7 signs you might not have enough money to retire

  • Retirement takes a lot of planning.
  • If you're still paying off debt and put off saving for retirement until later in life, retiring may be further away than you like.
  • You may also need to delay retirement if you're putting all your eggs in one basket — relying on just Social Security or an employer-sponsored retirement plan isn't enough; you need a diversified retirement portfolio, according to experts.

There are a few questions you should ask yourself before deciding if you're ready to retire.

One of those has to do with how much money you have saved. Even if you're emotionally ready to say goodbye to the 9-to-5 and know exactly what kind of lifestyle you want, the truth is that retirement isn't very feasible if your finances aren't in shape.

If you haven't saved enough money to get you through your golden years, you'll probably need to delay retiring.

Here are seven ways to tell you may not have enough money to retire.

1. You're not near your desired retirement savings goal

There's a simple way to calculate how much money you need to save to retire: Divide your desired retirement income by 4%.

For example, if your perfect retirement salary is $40,000, divide it by 4% and you get $1,000,000. If your perfect retirement salary is $80,000, divide it by 4% and you get $2,000,000. 

If you have enough saved up, you should be able to withdraw 4% each year to pay for living expenses in retirement. Using the 4% withdrawal strategy requires earning at least a 5% investment return annually (after taxes and inflation) on your retirement savings, according to Business Insider's Lauren Lyons Cole, a CFP.

If your savings isn't close to what you need to live off your perfect retirement salary every year, you may have a way to go before retiring.

Read more: What to do in your 20s, 30s, 40s, and 50s to retire with $1 million, according to financial planners

2. You're still paying off debt

Not all debt is considered bad, but even good debt can turn bad if you've been making late or incomplete payments.

Financial experts typically advise prioritizing paying off high-interest debt. If you're still paying off a credit card bill or consumer loans with high interest, it's likely you're more focused on paying that off than saving for retirement.

"The more debt you carry into retirement, the more retirement income you'll need to pay off what you owe," wrote Cameron Huddleston of GOBankingRates. "When you're deciding when to retire, you need to figure out how long it will take to pay off your existing debts."

Scott Bishop, Director of Financial Planning at STA Wealth Advisors, told Huddleston you should pay off any high-interest debts that aren't tax-deductible first, such as credit-card balances. If you have good credit, refinance any high-interest debt that's tax-deductible, such as a mortgage, to get the lowest rate possible, he said.

But Debt.org advises saving for retirement before paying off debts if you're nearing retirement age and you have a relatively small debt or your employer offers to match your 401(k) contributions, reported Laura Woods of GOBankingRates

RELATED: Take a look at the best places to retire in 2019: 

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Best places to retire in 2019
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Best places to retire in 2019

25. Boston

Boston’s many colleges are a magnet for young people. The highly educated population also helps to fuel the economy, and contributes to the low unemployment rate and relatively high salaries. This state capital city’s many amenities and strong job market also benefit retirees. For example, Massachusetts General Hospital is ranked 4th in the nation on the U.S. News Best Hospitals Honor Roll. And retirees who no longer want to drive can make use of the subway system, which provides discount fares to people age 65 and older. However, affordable housing can be difficult to find in Boston. The median home price for those age 60 and older is $425,800.

24. Jacksonville, Florida

This northern Florida city provides pleasantly mild winters and white-sand Atlantic Ocean beaches. Jacksonville is a retirement destination for golfers, with some courses overlooking the ocean and river. There are several high-performing hospitals, according to the U.S. News Best Hospitals ranking, including a branch of the Mayo Clinic. The median home price is $200,800 among people age 60 and older. There’s also no state income tax in Florida, so retirees who continue to work get to keep more of their earnings.

23. Melbourne, Florida

Located on Florida’s east coast, residents of Melbourne enjoy a beach retirement along the Atlantic Ocean at reasonable prices. Affordable housing helped propel the Melbourne metro area into the top 25 places to retire. The median home price is just $191,200 among people age 60 and older, according to Census Bureau data. The metro area is often referred to as the Space Coast due to the nearby Kennedy Space Center and Cape Canaveral Air Force Station, and residents use the area code 3-2-1 in reference to the countdown to liftoff.

22. Charleston, South Carolina

Visitors flock to South Carolina’s oldest city to walk the cobblestone streets, take in the classical architecture and enjoy the unique southern hospitality. History buffs will enjoy a visit to Fort Sumter and the area’s many historic landmarks and museums. This seaside city on the Charleston Harbor provides plenty of opportunities for boating, water sports and enjoying the fresh local seafood. Health care is available at the Bon Secours St. Francis Hospital and MUSC Health-University Medical Center. While some parts of Charleston are expensive, the median home price among people age 60 and older is $253,900.

21. Miami

Many retirees are drawn to this tropical city at the southern tip of Florida. In Miami, you can enjoy a beach retirement with all the amenities of a large metro area. Retirees have many health care options to choose from, including the Cleveland Clinic Florida. Miami-Dade residents age 65 and older are eligible to ride public transit for free. The Osher Lifelong Learning Institute at the University of Miami provides lectures and discussions specifically for people over age 50. The median home cost among people age 60 and older is $261,000.

20. Portland, Oregon

Oregon’s largest city is ideal for retirees who intend to remain active and enjoy the outdoors. Portland has an extensive city park system, is friendly to walkers and bikers and maintains a public transportation system with discounts for those age 65 and older. Gardeners will appreciate that the climate is well suited to growing roses, and can enjoy the gorgeous blooms and the company of other gardening aficionados at the International Rose Test Garden. Portland gets high scores for desirability, according to a U.S. News online survey. The city has a foodie culture that specializes in locally sourced farm-to-table dining as well as an extensive collection of independent microbreweries and specialty coffees. However, living in Portland doesn’t come cheap. Houses cost a median of $366,200 among people 60 and older.

19. Portland, Maine

Portland’s rocky coastline is mesmerizing as the Atlantic Ocean waves crash into the shore. A foodie paradise, Portland’s culinary delights range from traditional seafood favorites including lobster rolls and raw bar to more unique and innovative restaurants using locally sourced ingredients. Maine’s largest city scored high on the happiness metric, with many residents saying they have supportive relationships and love in their life, according to a Gallup-Healthways survey. Portland is also a college town that is home to the University of Southern Maine. Portland enjoys a four-season climate that gets warm in the summer, and has cold, snowy winters with occasional snowstorms. Portland is less than a two-hour drive from Boston, and a home there costs retirees a median of $265,000.

18. Allentown, Pennsylvania

Singer Billy Joel immortalized the decline of the steel industry and manufacturing jobs in his song “Allentown.” However, the city has since reinvented itself and is drawing new residents. Allentown was recently recognized by the Urban Land Institute in Washington, D.C., for new development downtown. Health care is provided by the Lehigh Valley Health Network, which is also a major employer in the area. Allentown is located an hour north of Philadelphia and 90 minutes west of New York City, but has a far lower cost of living than these two larger cities. The median home price for people age 60 and older is $204,200.

17. Phoenix

One of the sunniest cities in the country, Phoenix has long, hot summers, where the temperature frequently tops 100 degrees. Air conditioning is a necessity and a significant expense for much of the year. Phoenix does not observe daylight saving time in an effort to cut back on high cooling costs. Some snowbird retirees live in Phoenix during the mild winters and escape to cooler climes in the summer. No matter what sport you enjoy, Phoenix is likely to have a local team you can root for, perhaps including the Cardinals, Coyotes, Diamondbacks and Suns. The Mayo Clinic-Phoenix is ranked 11th in the country on the U.S. News Best Hospitals Honor Roll. The median home price among people age 60 and older in Arizona’s state capital city is $236,900.

16. New York

New York is not an easy place to retire on a budget. The median home price of $427,400 is prohibitively expensive for many retirees. However, those who can swing the cost, or are willing to take on roommates or live in small apartments, are rewarded in many ways. You won’t need a car in New York, and can easily get most places on the extensive public transportation system. Some of the top-ranked hospitals in the country are located in New York, including New York-Presbyterian Hospital-Columbia and Cornell, the NYU Langone Hospitals and Mount Sinai Hospital, according to the U.S. News Best Hospitals rankings. The strong job market, inspiring museums and prolific shows and sporting events give retirees ample opportunities for part-time work, volunteer positions and hobbies – no matter what your interests.

15. Raleigh & Durham, North Carolina

The research triangle is anchored by three research universities: Duke University, North Carolina State University and the University of North Carolina—Chapel Hill. This highly educated community frequently partners with industry to help foster innovation. These universities also provide many benefits for retirees, such as health care at Duke University Hospital and the University of North Carolina Hospitals. North Carolina residents age 65 and older can audit courses at North Carolina State University for free, as long as they aren’t pursuing a degree. Duke University even has a retirement community near campus.

14. San Diego

There’s a lot to like about retirement in San Diego, including year-round pleasant weather, convenient access to the Pacific Ocean and a range of high performing health care options, including Scripps La Jolla Hospitals and the UC San Diego Health-Jacobs Medical Center. San Diego is among the most desirable places to live in the country, according to a nationwide U.S. News survey that asked respondents where they would most like to live. The biggest downside of moving to San Diego is the high housing costs. The median home price among people age 60 and older is $560,200, and renters face median costs of $1,296 per month.

13. Daytona Beach, Florida

You can retire on the beach with a modest retirement income in Daytona Beach. The median home price among people age 60 and older is $185,300, according to Census Bureau data. But this is not a sleepy beach town. The headquarters for NASCAR is in Daytona Beach, and there are several large motorsports events each year. Health care services are provided by Halifax Health Medical Center of Daytona Beach and Florida Hospital Memorial Medical Center. Florida doesn’t have a state income tax, which adds to the appeal for retirees looking for a low cost of living, especially if they aim to work part time.

12. Washington, D.C.

The nation’s capital is not an affordable place to live. The median home price among people age 60 and older is $424,200, and some desirable neighborhoods cost far more. But retirees who can swing the housing costs are rewarded in other ways. The federal government and its contractors provide a wide variety of employment opportunities. The public transportation system allows you to navigate the city without a car and provides discounts to retirees age 65 and older. There are a variety of high-performing medical facilities to meet health care needs. Plus, many of the area’s best attractions, including admission to the Smithsonian Museums, a visit to the National Zoo with your grandchildren or a stroll along the National Mall, are free of charge.

11. El Paso, Texas

El Paso is located in the westernmost part of Texas and borders Mexico and New Mexico. The Rio Grande separates the area from the Mexican city of Ciudad Juarez. El Paso scored particularly well on the happiness metric, with many residents saying they like what they do each day and feel motivated to achieve their goals, according to a Gallup-Healthways survey. Low housing costs add to the appeal for retirees. The median home price is just $107,600.

10. Lakeland, Florida

Waterfront property is a big draw to this inland Florida area with 38 named lakes. The water views are affordable in Lakeland, where the median home price for people age 60 and older is just $146,500. Lakeland is the home of Florida Polytechnic University, an institution focused on STEM, which has an all-digital library and supercomputer. Retirees should be prepared for hot and humid summers, but winters are typically pleasant and mild. Located between Tampa and Orlando, both cities are within an hour’s drive from Lakeland.

9. Dallas-Fort Worth, Texas

Dallas has a surprisingly affordable cost of living for a large metro area. The median home price among people age 60 and older is $200,500, and the median rent among retirees is $993 per month. The state of Texas doesn’t have an income tax, but property tax should be factored into housing decisions. Health care options include the UT Southwestern Medical Center and Baylor University Medical Center. Sports fans will love the many professional sports teams including the Cowboys, Mavericks, Rangers and Stars.

8. San Antonio

The scenic vineyards and beautiful green hills dotted with wildflowers of the Texas Hill Country make for a peaceful retirement spot. If you settle in San Antonio, you get the benefits of the sprawling countryside as wells as the amenities of the city. Health care is provided by University Hospital, Methodist Hospital and the Baptist Medical Center. Retirees may be able to find a volunteer role at the San Antonio Missions, including the Alamo, a World Heritage Site. Housing is affordable, costing retirees age 60 and older a median of $161,800. There’s also no state income tax in Texas.

7. Nashville, Tennessee

Nashville is best known for its association with country music. Visitors often attend live performances at the Grand Ole Opry and visit the Country Music Hall of Fame and Museum. Tennessee’s state capital city has many colleges and universities, including Tennessee State University and Vanderbilt University. Vanderbilt University Medical Center is ranked No. 17 on the U.S. News Best Hospitals Honor Roll. The city also supports several professional sports teams, including the Titans and Predators. Housing in this musical city costs retirees age 60 and older a median of $234,000. The state of Tennessee doesn’t tax earned income, but will tax your dividends and interest.

6. Grand Rapids, Michigan

Grand Rapids is a haven for artists. The entire city becomes an art gallery each fall, with works displayed throughout downtown, and the public and art experts vote to allocate over $500,000 in ArtPrize awards. Retirees with an interest in art might be able to take on a volunteer role at a museum, such as the Grand Rapids Art Museum or the Frederik Meijer Gardens and Sculpture Park. There are several options for health care, including the Mercy Health St. Mary's Campus and the Spectrum Health-Butterworth and Blodgett Campuses. Best of all, you don’t need a fortune to join the art community in Grand Rapids. The median home price among people age 60 and older is just $171,100.

5. Pittsburgh

Sports fans can spend their retirement years rooting for the many professional sports teams in Pittsburgh, including the Penguins, Pirates and Steelers. The UPMC Presbyterian Shadyside hospital is rated 15th in the nation, according to the U.S. News Best Hospitals rankings. The area also has several colleges, including Carnegie Mellon University and the University of Pittsburgh, where retirees can take classes or enjoy sporting events. Residents age 65 and older are eligible for free public transportation on the bus and rail systems, which makes it easier to get around if you are no longer able to drive. Pittsburgh’s many amenities might draw you into the city, but it’s the low housing prices that make it easy to stay. The median home price among people age 60 and older is just $142,800.

4. Austin, Texas

This state capital city is famous for its live music and carefully cultivated quirky culture. The area has a diverse economy, and is a hub for tech jobs, with major employers including Apple, Dell, IBM and Samsung. Seton Medical Center Austin and St. David's Medical Center are major health care providers for the area. Austin is also a college town that is welcoming to retirees who are interested in going back to school or exploring some of the amenities of the campus. Seniors age 65 and older can take up to six credit hours tuition-free at the University of Texas—Austin. Housing can be expensive and costs retirees a median of $283,500, but is considerably more affordable than home prices in coastal cities with similar amenities.

3. Sarasota, Florida

Sarasota fell from the No. 1 spot to No. 3, due to a slight decrease in overall happiness and desirability, according to surveys from U.S. News and Gallup-Healthways. In September 2017, the powerful winds of Hurricane Irma downed trees and upended vegetation, and the area has spent millions on the cleanup effort. Nonetheless, housing remains affordable, with a median home price of $239,100 among people age 60 and older. Sarasota Memorial Health Care System and Doctors Hospital of Sarasota provide health care and jobs for the community. A bonus: There’s no state income tax in Florida.

2. Fort Myers, Florida

Fort Myers jumped in the 2019 ranking due to increases in desirability and happiness among residents. There’s no state income tax in Florida, which can benefit retirees with taxable income sources. Located along Florida’s Gulf Coast and the Caloosahatchee River, Fort Myers is an ideal place for those looking to spend their retirement years fishing, boating or relaxing at the beach. Fort Myers has hot summers, but mild winters. Thomas Edison and Henry Ford both escaped from the cold at winter estates in the area. The median home price of $233,100 makes it affordable for retirees to spend their winters or the entire year in the Fort Myers metro area.

1. Lancaster, Pennsylvania

Up from No. 2 in 2018, Lancaster now tops the list of Best Places to Retire due to increases in housing affordability, the overall happiness of its residents and access to health care. This former capital of Pennsylvania is located between Philadelphia and Harrisburg. A variety of health care services are available at Lancaster General Hospital. The median home price for retirees is just $198,500, according to Census Bureau data. The area has many historic sites, including Wheatland, the home of former President James Buchanan, and the city played a key role in supplying munitions for the Revolutionary War. Surrounded by Amish farmland, old warehouses and buildings are being transformed into hip restaurants and bars, and you can catch a show at the ornate Fulton Theatre.

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3. You put off saving for retirement

When it comes to saving for retirement, it's better late than never. But saving early is the best thing you can do for your retirement account, thanks to the power of compound interest

When you start saving, your original pot of money earns interest over time, creating more money in your account that accrues even more interest. The little bit of interest early on in the process can make a big difference.

For example, if a hypothetical person, Susan, invests $5,000 annually from age 25 to age 35 for a total of $50,000 assuming a 7% annual return, she'll have $562,683 saved by the time she retires at 65. If Bill invests $5,000 annually, but doesn't start until 35 and keeps it up until age 65, for a total of $150,000, he'll only have $505,365 saved by retirement.

"Whatever situation you're in, it's never too late to start growing, maximizing and safeguarding your retirement income — there are always things that can be done," Nigel Green, founder and chief executive of financial consultancy deVere Group, told MainStreet. "But the time to act is now as the longer you put off planning for your retirement, the harder it becomes."

Read more: A researcher who studied over 600 millionaires found they do 3 things to forge a clear path to financial independence 

4. You're too dependent on Social Security

Social Security doesn't look as promising as it once did. The trust funds are projected to run out in 2033, in which case the retired would only receive "77% of its scheduled benefits," according to Daily Finance

Social Security benefits represent around 38% of the elderly's income, with a $1,294 average monthly benefits, reported Woods. According to her, Social Security is an added benefit, not something to rely on.

5. You haven't been taking advantage of employer-sponsored retirement plans

Many employer-matching retirement programs, like 401(k)s, match up to 3% or 4% of each paycheck at 50% or 100% of the contributed amount, Thomas Walsh, an investment analyst with Palisades Hudson Financial Group in Atlanta, told reporter Jason Notte of MainStreet. But having a small amount taken out of your paycheck each month isn't the best way to achieve comfortable retirement.

"As your salary increases, try to maintain the same standard of living while increasing your retirement plan contributions," Walsh said. "Not only will the amount deducted from your paycheck escape income tax until retirement, the investments held in your account grow tax-free until the funds are later needed as well."

These tax savings can benefit from compounded growth, making a big difference in your future retirement income, according to Notte.

6. Your retirement portfolio isn't diversified

If you are taking advantage of employer-sponsored retirement plans, all the better, but you shouldn't put all your eggs in one basket.

"With the grim outlook on the future of Social Security and pension plans becoming a thing of history, relying on your employer's retirement plan to fund your golden years may just not be enough anymore," Walsh said. "Contributing to an employer plan such as a 401(k) is a great start for retirement saving, but the more you can save for the future, the better."

You should also be contributing to a private retirement plan like a traditional or Roth IRA, he said. If you're not, you may not be maximizing your retirement savings.

Your investment portfolio should include various asset types and be structured to outpace inflation, according to Bishop, with a mix of stocks to maintain growth and fixed income, such as bonds, to guard against market volatility.

Read more: Florida is one of the best places to retire in America — here's exactly how much it costs for a dream retirement in the Sunshine State

7. You've borrowed from your retirement savings

It's equally important to not dip into those retirement accounts early. According to Woods, an early withdrawal may be beneficial in the short-term, but it can hurt your long-term financial health. "You'll need to develop an aggressive savings strategy to try and get caught up again," she wrote.

Not only do early withdrawals from an IRA under age 59 1/2 put a dent in your retirement funds, they'll also incur a penalty and taxes. If you've already withdrawn, think twice before doing so again.

"If you need money, the last place you want to go for it is your IRA," Neal Frankie, a CFP, wrote for Business Insider.

"Once you start putting your fingers in that IRA cookie jar, you might be opening Pandora's Box. If you need the money for an investment, it might be investment you don't need to make," he wrote. "If you need the cash for an emergency, look for other options — any other option. But at the end of the day, if you do use your IRA money, please be aware of the tax consequences and the precedent you might be setting up."

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