Having your financial fitness in dire straits is a situation nobody wants to find themselves in – especially when you’re approaching retirement. Retirement planning is like training for a marathon; it takes long-term, carefully laid out preparation. However, many employees don’t look far enough ahead to consider their financial wellness after they retire. Retirement savings could end up being far less than what they’d need to survive, and unfortunately, there isn’t a time machine to let them go back and make different, more financially sound choices.
The good news is, unlike training for a marathon, it’s never too late for an employee to get their finances in order. Here’s some advice to give your staff on how they can revitalize their financial situation going into retirement.
Consider Downsizing
Ask your employees if they really need all the space they’ve currently got in their homes. Many aging workers will have families with grown children, and they likely don’t need all those extra bedrooms – not to mention the bill costs of keeping a large house heated or air-conditioned. It could be the right time to suggest they consider downsizing to a smaller house, especially if their new accommodations cost less and they end up making a tidy profit. U.S. News even proposes using a home sale as a chance to sell off unused items, which could add even more money to the pot.
Pay Off the Mortgage
If your employees are determined to stay in their original home, then at least suggest they completely pay off what remains on their mortgage. Monthly payments can be a slow drain on savings, and the same can be said for paying rent every month. Advise your retiring staff that they look to pay off these housing debts as soon as possible, so they can count on keeping more of their retirement savings – and reduce rising tenancy costs year after year.
Work on Your 401(k)
If your older employees haven’t been maxing out their 401(k)s, tell them there’s still time to make contributions that will go toward their retirement fund. According to the slideshow at U.S. News, “Workers ages 50 and older can contribute up to $24,000 to a 401(k) in 2016. If you maxed out your 401(k) for 5 years between ages 60 and 65 and earned 6 percent annual returns, you would pad your nest egg with an additional $139,648.” Smart investing is even smarter if your workplace allows other contributions to this account.
Look for the Discounts
It may be a matter of pride for some older colleagues, but the truth is that there are tons of savings out there for people who use the senior discount. A number of retail stores and entertainment venues such as movie theaters offer discounts for people above a certain age (generally in the range of 50-65 years old and up), and the money saved could be put towards an individual’s retirement nest egg. It also goes towards keeping more frugal habits once a person’s time in the workforce is done; having good financial fitness doesn’t mean living outside of one’s means, especially during retirement.
Stay On an Extra Year
Not all employees are in a hurry to retire, and staying on for a bit longer could actually be the best choice for someone who hasn’t had as much time to accrue retirement savings. U.S. News notes that if you delay retirement until an older age, you’ll actually qualify for higher Social Security payouts (up to age 70) – and suggests that even a part-time job can help keep someone afloat without having to dip into their savings. Any extra time a person can get to grow their retirement savings is valuable, particularly if their retirement planning is coming right under the wire.
Regain Financial Fitness Before Retirement
It’s important to reassure older employees that it’s not the end of the world if they haven’t spent decades building up retirement savings. What really matters is that they get their financial fitness back on track to ensure that their golden years aren’t hampered by poor retirement planning – and by using the above tips, you have a good chance at keeping your retiring staff worry-free.
For more information, check out our in-depth guide to Retirement Planning.