Retirement Planning: Troubleshooting And Catching Up
  1. Retirement Planning: Introduction
  2. Retirement Planning: Why Plan For Retirement?
  3. Retirement Planning: How Much Will I Need?
  4. Retirement Planning: Where Will My Money Come From?
  5. Retirement Planning: Building A Nest Egg
  6. Retirement Planning: Tax Implications And Compounding
  7. Retirement Planning: Asset Allocation And Diversification
  8. Retirement Planning: Troubleshooting And Catching Up
  9. Retirement Planning: Conclusion

Retirement Planning: Troubleshooting And Catching Up

Troubleshooting
As you build your retirement fund, you'll likely experience some bumps in the road along the way. One of the most common problems you'll encounter is an inability to make your monthly retirement contributions. A number of financial pressures can arise to make the process difficult, but fortunately there are ways that you can tilt the odds in your favor.

First of all, s

et up automatic payments from your checking account (your bank should be able to help you do this) into the investment account you are building your retirement fund with. This is commonly referred to as "paying yourself first". Once it's set up, each time you get your paycheck, your desired savings contribution will go right out to your investment account before you have a chance to spend it.

Additionally, if you participate in a 401(k) plan, try to make the maximum salary deferral contribution allowed. If your employer offers a matching contribution, at least try to contribute enough to ensure you receive the maximum matching contribution.

Automatic savings will make it a lot easier to avoid spending your contributions on things you can realistically do without. And if serious financial problems do crop up that require the use of your investment funds, you can usually access those that are deposited to an after-tax account without incurring penalties. The point of the automatic contribution is to avoid any instances of spending too much and missing out on your contributions unnecessarily.

If you do dig yourself into a deep hole of credit card debt, however, it's important you deal with the problem as quickly as possible. Create a feasible budget to pay down your debt and stick to it. Consider consolidating your debts into one account - this can lower your overall interest rate and help you pay off those debts quicker.

Other problems may crop up, but provided you're able to maintain your monthly contributions, you should be in good shape. If you are having prolonged difficulty following your plan, consider seeking the help of a financial planner.

What If I'm Late Getting Into the Game?
If you are beginning your retirement savings late in life, you will need to work hard to catch up. The first thing you can do is create a budget for your current expenses so that you can maximize monthly contributions to your retirement fund. With budgeting, a little goes a long way, and if you track your expenses for a month you will likely find that skipping the occasional dinner out can save you hundreds of dollars, which can go a long way to boosting your retirement savings. The main goal is to ramp up your savings rate as much as possible.



You might also consider alternative ways to boost your financial situation. Second jobs are an option, but not a particularly pleasant one. If you own your own home, consider renting out the basement or taking on a roommate in order to lower your living expenses. Converting part of your residence into an income-generating asset can do wonders for your overall retirement plan.

Once again, part-time jobs during retirement can be a feasible way to catch up. If you're able to earn a modest income during your retirement years, your financial picture can change drastically - especially if you are an active type of person. You may actually prefer semi-employment during your golden years instead of 100% leisure time.

Your Home May Be a Source of Funding for Your Retirement
If you own a home, it could serve as one of the means of financing your retirement - either by selling it and moving to a smaller, less expensive home or by using a reverse mortgage. A reverse mortgage allows you to convert a portion of the equity in your home to tax-free income while retaining ownership (of the home). A reverse mortgage can be paid to you as a lump sum, as a line of credit and/or as fixed monthly payments. If you decide to pursue a reverse mortgage, be sure to factor in the costs, which are similar to those that would usually apply when a house is being purchased. This includes origination fees and appraisal fees. (To read more on this, see The Reverse Mortgage: A Retirement Tool.)

Retirement Planning: Conclusion

  1. Retirement Planning: Introduction
  2. Retirement Planning: Why Plan For Retirement?
  3. Retirement Planning: How Much Will I Need?
  4. Retirement Planning: Where Will My Money Come From?
  5. Retirement Planning: Building A Nest Egg
  6. Retirement Planning: Tax Implications And Compounding
  7. Retirement Planning: Asset Allocation And Diversification
  8. Retirement Planning: Troubleshooting And Catching Up
  9. Retirement Planning: Conclusion
RELATED TERMS
  1. Pay Yourself First

    A phrase commonly used in personal finance and retirement planning ...
  2. Additional Voluntary Contribution – AVC

    An extra allocation of funds to a retirement savings account ...
  3. Thrift Savings Plan - TSP

    A retirement savings plan created by the Federal Employee's Retirement ...
  4. Retirement Planning

    The process of determining retirement income goals and the actions ...
  5. Auto Enrollment Plan

    An employer’s decision to sign employees up to have a percentage ...
  6. Matching Contribution

    A type of contribution an employer chooses to make to his or ...
RELATED FAQS
  1. Is there a minimum I have to contribute to my 401(k) plan?

    Deciding how much to put into a 401(k) account can be tricky. There are guidelines to ensure you are investing what you need ... Read Answer >>
  2. Can I take my 401(k) to buy a house for my children?

    Find out how you can use your 401(k) savings to fund the purchase of a home for your children, including the basics of standard ... Read Answer >>
  3. What are the Registered Retirement Savings Plan (RRSP) contribution limits?

    Review annual contribution limits for Registered Retirement Savings Plans and figure out how much you can invest for your ... Read Answer >>
  4. What should you do when you're five years from retiring?

    One of the first steps you should take at this stage is avoid the pitfall many pre-retirees experienced in 2008 – overexposure ... Read Answer >>
  5. Where else can I save for retirement after I max out my Roth IRA?

    The first option to explore is to determine if you can contribute to a 401(k), 403(b), or 457 plan at work. If your employer ... Read Answer >>
  6. How should I invest the extra cash?

    I am a 55 year old man, making low 6 figure income. I contribute 30% to my 401k Read Answer >>
Hot Definitions
  1. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  2. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  3. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  4. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  5. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  6. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
Trading Center