Sectors hit include air travel, insurance, oil production, and entertainment.
The path to retirement can often seem daunting, with the end goal appearing distant and difficult to reach. This sentiment has only grown in recent years, as indicated by a recent report on the Economic Well-Being of US Adults conducted by the Federal Reserve.
According to the study, only 31% of non-retired Americans are confident in their retirement savings progress – a significant drop from 40% the previous year and the lowest since 2017. However, don’t be discouraged. You can adopt various strategies today to get your retirement savings back on track.
Capitalize on Company Match Programs
If your employer offers a 401(k) match, it’s crucial to contribute enough to secure the full match. It’s essentially “free” money that can exponentially boost your retirement savings over time. Remember, every dollar your employer contributes is a dollar less you need to save to meet your retirement goals.
Tailor Investments to Your Goals
Ensure your retirement savings are invested in alignment with your personal goals, time horizon, and risk tolerance. Diversify your portfolio to balance potential risks and rewards as you accumulate wealth. Consider placing most of your assets in broad-based, low-cost stock market index funds for those further from retirement age. These funds offer market exposure, reducing risk through diversification while promising a solid return over time.
Formulate a Comprehensive Plan
“Have a plan!” is not just a catchy phrase – it’s a fundamental piece of advice for retirement planning. Your plan should define your retirement goals, map out your financial journey toward those goals, and create a contingency plan for unexpected expenses or changes in income. Regularly revisit and revise your plan to keep your retirement savings on track.
Utilize Health Savings Accounts
Health Savings Accounts (HSAs) are an underutilized retirement saving tool. HSAs are triple tax-advantaged: contributions are tax-deductible, the funds grow tax-deferred, and withdrawals for qualifying medical expenses are tax-free.
The family deduction limit for 2023 is $7,750. In addition to your traditional retirement accounts, such as a 401(k) or IRA, consider incorporating an HSA into your retirement savings strategy.
Preserve Your Retirement Nest Egg
It can be tempting to tap into your retirement savings in challenging times. However, it’s essential to remember that your retirement accounts are for the long term. To weather short-term financial difficulties, ensure you have an emergency fund separate from your retirement accounts. Compound interest is vital in retirement savings, and the larger your nest egg, the more it can grow over time. Therefore, avoid drawing from your retirement savings before retiring, if possible.
While the current landscape may seem challenging, remember that your journey to retirement is not a sprint but a marathon. Start by taking small, consistent steps, such as securing your company match and investing according to your goals.
Gradually, you’ll find your retirement savings back on track, steering you toward a comfortable and financially secure retirement.
Retirement planning is complex and multi-faceted, but our team at Dominion Wealth Management can provide the expertise you need to create a secure retirement. Having a professional handle managing such an important part of your life may be worth the investment and peace of mind today for a desired retirement tomorrow. Get started on that path by contacting us to schedule your no-cost, no-obligation appointment.
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