Shoring Up Your Retirement Plan

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If you follow the SimpleMoney blog, you know I’ve recently offered some honest – but somewhat uncomfortable — thoughts about retirement.  The truth is that if you’re trying to achieve a retirement that looks like your parents or grandparents, you’re up against some tough odds.  For most of us, working longer is a necessity.

But all is not lost!  Here are some additional strategies to employ now to help you get closer to, if not achieve, your retirement goals.  I’m also adding some suggestions about what to do if you cannot bear the thought of working longer in your present job.

More obvious strategies

Save more for retirement.  I realize this one should be filed under the “duh” category.  But when I considered not mentioning this, it felt wrong.  Clearly prioritizing more of your savings efforts toward retirement will make a difference.  What you might not realize, however, is the closer you are to your target retirement, the less impact additional savings will have.

If you have five or more years until retirement, focusing on increasing your savings rate into investments can result in a nice boost to your nest egg.  If you are fewer than five years away, though, you will benefit more from paying down your mortgage, if you have one, or building up a larger emergency cash cushion.

Spend less in retirement.  Another painfully obvious strategy, and yet this notion demands more attention.  When we run retirement projections for clients in our financial planning practice, the single most impactful variable — one that is reasonably controllable by you — is your spending.  Plan to live smaller in retirement by spending less, and your nest egg will last longer.

More creative strategies

Can’t stand the thought of working a minute longer than absolutely necessary in your current job until retirement?

Plan your second act.  If you hate your present job, or you can’t see yourself staying in your current line of work for another ten or more years, it’s time to plan your second act.  Don’t quit in a huff and then struggle to get back on track with a new job.  Do some deep thinking and research about what you want to be when you grow up.  Be strategic about a future transition so you don’t lose benefits and current income until it is absolutely necessary.

Start moonlighting.  This is also known as a side hustle. No matter what you call it, people do it for one of two reasons.  First, they aren’t passionate about their job, so they start to engage in a passion project (for money or just for fun) in their non-work hours.  They have no intention of quitting their job and engage in the side hustle merely to earn additional money or to satisfy a creative need.

The second reason is to begin a transition into a new career.  The thought is if they have to work additional years to retire, they want to do something they enjoy.  Starting the transition in their free time provides the opportunity to build the new venture before pulling the plug on their main occupation.

If you want to be self-employed, this is the recommended approach.  Don’t lose your income stream if you don’t have to.  Work additional hours outside your “day job” and build a solid foundation before you leap.  Yes, it means working twice (or more!) as hard for some period of time.  But it also means taking less risk and maintaining your income with little or no interruption.

Go back to school.  You could approach this in moonlighting mode or as a total shift.  You can quit your job and go back to school full time if you have the financial cushion to cover your loss of income.  If not, going to school or otherwise educating yourself in the evenings or on weekends is the best plan.

Pick a course of study that provides a more stimulating “second act” for your working life, but also consider a change that will provide enough income to meet your needs.  Consider your current and future financial situation before making a leap into schooling.  Not all education is created equally, and not all courses of study result in making a good living.  Whatever you choose, pay attention that you don’t accumulate significant debt.

Work IN retirement.  Many retirees already do this.  Some people retire and then go back to work part time to satisfy a need to be busy or to find meaning and satisfaction in their days.  They might not really need the income.  Others might find that they can’t live on the amount they planned in retirement, so returning to work in some fashion is necessary.

Both of those scenarios are completely legitimate, but there is a third option – planning from the start to work in retirement.  Think outside the box that retirement means the cessation of work.  Instead, plan ahead how you might incorporate work in your retirement years in order to facilitate the retirement you wish to have.

Not everyone likes the idea of continuing to work but financial circumstances might require generating some form of income to be able to “retire” from your main career.  There is no shame in that.  Instead, embrace it and think years in advance how you might incorporate work into your plan.  In this way, the whole process becomes a practice in positive thinking, versus worrying you’ll find yourself in an unappealing, negative situation.

The key to all these strategies is positive thinking.  If you have a negative view about your retirement prospects, change your lens.  Viewing your options in a positive light will help you be creative about finding the right path.  It may be a less orthodox path, but it should help you retire happily, whatever that looks like for you.

How do you plan to retire?  Or maybe you don’t plan to retire at all?  Share your thoughts below.  Or if you want some like-minded friends, join the free SimpleMoney Community on Facebook to share your retirement wins or woes.


You might also like these posts:

Living Small

The Most Important Thing You Can Do to Plan for Retirement

Why You Should Work Longer Before You Retire



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