The United States is facing an unprecedented retirement crisis, with older adults struggling to live on their monthly payments, with a Social Security system that is on its way to bankruptcy, federal governments and legislators who can’t agree on what to do (or who don’t have the slightest idea). So what can a future retiree do to get ahead when his time comes?
According to projections by the Census Bureau, by the end of the decade approximately 21% of the country’s population will be 65 years or older, compared to 15% recorded in 2016. While the majority of non-retired adults have some kind of retirement savings, only 36% consider their savings to be on the right track.
Complementing Your Social Security Check: Ideas for a Good Retirement
If it’s true that the Social Security check was never intended to cover all of your cost of living expenses, with inflation knocking on your door every day, you have to be creative to make ends meet. Here are some ideas we’ve consulted with retirement experts for you to take into consideration.
Have you thought about the idea of working part-time to supplement your Social Security check? Many people choose to do so in order to receive a constant flow of cash and thus be able to defray all their expenses. You can do this as long as your health and physical condition allow it, or look for job options that adapt to your reality, if necessary.
Investments Are Always a Good Idea
Consider investing in retirement funds, such as IRAs or 401(k)s, to increase your savings and enjoy tax advantages. IRA funds (Individual Retirement Accounts) are retirement savings tools available in the United States (we don’t know of the existence of that kinda thing in some other countries) that offer tax benefits. These accounts allow individuals to invest retirement money in a variety of financial instruments, such as stocks, bonds, mutual funds, and more, depending on the options available within the selected IRA.
There are two main types of IRA funds: traditional and Roth. In a traditional IRA, contributions may be tax-deductible in the year they are made, which can provide an immediate tax benefit. However, future withdrawals are subject to tax.
On the other hand, in a Roth IRA, contributions are not tax-deductible, but future withdrawals, including earnings, are generally tax-free, as long as certain requirements are met.
Regarding the 401(k) plans, these are retirement savings plans offered by many companies across the country. It allows employees to set aside a part of their salary before taxes for their retirement. The name “401(k)” is derived from the corresponding section of the American tax code.
In a 401(k) plan, employees choose how much money they want to put into their retirement account from their salary before taxes are applied. This money is invested in a variety of financial options, such as stocks, bonds, mutual funds and more, depending on the options provided by the plan.
And one of the sweetest things about these plans is that many companies offer a contribution match, which means they will match a portion of the employee’s contributions to the plan, and that further increases the retirement savings potential. Beautiful, isn’t it?