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 2019.
If you haven’t saved enough, remember that there is always time to pad your nest egg. But to make progress toward retirement savings goals, hard choices are ahead.
Following are some key ways to get your retirement plan back on track. The sooner you start, the easier your job will be.
1. Crack the paralysis
Paralysis is understandable: Many of us have little or no education on the subject of investment.
Take this to heart: You don’t need to be an investment expert to get started. Instead, start saving, keep saving, and learn as you go.
To begin the education process, check out:
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 set a savings goal of between $600,000 and $720,000.
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 on average they earn less and often drop into 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.
5. Delay all you can
Hold off quitting work as long as you can. Also, wait to claim Social Security retirement benefits if possible. Waiting until age 70 to claim will mean you receive the largest possible monthly benefit payment.
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.
6. Wipe out debts
All debt — 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 before retiring.
For more, check out “8 Surefire Ways to Get Rid of Debt ASAP.”
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.
Spending less than you earn is the magic sauce that enables people to save, live debt-free and rescue shaky retirements.
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.
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 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. For more, check out “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.