Don’t fall short

Minnesotans are lagging in retirement savings; here’s how you can buck the trend

retirement savings jar
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Minnesota seniors have a retirement savings shortfall.

In fact, The Land of 10,000 Lakes ranks as the fourth worst state when it comes to replacing income in retirement in the United States.

There’s no magic number to ensure a comfortable retirement, but a good goal is to be able to replace at least 70 percent of your pre-retirement income.

You may want to save more, especially if you plan to travel or build a new home — or if you’re expecting large medical bills.

Seniors in most states are falling short. Only three states meet that 70 percent threshold (Hawaii, Alaska and South Carolina, according to

Nationally, the median income for ages 65 and older is just 60 percent of the median income for 45- to 64-year-olds. In Minnesota, that gap is even bigger — 53 percent.

Here are some ways to make up for lost time:

Max your accounts

Anyone age 50 and older can take advantage of catch-up contributions in retirement accounts.

In 2016, older workers can save an additional $6,000 on top of the $18,000 maximum allowed for a 401(k).

IRAs also have higher limits for workers age 50 and up.

Younger workers can save $5,500 in an IRA, older workers can save $1,000 on top of that. (That’s unless your income exceeds a certain amount.)

Delay Social Security

Deciding when to claim Social Security is one of the decisions that will have the biggest impact on your retirement.

The majority of retirees claim their first benefits as soon as they’re eligible at age 62.

If you wait even longer, your benefit will grow 8 percent for every year you delay up to age 70.

Just 3 percent of Americans take advantage of the additional income by waiting until age 70 to file, according to the Center for Retirement Research at Boston College.

Work longer

By staying on the job longer, you can continue building up your nest egg instead of withdrawing from it.

But working later in life isn’t something you can count on: More than half of retirees say they left the workforce earlier than they had planned, according to TransAmerica Center.

You can take steps in your 50s to boost the longevity of your career.

Take advantage of any training opportunities your company offers to build up your marketable skills; grow your business network; and don’t forget to take care of your health, too.

Minimize fees

Finally, there’s some good news about investment fees: They dropped to 0.89 percent in 2013, down from 1.02 percent in 2009, according to research by BrightScope.

Still, if you’re behind in savings, any fees can have a negative impact.

Start with your Human Resources department and ask for your plan benefit book to find out how much you’re paying in fees.

Let your company know if the fees are too high.

If the fees cannot be reduced, contribute enough in your 401(k) to get the company match, then allocate extra funds elsewhere, like a spouse’s 401(k) plan or an IRA.

Get help

You don’t have to go it alone! A recent study shows people who work with a financial advisor double their retirement preparedness.

A financial professional can help you navigate important decisions when it comes to saving, investing and claiming Social Security so you can avoid falling short in retirement.

Skip Johnson is an advisor and partner at Great Waters Financial in New Hope, a financial planning firm and Minnesota insurance agency. Skip also offers investment advisory services through AdvisorNet Wealth Management, a registered investment advisor. Learn more at