72% of Retirees Say Retirement Is Going as Planned: 5 Things They’re Doing Right
Written by
John Csiszar
Edited by
Amber Barkley
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With all the reports in the press about how hard it is to save for retirement, it’s easy to get discouraged. But perhaps things are not quite as bleak as you’ve been led to believe.
According to recent data from Fidelity Investments, 72% of recent retirees said “their retirement is going as planned,” and 70% indicated that they have “saved and planned appropriately for a comfortable retirement.” This is certainly encouraging news, and it shows that with foresight and dedication, a financially secure retirement is indeed within reach of many Americans.
If you don’t feel like you’re quite on track yet with your own retirement, a good strategy is to take lessons from those who are. Here are some of the key things the successful retirees in the Fidelity study are doing right.
Multiple Sources of Income
Successful retirees typically report having multiple sources of income — not just during their working careers, but after they retire, as well. In addition to Social Security, many financially secure retirees have pensions, 401(k) plans, IRAs or other types of retirement accounts, in addition to rental real estate and/or private investment accounts.
Not only do multiple income streams help to diversify your holdings, they also provide options in case any single income source dries up or becomes unpredictable.
Predictable Income Streams
Speaking of predictable income streams, most successful retirees have regular income checks coming in that either remain the same or increase over time. This type of consistent income makes budgeting in retirement much easier.
If you know for a fact that you’ll have, for example, $2,200 in monthly Social Security checks and $1,500 in pensions or other income, you can budget around having at least $3,700 coming into your bank account every single month.
One common strategy is to use fixed, guaranteed income to cover necessary bills, such as rent and utilities, while using variable income to cover discretionary expenses, like eating out or travel.
Consolidated Retirement Accounts
By the time you retire, it’s likely that you’ve worked a number of different jobs in your life. If you’ve left various 401(k) accounts or other retirement plans scattered across different employers, it can be hard to manage them all — or even remember they exist.
Many successful retirees make sure to transfer or roll over their retirement accounts as they go, ultimately building them into one large account by retirement. This makes tracking your money, compounding it and managing it much easier and more efficient.
Catch-Up Contributions
Catch-up contributions are a true gift from the tax code, as they allow those 50 and older to shovel additional money into their retirement accounts.
While you can only put in an additional $1,000 to your IRA, you can add an extra $7,500 per year to your 401(k). If you’re turning 60, 61, 62 or 63 by the end of 2025, then you can avail “super” catch-up contributions of a whopping $11,500 annually.
Considering you are likely in your peak earning years in your 50s and 60s, this is a great way to rapidly boost your nest egg.
Solid Investment Mix
Obviously, the higher the investment returns you can generate, the more rapidly you can reach your savings goals. But those who have successfully planned for their retirement understand that risk must be balanced with reward.
While an all-stock portfolio potentially generates a higher gain than a balanced one, it also courts extensive short-term risk. If you work hard all your life building a sizable nest egg and then see its value drop by 20% right when you’re about to retire — which happens relatively frequently in the stock market — you could find yourself scrambling just as you’re planning to relax and enjoy “the good life.”
Each individual investor has their own financial goals and ability to handle risk, so be sure to build a portfolio that matches yours.
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