What To Do When You Haven't Saved Enough For Retirement.
How much is in your savings accounts?
A simplified equation for determining how much you will be able to spend during your first year in retirement is Social Security benefit(s) + pension benefit(s) + 4% of retirement savings.
Retirement savings in a Roth IRA or Roth 401(k) account will generally not be taxed if withdrawn past the age of 59½.)
Still, you can start by estimating your fixed expenses and likely discretionary expenses to get an idea of what you will need.
Every year no money is withdrawn from retirement savings is an extra year those savings can benefit from compounded returns.
For a person who has not saved enough, the potential tax savings must be weighed against the ability to save more for retirement.
Though Roth IRA withdrawals are not taxed, a person’s or couple’s tax rate may be lower in retirement.
Allocate money needed in three to seven years to a bucket with high-quality bonds and high-quality dividend-paying stocks.
A smaller withdrawal rate is used during years with bad investment returns and a larger withdrawal rate is used during years with good investment returns.