3 Ways Baby Boomers Can Dramatically Improve Their Retirement Outlook

The majority of baby boomers in the United States don't have enough saved for their retirement. According to one recent survey, only 27% of boomers feel confident they will have enough money to last throughout retirement, and many have no retirement savings at all. While it may seem like it's too late to have a meaningful impact if you're in the other 73%, that doesn't have to be the case. We asked three of our retirement experts for some of the most effective ways baby boomers can improve their retirement outlook, and here's what they had to say.

Jason Hall: One simple way to improve your retirement outlook is to take even more advantage of the tax-deferred growth potential of your IRA or 401(k) once you reach 50, using "catch-up" contributions. 

If you have an IRA -- either a Roth or traditional -- you can contribute up to $6,500 in 2015, $1,000 more than those under 50. That would give you another $15,000 to invest and grow for retirement. Based on the historical long-term 8% annual returns of the stock market, that extra $15,000 -- invested $1,000 per year from 50 to 65 -- could be worth $43,000 once you reach 70. Even a modest 5% rate of return would leave you with almost $29,000 extra.

Put that money in a Roth IRA, and you're talking about completely tax-free income in retirement.

If you have a 401(k), you can contribute an extra $6,000 in 2015, which could create a substantial amount of retirement income over time. Following the same math above, which is based on actual historical market return data, putting an extra $6,000 in your 401(k) each year from 50 to 65 could easily generate between $170,000 and $250,000 in retirement savings when you reach 70.

Yes, the market will have its ups and downs, but at 50 you still need to invest for the long-term. Catch-up contributions are an excellent way to do just that.

Dan Caplinger: The stock market's plunges from 2000 to 2002 and in 2008 scared many baby boomers out of the investing world, and as a result, they've largely missed out on the long-term gains that many stock investors have seen in their portfolios over the past 15 years. Instead, Boomers find themselves struggling to make ends meet with bank savings accounts that almost universally pay less than 1%, and often pay 0.1% or even 0.01% in interest annually. Every day they keep their money relatively safe from market risk, they accept the certainty of purchasing-power erosion from inflation.

A simple way to improve prospects for retirement is simply to embrace the higher return potential from investments other than insured bank accounts. It's true that by doing so, you'll take on greater risk, and there's no guarantee that you won't lose money in the future. Nevertheless, making your modest wealth work harder for you could help you stretch even meager retirement nest eggs longer than you would have thought -- and far longer than an account earning 0.01% in interest will. Even with limited amounts of time before you need to start drawing from savings, putting the longer-term part of your portfolio into riskier assets is the better alternative to low-interest vehicles right now.

Matt Frankel: Many experts say that you'll need about 80% of your pre-retirement income in order to maintain your lifestyle after you retire. And this number makes sense, as other than a few expenses (such as contributing to retirement accounts and the cost of commuting to work), your cost of living won't change too much.

However, if you can manage to eliminate some expenses, you could retire and maintain your lifestyle with a lot less money. While there are hundreds of small day-to-day reductions you could potentially make, paying down your large debts such as your house and cars could dramatically reduce your savings needs.

Consider an example of a married couple that earns $84,000 per year after taxes ($7,000 per month). They have the following monthly expenses before they retire:

When this couple retires, they'll no longer need to save for retirement, and we'll assume they'll spend half as much ($200) on gas since they're no longer commuting every day. Eliminating these expenses reduces their income need to $6,000, or 86% of pre-retirement income.

However, if this couple makes debt repayment a priority and pays off the house and cars before they retire, it would bring their income need down to $3,300, or just 47% of pre-retirement income without sacrificing their lifestyle. Based on the "4% rule" of retirement, and assuming this couple will bring in $2,500 per month from Social Security, this makes the difference between needing a nest egg of $1.05 million and just $210,000 to have a comfortable retirement.