Approaching retirement should be an exciting time for you. This is it: the goal you’ve been working towards since you took your first job is finally on the horizon.
But what if you don’t have enough to retire? In that case, any feelings of excitement or happiness can quickly turn into fear, even panic.
You don’t want to be stuck working forever — but do you have a choice if your investment portfolio isn’t enough to support you if you stopped earning an income through a job?
The good news is that you just might, but you need to act now. Explore your options, understand what you can do to make a positive impact to your financial situation, and focus on what you can control.
If you’re not on track to reach your initial goals, consider these 5 ways you can still secure the retirement you want.
1. Change Up Your Timeline
It might not be ideal, but you can still have the retirement you want if you’re willing to work a little longer for it. Working an extra five years can make a massive impact on your nest egg.
Since the last years of your career are also usually your highest earning years, this could help you make the catch-up contributions you need to get your nest egg to “enough.” If the thought of 5 more years of your existing job is unbearable, consider how you could improve the situation.
Could you reduce your hours? Request flex time? Work from home some (or all) days of the week? Talk to your supervisor about your options and get creative to make a few extra years something that feels just a little less like work.
You don’t necessarily need to work an extra decade or more — and you can still enjoy a long retirement after you give you nest egg a little boost. Plus, don’t forget that those extra years could help your retirement planning in other ways, like boosting your Social Security benefit, too.
2. Double Down on Your Savings and Reconsider Your Investment Strategy
You can still retire when you want if you’re willing to make the most of your final working years. Review your budget and find places to tighten your belt. What costs can you cut to make room for more savings?
In addition to cutting back on expenses, consider pursuing potential pay raises, job promotions, or even working a few overtime hours to boost your income (and therefore, you savings). You could even look at a side job like driving for Uber or find a way to utilize an idling asset.
Then, make the most of your savings by taking advantage of catch-up contributions in your retirement plans. People 50 and older are allowed to contribute $1,000 more per year to IRAs, up to $6,500. They can also contribute an extra $6,000, up to $24,500, toward 401(k) programs.
The tax benefits of these plans will help close the gap to your goals more quickly.
In addition to simply trying to save more, take a moment to review your investments. You want to make sure that you invest in such a way that you can take advantage of potential returns without taking too much risk.
This is a tricky balance to strike well, so consider talking to an experienced financial advisor who knows how to create appropriate portfolios for pre-retirees to help you get to the goals you want — not necessarily by working yourself to the bone, but by making sure your money is working as hard as it can for you!
3. Find Ways to Make Money in Retirement
Doing nothing in retirement probably sounds nice while you’re working, but day after day of nothing is bad for your physical and mental health.
Consider ways you can fill your time in retirement that could allow you to build a small income stream. You could start the business you always wanted to pursue. You could monetize a hobby or just plan to work part-time in a position that’s fun to you and you enjoy. You could even put your considerable professional experience to work for a charitable organization – it’s deeply rewarding, and if you are already retired, the low pay associated with charitable work is less of a concern.
(If that sounds crazy, consider this: a part-time gig at the local country club could mean reduced greens fees or dining room discounts, and may actually be enjoyable work!)
Earning even a small amount of income in your retirement years means you don’t have to rely 100% on your savings to fund your lifestyle — and that, in turn, means you may be able to retire with a little less in the bank.
4. Adjust Your Retirement Lifestyle
Explore ways you can live well on less so you can still retire when you want to and use a little less money than initially planned.
Remember, you’re making this change in order to create the retirement you want. Living a little more frugally is absolutely worth it when you consider why you’re doing it.
Take time to identify where expenses may fall in retirement, such as costs you may still have for your children. Then look for places in your budget where your spending is no longer in line with your needs or priorities.
If you own a home, consider downsizing or moving to a lower cost of living area. This will not only reduce your monthly expenses, but could also allow you to take advantage of some of your home equity to bolster your savings (since you’ll be able to invest some of the cash you received from the sale of your house if you buy a cheaper new home).
The less you need to be satisfied, the easier it will be to retire when you want.
5. Delay Claiming Social Security
You may not want to work in retirement. But taking on a part-time job the first few years so you can delay claiming Social Security could significantly boost the benefit you receive. Each year you delay claiming your benefit between age 62 and 70, your benefit increases by 7 to 8 percent.
The Social Security formula also averages your 35 years of highest earnings, including zeros, to determine your monthly benefit. If years spent out of the workforce in the past means you don’t have 35 years of earnings history, those extra years of even part-time work could help increase your Social Security check, too!
Social Security was never meant to be your sole source of income in retirement. But a 15 percent higher check from delaying just two years could make a huge difference to when you can retire, and what you can do in that retirement.
Have Enough to Retire by Making the Most of Your Time
The most effective way to close the gap with your retirement needs is taking advantage of a combination of the options discussed. It won’t be easy, but if you make the most of your last working years, you can achieve the relaxing retirement of your dreams.
It isn’t too late to make up for lost time — and you don’t have to do it alone. Reach out to a financial planner who can provide a review of your financial situation, help you understand whether or not you’re on track, and give you a specific plan of action to follow to secure the future you want.
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This information is not intended to be legal or tax advice. The author can provide information, but not advice related to social security benefits. Clients should seek guidance from the Social Security Administration regarding their particular situation. Social Security benefit payout rates can and will change at the sole discretion of the Social Security Administration. For more information, please consult a local Social Security Administration office, or visit www.ssa.gov.