In 2020, only a quarter of Americans were confident they would have enough money saved to live comfortably in retirement, according to a survey by Principal. Not surprisingly, few people are sure how they will cope financially in their later years, as saving enough for a secure retirement can be a financial challenge. But there are some habits that can help that happen.
According to the director’s study, unsuspecting Americans have done two key things to make sure they are ready to retire to a life without financial worries.
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1. Saved a strong emergency fund
Although studies have shown that about 62% of Americans live without an emergency fund, the numbers are very different for those who trust their retirement savings. In fact, 60% of those who feel confident that they have enough to live in retirement have an emergency fund large enough to cover at least seven months of expenses. This is actually more than the recommended minimum fund size, as most experts suggest having at least three to six months of living expenses on reserve.
Not surprisingly, having an emergency fund makes these Americans more likely to feel safe about their later years, as this money means they won’t have to pause retirement investments to cover unexpected expenses, they won’t have to incur accounts retirement if you hit a tough financial situation, and you won’t have to withdraw too much from your savings if something goes wrong.
2. Worked with a financial professional
Having an emergency fund was not the only thing that unsuspecting Americans had in common. The same number, 6 out of 10, had also worked with a financial professional.
Getting professional financial help can be beneficial for several reasons. A financial professional can offer advice on how to make a comprehensive plan on how much to save for retirement, which accounts to use, and where to invest money.
If you choose to work with a professional, you’ll want to make sure you find someone with the right credentials who charges reasonable fees. You can get recommendations from friends and family, or visit NAPFA.org to find a consultant in your area. Talk to any professional about the scope of your work, and be sure to choose someone you feel comfortable with to guide you.
You can also decide that you can make a comprehensive financial plan and select investments on your own without this type of assistance. There is nothing wrong with that. And you can still join the ranks of Americans who feel confident that they will have a secure retirement, even without paying for professional advice. The key is to sit down, make an informed plan, and monitor your progress over time.
Take steps today to be more confident in your retirement prospects.
If you want to join the minority of Americans who are confident they will have enough money to live comfortably throughout retirement, you can start achieving that goal today. Like other Americans who feel their future is secure, you can save an emergency fund to help you weather the 2020 recession or any other economic downturn or unexpected expenses that arise. And whether you’re working with a financial professional or doing it on your own, you can create and start executing a plan to save and invest wisely for your future.
It’s worth the effort to do so, as the last thing you want to do is spend your final years worrying about running out of cash.
