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What Can You Do to Make Up for Your Retirement Shortfalls?

July 19, 2017


Good retirement planners choose and decide ahead of time how they want to live during their retirement. They know how much money they will need to live comfortably during retirement. Unfortunately, because of the different factors that can affect how much your retirement will cost—and how much you are able to save—then the fact that you are planning for something happening many years down the road—it is quite common to misjudge or miscalculate.


If you are approaching retirement now, and realizing that you are coming up short in terms of your savings goals to cover your needs for the rest of your life, don’t freak out just yet. There are several ways you can do to make up for the shortfall. Here some ways you may need to consider:

  • Put more money in your retirement. It is normally easier said than done. But if may be time to ramp up your savings now if you haven’t yet retired and you anticipate a retirement shortfall. The good news is the years before retirement are typically the peak earning years for many, and you have no more large expenses like a home purchase or paying for a college education. If you are using an investment vehicle like an IRA or 401(k), while it’s true your contributions will have less time to compound, you can still earn an average rate of return that will boost your nest egg to the point where it can make up for a financial shortfall.


  • Work a little longer (or go back to work). As you are approaching retirement, and realizing you may face a financial shortfall, working for a few more years will help make up for your deficit because this will help you to add to your savings and avoid dipping into your portfolio longer. If you are already retired, and a retirement shortfall comes onto your radar, then consider going back to work—at least part time—to garner additional income.


  • Hold off taking your Social Security. If you have detected a shortfall in your retirement savings, delaying Social Security—though it may not sound too appealing to many—can actually put you in a better position financially than if you take your benefits right away. You can always start taking Social Security benefits at any time beginning at age 62 until age 70. The longer you wait to take Social Security benefits, the higher your benefit will be. In fact, individuals who wait until their full retirement age (66 if you were born before 1960, 67 for those born 1960 or later) will see about a 30 percent increase in benefits than if they filed at age 62. Waiting until age 70 ups that number to about 32 percent.


  • Change your standard of living. This may be a little tougher for many. What this really means is cutting costs where you can and living on a more limited budget—perhaps more limited than you were used to during your working years. In addition to lowering your day-to-day expenses where you can, you can also consider downsizing your home, or moving somewhere where the cost of living is lower.


  • Keep your savings protected. Especially if you think your finances are in a position to come up short for retirement, you do not want to go any further backward. To prevent any potential loss, consider an insurance-guaranteed product like a fixed index annuity, which will guarantee the protection of your principal and can set you up to receive regular income payments in retirement. With this type of product, you essentially will never have to worry about encountering a retirement shortfall because the money you need to support you for the rest of your life will be secured.

These combinations of methods for attacking your financial deficit in retirement can be the best course of action for making sure your money is sufficient to take care of you during your retirement. To learn more about how you can keep your money protected and get guaranteed income in retirement, call our Perpetual Wealth Group specialists today at 800-278-2105.

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