Bridging The Retirement Income Gap Article | Golden Opportunities In Every Move

Ingrid J. Storm
DRE Lic #01752907
Century 21 Real Estate Alliance
ingrid@ingridstormproperties.com
(831) 888-7114

Bridging The Retirement
Income Gap

June 2023

Start Saving Early: The sooner you start saving for retirement, the more time your money has to grow through compound interest. Begin saving as early as possible and contribute regularly to retirement accounts such as 401(k)s, IRAs, or pension plans.
Increase Savings Rate: If you’re already saving for retirement but find there’s a gap, consider increasing your savings rate. Look for opportunities to cut expenses and redirect those funds towards your retirement savings. Aim to save at least 10-15% of your income.
Take Advantage of Employer Contributions: If your employer offers a retirement savings plan, such as a 401(k) or a pension, contribute enough to receive the maximum employer match. It’s essentially free money that can significantly boost your retirement savings.
Diversify Investments: Diversification is crucial to manage risk and maximize returns. Consider diversifying your investment portfolio across various asset classes, such as stocks, bonds, real estate, and international investments. Consult with a financial advisor to create a well-balanced and diversified portfolio based on your risk tolerance and retirement goals.
Consider Delaying Retirement: Working a few more years can significantly increase your retirement savings and reduce the income gap. It allows you to accumulate additional savings, delay claiming Social Security benefits, and give your investments more time to grow.
Explore Part-Time Work: If continuing full-time work isn’t feasible, consider working part-time during retirement. It can provide a source of income to supplement your retirement savings and help bridge the income gap.
Optimize Social Security: Understand the implications of claiming Social Security benefits at different ages. Delaying the start of benefits beyond the minimum age (typically 62) can result in higher monthly payments. Consider factors such as life expectancy, health, and overall financial situation when deciding the best time to claim benefits.
Generate Passive Income: Explore opportunities to generate passive income streams during retirement. This could include rental properties, dividend-paying stocks, bonds, or annuities. Passive income can provide additional funds to supplement your retirement savings.
Downsize or Relocate: If your housing costs are a significant portion of your retirement expenses, downsizing to a smaller home or relocating to an area with a lower cost of living can help bridge the income gap. It can free up equity, reduce monthly expenses, and potentially provide additional savings.
Seek Professional Financial Advice: Consult with a certified financial planner or retirement specialist who can assess your unique situation and provide personalized advice. They can help you create a comprehensive retirement plan, optimize your investments, and suggest strategies to bridge the income gap effectively.

Remember that bridging the retirement income gap requires careful planning, discipline, and often a combination of multiple strategies. It’s crucial to start early, make consistent efforts to save and invest, and adjust your plan as needed along the way.