This move 1 could reduce the risk of a retirement shortfall by 48%

Running out of money in retirement is a real concern for workers today. Inflation has driven up costs significantly in recent years, and Social Security’s purchasing power continues to decline, putting more pressure on seniors’ personal savings.

Workers are increasingly having to be creative about how they fund their retirement, either by working a part-time job or relying on family members for support. But there’s another option that might appeal to some and reduce the risk of a retirement shortfall by about 48 percent.

Image source: Getty Images.

Increase your savings and reduce your expenses at the same time

There are two essential strategies to prevent a retirement savings shortfall: You can increase the size of your nest egg, or you can reduce your retirement spending. You can also do a bit of both. One of the most effective ways to accomplish this is to delay your retirement.

Doing so gives you extra time to save for the future while also allowing your existing savings to stay invested so they have more time to grow. At the same time, it reduces the length and cost of your retirement. Even your Social Security benefits will increase if you’re willing to wait.

Delaying retirement by just a few months can make a noticeable difference, but delaying by a few years can drastically reduce the risk of running out of money prematurely. A Morningstar survey found that delaying retirement from age 62 to age 70 nearly halves the likelihood of experiencing a retirement savings shortfall, from 54 percent to 28 percent.

The results were similar for the three groups — couples, single men and single women — but single women faced the highest risk of running out of money in retirement at all ages.

It’s not for everyone

Postponing retirement is worth considering if you are concerned about your finances and can afford to continue working. But not everyone is so lucky. Health problems, family care obligations and job loss are forcing people to retire earlier than they had always planned.

You may be able to work around this by finding a new job or considering a part-time job that you can fit around your other obligations. If that’s not possible, you may need to turn to other sources of support, such as Social Security and other government benefits, to help cover what your retirement savings don’t.

If you were already planning to work well past typical retirement ages, that’s okay. But it’s important to keep saving, even if you have to retire earlier than expected. If all goes according to plan, you’ll have some extra cash that you can put toward things you like or pass on to your heirs. But if things fall through, you’ll be glad to have those extra savings to cover your living expenses.

No matter when you plan to retire, be ready to adjust your strategy as your circumstances change. Reevaluate how much you contribute to your retirement accounts and how much you expect to spend in retirement each year. Then make any necessary adjustments to keep you on track.