The Center for Retirement Research at Boston College calculates that only 39% of U.S. households are financially on track for retirement. The remaining 61% of Americans are at risk of not having enough to maintain their living standards.[1] In fact, 20% of Americans age 50 and older have no retirement savings at all.[2]

Which category are you in?

Step 1: Identify What You'll Need

It's best to think about what you'll need to retire, then work backwards. Keep in mind that it’s not necessary to determine an exact amount, rather it’s important to have a target given this number will affect your future lifestyle, legacy planning, long-term care options and more. Many planners also use 80% of current income as a rule of thumb as the average amount of expenses. Or you could also, say, plan on maintaining your current expenses into retirement.

Because everyone's situation is truly unique, no easy rule applies. You'll need to consider:

  • Your spending patterns
  • The value of investments and other assets
  • Social Security and other projected income
  • How much you can realistically invest for retirement
  • When you want to retire
  • How much you'll need to live on each month
  • Your tolerance for risk
  • Longevity expectations
  • And other individual goals and circumstances

Not sure what those expenses are? Our budget planning worksheet might be a good place to start.

Step 2: Leverage Strategies to Help Increase Your Retirement Assets

Knowing what you'll need is the first step. Getting there may not be so straightforward. However, there are strategies that may help you to grow your retirement assets and avoid pushing off your retirement or living on less.

Maximize employer matches. If you have a lot of catching up to do, the first area of opportunity may be maxing out contributions to retirement plans if you are a participant. Many employer-sponsored 401(k) plans match contributions up to a set percentage —for example, the employer may contribute 50 cents for each dollar you put in, up to 6% of your salary. This is essentially free money, so do what you can to receive the maximum match.

Take advantage of over age 50 options. Additional retirement plan contributions, called catch-up contributions, are allowed after age 50. You may be able to contribute an extra $6,500 per year in a qualified employer retirement plan or $1,000 annually in an IRA.

Pay down credit cards. Average interest can run as high as 21%, and paying this each month is like throwing money away. Clearing credit card debt may open up funds that could be shifted to retirement assets, but it takes a plan.

Prioritize your most important savings goals. It’s not an easy choice to make. But if you find yourself forced to choose between prioritizing retirement or funding education, retirement should come first.

Pay yourself first — automatically. Putting yourself first takes discipline. Use automatic transfers to help make planning for retirement easier. If you don't see the money in the first place, you may not miss it.

Take advantage of compounding. Even the smallest adjustment to your savings allocation can have a major ripple effect on your retirement savings. Earning interest on interest is key for growing wealth. Even if you're starting late, you can still benefit. Resist the temptation to withdraw earning and interest earned. Reinvesting may allow retirement assets to grow at an increasing rate. Our retirement calculator is a great tool for trying various scenarios as you build your nest egg.

The Best Time to Start Is Right Now

start early, so that you have years to accrue interest and earnings. While that may be true, it doesn't help you today. Fortunately, it's never too late.

Small adjustments in your investments, spending and retirement age can have a bigger impact than you might expect. The important thing is to avoid surprises when it's time to retire, and the best way to be sure is with the help of a financial professional. Even people who feel well prepared for retirement can be surprised by the opportunities a professional can find. Talk to PNC today about your situation and what may be the most appropriate course of action for you to achieve your retirement goals.

For financial planning help: Visit a professional in your local branch or call 1-855-762-4683