Feeling antsy about your retirement plans? Does the calendar say that happy day is just around the corner while your savings are saying, "Dream on. At this rate, you'll be working forever"?
Take a deep, cleansing breath. An underdeveloped nest egg isn't the end of your sunny-side-up retirement. There are three ways to get it cookin' again:
1. Increase your savings
Well, duh. But instead of clipping coupons, think big -- big-ticket items that will make a significant dent in your expenses. Try to get by on less than your pre-retirement spending. Remember, the less income you draw, the lower your tax burden will be. Other savings-boosting strategies to consider:
- Make your mortgage go away by paying it off before retiring.
- Look into a reverse mortgage.
- Move to a small town away from employment centers so the cost of living in general is less.
- If you're not yet retired, cut your current spending so that you can funnel extra money into your retirement accounts.
- If you're currently retired, operate on an expense-by-expense basis. If you spend $200 per month eating out, you need to save $60,000 to fund that $2,400 annual expense indefinitely. Cut that one expense in half and you reduce your requisite nest egg by $30,000. Savings calculators can help you see the light.
- Tell the kids they're on their own. In the choice between saving for college or retirement, sorry, Junior. Retirement wins. There's no Pell Grant for senior citizens or scholarships to Sunset Retirement Village.
2. Increase your returns
No one is advocating day trading, dabbling in risky investments, or putting five years of retirement cash on red at the craps table. Instead, consider some more traditional strategies to increase your investment returns:
- If you're not yet retired, instruct your employer to direct more of your paycheck to your 401(k).
- Take advantage of the catch-up provisions Uncle Sam allows for people 50 and older.
- Read up on other investment vehicles (e.g., annuities, life insurance, reverse mortgages). We cover such strategies regularly in our Rule Your Retirement service.
- Change your savings vehicles -- paying close attention to expense ratios, particularly if you own mutual funds.
- Be that gauche relative and ask outright about any inheritances or windfalls you can expect from family members in the future.
3. Increase your income
We know that you probably retired to get out of the workforce. But if cost-cutting and investment-increasing measures aren't enough, consider the benefits of drawing an income:
- Postpone your retirement for a few years so you have more of a cushion.
- If you're already retired, buy some time -- for your savings to grow and for you to save -- by getting back into the workforce.
- You don't necessarily have to continue to work in your same profession. And you can also look into part-time or contract-basis work.
It might not be as easy as 1-2-3, but getting your retirement back on track may help revive that youthful glow.
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