If you think you're ready to retire, think again — Money moves to avoid a financial crisis in retirement

Moneywise

Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.

Everyone hopes that their reward for decades of hard work will be decades more to enjoy the fruits of their labor.

But if you ask financial guru Suze Orman, the average American is nowhere near ready. Their savings won't last decades — they'll last about three years.

Must Read

Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and 3 simple steps to fix it ASAP I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 6 of the easiest ways you can catch up (and fast)

The average amount that Americans have saved for retirement dropped slightly to $88,400 in 2024 from $89,300 in 2023, according to a survey by Northwestern Mutual Life Insurance Co.

If you want more than three good years, Orman's book The Ultimate Retirement Guide for 50+ offers four key moves you can make today to set yourself up for a happy retirement.

1. Maximize your savings

You don’t always have to put away large sums to move toward your retirement goals.

Acorns makes saving effortless by automatically rounding up your everyday purchases and investing the spare change.

Every time you make a purchase on your credit or debit card, Acorns automatically rounds up the price to the nearest dollar and places the excess — the coins that would wind up in your pocket if you were paying cash — into a smart investment portfolio.

It’s a simple way to grow your savings without even thinking about it.

A certificate of deposit (CD) is another helpful way of growing your retirement savings. A CD is a low-risk savings account that offers a fixed interest rate for a specified period.

You can easily get a rate of return over ten times higher than the average 0.41% on most traditional savings accounts.

2. Take a hard look at your finances

If you haven’t already, Orman says it’s time to buckle down and take a deep look through your budget.

Compare what you’re spending to what you’re saving. Trim the fat where you can and cut back on unnecessary spending so you can allocate more to your retirement savings account.

When it comes to essential expenses like home and auto insurance, you can find ways to save without sacrificing quality. For instance, regularly shopping around for better rates could shave hundreds off your annual premiums.

OfficialCarInsurance makes it easy to comparison-shop for car insurance by providing quotes from various providers based on your personal information and driving history. In just minutes, you can see if switching to a more affordable plan could be worth it.

Story Continues

The savings don’t have to stop at car insurance. With OfficialCarInsurance, you can easily compare home insurance rates and reduce another significant monthly expense.

In less than two minutes, OfficialCarInsurance scans the leading insurers in your area to find the best offers. Just provide a few details, and you’ll quickly see the coverage options available at the lowest possible cost.

Read more: Rich, young Americans are ditching stocks — here are the alternative assets they're banking on instead

3. Update your investing strategy

Taking a “set it and forget it” approach to your investment portfolio rarely pays off. You have to regularly revisit your portfolio and make sure it’s still in line with your financial goals and timelines.

Orman generally recommends either stocks or ETFs that pay dividends. So even if the market sees a downturn, your investments will still provide you some income. But you don't need to get down on yourself for not knowing what approach to take — that’s what financial advisors are for.

To ensure your retirement fund is on the right track — and help you spend less time worrying about it — Advisor.com is an online platform that can match you with a vetted financial advisor near you.

Advisor connects you with experienced fiduciary advisors nearby to help you create a customized retirement strategy tailored to your goals and timeline. Whether you're looking for guidance from established firms like Vanguard and Fisher Investments or boutique local advisors, Advisor will find your ideal match.

How it works

Three easy steps to get matched with a financial advisor.

Step 1: Answer a few quick questions about yourself and what you would like help with. Step 2: Advisor.com will match you with a vetted advisor who can provide you with a personalized plan to meet your financial goals. Step 3: Book a free, no-obligation consultation to confirm if your match is right for you.

4. Open a Roth IRA

Orman recommends opening a Roth IRA to avoid paying tax on withdrawals from your retirement account.

“Later on in life, you want to be able to take that money out tax-free,” she explains.

Because your contributions to a Roth account are made after tax, you won’t have to deal with deductions when you withdraw. Traditional IRAs, on the other hand, aren’t taxed when you make contributions, so you end up paying later.

RothIRA.org connects you with pre-screened financial advisors who can guide you in choosing the best Roth IRA to meet your retirement needs.

When you sign up with RothIRA.org, you’re custom-matched with two or three advisors near you who meet your specific needs. Your financial advisors will contact you to set up your initial one-on-one consultation — for free, with no obligation to hire.

What to read next

Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in ‘great wealth’. How to get in now Goldman Sachs says this asset class is behaving more like Manhattan real estate than oil — and here's how 'opportunistic' buyers can get in before its price keeps skyrocketing Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it The ultrarich monopoly on prime US real estate is over — use these 5 golden keys to unlock passive rental income now (with as little as $10)

Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free. Subscribe now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

View Comments