As the job market continues to struggle, so do people's retirement prospects. Recent statistics show that 44 percent of people plan to continue to work later in life than they had anticipated before the recession hit. Additionally, 54 percent plan to work in retirement and 23 percent have no back-up plan.
But staying at work may not be all bad. In fact, it may be your best bet to keep a healthy portfolio.
"At end of day . . . people are willing to work longer," Bill Losey, a certified retirement advisor, told RTTNews. "I always tell people that their biggest asset is their ability to earn an income."
Experts suggest that for retirement, you can withdraw up to 4 percent of your nest egg per year. So if you want to pull out $40,000 per year, you'd need $1 million in savings and investments.
Losey is the author of "Retire in a Weekend! The Baby Boomer's Guide to Making Work Optional," the founder of "National Retirement Planning Month" and publisher of "Retirement Intelligence." He offers seven steps for a happier retirement:
1. Downsize your home
"You get a lot of people in their 50s and 60s. They have these big 2,500-square-foot homes," Losey said. "By downsizing, you save on taxes, save on heating, save on water, save on yard work, save lots of money."
2. Reduce car costs
"Either going from three cars to two cars or if you don't want to reduce number of cars, reduce the size of the car you have," he said.
3. Move to a lower-cost area
"Take a look at other communities where there's a lower cost of living," he said. "And certainly if you're open to moving out of state, there are a whole host of states that don't have state income taxes."
4. Take steps to retire in partial steps
"A lot of people think of retirement as black or white, either I'm working full-time or I'm retired," he said. "But there's a big gray area in between."
5. Try to be debt-free by the time you retire
"Look at paying off credit cards, car loans, RV loans, things like that," he said. "Perhaps so that mortgage is the only debt they have left when they enter retirement."
6. Increase annual savings and retirement contribution
"For people over the age of 50, there's something called a catch-up contribution," he said. "So if you haven't been maxing out your savings, you are able to save an additional $5,500."
7. Consider reducing retirement income needs
"If they can make astute lifestyle choices, if they can control spending and live on less, they will feel much more in control of their future," Losey said.
Many younger people have yet to start saving money. Losey recommends starting a 401K or IRA as soon as possible. But now is also the time to make sure you have maximized your earnings potential.
"Go back to school, continue your education, network and do the best to make sure their job or company or career really offers the best kind of potential that will carry them into their 60s and 70s."
Source: http://www.rttnews.com/Content/ColumnStory.aspx?ID=1752524&Category=Money&Node=B15
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