Heading Toward Retirement With a Savings Deficit?

There Is Hope If Retirement Is Around The Corner, And Your Savings Aren't Ready Yet

You'll frequently hear that you should start retirement with ten to twelve times your final salary in savings. The thinking is that a sum of that size should be enough to cover your living expenses, in addition to your Social Security payments.

But what if you're nearing retirement and haven't yet met that goal? Don't get too worked up if this is the case. While it may be disappointing to fall short on your financial objectives, your golden years aren't necessarily ruined. But here are a few things you should do if you're facing a savings deficit and have only a few years left working to compensate.

Put off retirement a couple years

If your nest egg doesn't even come close to the amount you desire, deferring retirement by a year or two may just result in a small boost to your IRA or 401(k) plan. But it's still worthwhile pursuing.

Consider this scenario: You can save another $5,000 by working an extra year. That $5,000 may not make much of a difference over a 20-year retirement.

But by extending your tour another year, you're also setting yourself up for a scenario in which you would put off tapping into your existing savings and allowing your money to grow a little longer. That's something to keep in mind.

Furthermore, if you work an extra year, it may enable you to delay taking Social Security until age 70 and increase your payments in the process. Your benefits will get an 8% boost for each year beyond full retirement age (FRA) that you put off filing for Social Security until you are 70 years old - for the rest of your life. That is,  by sticking it out at your job longer, then you might increase your income level.

Plan to keep working part-time

You may be excited about retirement since you're tired of working. But if you stop and think about it, the thing you might be the most weary of is your own profession and the daily routine that comes with it.

If you're lacking in retirement funds, working part-time after you retire might be worthwhile. However, the job you obtain doesn't have to be bad. You may discover a passion and make it into an income stream by doing something you love.

There are many jobs out there that can help you earn additional money while meeting your interests. If you enjoy animals, for example, you may offer your services as a pet sitter. You can also sell paintings and other works at craft fairs or establish an online store if you're artistic. You are absolutely permitted to create a business out of your hobbies, and you may in fact turn them into an income-generating opportunity.

Downsize your home

Housing might end up being your most expensive expenditure in retirement. If you're not satisfied with the amount of money in your savings, downsizing is an excellent choice.

Even if you're mortgage-free by retirement, downsizing may save you money on property taxes, homeowners insurance premiums, maintenance, and utility bills. All of this might help you stretch your limited funds further. If you do have a mortgage left on your property, downsizing may allow you to sell it, pay off the loan, and buy a new house without taking on any debt.

You may have wanted to increase your retirement savings only to find that you ran out of time. If that's the case and you're now short, keep in mind that there are alternatives available to you beyond being unhappy throughout your retirement years due to a lack of money.

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