How To Give Retirement Savings A Major Boost

Posted on August 26, 2013 at 11:34 AM PST by

Worried about your retirement savings? If so, well, that’s normal. Few people worry early enough, so the fact that you’re even thinking about it now is a good sign.

What can you do about it? The simple answer is “save more.” But there are good strategies, ideas retirees often put into place well after the time to act has passed.

retirement savings

Rather than being forced into decisions, it’s wise to make proactive choices in a timely manner, putting the power of those decisions squarely in favor of increasing your retirement savings.

Here’s a short list of tactical savings ideas to consider:

1. Work part-time in retirement

You’re looking forward to retirement, but are you looking forward to free time? Lots of retirees head back to work part-time within a year or two out of sheer boredom. There’s only so much golf to play, and they miss the social aspects of their careers. If this sounds like you, why not plan ahead for a retirement career you might enjoy?

2. Build a larger cash reserve

You can make much better long-term investment plans if you aren’t forced to cash out of stocks and bonds today to pay living expenses. Some advisers say to target 24 months of living costs, but be sure to overestimate if possible. You won’t know until you’re in retirement what things really cost month-to-month.

3. Retire one year later

If you don’t face imminent downsizing, it can be a very good idea to focus on cutting costs in the home stretch and then living on your retirement budget while earning your current salary. Bank every cent you can and invest it as if you were 20 again. You’ll be happier with the long-term outcome.

4. Downsize early

As mentioned in No. 3, don’t wait until you are handed a gold watch to figure out your retirement expenses. If you expect to move to a smaller, cheaper place, go ahead and put your current home on the market. If you have car loans, pay them off. Obviously, extinguish any and all credit card debt. This will create an updraft of free cash flow in your last few years of work that you can put aside as cash reserves or invest.

5. Save automatically

Not anywhere near 60? Start now, today, and up your savings rate dramatically. Every dollar you can set aside rather than spend today is $2 to you a decade down the line. A decade more and your $2 is suddenly $4, then it turns into $8.  The magic of compounding is an important wealth-building tool.

You can and you will retire. Whether your retirement savings will match up to your needs is another matter entirely. Taking charge of the situation is the better answer by far.