Last minute action won’t replace decades of saving. However, there are actions that can be helpful.
It is likely that most people have every intention of saving enough money for retirement. However, it is very possible you will be one of the many who find themselves approaching retirement with insufficient funds to carry you through those years. However, there are some actions you can take at the last minute that will be helpful, according to Bankrate.com in “6 last-minute retirement planning strategies.”
Start saving like crazy. Reduce all discretionary spending and put anything and everything you can, into your retirement accounts. If you’re over 50, you can add a catch-up contribution to your annual IRA limit of $6,5000—giving you a maximum contribution in 2018 of $24,500. If you exceed the limit, put the money into a savings account. Just be sure to save it.
Consider a shift to your investment portfolio. If your investments are all in low interest rate CDs or bonds, you may want to make a change. This could involve modest moves up on the risk scale that could make a difference. Make moderate changes. Big shifts are never a good idea.
Keep working. While you are able to work, you aren’t drawing money from your retirement accounts, so investments have more time to grow. Working longer also gives you more time to add to those funds. Delaying retirement also increases the income you’ll get from Social Security.
Change your retirement budget. If you thought you were going to spend your retirement living high, rethink that. If you don’t have enough saved, you will likely have to cut expenses. If you have, for example, $400,000 saved for retirement and are used to spending $50,000 annually, your savings won’t last much past eight years (ignoring any investment gains).
If you cut your spending in half, your savings will last 16 years, and if your investments do any growing, so will your overall portfolio. If you can’t make that much of a cut, consider part-time employment. Many retirees today are using this time to pursue careers they once considered a hobby, or simply taking lower-paying, less stressful jobs to round out their household budgets.
Sell your home. If you have a lot of equity in your home, consider selling your home and using the proceeds to add to your retirement account. Rent or buy a smaller home or move to an area where home costs are lower. You may also consider a reverse mortgage, which lets you continue to live in the house, while receiving monthly income.
Any of our estate planning attorneys would be happy to advise you in creating an estate plan that fits your unique circumstances.