Just because you’re a “retirement age” baby boomer doesn’t mean you’re actually in a position to retire. Financial preparation, not age, is the key to a successful retirement.
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While many Americans believe that once they hang up their work shoes they will be able to retire through savings, Social Security and/or a pension, the truth is that many will not. really ready. If you’re a baby boomer – generally defined as born between 1946 and 1964 – and you’re having trouble retiring, it could be due to one of the signs listed below.
If you can solve any of these problems, you may one day be able to make it to the promised land of retirement.
You haven’t reached your retirement savings number
The biggest and most obvious reason why you won’t be able to retire is that you can’t meet your retirement savings goal. For example, if you need $40,000 a year to live on and you only have $100,000 in your retirement account, you are not really in a position to retire. Sure, you could live for two or maybe three years on that money, but if it runs out and you don’t have any real sources of income, you’ll find yourself in a tough spot.
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While it may seem a bit late to start saving for retirement if you’re already 70, if you’re on the younger end of the baby boomer spectrum – say, around 60 – you can continue to work and save for at least a few more years. This alone may be enough to help you achieve your goal. Remember that the longer you work, the fewer years of retirement you will have to fund, so your savings goal will decrease each year.
You have too much debt
Debt is a financial killer, no matter what your age. During your working years, debt diverts your cash from your savings and investments, making it difficult to reach your retirement savings goal and creating problem #1 above.
Debt is especially troublesome if you’re already in your 60s or 60s, as paying down debt and maxing out savings at the same time can overwhelm your cash flow. If you have too much debt at age 70, it can be difficult to retire, even if you’re only making minimal payments, so try to start addressing this problem as soon as possible.
You don’t have an emergency fund
While an emergency fund isn’t an absolute necessity for retirement, it’s definitely a red flag if you don’t have one. One large, unexpected cost could put you in deep debt, which in turn would deplete your cash flow. So a retirement budget that covers all of your bases should divert significant resources to servicing debt.
Without enough money to cover basic expenses like rent and utility bills, you could fall deeper and deeper into a spiral of debt that you can’t recover from. This is why having an emergency fund is essential in order to be able to retire.
You don’t know how to budget
In retirement, you will trade your main source of income for investment and social security income. Although the value of your investment accounts may increase and your Social Security payments adjust annually for inflation, this type of income is essentially fixed. If you don’t know how to budget around a fixed income, chances are you’ll fall into an overspending pattern.
Without the ability to track every dollar coming in and going out, it’s far too easy to spend money whenever you want. This will almost certainly deplete your retirement savings prematurely. If you don’t have the interest or the ability to budget, you really aren’t in a position to have a successful retirement.
The good news is that budgeting isn’t particularly difficult – it just takes patience and dedication. Even if you’re already over 70, it’s not too late to learn how to budget.
You can’t imagine life without work
A successful retirement isn’t just about the numbers. There is also a well-defined mental component. If, after a lifetime of working and socializing in an office, you’re not sure you’re ready for a life on your own, you may not be. If you don’t have any outside hobbies or plans for your life after retirement, retirement could actually become a chore or downright lonely.
To avoid falling into this predicament, start thinking about exactly how you envision a successful retirement and make sure to fill it with mentally stimulating activities.
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This article originally appeared on GOBankingRates.com: Boomers: 5 Signs You’ll Never Be Able to Retire