4 Retirement Moves Americans Over 50 Weigh When Savings Drop Below $500K
Don't think you're unprepared just because you're underfunded. Having a financial plan makes all the difference to your retirement.
Americans over 50 say they need $500,000 to feel secure in retirement, according to a recent Western & Southern Financial Group survey. But if their savings fell below that mark, many already know what moves they would consider next.
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Some of those strategies can help strengthen a retirement plan. Others may require more careful planning. The key is knowing which responses can improve cash flow, and which could create long-term trade-offs.
Here are four moves older Americans say they would consider if their retirement savings dropped below $500,000 — and what to know before making them.
Reduce Everyday Costs
If their retirement savings fell below $500,000, 67% of Americans over 50 said they would cut back on day-to-day spending.
"Cutting back on day-to-day spending can be one way to create room in your budget and build savings over time," said Matt Loveless, vice president of agency strategy, training and field talent acquisition at Western & Southern Life.
However, focusing on larger expenses will usually move the needle more.
"Small changes can add up, but reviewing larger recurring expenses may have a greater impact for some households," Loveless said. "Housing, transportation, insurance and subscription services are good places to review, along with discretionary spending like dining out and entertainment."
Regularly evaluating these expenses may help identify opportunities to save while maintaining a lifestyle that aligns with your financial goals.
Return to Work Part-Time
Over half of Americans 50 and older (58%) told Western & Southern they would return to work part-time if their savings dropped below $500,000.
"Returning to work part-time can be an effective way for some people to strengthen their retirement finances by generating additional income while allowing retirement savings to remain invested longer," Loveless said.
Of those who planned to return to work, 73% believed doing so would positively affect their retirement finances.
"Whether it's more effective than cutting costs depends on an individual's circumstances," Loveless said. "For some, increasing income may have a greater impact than reducing expenses alone. A combination of managing spending and earning additional income may provide the greatest financial flexibility."
Sell Assets
About a third of those surveyed (30%) said they would sell assets if their savings fell short — but not all assets are equally helpful to sell.
"Selling assets can have a meaningful impact on retirement finances, but the decision should be made carefully," Loveless said. "Because each asset may serve a different purpose in a retirement plan, it's important to evaluate options carefully."
Underutilized or high-cost assets, such as a second vehicle or vacation property, may be worth reviewing first, he said.
"Before selling any asset, consider factors such as taxes, market conditions, future income needs and the role the asset plays in your long-term financial strategy," Loveless said.
Draw Social Security Earlier
Lastly, about a quarter of Americans over 50 (23%) said they would start collecting Social Security earlier than they had planned if they missed their savings target.
"Claiming Social Security early may provide needed income, but it is not always the best long-term financial decision," Loveless said. "Claiming benefits before full retirement age generally results in a lower monthly benefit for life."
While it's important to consider the long-term tradeoffs, collecting early may still be the right choice for some.
"There are situations where claiming early may make sense," Loveless said, "depending on factors like income needs, health, other sources of retirement income, taxes, potential spousal benefits and overall retirement goals."
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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