Are Your Retirement Savings On Track? Here Are 8 Tips

A woman reviewing her finances on a tablet in a bright living room. — A smiling senior woman reviews her retirement progress on a tablet while relaxing in her bright and airy home.

How Do YOUR Retirement Savings Look?

You’ve probably worked and have been saving up for most of your life. So now it’s FINALLY time to settle down and live off those retirement savings.

But what’s the best direction to maximizing your retirement accounts, such as a 401(k) and IRA, to guarantee that you don’t experience the most common retirement fear: outliving your money?

You might think it’s difficult saving for retirement with bills and other priorities eating up your earnings, but some strategies can help make the process easier.

Find out about 8 ways you can increase your retirement savings, and settle down with wealth and peace of mind.

Can you outlive your money?

Get Rid Of Any Unnecessary Costs

It will surprise you to learn that you might have more room in your budget to save for retirement than you think.

Tom Corley, author of “Rich Habits: The Daily Success Habits of Wealthy Individuals,” recommends going over your bank statements to find any unnecessary spending. “You’ll discover certain expenses for things you’re not even using.

Including club memberships, subscriptions, and automatic charges for services you’ve never used,” he said. We also recommend checking competitor prices on your cable, internet, and other services to see if you can get a better rate.

Once you lower your monthly expenses, you can put those savings towards retirement contributions.

Close-up of hands pouring coffee, representing steady daily retirement income. — A man pours steaming coffee into a mug, enjoying a slow morning supported by a sustainable retirement withdrawal strategy.

The 4 Percent Rule

The 4% Rule is an oldie, but goodie! And it remains a popular way to withdraw funds that reduces the risk of running out of money. With this rule, you withdraw 4% of your portfolio value in the first year of your retirement.

The amount of that withdrawal is then increased by the inflation rate each year. To simplify, if you have a $500,000 nest egg, your first-year withdrawal will be $20,000. In year 2, the $20,000 withdrawal will be increased by the inflation rate.

The 4% Rule is only applicable to the amount taken in the first year. Still, the amount of money withdrawn each subsequent year is adjusted upward by the inflation rate to maintain the buying power of the amount originally withdrawn in year one.

Downside: A withdrawal rate that’s too high, added with a declining market in the early years of retirement, might drain your retirement savings fund too much, too fast.

If you withdraw money when the market is down, you lose a little ability to ride it back up, which could permanently reduce your nest egg’s life span. This is also known as the “sequence of return risk.”

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Begin Saving Early

One of the most perfect ways to retire wealthier is to start saving money as soon as you make it.

Because of the power of compound interest, even small monthly contributions to a retirement account or other high-interest reserve can grow over time to become a sizable nest egg. The more time you have, the more your money will increase.

You can capitalize on its high-interest rate if you take advantage of something like a 12-month CD from SunTrust.

Locking in an interest rate guarantees that your retirement savings will grow whether you want to put your money away for your short-term or long-term goals. This is a great way to let your money work for you by saving sooner.

A woman organizing travel plans, representing different financial 'buckets'. — A smiling woman reviews maps and photo albums, organizing her financial buckets for a retirement filled with new adventures.

The Bucket Strategy

This strategy splits the difference from other methods, leaving the money invested in high-return assets for more extended periods while allowing you to take out cash for your short-term needs.

Your investments are divided into three buckets according to when you need the cash and are placed in various investments matching a time frame and risk:

Bucket 1 holds the money you need within the next 6-12 months. It’s maintained in high-yield retirement savings accounts or some other liquid account.
Bucket 2 holds the money you need over the next 7-36 months. It can be invested in short-term bond funds or higher-return CDs.
Bucket 3 contains the investments you won’t need for at least 24 months. This allows you to put at least some of them into higher-yielding assets like stocks.

When funds from the first bucket are drawn out, you pour in money from the second or third bucket, depending on how investments in those accounts have performed. By securing your short-term cash needs, you give the support in later buckets a chance to develop.

This benefit is that the retirees have protected their retirement savings from market volatility. The following 12-36 months of expenses are safer and provide excellent comfort and security.

Meanwhile, they can take advantage of the potentially positive outcome of market volatility and increased returns on the funds invested in bucket 3.

A total return strategy might give you the most possible upside, but a bucket approach gives you more safety today because you’ve locked in your cash needs and still offers some long-term upside.

The downside of this retirement savings approach is that it may require more regular monitoring from individuals to refill the buckets.

Don’t Fear Risk

For many people, the key to success in investment comes down to three words: Save-Save-Save, says Ken Weber, president of Weber Asset Management and author of “Dear Investor, What the Hell Are You Doing?”

But, it’s not enough to just put away your money in a retirement savings account. You have to take some sort of risk to be able to reap the rewards later on, he mentioned. You should invest with as much gambling as you can tolerate for each stage of your life.

Ideally, it would be best if you were putting most of your retirement savings into stock mutual funds in your 20s and 30s. And as you get closer to your retirement age, you can lower your risk by investing in fixed-income assets, such as bonds and stocks.

Or, consider a target-date fund that will automatically adjust your allocation of stocks and bonds as you approach your retirement.

A couple walking on a beach at sunrise, symbolizing steady financial habits. — A senior couple strolls along the beach at sunset, enjoying the reliable financial freedom of a fixed-dollar strategy.

The Fixed-Dollar Strategy

In the fixed-dollar strategy, seniors can determine how much they need to withdraw each year and then reassess it every few years.

Their withdrawals could be reduced at any point in the future to match a lower portfolio value, or they could even be raised if their assets have increased in value.

One massive benefit to the fixed-dollar strategy is that retirees know the exact amount of money they will be receiving every year for their retirement savings. Unfortunately, the downside is that this strategy doesn’t protect the retiree from inflation risk.

This strategy is faced with the same downfalls as the 4 percent rule when faced with volatility.

A collection of various hobby items, representing a diversified lifestyle and portfolio. — A camera, passport, and gardening tools represent the diverse assets that build a rich life and a balanced portfolio.

Diversify Your Investments

You shouldn’t be putting all of your money in just one stock. If you do, you risk losing your retirement savings if that stock takes a nosedive. We recommend diversifying your portfolio with a combination of stocks and bonds or mutual funds.

And if you want some safer options to add into the mix while still increasing your retirement savings, use high-interest savings accounts like the SunTrust Advantage Money Market Savings account.

You only need $100 to open the account, and with balances of $10,000 or more, you’ll receive a competitive interest rate. Your money will grow, but at the same time, it’s also readily available to you if you need it for an emergency.

A beautiful American home at sunset, symbolizing total financial success. — A family celebrates financial freedom at their debt-free home, showcasing the ultimate reward of a disciplined total return strategy.

The Total Return Strategy

This strategy aims to remain fully invested as long as possible with long-term growth assets such as stocks. This strategy works well for seniors who can handle higher-risk, higher-return assets such as stocks and don’t need to sell them if the market drops.

You can ride out the market’s instabilities to an overall higher return. It helps if you have more money in your retirement savings fund so that any amount you do take is a small portion of your assets, leaving the rest in the account to appreciate.

Unfortunately, this strategy exposes your portfolio to higher potential gains and losses, which may not be possible for many retirees. If you need to tap into your accounts just when the market has declined, you may have to sell or downsize your living expenses.

Ultimately, the total return strategy can succeed because your assets remain invested long-term. Still, it should be used for clients with good knowledge of market performance and can handle the volatility and optics of selling, even when markets are down.

Takeaway

The bottom line here is that whichever approach you take when it comes to retirement strategies, you should make sure it lines up with your overall needs and goals. And remember to think long-term.

It can be a very complicated process and requires special skills when planning for your future decades in advance, so it may be worth hiring an independent financial planner to help you manage this retirement savings process.

And if retirement savings is a big concern for you, you might also want to check out: 5 Types of Retirement Income That Are Exempt from Taxes