3 ways to supplement a meager retirement savings account
August 16, 2011
It's probably safe to say that the recent gyrations in the stock market--triggered by dim economic news, a downgrade of the United States' debt rating and entrenched squabbling in Washington over how to pay the nation's bills--have not made over-50 consumers optimistic about their retirement prospects.
But that's really nothing new. A recent AARP Public Policy Institute survey found that three years after the country's last economic upheaval in 2008, older Americans are still facing financial challenges, including skyrocketing health care costs, high unemployment, meager savings accounts and lousy housing prices.
The survey found that about 40 percent of the 55-and-over Americans interviewed expect their retirements to be less financially secure than their parents'.
The soon-to-be seniors are, however, starting to put more into savings accounts and money market accounts, AARP found. They kept on saving during the downturn and 44 percent are actively saving for retirement. Unfortunately, Forbes.com is also reporting that older Americans aren't saving enough for retirement, quoting one expert who called insufficient retirement savings accounts a "huge crisis."
Well, that might be the case if you're envisioning a retirement complete with vacation homes and long, lazy trips to the Caribbean and Europe. But if you are contemplating a retirement that is simply more relaxed than your current working life, here are some ways to make that happen:
- Start now by cutting back on everyday expenses like restaurant meals and expensive coffee. According to Investopedia, if you can cut those expenses by $50 a week over 20 years and move the savings from your checking account to a 4-percent interest-earning account, you'll have an extra $79,914 during your retirement.
- Get a second job or start a small business. The immediate impact on your checking account could be significant, and the job or enterprise might carry over to retirement and supplement your retirement income.
- Invest in a rental property. Current mortgage rates and refinance rates are low, and even the federal government is looking to unload thousands of foreclosed properties to investors who will put them on the rental market.
Remember that although it's important to save money for retirement, there are ways to supplement your income after you leave the full-time workforce.