Retirement

Retirement Planning: What to Do When You Fall a Little Short

by Nancy Osborne, COO of ERATE®

If you have not been much of planner/saver and have failed to contribute sufficiently to your retirement accounts, here are a few tips for consideration so you can still hold out hope of retiring one day….

• Re-think your retirement age – if you were to push it out farther you could save more and spend less, double the benefit.  If you have lost your job or if staying in your current job is not an option, this might not work for you.  But if you were to find another job and work on a part-time basis to help supplement your expenses and possibly add to your retirement savings, this would help considerably.  As long as you are healthy, throw the old adage of designated retirement age out the window and work as long as possible.

• Go over your expenses with a microscope – there are two things you can do, either increase your income and/or cut your expenses.  Better to do both at the same time if possible.  Adjusting your lifestyle and living within the parameters of reality will help significantly, if this involves relocating to a less expensive area or region so be it.

• Improve the return on your investments – the bigger the return on your investments and the faster your money grows, the less you will need to save each year to reach your goal.  Even a few percentage points can make a huge difference in what you would need to sock away.  Many tax-deferred retirement accounts have catch-up provisions for those over the age of 50 to help save more on an annual basis.  Don't make the same mistake twice, start saving and earning more on what you have now.  Investing with a prudent tax strategy in mind can also help you achieve a better return on your investment.  If you are in a high tax bracket, you may earn more by utilizing tax-free investments that help minimize heavily taxed distributions.  The government also offers tax credits for low to mod income earners taking advantage of tax deferred retirement accounts.

• Tapping into home equity – this may not have been part of your original plan, but if you are seriously short of funds to cover your living expenses in retirement you may not have any other choice.  Your first option may be to simply sell your home, take your net proceeds and relocate to a less expensive area where you could re-purchase a lower cost home or simply choose to rent.  However if you feel moving late in life would be too traumatic, losing ties to family and friends, then a reverse mortgage is certainly a second option worthy of consideration.

• Start a “second” career doing something you love – if you have hobbies or diversions that you were unable to pursue while you were working, raising a family and persevering towards your goal of retiring, take the opportunity now to indulge yourself in a job or position you've long dreamed might suit you.  The presumption is that you are in good health and that the hobby or diversion of interest does not require much education or training to pursue and that if you do venture out on your own, you do not spend any of the funds you've set aside for retirement in doing so.

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Nancy Osborne has had experience in the mortgage business for over 20 years and is a founder of both ERATE, where she is currently the COO and Progressive Capital Funding, where she served as President. She has held real estate licenses in several states and has received both the national Certified Mortgage Consultant and Certified Residential Mortgage Specialist designations. Ms. Osborne is also a primary contributing writer and content developer for ERATE.

"I am addicted to Bloomberg TV" says Nancy.