An old year is gone, and a new one has arrived. That means you are 12 months closer to retirement than you were in January 2018.
Does that thought make you excited — or nervous? If you haven’t saved nearly enough, remember that there is always time to pad your nest egg. But if you hope to make progress toward your retirement savings goals, hard choices are ahead.
Following are some key ways to get your retirement plan back on track. Some require extreme changes, but the sooner you start, the easier your job will be.
1. Crack the paralysis
Paralysis is understandable: We’re living longer and being forced to assume more of the savings and investment burden, with little or no education on the subject or support.
“Nearly three-quarters of pre-retirees agree that they should be doing more to prepare for retirement, but 4 in 10 say they simply don’t know what to do,” says Prudential Investments’ 2016 Retirement Preparedness Study.
Take this to heart: You don’t need to know what you are doing to get started. Start saving, keep saving and learn as you go.
Learn more : “5 Simple Ways to Invest Your Retirement Savings”
2. Pick a number
Set a savings goal. It may change later, but pick a number now to get going.
To fund a nest egg, many investment professionals suggest that people consider saving 10 to 12 times the amount of their last full year of income.
By that logic, if you expect to earn $60,000 in your last full year of work, you should make your goal $600,000 to $720,000. So, get started now!
Learn more: “Ask Stacy: How Can I Know I’ll Have Enough to Retire?”
3. Emancipate adult kids
Sit down with grown children and tell them what you are facing.
It’s a tough conversation. But laying your financial cards on the table gives them information they may need to plan their lives. It also may let you get a sense of whether living with them or expecting any support from them in your old age is a possibility.
Also, if your retirement is in peril and you are helping your adult kids financially, you’ll have to stop. There are other good reasons for withdrawing your support besides your money woes: Supporting adult kids can undermine their self-sufficiency.
4. Think carefully about divorce
If you’re on the fence about ending your marriage, understand that getting divorced deeply wounds couples’ finances.
This is especially true for women because they earn less and often drop in and out of the workforce for family reasons, contributing less to Social Security and retirement funds. But divorce affects men’s finances, too.
Divorcing at an older age can make it especially hard to recover. Think realistically about the financial implications for yourself, your children and your retirement.
Learn more: “10 Hazards of Divorcing When You’re Older”
5. Delay all you can
Hold off quitting work as long as you can. Also, wait to claim Social Security retirement benefits.
Foot-dragging is a great tactic for extending the life of your retirement savings. Waiting to retire helps delay the moment when you’ll need to crack open your nest egg, thereby giving investments longer to grow and giving you longer to contribute to them.
If you will have a financially tight retirement, leave savings untouched as long as possible. Stay on the job — whatever job you can get. A low-paying job or a part-time job is generally better than no job.
Learn more: “How to Use the ‘Gig Economy’ to Boost Your Income”
6. Wipe out debts
All debt, and high-interest credit-card debt in particular, forces you to spend money on interest that you could be putting toward retirement. Set a goal to pay off your debts, even your mortgage, if possible, before retiring.
Learn more: “8 Guaranteed Ways to Get Rid of Debt Fast“
7. Radically shrink spending
You’ll have to cut back on spending when you retire. If you start now, you can use the savings to help fund your retirement.
A drastic cut in spending requires big decisions and determination.
For example, how would life change if you decided to spend no more than 30 percent of your income on housing? You may decide to move to a cheaper part of the country, or to leave the United States and move abroad.
Spending less than you earn is the magic sauce that enables people to save, live debt-free and rescue shaky retirements.
Learn more: “How to Live Rent-Free (or Way Cheaper Than You Are Now)”
8. Get help from your home
If you own a home, the equity may well be your biggest source of wealth. Two common ways to tap it are taking a reverse mortgage or selling the home and downsizing, investing the profit in a retirement account.
Maybe you don’t want to sell or take on debt. There are other ways to use your home as a retirement asset.
For example, you could rent a room to a boarder or get a housemate, occasionally rent part of the home to vacation travelers or rent it out while you travel. Or you could move to a cheaper location.
Learn more: “10 Alternatives to a Reverse Mortgage”
9. Find a job with a pension
Jobs with old-fashioned defined-benefit pensions — the type that pay retirees a set amount each month or year — are scarce. But they have not entirely disappeared. You could make it your mission to find one.
At least, make sure you collect on any pensions you may have had from past employment.
Learn more: “4 Places to Look for Pension Money You Have Forgotten”
Do you have ideas for others who are trying to build up their nest egg? Share with us in comments below or on our Facebook page.