You've finally reached the age at which you planned to retire, but there's just one problem: You can't afford it. Is it too late to retrieve your financial situation and rescue your retirement, or are you doomed to spending your golden years working in retail?

The short answer: Don't give up yet.

What went wrong?

If you can't afford to retire, it's almost certainly because you don't have enough money saved. If that's the case, you're definitely not alone. The average American is terrible about saving money in general and saving for retirement specifically; a recent GoBankingRates survey found that 55% of workers have less than $10,000 saved for retirement.

Fixing this particular problem means finding a way to get more retirement income -- fast. That can be quite a challenge at this late date, but it's definitely not impossible; you'll have to make some sacrifices in the short-term, but in the long term, you'll be rewarding yourself with a pleasant retirement.

Worker hiding head under laptop computer

Image source: Getty Images.

Step one: delay your retirement

I know you're tired of working and just want to kick back and enjoy life, but before you can do that you need to get your financial house in order. Delaying retirement gives you a few extra years to keep putting money into your retirement savings accounts instead of taking money out. What's more, it can help your retirement income in other ways: for one thing, waiting to claim Social Security means that your benefits checks will be larger.

Your Social Security benefit hinges partly on whether you retire before, at, or after your full retirement age. Claim your benefits before your full retirement age, and you'll get hit with a penalty that will permanently reduce your benefits by as much as 30% annually. Claim them after full retirement age, and you get "delayed retirement credits" that can increase your benefits by 8% per year you wait. The credits stop coming once you hit age 70, so waiting to claim your benefits until after that point won't get you anything.

Step two: save, save, save

Now that you've decided to keep working for at least an extra year or two, your mission is to contribute up to the annual contribution limit for your retirement savings accounts. Workers age 50 and over can save $6,500 per year in an IRA and $24,500 in a 401(k) (for 2018). If you have both types of account, by all means max out both your limits.

Saving this much money will probably require you to rearrange your lifestyle. Any time you need more money, you have two basic options: increase your income or decrease your expenses. Since you're really going to turbocharge your savings, you'll probably need to do both.

Options for increasing your income include getting a raise or promotion at work, picking up a part-time job on the side, monetizing a hobby, selling your stuff, and so on. Setting up passive income sources is also a great idea because you can often keep them going after you retire, which will give you an extra source of retirement income.

Reducing your expenses starts with trimming out all the things that you're not actually using, like a gym membership when you haven't been to the gym in over a year. You can also review various subscriptions (cable or satellite TV plan, cellphone plan, Internet plan, Netflix subscription, etc.) and see if you can painlessly cut back to a cheaper plan. For example, if your current cellphone plan includes way more minutes than you ever use, switching to a smaller plan won't hurt a bit.

Once you've cut out all the fat, you can reassess your budget and see how much you've managed to free up. If you're lucky, you may even have enough extra income now to hit your savings goals. However, most people will have to keep cutting and sacrifice some expenses that they're actually using. This may mean canceling that Netflix subscription entirely instead of just switching to a cheaper plan, committing to brown-bag your lunches instead of eating out, picking up books and movies at your public library instead of buying them, and so on. Living such an austere life is definitely painful, but at least it's just temporary. And as you increase your income, you'll likely be able to add some of these discretionary expenses back to your life.

Step three: find extra retirement income

If your only sources of retirement income are your Social Security benefits and the money you've saved, you'll need to save a lot of money. But if you can scrape up some additional income sources, you don't need to save quite so much money – and your goal will be a lot more achievable.

A part-time job or side gig that continues in retirement is probably the easiest additional income source to find, and can be beneficial in other ways. Many retirees find it jarring to go straight from working full time to not working at all, so a part-time job can ease this transition for you.

Other options include buying an annuity with some of your retirement savings (a fixed annuity can give you guaranteed income for life -- unlike stocks and bonds, which can go up or down unpredictably), investing in real estate, setting up passive income sources (see the previous section for more on this), picking up part-ownership in a small business, and so on. Finding new ways to generate retirement income means you won't have to delay retirement quite so long, and it also will give you a little extra security after you retire.

Step four: retire

So how do you know when you can finally stop laboring away and retire? You figure out how much your monthly expenses will be during your retirement, add in a 10% margin of error, and set that as your income goal. Once you've managed to scrape up at least that much retirement income, you're all set.

For example, let's say that you add up all your current expenses, remove the ones that will no longer exist after you retire (i.e. the expenses related to commuting to work), add in any new expenses that will arrive during retirement (i.e. Medicare premiums) and end up with a total of $3,000 per month. Add 10% of that ($300) so that you'll have some extra money to cover expenses you didn't think of as well as emergencies, and you'll arrive at a sum of $3,300 per month. That's how much income you need to have ready in order to retire.

Pulling up your Social Security statement will tell you how much you'll be getting in Social Security benefits. As for your retirement savings, limit yourself to no more than 4% of the total balance per year in withdrawals. For example, if you have $500,000 in your 401(k), you can assume you'll be able to take around $20,000 per year from the account. Add up the totals from those two income sources, and you'll know how much you'll need from other sources.

When you're behind on retirement savings, it means you'll have extra months or years of hard work ahead of you to get back on track. You might even find that you enjoy the challenge of squeezing every possible penny out of your budget and into your IRA or 401(k). And when you hit your income goal at last, all that hard work will be richly rewarded.

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