Issue 3, 2025

Make up for lost time Reader Question: I’m close to retirement age but haven’t been a great saver. How can I turn things around? Life happens. Now, you’re closing in on retirement with little or no retirement savings. Does that mean you’ll have to work until you die? The short answer: There is always hope. It’s never too late to start preparing for retirement. Let’s explore four things that may surprise and help you replace retirement despair with hope. • Deferred Comp Catch Up Provisions • Social Security • Retirement Savings & Budgeting • Home Equity • Eliminate Debt Catch-up Provisions Uncle Sam knows saving for retirement isn’t always easy, and many Americans could use a boost. So, Congress created special catch-up contributions. • If you’re age 50 or will turn 50 before the end of the calendar year, you may contribute an additional $7,500 in 2025 under the Age 50+ Catch-Up provision. • You may also have a chance to save even more in the three years before your normal retirement age, if you didn’t max out your contributions in past years. Contact a plan counselor for more information on these “catch-up” provisions [link here]. Social Security Are you eligible for Social Security? One option for closing potential income gaps is postponing Social Security. Did you know you will receive an 8% increase in monthly benefits for every year you delay taking Social Security after your FRA (Full Retirement Age) and age 70? First, and most importantly, check your potential Social Security benefit. You can access a Free statement online with personalized monthly retirement benefit estimates for various ages. When debating when to start Social Security, two key factors to consider are health and longevity risks. Are you in good health, and will you live long enough to claim a larger benefit? The decision of when to start Social Security benefits can be rather complicated. For more details, check out My Penny Earned’s on-demand webinar, Managing Your Retirement Income. (Login required) Retirement Savings & Budgeting Savings are the first place we often look to when plugging a retirement income gap. But, to save for retirement, you need to find some money to save – if even a little bit. Get aggressive with, or start, a basic budget. That will help you identify and reduce any optional expenses while controlling debt. See My Penny Earned’s Budgeting & Financial Goals courses. (login required) Home Equity If you’re buying a home, remember your mortgage also is a form of forced savings. With every payment, you own a little more of the house and owe a little less. That savings is called equity, which can come in handy in retirement. Eliminate Debt Finally, make it a priority to eliminate debt before retirement. Imagine how life without a mortgage, car, and credit card payments will help you stretch those retirement dollars. See My Penny Earned’s Managing Debt courses. (Login required)

Getting the Most From Social Security Are you bouncing back from hard times or working at a lower-paying job you love? You may get more Social Security benefits than you know. Those with lower earnings may actually replace a greater percentage of their income than those making more. Why the difference? Social Security’s benefit calculation is “progressive.” That means it provides proportionally higher benefits to workers with lower incomes. Hypothetical Example For example, let’s consider Joe, an IT pro. He’s earning $120,000 and could receive Social Security benefits, replacing about 30% of that income at his full retirement age. However, his brother Jim, a laborer earning $40,000, may replace as much as 45% of his income with Social Security benefits at his full retirement age. Learn more from the Social Security Administration.

Where Will You Retire? Should I stay, or should I go? Millions of Americans plan to relocate when they retire, whether for lower costs, better weather, or to be closer to family. Are you one of them? Still, most retirees do not move. According to a study from Boston College’s Center for Retirement Research, 53 percent don’t leave the home they owned in their early 50s. Do you plan to move in retirement or stay put? Why? Take the survey, and we’ll report the results in the next newsletter.

Will you stay, or will you go? Take the survey.