EL PASO, TX - Rising costs and keeping up with your current financial obligations – like raising kids and paying for college – means some Americans are tempted to hold off on saving for retirement. They think it makes sense to wait until the kids have grown and there’s more money to save. The problem? It’s easy to say you’ll save more later, but as ABC-7 Financial Contributor and Investment Advisor Brian Mirau explained on ABC-7 at 4, a lot of empty nesters are struggling to keep that promise to catch back up.
"The Center for Retirement Research at Boston College says empty nesters, who are parents whose kids have left home, are not saving more for retirement after the kids have left," Brian explained. "Many parents cover hundreds of thousands of dollars in college costs, rather than building their own retirement savings and they’re planning to catch up later. The survey found empty nesters aren’t paying down mortgages or debt any faster than they did during their working years. The survey shows many people actually cut back on work hours once their children were out of the house and took more leisure time, but their savings rate didn’t increase significantly."
Brian explained the rules for catch-up contributions for people who want to boost their savings in the final years of their career.
"If you have retirement accounts like IRA’s and 401-K’s and your income falls into specific levels and are over the age of 50, you can make up past contributions and deposit $7,000 per year if you have earned income. That is $1,000 more that the regular $6,000 allowance. This will allow you boost your savings for the older person you will someday be."
Mirau talked about the reality check he has with some of his clients who aren't saving as much as they should.
"One of the first things we do is run a retirement income analysis," said Brian. "This will take into consideration many of the landmines’ retirees face in retirement such as taxes, inflation, unnecessary fees, long term care expenses and market risks. This is eye opening and will help answer the question 'Have I Saved Enough?' If you see that your current savings rate is not enough, you may need to 'right you ship.' The quicker you understand and know what your picture looks like, the quicker you can make adjustments to correct your path."
Brian concluded by saying you must have a game plan for your retirement. You need to know your options now before you flip the switch and call it a career.