Road to retirement is not a smooth ride. Even if one starts early, issues like job loss, marriage, divorce, illness, mortgage payment, etc., take precedence, thus making retirement planning an arduous task.
According to the '2010 Retirement Confidence Survey' by the Employee Benefit Research Institute, though 69 percent American workers have saved for retirement, only 16 percent are very confident that they have enough money for a comfortable retirement.
If you're among the 84 percent, and approaching retirement, don't repent for what has gone undone; instead, gear up to get retirement planning back on track. Here are a few tips:
1. Downsize Lifestyle
The fact that you are underfunded and haven't been able to accumulate much for retirement means your budget is stretched out too thin.
To ensure there are enough funds to last entire retirement, look for areas where you can cut expenses and redirect that money into savings.
Cost cutting can include relocating to regions where cost of living is low, trading big homes for small ones, replacing big cars with economical ones, or opting for public transport to work, etc.
2. Delay Retirement
Postpone retirement by working for a few more years, and for longer durations. You do not have to do the same job. If age disables you from physically working for long hours, opt for part-time jobs that are less strenuous.
Not only will this pile up cash into your saving account, but may also lessen years from retirement, thus enabling you to comfortably spend long collected stash.
3. Consider Asset Allocation
Review assets to ensure that your investment portfolio is diversified. The biggest mistake that most prospective retirees make is replacing shares for conservative bonds. But they are likely to run out of cash as bonds might fail to reap expected returns amid inflation.
According to investment experts, retirees should have a mix of shares and bonds. Also, investment in liquid assets like Certificate of Deposit, etc., is important to keep assets close to home in case an emergency strikes.
4. Opt for Long Term Care Insurance
While planning retirement, sign up for long term care insurance that provides for cost of activities like adult daycare, home care, visiting home nurses, among others.
As the rate of these policies doesn't vary much, do not opt for least expensive plans as they might exclude important benefits.
These days some companies even allow payment of premiums annually, thus freeing clients from the hassle of monthly payments.
5. Sign Up for Heathcare
As you evaluate retirement needs, check if you have a health insurance plan as healthcare proves most expensive for the retirees.
Know if your employer offers health benefits for retirement. If not, seek a private insurance as soon as possible.
Also, one can sign up for medicare, a health insurance program run by the Federal government for retirees. The program, whose enrollment period starts three months before one turns 65, covers hospital, medical, and drug costs.
Though the program has many attractive features, medicare does not cover 100 percent of everything. For instance, it does not provide for the cost of dental care, hearing aids, personal care, non medical services, etc.