirement assets. This provides flexibility to invest your money in a way that can generate a competitive return because you have time to overcome short-term market fluctuations. If your savings isn’t generating the return you expected, you may want to reassess your holdings and seek out a combination of investments that have the potential to earn a higher return within your tolerance for risk.