Sten: On the Money

On the Money

PROFESSIONAL HELP: Tips from local leaders in their industry Sten Carlson • YOUR FINANCES

Filling A Retirement Savings Gap

By Sten Carlson

ARE YOU ON TRACK TO ACHIEVE YOUR RETIREMENT SAVINGS GOALS? IT’S IMPORTANT TO ESTABLISH A TARGET SAVINGS AMOUNT AND REGULARLY MAKE RETIREMENT PLAN CONTRIBUTIONS. IT’S ALSO VITAL TO REGULARLY CHECK YOUR PROGRESS SO YOU KNOW IF YOU ARE ON THE RIGHT TRACK. SHOULD YOU DETERMINE THAT YOU ARE FALLING BEHIND ON YOUR SAVINGS GOALS, IT’S TIME TO TRY TO RECTIFY THE SITUATION.

Any or all of the following solutions can help you overcome a retirement savings gap:

#1 – BOOST YOUR SAVINGS

The first option to make up for a retirement shortfall is to boost your savings. For example, if you set aside $200 more per month in your retirement accounts, that could add up to more than $63,000 in 15 years (assuming a 7% average annual return before fees and taxes). Find that money by reducing current living costs, particularly discretionary expenses. You may want to refinance your mortgage to reduce house payments or transfer balances on high interest credit cards to lower your monthly payouts. Be sure to take full advantage of an employer’s matching contribution to a workplace retirement plan if you have access to one.

#2 – UPGRADE YOUR INVESTMENTS

For most people, time is on their side when investing retirement assets. This provides flexibility to invest your money in a way that can generate a competitive return because you have time to overcome short-term market fluctuations. If your savings isn’t generating the return you expected, you may want to reassess your holdings and seek out a combination of investments that have the potential to earn a higher return within your tolerance for risk.

#3 – MOVE YOUR RETIREMENT DATE

You can choose to take more time to meet your retirement savings goal. That might mean working longer than you initially expected and continuing to set money aside to close the savings gap. If you planned to retire in your 60s or earlier, you should have some room to maneuver. Assuming you are in good health, adding a year or two of work may be feasible.

#4 – ADJUST YOUR RETIREMENT EXPECTATIONS

If you are too close to retirement to make a significant dent in your retirement savings gap, you may need to adjust lifestyle expectations when you are done working. Take a closer look at your retirement income needs and determine where you can cut back on discretionary expenses in the years to come.

LOOK FOR HELP

Even if retirement is a long way off, you want to stay on top of your progress and make sure you are taking all of the steps you can to make your goals a reality. Talk to a financial advisor to help you assess where you stand and what you can do to avoid or erase a savings gap.

Sten

Sten Carlson, CFP®, CLTC, CKA, MBA, is a Financial Advisor with PacWest Wealth Partners, a financial advisory practice of Ameriprise Financial Services, Inc. in Corvallis, Oregon. He offers fee-based financial planning and asset management strategies and has been in practice for 25 years. To contact him, visit the team website at www.PacWestWealthPartners.com or call at 541-757-3000. Office address is 2396 NW Kings Blvd., Corvallis, OR.

Sten Carlson

PacWest Wealth Partners in Corvallis, OR.

Contact him at Sten.E.Carlson@ampf.com 541-757-3000