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Didn't Save Enough for Retirement? 4 Ways to Work Around It

By Maurie Backman - Mar 14, 2021 at 5:48AM

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If your nest egg is going to come up short, there are things you can do to compensate.

Ideally, you should enter retirement with about 10 times your final annual salary socked away in your investment portfolio. You'll need those assets to supplement your Social Security benefits, which only pay the average senior today about $18,000 a year.

But what if you're on the cusp of retirement and you haven't got quite that much set aside in your IRA, 401(k), or brokerage accounts? It's a situation you wouldn't be alone in. Here are a few things you could do if that's where you look likely to end up.

1. Delay filing for Social Security

Though Social Security only pays the average recipient today about $1,500 a month, you may be in line for a higher benefit if your career earnings were above average. Furthermore, anyone can boost their monthly benefit by delaying the date when they file for Social Security past their full retirement age -- the age at which the government says you're entitled to receive what it calculates as your "full" monthly benefit. Specifically, you'll boost your benefits by 8% for each 12-month period you delay your filing, up until you turn 70. (It's pro-rated, so every month you postpone adds 0.67%.) As such, if you'd be entitled to a $1,500 monthly benefit at 67, waiting until 70 to claim it will give you $1,860 a month instead.

Older man and woman with concerned expressions at laptop with papers next to it

Image source: Getty Images.

2. Rethink your housing situation

Housing is a lot of people's greatest monthly expense, so if you need to adjust your budget, that's a great place to start. One option is to downsize to a smaller, less expensive home, or move to a less pricey locale -- but those aren't your only options. You can also look at renting out part of your home as a means of supplementing your retirement income.

3. Start a business

You'll probably want to find ways to keep busy during retirement -- so why not earn some money at the same time? You might start a part-time business that's based on your interests. If you're an avid pianist, you could give music lessons. If you love animals, you could offer pet care services. There are plenty of options to explore, so think about the ways you can earn some extra money by doing the things you already like to do.

4. Transition into retirement gradually

A lot of people work full time right up until the day they retire, then shift completely into a life of leisure. But if your savings aren't as robust as you'd like, you might want to see if your employer would be amenable to a more gradual dialing down of your responsibilities. You might, for example, cut back to working four days a week for a year, three days a week for the following year, and then a couple of days a week the year after that. Your company's needs and policies on this topic may vary, but if you can keep earning some smaller paychecks, you won't have to tap your savings as much.

You don't necessarily need to kick off your retirement with a million-dollar nest egg to enjoy your senior years. But you should aim to have a hefty chunk of money set aside, and if that's not in the cards, you'll want to take steps to compensate. You may need to adjust your plans or make some comprises, but that's better than sitting back, doing nothing, and struggling financially during a period of your life when you ought to be putting those sorts of worries behind you.

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