Adjusting your plan
Once you have a better estimate of your remaining years, you can tweak your money plan for a longer life.
1. Start saving to go the distance.
Use one or more retirement-income calculators to estimate if you’re on track, based on factors such as your new longevity expectations, how much you’ve saved so far, your expected Social Security benefit and other guaranteed income, and your spending. Ameriprise, Fidelity, NerdWallet, T. Rowe Price and Vanguard all have good web-based tools; just search online for the company name and “retirement-income calculator.” If your projections come up short, look for efficient ways to save more. Workers should generally turn first to their employer’s 401(k) or 403(b) plan; these make it easy to contribute pretax dollars. Your employer may match a portion of your contribution, too, boosting savings even more.
Plus, take advantage of catch-up contributions, which let workers 50 and older contribute additional sums to their retirement accounts. This year, for instance, you can shovel an extra $6,500 into your 401(k) plan, beyond the standard $19,500 limit; you can bump another $1,000 more than the standard $6,000 limit into a traditional or Roth IRA.
2. Look for ways to cut back.
For many older Americans, that translates into giving your family more of your time, not more of your money. In a recent CreditCards.com poll, nearly 80 percent of parents who helped their adult kids financially during the pandemic said they gave money that they would have otherwise used to improve their own financial situation — to pay off debt, for example, or to save for emergencies and retirement. The average gift was $4,154. That’s in line with other surveys, such as one by Bankrate that found that half of parents put their retirement savings on a back burner in order to help adult children.
3. Plan for health costs.
If your employer offers a health savings account with a high-deductible health insurance plan, consider enrolling in it. You can save pretax dollars that grow tax free. Even better, when you withdraw the money to pay for qualified medical expenses, you owe no taxes.
Plus, check if you’re entitled to wellness benefits such as a subsidy for a gym membership. A few hours every week practicing yoga or lifting weights could save you a bundle in the future — and give you a better, more active retirement. Remember: Unexpected medical costs are one of the top financial challenges of retirement.