I am 53 and I have $46k in an employee 401k with a 3% match (I contribute another 3%), and about $30k in a Roth IRA that I haven't contributed to in 15 years (money went to kid's college fund). Should I..... - increase my 401K contributions to 6%, which would reduce my end of year tax burden and increase my refund and.... - dump the additional refund $$ into my Roth IRA? How screwed am I finally waking up at 53 realizing I wanted to retire at 65?
First, thanks for having the courage to talk about your situation, and please know that you are not alone. There are a lot of people that are underprepared for retirement, and quite a few only come to the realization when they are much older than you. A recent study by the Employee Benefits Retirement Institute (EBRI),https://www.ebri.org/pdf/FF303.pdf, looks at retirement preparedness by examining households headed by individuals ages 35-64 that are seeking to cover 100 percent of the average costs for retirees with their same age-, income-, and family-status. The study finds that nearly 43 percent of households are projected to run short—and are not on track for “retirement success” --according to the model. Don’t despair though, there is a lot that you can still do. Many of us in the same situation will need to take a holistic approach to retirement planning that may include adjustments to work, lifestyle, and financial choices. Examples of some solutions that could be implemented individually or in combination might include:
Save more now
Reduce expenses now
Other options that may be available to you now or at retirement
In summary, consider using some of these tactics to control what you can, and then enjoy life. Since this is such an important topic, it would be great to hear from others in the community on how they are dealing with this issue. See how much money you can afford to withdraw to make your retirement savings last by using the free USAA Retirement Planning Calculator.
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USAA or its affiliates do not provide tax advice. Taxpayers should seek advice based upon their own particular circumstances from an independent tax advisor.