Am I Saving Enough for Retirement? 6 Ways to Make Sure

Am I Saving Enough for Retirement? 6 Ways to Make Sure

Back in the good ol’ days, you didn’t have to worry much about saving for retirement. Your employer set you up with a respectable pension plan that would carry you through to your dying day. Any extra savings you accumulated was simply the icing on the cake. But fast forward to today, and retirement and financial planning are a lot different.

Today, many people are 100 percent responsible for funding their own retirements. This often means putting money in a 401(k) or another retirement plan. Then, investing it in the stock market.

But what happens if you need to withdraw money while the market is down? Doesn’t this mean your retirement money is subject to the whims of economic conditions?

Unfortunately, yes. The only way to safeguard your money from the unexpected is by establishing a saving strategy that provides a steady stream of income in retirement.

Wondering how to do that? Here are 6 ways you can make sure you’re saving enough for retirement (while safeguarding your money from unexpected risks).

Cash Reserve

Keeping all your retirement money in the stock market is risky business. Having a cash reserve helps you avoid this problem. Instead of having to sell stocks during a downturn, you can rely on cash savings until the market recovers. This helps protect your nest egg from volatility and puts you in a position to hold steady while the market is down.

How much you should keep in your cash reserve ultimately depends on you and whatever amount gives you peace of mind.

Here is a general rule of thumb:

Montgomery Taylor am I saving enough

We suggest talking with a financial advisor to adjust these amounts based on your unique situation.


Have questions about your future? Contact Montgomery Taylor Wealth Management and get the conversation started.



No one likes to think about the day they’ll need to use an insurance policy – whether it’s life insurance due to the death of a spouse or disability insurance due to a prolonged illness. But securing adequate insurance coverage can protect your retirement money from the unexpected.

Discuss your specific retirement and financial planning needs with a financial advisor you trust, but generally, you should consider:

  • Health insurance. The average healthy, 65-year-old couple will need close to $390,000 to cover healthcare expenses in retirement. Choosing the best coverage for your health needs can help mitigate these costs.
  • Life insurance. There’s a possibility you may not need life insurance if you’re retired and have enough money to cover all your expenses. But you’ll want to re-evaluate coverage if you have a large estate, are still working, or are entering retirement with debt or family members who depend on you.
  • Disability insurance. What would happen if you could no longer work due to illness or a disability? Disability insurance protects your income from the unexpected, which is especially important if you’re the primary breadwinner in your household.
  • Long-term care insurance. Research shows that 63 percent of today’s 65-year-olds will need long-term care in retirement. With private rooms in nursing homes averaging $7,698 a month, these costs could eat up a bulk of your savings. Long-term care insurance could be a good solution depending on your needs.

Home Equity

Your home is a valuable asset, and contrary to popular belief, it can play a key role in funding your retirement dreams. Here are a few scenarios:

Scenario 1: 

If you decide to stay put in your current home, you could take out a home equity line of credit if you ever need money. You could also use this credit for home renovations, although this may not be the best option for everyone.

Scenario 2: 

If you decide to downsize, as many people do once the kids are out of the house, you could sell your home, buy a cheaper one and use the profit to boost your retirement savings. Taking this a step forward, in Sonoma County, many families decide to rent out their home and use the money as an extra source of income. If you’re in the Santa Rosa area, talk to a Sonoma County wealth advisor to see what options you have.

Scenario 3:

If you and your spouse need to move into an assisted-living facility or nursing home, you could sell your house and use the money to pay for long-term care costs.

Of course, these are not your only options. Discuss your retirement and financial planning needs, your goals and your plans for the future with a financial advisor you trust. If you’re not currently working with a financial advisor or feel it’s time for a second option, contact the experienced team at Montgomery Taylor Wealth Management.

Retirement Plans

Saving money in your 401(k) or other retirement plan may be a no-brainer when it comes to planning for the future, but it’s important to re-evaluate your retirement portfolio at least once a year to make sure it’s properly diversified based on your age, target retirement date and anticipated retirement lifestyle. Just like your other investments, you want to make sure you’re not carrying too much (or too little) risk.

Will your retirement benefits be enough?


The majority of people start thinking about taxes in January, they file their return a few months later, and then they completely forget about taxes until the next year. But as a full-service tax-planning firm, we understand how important taxes are all year long. If you want to maximize your savings in retirement, you need to focus on minimizing your tax burden year-round.

Here are a few strategies you can use to save on taxes:

1. Use Roth IRA conversions. If you can’t contribute to a Roth IRA because of income restrictions, there may be a workaround where you can convert Traditional IRA funds to a Roth account to enjoy tax-free income later. The catch? You have to pay income tax on these conversions, so it’s wise to do this in the years where your income is low.

2. Be strategic about IRAs you inherit. Due to recent IRA changes, non-spousal beneficiaries must deplete inherited IRAs within 10 years, which could have major tax consequences if you’re not careful. If you inherit an IRA, talk to the professionals at Montgomery Taylor Wealth Management about how and when you should take withdrawals.

3. Donate constructively. Traditionally, you can deduct charitable donations from your taxes, up to 60 percent of your adjusted gross income. But the IRS raised this threshold to 100 percent for 2020. There’s some fine print to work through, but if you’re charitably inclined, being strategic with donations can be a great way to offset taxes.

4. Try to avoid the 3.8 percent Medicare tax on investment income. High-earners with investment income may want to look for ways to minimize their exposure to the 3.8 percent Medicare tax. Some strategies include moving less efficient investments into tax-deferred accounts, utilizing tax-loss harvesting and investing in municipal bonds.

Social Security Optimization 

Another critical part of retirement planning is deciding when to take Social Security benefits. You can start claiming these benefits as early as age 62, but your monthly benefits increase the closer you wait until age 70.

For example, if your benefit amount is $3,000 a month and your full retirement age is 66, you’ll receive:

  • $2,100 at age 62 (70 percent of your benefit amount)
  • $3,000 at full retirement age (100 percent of your benefit amount)
  • $3,960 at age 70 (132 percent of your benefit amount)

You’ll also want to consider when you should start taking spousal benefits. In many situations, the lower earning spouse may decide to collect benefits early while the higher-earning spouse waits until closer to age 70. This strategy allows couples to take advantage of the smaller benefit while the bigger benefit continues to build.

Find Out if You’re on Track for Retirement

Throwing money into your retirement plan and calling it a day isn’t enough. Smart planning includes a savings strategy built to weather unexpected events that might come your way.

Find out if you’re saving enough for retirement by scheduling a complimentary meeting with the retirement and financial planning professionals at Montgomery Taylor Wealth Management. We specialize in helping hard-working families retire with confidence, and would love to discuss how we can help you find out if you’re on track to retire as you wish. Contact us to get started.

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