Research conducted by Transamerica Center for Retirement Studies have shown that 27 percent of American workers have requested some kind of a loan, hardship distribution or early withdrawal from a 401(K) or an IRA. Loans have been taken from similar plans as well. For people who have done that, the feeling of helplessness of having little money when retirement looms is all too real. However, this kind of situation can be salvaged.
Saving money and affordable homes
To make sure that you are comfortably nested after retirement, the first thing to do is obviously to save in larger amounts. Increase the quantum of money you put towards retirement. Begin with the retirement plan sponsored by the employer. The 401(k) plan is such an example. Contributing towards the workplace retirement plan could also generate matching employer contributions. This advantage helps to swiftly rebuild the retirement savings,
Another method to make a fatter retirement package is to move to a more affordable home. A report published by Joint Center for Housing Studies from Harvard University stated that almost 39 million American households, nearly one-third of the US population, cannot afford the house they presently live in. About 50 percent of the previous fraction pays a staggering 50 percent, if not more, of the money they earn to sleep in the environment of their choice. An excellent lay person's rule in this regard is not to spend more than 30 percent of the income on rent or on a mortgage.
If you own a home, it is an excellent idea to move to a smaller accommodation to reduce housing expenses. Mortgages will be reduced and property taxes get much less. Utility expenses become cheaper too. Larger houses involve more money to live in as they consume more energy to heat and cool. Alternatively, you can move to a more economical location. To give an example, living in the Midwest is much cheaper than living in or near the West Coast.
Many people take the sensible path if faced with a shortage of retirement funds. They simply work longer. You not only enjoy a larger sum of money but also increase the Social Security benefit. This is important as although one is eligible to receive Social Security at 62 years of age, delaying this every year until you attain 70 years of age will increase the benefits every year by eight percent. It follows that working for a lengthier amount of time helps to shore up retirement finances.