What should you have saved for retirement?
Everyone has different needs, and therefore might have a different number when it comes to the ideal retirement nest egg. The best way to figure yours out is to make your own budget based on your expected expenses and identify your income sources.
For example, if you want to live off of a $60,000 annual income, you may need to find ways to bolster your savings and boost your income, if possible. Keep in mind as well that the age you begin to claim Social Security determines your monthly benefit.
Let's not forget the importance of an emergency fund, even in retirement. This will help protect you against an unexpected medical or housing expense.
It's also never a bad idea to consult a financial adviser to help you plan your retirement journey.
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Read MoreHow you can still build a secure retirement
There are a number of different ways you can better prepare yourself as you enter retirement. Boomers who are still working can take many different steps to increase financial security in retirement, including:
Step up savings: Workers aged 50 and older can make extra "catch-up" contributions to 401(k) and IRA accounts. While the typical worker can contribute $23,000 to a 401(K) and $7,000 to an IRA in 2024, Americans aged 50 and up can invest $30,500 and $8,000, respectively. Aim to max out these accounts so tax breaks and employer 401(k) matching contributions can grow your nest egg.
Work longer: Staying on the job provides more time to save and puts off the time when you start drawing down your accounts. You can often increase your Social Security benefits by working longer as well, either by delaying your claim or raising your career-average wages that benefits are based on — or both.
Invest in an HSA: If you have a qualifying high-deductible health plan, you can make tax-free contributions to a health savings account (HSA). Health savings accounts provide a triple tax benefit. Withdrawals for medical expenses are tax-free. Investment growth within the account is tax-free. Contributions also reduce taxable income. Withdrawals for any reason are also allowed after age 65 without penalty, though may be taxed as ordinary income.
Downsize: The total value of homes owned by baby boomers is around $18 trillion, according to Redfin. Selling could allow older Americans to capture some of their housing gains, pay cash for a smaller home and bulk up their investment balances.
Exploring these choices could help ensure retirement security is still within reach. Those who have already retired also have similar choices, including downsizing, working part-time to increase savings or moving to an area with a lower cost of living.
Correction, June 17, 2024: This article previously reported baby boomers held $18 trillion in home equity, according to Redfin, when in fact this is the total value of the homes they own.
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