Scared that you won't have enough to retire? You are not alone. Jack VanDerhei, research director for the Employee Benefit Research Institute, told the Washington Post that employees who have spent between 20 and 29 years on the job will have to spend 1 year and 9 months working to recoup market losses. But there are things you can do to stop it from getting worse. Here are 6 tips to get your retirement plan back on track:
1. Keep contributing to your retirement plan even if your employer has stopped the matching contributions.
2. Work longer. Even if you work a year or two more than what you planned, that can make a big difference in helping to recoup those losses because you will be adding more funds in and taking less out over time. Many people will also look for part-time work.
3. If you are eligible, fund a RothIRA in addition to contributing to your other retirement plans.
4. Review your asset allocation. Don't panic and put everything into cash. See if you have too much in equities and reduce your allocation to suit your risk tolerance. A good rule of thumb is that the percentage of cash assets should be equal to your age.
5. Take advantage of catch up provisions. If you are age 50 and older, you are able to put in up to $22,000 in a retirement plan instead of the normal $16,500.
6. If you are retired or about to retire, spend less in the next couple of years. Most experts advise a withdrawal of 4% a year maximum during retirement. Start out with 3% to give yourself a headstart. You don't want to outlive your money, so slow down on the spending in the bad years.
If you have heavy losses in your investments and you are close to retirement, keep these 6 tips in mind to make sure that you have enough funds to finance the lifestyle you desire. Just a little tweaking here and there can make a big difference in the outcome. It is possible, even in times like this for you to have a retirement plan that is achievable.
2008© Fern Alix-LaRocca CFP® All Rights Reserved
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