As Americans across the nation face a savings crisis, it helps to get a plan to retire comfortably.
On average, about half of Americans may experience a shortage covering substantial retirement expenses, according to Fidelity Investments.
"It's a challenge for many Americans," said Keith Bernhardt, vice president of pension income at Fidelity Investments, to FOX Business.
Overall, Bernhardt recommends that people spend 1
Stashing money in a 401 (k) or other employer-sponsored plan can help, especially when there is an employer match. This would be reported in the 15 per cent saving target. The grant limit for 401 (k) plans in 2019 is $ 19,000. People over the age of 50 can cut off an extra $ 6,000 in so-called catch-up contributions.
For IRA, the grant limit is $ 6,000.
Health Insurance Account (HSAs) is another useful tool. An HSA is an account where an individual contributes pretax dollars for the explicit purpose of spending these funds on future healthcare costs. HSAs can be used to cover everything from dental, vision and prescription costs to Medicare premiums.
Furthermore, social security is a "very important factor that should come into play," says Bernhardt.
However, many people have rather serious misconceptions about the program, which was designed only to supplement pension savings – not replace them. As previously reported by FOX Business, one-in-four Americans believe they will be able to live on social security alone. Others believe that if they claimed their benefit at the age of 62, it will actually increase over the years.
Misconceptions can lead to people making poor decisions. Some people claim benefits early, for example, because they think the program is "broken", while others do it based on hearsay or advice from family and friends. "
" One of the most powerful things people can do is delay social security, Bernhardt says. "Every year you delay your payout by about 8 percent annually. It can make a really big difference in your life."
The reduction of benefits for those claiming 62 years is 25 percent, 20 percent for those who claim 63, 13 , 3 percent at age 64 and 6.7 percent at age 65. means that it can be worth staying in the labor force for some extra years.
People may have problems because the social security reserve funds are expected to be depleted by 2035, according to the annual report Social Security and Medicare Trustees. At that time, approximately 80 percent of the benefits will be paid.
But for today's workers, Bernhardt says that social security is something people can trust, even if the program is changed or adjusted.
"It is a very important part of the Americans' economy, I think it is reasonable to expect that it will last quite a long time," he says.
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Working with a financial advisor has proven to help. Those who worked with an expert saw 15 percent greater lifetime social income benefits – $ 1,551 per month compared to $ 1,324.
It is also important to note that if you recently submitted, but think you made a mistake, you can turn that decision within 12 months, to pay you all the money back in a lump sum, cancel your account and it continues to grow until you are ready to file benefits in the future.