1 in 3 Feeling Stressed About Retirement

According to the 2017 Retirement Confidence Survey from the Employee Benefit Research Institute, approximately one in three employees feels stressed about preparing for retirement. Yet too many people aren’t taking the necessary retirement planning steps, such as:

  • Saving and investing for retirement
  • Figuring out how much money they may need in retirement
  • Estimating the amount of their potential Social Security benefit

If you’re worried about having enough money for a comfortable retirement, make a plan to improve your future financial well-being. Here are some simple steps you can take.

1. Increase your retirement savings plan contributions.

Setting aside even a small amount of money from your paycheck gives you the potential to build up savings for your retirement over time. If you’re not contributing yet, start right away at a modest percentage and then increase it by 1 percent every year. That may not seem like much now, but could mean hundreds of thousands more later on, as this example shows:

Compare Plans Image 

2. Check your investment diversification.

If you’ve allocated all your money to a target date fund or another type of professionally diversified fund, you’re already well diversified. If, however, you’ve allocated all your money to a single stock fund or single bond fund, you might want to rethink your strategy.

Diversification is a time-tested strategy for increasing your chances for growth while decreasing your risk of loss.** That’s because the markets favor different types of investments at different times. Because it’s impossible to predict the future (and chasing past returns is never a good idea — in fact, it’s a sure way to decrease your long-term performance), you’re better off investing in a variety of investments that offer exposure to different opportunities. Review your plan’s investment options carefully before deciding on the fund or funds that are best for your tolerance for investment risk, retirement timeframe, and investment goals. Also remember to review your investments and rebalance (set them back to their original percentages) on a regular basis.

3. Keep retirement in mind when you have an unexpected financial windfall.

If you receive a bonus, inheritance, or another large sum of money, take part of it and set it aside for retirement. Consider opening an Individual Retirement Account (IRA) or simply boost the amount that goes into your retirement savings plan from your paycheck. You can always reduce the amount later if you can’t maintain the higher contribution rate after your extra cash is used up.

4. Take advantage of other ways to prepare for retirement.

While it’s a great foundation for your retirement savings, your organization's retirement savings plan isn’t the only way to prepare for your financial future. If your medical plan offers a Health Savings Account (HSA), you’ve got a great way to save for health expenses in retirement. Remember that the money you contribute to an HSA is never forfeited and can be used at any time in the future, even in retirement. And an HSA provides triple tax savings — the money goes in tax-free, it can build interest or investment earnings tax-free, and you can withdraw it for eligible expenses tax-free. Because health care is one of the largest expenses retirees face, taking advantage of the tax-free HSA to save for future medical costs is a smart idea.

** A diversified portfolio does not provide a guarantee against loss.