Worried about having enough money to retire? These 3 moves might help ease your mind.

Maurie Backman, The Motley Fool Published 5:02 a.m. ET Dec. 2, 2021

What do retirees regret most about their retirement saving plans? Buzz60

Many people look forward to retirement but worry about what their finances will look like once their careers come to an end. If you're concerned about money in retirement, here are three essential moves to make.

1. Have an income source outside of Social Security

Social Security may provide a substantial amount of retirement income for you. But it probably won't be nearly enough to live comfortably on.

If you're an average earner, you can expect your benefits to replace about 40% of your wages. Most seniors, however, need a good 70% to 80% of their former income to keep up with their bills, so having funds outside of Social Security could prevent a major financial crunch.

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For context, the average senior collecting benefits today receives $1,565 a month. Chances are, you'll need more money than that to cover all of your bills. And while you may be in line for a higher benefit than the average senior based on your career wages, it still pays to have additional income at your disposal.

Socking away money consistently in a dedicated savings plan could pave the way to a less stressful retirement. If you contribute $300 a month to an IRA or 401(k) plan over a 35-year period, and your investments in that plan generate an average annual 7% return (which is a bit below the stock market's average), you'll end up with a nest egg worth about $498,000. That's a nice sum of money to supplement your Social Security income.

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2. Save in a Roth account

Putting money into a traditional IRA or 401(k) means getting an immediate tax break on your contributions. But once retirement rolls around, you'll be taxed on the withdrawals you take from your savings.

If you're concerned about not having enough money in retirement, it could pay to save in a Roth IRA or 401(k) instead. Though your contributions won't go in on a pre-tax basis, your withdrawals will be yours to enjoy tax-free. And shedding that tax burden could make it easier to manage your finances once you're no longer working.

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3. Fund an HSA

Not everyone is eligible to put money into a health savings account (HSA). To contribute, you must be enrolled in a high-deductible health insurance plan. But if you do qualify, funding an HSA could make it much easier to manage your healthcare expenses once retirement begins.

Many seniors are surprised to learn how expensive their healthcare costs are under Medicare. Having money in an HSA could make it much easier to cover your deductibles, copays, and any other out-of-pocket expenses you incur.

Another great thing about HSAs is that they get very flexible once you turn 65. Prior to that age, withdrawals taken for non-medical purposes are subject to a costly penalty. But once you reach the age of 65, you can take HSA withdrawals for any reason penalty-free. The only difference is that healthcare-related withdrawals are tax-free, whereas non-healthcare withdrawals are taxable.

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Set yourself up to worry less

It's natural to fear that you won't have enough money to support yourself as a senior. But rather than let those concerns keep you awake at night, be proactive in setting yourself up for a secure retirement. Save consistently to supplement your Social Security benefits, look into a Roth account, and contribute to an HSA to make healthcare more affordable. You'll be thankful for having made these moves once your career comes to a close.

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