Five tips to boost your pension savings for early retirement

Americans are increasingly looking for the best ways to bolster their retirement savings. Experts are sharing five ways it may be possible to retire 10 years earlier than the Full Retirement Age (FRA) which is 67 in the US.

In Nerdwallet’s poll of 2,000 Americans, 30 percent admitted that their planned Retirement Age has changed over the past 12 months.

Some 16 percent plan to leave the workforce later than originally planned, while 11 percent are preparing to retire early.

Respondents who have yet to retire but plan to at some point have a planned average Retirement Age of 57.

This is a full 10 years before the FRA with Americans not having the opportunity to partially qualify for Social Security benefits until they reach 62.

In light of this, Nerdwallet broke down the five ways people can make plans towards an earlier retirement.

These include:

  • Saving more money
  • Knowing how much they want their retirement pot to be
  • Allocating investments accordingly
  • Understanding withdrawal rules
  • Part-time work after retiring.

When it comes to savings, most experts agree that the more people put money away in their pots, the more they will have in retirement.

It is generally recommended that workers save anywhere between 10 to 15 percent of their pre-tax earnings.

One of the stand-outs from Nerdwallet’s poll was that one in five people did not know how much they will need to have saved in order to retire early or comfortably.

The finance advice site recommends using retirement calculators to determine how much individuals will need to have in their pension pot.

In order to have an early retirement, taxpayers will need to have a more aggressive investment portfolio.

While it is possible to retire with a majority-stock portfolio, it is generally safer to have a mixture of assets, according to Nerdwallet.

In the US, retirement plans are often tax-advantaged which means there are rules about withdrawing funds from them.

For example, if someone takes money out of their 401(k) before turning 60, they could be levied with a tax penalty.

Alana Benson, a NerdWallet investing and retirement writer, shared why many people are considering leaving the workforce earlier than expected.

She said: “For some who are getting close to retirement, high inflation, layoffs or other factors may have impacted their ability to retire on schedule.

“Remember that your money, your emergency fund and your retirement savings, are tools so you can live a good life.

“You may choose to bolster them now, so you can have less stress and live more comfortably in the future. But everyone’s situation is unique. Don’t feel bad if you have to use those tools earlier than you planned.”

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