10 Ways to Play Catch-Up Before Retirement

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Back in 2001, David Raether was a comedy writer for the TV sitcom "Roseanne," earning $300,000 a year. He and his wife and their eight children lived comfortably in a big house in an upscale suburb of Los Angeles.

That was before the recession, before Raether lost his career, his home and his marriage and found himself homeless for 18 months. Now 57, he shares a house with two 30-something graduate students in Berkeley, Calif., and ekes out a living as a freelance writer.

While his story is more dramatic than many, Raether's fall from a comfortable upper-middle-class life to unemployment and substantial loss of assets is common among Americans approaching retirement.

"I'm not the only one who's struggling," says Raether, who has heard from hundreds of people in response to his essay, "What It's Like to Fail," published last month by the website priceonomics.com.

Americans in their 50s and 60s, who expected to be at the peak of their careers before retirement, are finding themselves playing catch-up. While they may never get back the lives they had before, there are steps they can take to improve their retirement prospects.

[See: 6 Ways Retiring Can Be More Affordable.]

"Focus on things you can control," advises Maria Bruno, senior investment analyst at Vanguard. You can't go back to your old life, time the market or, in most cases, recover what you've lost. But that doesn't mean you can't make a new plan. "The sooner you can get back on track, the better, because of the power of compounding," she says.

The unemployment rate for people over 55 was 4.9 percent in November, up from 3.2 percent before the recession. Research by the Pew Charitable Trusts found that early baby boomers (born between 1946 and 1955) lost 28 percent of their net worth between 2007 and 2010, late boomers (born between 1956 and 1965) lost 25 percent and Gen Xers (born between 1966 and 1975) lost 45 percent.

The important thing, experts say, is to acknowledge the new reality and do the new math. Run a retirement calculator or consult a financial advisor. And then adjust to a downsized retirement plan.

"It's so hard to recover at that point," says Liz Weston, a personal finance author and columnist for Reuters. "Their retirement isn't going to look like they thought it would."

Here are 10 tips for getting your retirement plans back on track:

Save as much as you can. If your salary has fallen from $100,000 a year to $50,000, clearly you won't be able to save as much as you did before. But that doesn't mean you can't save anything. "You don't give up in desperation," Weston says. "Save what you can."

Make sure your lifestyle reflects your new income. That could mean relocating to a cheaper area, selling the house or getting by with one used car rather than two new ones. "If you're heading for retirement and you're very far behind the goal, you're going to have to change big things," says Jean Chatzky, financial editor for NBC's "The Today Show" and a personal finance author.

[See: 10 Ways to Upgrade Your Finances in 2014.]

Quit giving money to your adult children. "The welfare for the kids has to stop," Weston says. "Parents want to help, and I see so many of them who are subsidizing their able-bodied kids." A 2013 survey from Merrill Lynch found that 68 percent of parents age 50 and older had provided financial support to children age 21 and older during the past five years.

Plan to work longer. That could mean delaying early retirement, staying in your job past retirement age or working part-time in retirement. Vanguard calculations show that someone who could retire at age 65 with a portfolio of $169,400 could see that portfolio grow to $233,000 if he worked until age 68 or $266,300 if he worked until age 70.

Wait as long as you can to draw Social Security. For each year you delay claiming Social Security up until age 70, your payouts will grow. For example, someone whose Social Security payment at full retirement age would be $2,200 a month would get only $1,630 a month at age 62, but the amount would grow to $2,860 a month if she waited until age 70 to start receiving payments. You can get personalized estimates at ssa.gov/estimator.

Accept that your retirement lifestyle isn't going to be what you expected. Raether once expected to sell his big house in San Marino, Calif., and buy a retirement home at the beach. Now he dreams of a two-bedroom apartment with a piano. "Realize that the stuff you thought was really important to have ... is really not that important," he says.

Review your investments. Look at the numbers, run the retirement calculators, talk to a financial advisor and see if your money is invested in the right vehicles. Conventional advice is to move into safer investments as you approach retirement, but if you expect to work longer, weigh whether it's worth the risk of keeping more money in stocks, which traditionally bring a higher rate of return. Also make sure you're not paying high investment fees.

Embrace simple living and economize where you can. Cooking more often at home and taking your lunch instead of spending $10 on takeout every day could add substantially to your retirement savings over time.

Set a goal of being debt-free by the time you retire, including paying off your mortgage. That could mean making additional mortgage payments or selling a house with a large mortgage and buying a smaller place for cash.

Contribute the most you can to tax-advantaged investments. That means 401(k)s, individual retirement accounts or Roth IRAs. If you've been forced into self-employment, look into options such as a Simple IRA plan, a SEP plan or a solo 401(k). People over 50 are allowed to make additional contributions to those plans.

[See: Your 10-Step Financial Recovery Plan.]

Coming back won't be easy, warns Raether, who has written a memoir, "Tell Me Something, She Said," about his experience, He wrote in his essay:

"What happens when you hit bottom? I can tell you one thing: You don't bounce back. You crawl back, fighting every step of the way. It isn't a straight arc back up either; there are dozens of setbacks every step of the way. And the place you land isn't anywhere near where you were when you slipped off the cliff."

Still, Raether says he counts himself lucky to have his health and good relationships with all eight of his children, who are now in college or older. Plus, he will get a pension from the Writers Guild once he's 65. Most baby boomers will not have pension income in retirement, making savings even more important.

While older workers have less time to save for retirement than workers in their 20s, they still have time, especially if retirement comes later. "If you're in your 40s or early 50s, you're not that close to retirement. You've got a lot of time," Chatzky says. "Thinking you're so close to retirement that you can't do anything is a defeatist attitude, and it's not going to help you."



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