7 Signs Boomers Have Enough Savings to Last in Retirement

If you were born between 1946 and 1964, chances are you’re either retired or well on your way there. But do you have enough to enjoy those years comfortably?

Without enough money in your retirement accounts, your golden years might be a tough tight. Social Security only covers so much, and it’s worse if you have debt.

According to AARP, many Boomers are ill-prepared for the future ahead of them. So how can you tell if you have enough in savings? Financial experts say these are good signs.

1. You Have Little or No Debt

One of the key ways to determine whether you have enough savings to last is to determine how much debt you have. If you have little debt, such as a mortgage that’s almost paid off, or no debt, you’ll be in great shape.

However, if you have a lot of debt heading into retirement, your money will not last as long. The best thing to do before you stop working is to pay down your obligations as much as possible. This includes high-interest credit cards and loans.

2. You Contributed Early and Consistently

If you started contributing to your retirement plan early on, meaning as soon as or shortly after you entered the workforce, you had more time to build up savings. If you contributed consistently each year, you’re likely even better off.

The key is to give your retirement portfolio time to grow. Once you hit a certain benchmark, it’s better to be more conservative.

3. You Maxed out Your Retirement Plan(s)

Each year, the IRS releases its contribution limits, the maximum amount you can put away toward your retirement fund. If you consistently maxed it out year over year, and didn’t touch it, chances are you have more than enough savings to last several years.

If you’re still working, you have the opportunity every year to pad your retirment with catch-up payments. Only employees 50 and older have the option to contribute more.

4. You Have an Emergency Fund

One thing most Americans do not have is an emergency fund. This is a savings account that has between three and six months’ worth of expenses tucked away should an emergency crop up.

The idea is if you have an unexpected expense, such as a hot water heater that needs replacing or your car breaks down, you don’t have to touch your regular checking account. It’s also good to have in case you lose your job.

5. You Have a Nest Egg Outside of Retirement

If you have even more savings beyond your emergency fund and outside of your retirement, you’re pretty well prepared for years beyond the workforce. Hopefully, you’re investing this money in a short-term option, rather than letting it sit in a low- or no-interest savings account.

Certificates of Deposit (CDs), high-yield savings accounts, and money market accounts are just a few options available. Speak with a financial expert to determine which is best for your needs.

6. You Have a Deferred Annuity

A deferred annuity is a contract with an insurance company. It allows you to grow money, tax-free, for a specified amount of time. When that time period is up, you receive the money in guaranteed payments.

A deferred annuity is a great way to have reliable monthly payments coming in to supplement your retirement and your Social Security payments.

7. You Have a Solid Budget in Place and the Money to Support It

Budgeting is just as important after you retire as it is while you’re working. You need to figure out your plans for your golden years and how much money it will cost per year to live.

Once you have that sum, you can weigh that against how much money you have in your retirement account(s) and determine if it’s enough to live the life you want. Don’t forget to account for one other constant: inflation.

What if I Don’t Have Enough in Savings?

If you don’t have enough in savings, you have a few options. If retirement is a few years off yet for you, like it is for some Boomers, you can take advantage of catch-up contributions, which allow you to put $7,500 more and $1,000 more toward your 401(k) and IRA, respectively.

Another option is to work longer, past the full retirement age of 67-½. This will give you the opportunity to continue putting money away for a few more years.

Will Social Security Help Me Through Retirement?

Yes, but for most people it’s not enough. As of 2024, the average payout is just under $2,000 per month. Consider your monthly expenses and how far that money can go.

For those who do not have enough retirement funds, Social Security can definitely help bridge the gaps. But, barring some drastic unforeseen circumstances, it shouldn’t be your only source of income during your golden years.

When Is It Too Late to Put Money Away?

Ideally, you want to start as soon as possible, but it’s never too late to start saving. The reality, however, is the later you start, the less money you’ll have to settle down on.

You can always leave money in your retirement and let it gain interest while you withdraw smaller sums to live on. In fact, this is the preferred method to avoid a shocking tax payment as withdrawals, depending on the type of account, are typically taxed.