5 Signs You're Not Saving Enough for Retirement

Are You Saving Enough for Retirement? Do These 5 Things to Make Sure


Written by John Rothans

Mar 26, 2021

Retirement feels like it’s years and years away. You love living in the moment and embracing everything life has to offer right now. But you're starting to keep a keener eye on what's up ahead and want to make sure your golden years live up to your expectations. To help make sure you're stashing away enough savings for retirement, check that you're doing these five simple things.

1. Do the math.

Calculate exactly how much money you need to retire comfortably. It's the only way you can be sure you'll have the resources you need to retire in the manner that you want. Numerous websites, including Bankrate and SmartAsset, enable you to estimate how much money you’ll need for retirement. If you’re seeking a more precise calculation, consider tapping the expertise of a financial planner or financial advisor.

According to AARP, the “rule of thumb is that you’ll need about 80% of your pre-retirement income when you leave your job.”

No matter how you do it, this math should be part of a planning checklist that can help put you on the right track toward retirement.

2. Watch your spending.

When you overextend yourself on expenses, it results in fewer dollars being available for retirement savings. Be careful to avoid overspending. Overspending could involve putting too much money toward vacations, gadgets, or other things that aren’t absolute necessities. Or it could be that you’re spending more than is generally recommended on housing costs or you’re racking up debt on high interest credit cards. Whatever overspending situation you find yourself in, it might be time to work on spending less.

How can you tell the difference between spending and overspending? Business Insider notes that you might want to take a second look at your budget if:

  • You never check how much you’re spending.
  • Your housing costs more than 25% of your monthly paycheck.
  • You dig into your savings to make your car payment.
  • You reach for your credit card more than your debit card.

In many cases, you should be stashing at least 20 percent of your gross income to help achieve long-term goals, such as attaining financial freedom and retiring comfortably.

So if your annual gross income is $100,000, this formula would suggest that you put aside $20,000 a year for long-term goals like retirement. Everyone’s situation is different, so you may want to visit with a financial planner or financial advisor to clarify how much money you should be saving for retirement.

3. Max out retirement contributions.

In 2017, just 13 percent of participants maxed out their contributions to employer-sponsored 401(k)s, according to Vanguard, a provider of 401(k)s. And in 2020, one fourth of Americans who aren’t retired had not a single cent set aside for retirement.

Those statistics underscore how many Americans are missing the mark when it comes to contributing the full amount each year to 401(k)s and other retirement accounts. You don't have to miss the mark.

For 2021, the maximum employee contribution to a 401(k) is $19,500. If you’re at least 50 years old, that figure jumps to $26,000. With IRAs, the maximum contribution for 2021 is $6,000. The number climbs to $7,000 if you’re at least 50 years old.

How do you measure up when it comes to contributing to your retirement accounts? If you haven’t been maxing out your contributions each year, you might consider adjusting your budget to ensure that you’re able to do so.

4. Reduce your credit card debt.

The average U.S. household wrestles with slightly over $8,000 in credit card debt. That’s just over $8,000 that could be going toward your retirement. And this doesn’t even include the hundreds of dollars of interest you could be paying on that more than $8,000 in debt.

If you find yourself with thousands of dollars in credit card debt, you could do your future self a favor by chipping away at that debt as soon as you can. NerdWallet recommends setting up a payment strategy, considering debt consolidation, and working with your creditors to pay off credit card debt.

In the end, the less money you’re racking up on credit cards, the more money you can allocate for retirement.

5. Research alternative assets.

It’s wise to ensure that your portfolio is diversified when gearing up for retirement. In other words, don’t put all of your eggs in one basket. If you do, some or all of those eggs could crack.

For example, Investopedia notes that “over a 15-year period, gold has outperformed stocks and bonds.” If you were retiring within this 15-year window and your portfolio was only made up of stocks and bonds, you might not be sitting in a comfortable position at retirement.

One path for portfolio diversification is setting up a self-directed IRA, which can be a fast, simple way to mix up your asset allocation. Through one of these IRAs, you can purchase and keep gold, silver, platinum, or palladium, along with other alternative assets like real estate, livestock, and oil. Among other things, a self-directed IRA may help you preserve wealth and weather market fluctuations.

Kelli Click, a member of the board of the Retirement Industry Trust Association with three decades of experience working with self-directed IRAs, notes that “by diversifying your portfolio, you could benefit from both traditional and alternative assets, potentially meeting your retirement goals sooner.”

Start small, but start right now. Download U.S. Money Reserve’s free Precious Metals IRA Information Kit for easy-to-understand information about retiring with wealth in your hand.


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