Realizing that your retirement plan has taken a huge setback is a common symptom of the recent recession. The good news, however, is that there are ways to go about rebuilding your funds.
Though 60 percent of baby boomer, according to a recent study conducted by Bell Investment Advisors, have put off retirement for one to four years due to lost investments and perception of inflated prices.
Congress reported in March 2009 that over $3.4 trillion had been wiped out of retirement accounts due to the market crash in 2008, which left many dazed and confused with their financial planning. And now everyone’s trying to figure out how to get that money back in a few short years.
Get Your Retirement Planning Back on Track
It’s not easy to think that after years of saving, the money you diligently set aside and invested responsibly could be taken from you in a few months. But there’s no sense in crying over spilled milk. Instead, it’s time to take action and start rebuilding your retirement. Here are some steps you can use to get started:
- Continue Funding Your 401(k). You may feel a little leery about continuing to fund your 401(k) after the market crash, but it’s something you’ll have to try to trust in again if you want to build retirement up quickly. If you can add more to the pot comfortably, then do so. The limit for investors 50 or older in 2009 is $22,000. Take advantage of it if you can. Use a retirement calculator to see how much you’d need to retire comfortably.
- Work a Few More Years. This may actually be mandatory in your eyes seeing that the savings you had is simply not there to fund your current bills. But there may be benefits to working a few more years. You have more time to save your income and set aside more for your 401(k). Also, some companies are buying out their employees so they will retire early. By waiting a few more years, you may fall into this lucky group of people.
- Diversify Your Investments. You may be accustomed to playing it safe or extremely risky when investing. But now’s the time to dive into a little of both. Yes, the market is still shaky. But by diversifying your investments, you can improve your chances of quick income with some security as well.
- Try a Guaranteed Annuity. If a large chunk of your savings is gone, you can choose an annuity that guarantees minimum payouts no matter how the market is performing. However, if you choose this route, be aware that these types of annuities can bring steep fees with them.
- Cut Back on Some Expenses. Now’s the time to consider cutting back on some major expenses to save money. Not just clipping coupons and stopping magazine subscriptions; you may also want to think about downgrading your car(s) and trying to sell your house to buy a smaller one (especially if the kids are gone). These actions may not be necessary, but are things you might consider to accumulate funds.
- Don’t Give Up. When it feels like you’ve been defeated, it’s easy to want to give up. But rebuilding your retirement requires your diligence, determination and confidence. In other words, don’t let those bad days get you down. Pick yourself back up and continue your fight to get your retirement back.
Rebuilding your retirement is something that can be done if you’re disciplined, willing to plan and save, and simply believe you can do it. So keep fighting the fight and know in the end you’re doing what’s best for you and your family.