Behind On Saving for Retirement? Here’s How to Catch Up
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Access to affordable credit helps me pay my employees, but I don't really need it. Inflation is killing me. But who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill. See? Banks and credit unions help small businesses make payroll. This bill would cut the vital resources they need. While increasing megastore profits. They deserve it, don't they? Tell Congress, stop the Durbin Marshall money grab for corporate megastores. Paid for by the Electronic Payments Coalition.
Here's your Money Briefing for Monday, August 26th. I'm J.R. Whelan for The Wall Street Journal. Last week, we focused on how some members of Generation X who are approaching retirement are not in a financial position to stop working. Today, we're looking at ways they can catch up.
The IRS allows people 50 and older to make additional contributions to 401ks or other similar employee-sponsored retirement plans. This year in 2024, everyone is allowed to put $23,000 into a 401k or an employer sponsored retirement plan. If you're 50 and older, you can add an extra $7,500 on top of that.
Wall Street Journal reporter Hannah Miao spoke to financial professionals about other ways Gen X can better prepare for retirement. She'll join us after the break.
Access to affordable credit helps me pay my employees, but I don't really need it. The inflation is killing me. But who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill. See? Banks and credit unions help small businesses make payroll. This bill would cut the vital resources they need. While increasing megastore profits. They deserve it, don't they? Tell Congress, stop the Durbin Marshall money grab for corporate megastores. Paid for by the Electronic Payments Coalition.
Americans close to retirement age who feel uneasy about the amount they've saved have options to catch up.
Why are many Gen Xers feeling unprepared for retirement?
Wall Street Journal reporter Hannah Miao joins me. Hannah, refresh us as to why many in Gen X, or those approaching 60, feel unprepared for retirement.
Gen X is considered the guinea pig of the 401k system. So the 401k system really became popular starting in the 80s. So Gen X's career really lined up to begin at the start of this transition from pension systems to a 401k system. where it's up to you to save for your retirement and invest it. And when Gen X was starting out their career, a lot of the options that make 401ks more helpful for workers these days, like automatically enrolling workers in them or automatically upping contributions, were not quite commonplace yet. So they were starting from a place of this being a new thing and trying to understand this transition.
You spoke with financial advisors who said that people who are wary of what they have in their retirement portfolio still have time to make up for shortfalls. What's the first thing they should do?
First is to take a very thorough look at your finances. And you can start by taking a look at your expenses. Obviously, it's not always fun to see exactly what you're spending on things. But once you do an audit of that and get a sense of what you're spending on necessities and what you're spending on everything else... It helps you understand first a sense of how much money you actually are going to need in your retirement to keep up with your regular day-to-day living and also where you could potentially cut back on spending to increase your savings. And then from that point on, you should also take a look at where your retirement funding is right now. What are the savings you have in place? What are the 401Ks plans that you have?
Do you have a pension that you're entitled to? Getting a sense of that full picture. And then from there, it helps you calculate exactly how much more you want to save to meet your goals.
The pension and 401Ks seem to fall under a category of sources of income people might have forgotten about. What else could be in that category?
Yeah. So people have forgotten about 401ks from previous jobs.
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