Lost Your Retirement Savings? 7 Steps To Take Right Away

Distressed mature 60s husband and wife sit at table calculate manage household expenses having problems with finances, upset pensioners frustrated troubled with paying bills expenditures.
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As hard as it can be to build your retirement nest egg, it can be relatively easy to lose it. Whether through bad investments, significant financial obligations, a spendthrift lifestyle or other factors, if you don’t take care of your retirement savings, you may lose them.

If you find yourself in this situation, you’ll have to take some steps to restore what you’ve lost. Depending on how you lost your savings — and what stage of life you are in — those steps will likely differ. Here are some that you should pick and choose from to help get your retirement savings back on track.

Reevaluate Your Investment Strategy

If you’ve lost your nest egg due to poor investments, you may still have time to recover if you reevaluate your investment strategy. A total collapse of account value is often due to a lack of diversification — putting all your eggs in one basket. Regardless of how solid you think a stock may be, betting your entire retirement on it is a risky strategy at best.

If you’ve lost your retirement savings due to this, you’ve already learned that lesson. Take this chance to rebuild your savings with a diversified portfolio of quality names with long-term growth potential.

Are You Retirement Ready?

Plan for Emergencies

Sometimes, an emergency completely beyond your control will wipe out your life’s savings. This is a tragic situation that you can never fully prepare for. However, as you recover, rebuilding a sizable emergency fund is a good first step.

Although you can never predict a specific emergency, you can count on them happening in life. Cash reserves are essential to prevent falling into debt or having to drain your retirement accounts.

Change Your Asset Allocation

Even if you didn’t lose your entire retirement savings by betting on one stock, building a portfolio that is too aggressive can end up with the same result. For example, if you put all of your investments into speculative meme stocks, no level of “diversification” will protect you from the volatility that afflicts that sector.

When you rebuild your account, consider reallocating into more diverse sectors.

Develop a Social Security Claiming Strategy

If your retirement savings are depleted, you may have to rely on Social Security in your golden years, like so many other Americans. If this is the case, you’ll want to work on developing a Social Security strategy as early as possible.

There are two primary ways to boost your Social Security payout: maximize your earnings and delay your claim as long as possible, at least up until age 70. Consider speaking with a financial and/or tax advisor to come up with the best possible strategy based on your personal situation.

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Pick Up Extra Work

One of the hard truths of losing your savings, particularly if you are in or near retirement, is that you might have to pick up extra work. As unpleasant as that might sound, if you can find a job doing something you enjoy, even on a part-time basis, you may be able to generate enough income to overcome your savings deficit.

If you’re still in the workforce, ask if you can earn some overtime pay, or consider looking for a part-time job on the side.

Ask for More Money

Rising inflation has made life more expensive for Americans, but in many cases, it has also resulted in higher wages. In this environment, your employer may be more receptive to your request for increased pay for the work you already do.

Coupled with extra hours, more savings and a more disciplined approach to your budget, your increased pay could help rapidly restore your retirement savings.

Consider Lifestyle or Location Changes

If you still have time to beef up your retirement savings, making lifestyle and/or location changes can help you get there faster. Trim all you can out of your discretionary spending and consider moving to a lower-cost area, whether that means a less expensive city or even another state.

In many cases, the income you’re earning via Social Security and/or your own work can stretch much further with a simple change of locale.

The Bottom Line

Losing your retirement savings, for whatever reason, is a tough reality to deal with. But the only way you can rebuild your nest egg is to set aside your emotions and work on a comprehensive plan to raise money as fast as you can. These steps can help steer you in the right direction.

Are You Retirement Ready?

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