7 Factors That Make Your Retirement More Financially Stable

For many people, retirement is the reward for a lifetime of hard work. The dream is to live comfortably without having to continue to work behind a desk or register. Unfortunately, many people fear they simply won’t have the money they need to stop working.

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According to a study from AARP, around 1 in 5 adults age 30 or older have no retirement savings, and 64% worry they won’t have enough money throughout retirement. In order to live comfortably longer, here are seven factors that may make retirement more financially stable.

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1. Having a Pension

While pensions are becoming exceedingly rare, they do still exist, and they can be a game changer for retirees. As CNN reported in 2023, pensions or defined benefit plans are most frequently still found in industries with unionized workers, such as autoworkers and teachers.

While these plans were once the norm, defined contribution plans like 401(k)s skyrocketed to popularity beginning in the mid-1980s. By 2020, only 12 million workers still had pensions compared with over 85 million with defined contributions, per CNN.

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2. Paying Off Your Mortgage

Another factor that may make retirement less stressful is owning a home, particularly if the mortgage is paid off. For most people, their largest expense revolves around housing.

Reducing housing costs to just property tax, insurance and utilities can mean thousands of extra dollars in the bank each year. If paying the house off completely is not realistic, then a focus on paying down the principal can help.

3. Working With a Financial Advisor

Until now, most generations grew up never really talking about money. It was considered a taboo dinner table conversation. This means that millions of adults lack financial literacy and may be fumbling in the dark when it comes to retirement. Working with a financial advisor can help instill confidence in money management and ensure stability for the long run.

According to Northwestern Mutual’s 2024 Planning & Progress Study, when surveyed Americans with an advisor felt they could retire on average at 64, two years earlier than those without an advisor. They also saved almost twice as much for retirement, $132,000 compared with $62,000.

4. Having an Emergency Fund

Another key factor that can make retirement more predictable is having an emergency fund. In addition to retirement savings, an emergency fund of at least $1,000 can help offset any unexpected costs, such as car or house repairs.

The money should be easily accessible ensure that the sudden expense does not become a burdensome debt.

5. Paying Off Credit Cards

Prior to retiring, most experts recommend focusing on paying off any high-interest credit cards. A survey by the Employee Benefit Research Institute found that 68% of retirees with debt had outstanding credit card debt.

For retirees living on a fixed income, paying off debt can help put hundreds of more dollars into their pockets each month.

6. Not Taking on New Debt

In addition to paying off debt, retirees should avoid taking on new debt to ensure a more comfortable retirement. Credit cards can take years to pay off if just the minimum payment is made each month.

Racking up debt can cause a financial headache that may make it more challenging to not work during retirement. Keeping expenses low can help to ensure an easy, more stable retirement.

7. Making a Budget

Finally, retirees who hope to maintain financial stability during retirement should consider making a budget. While the principle sounds simple, it can truly be transformative for retirees on a reduced or fixed income.

Understanding how much money is coming in and what is going out can ensure that there is plenty to go around for the long run.

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