Your retirement is approaching in a few years, and as things now shape up, you won’t have nearly enough money to live on. How could this have happened? You’ve been earning a good salary, but you somehow underestimated your needs for your retirement years — and now you feel trapped, maybe even panic-stricken.
Although your options are limited, there are still some things you can do to help make life easier when your retirement funds seem meager. Here are a few of those things.
Eliminate All Credit Card Debt — If you’re paying anywhere between 12 and 29.5% on consumer purchases, you’ll effectively counteract even impressive gains in your 401(k), IRA, or other retirement accounts. Start by first paying off the cards with the highest rates of interest. Once these are paid off, use the increased monthly balance in your checking account to retire the other cards. In the future, for online or large purchases, use a debit card. Or retain only one credit card for these expenses, and religiously pay the entire balance off immediately when you do make large purchases.
Open an Automatic Savings Account — Remember your grandfather’s old rule, “Pay yourself first?” Well he was on to something. Instead of letting yourself feel suddenly restricted by a smaller paycheck, think of yourself as your own creditor who’s demanding a payment every pay day.
Sell Your Luxury Car and Buy a More Modest Car — Then bank the difference. While you’re at it, think of ways to do this with other luxury assets. In this case, think of yourself as your own liquidator. Who were you trying to impress, anyway? Do you think your neighbor or your colleagues at work really care about your wheels?
Move to a Smaller House — You spend most of your time in only a few rooms in your house. The rest is for elbow room — that you might be able to turn to cash. If you sell your large house and move into a smaller one, you can pull off a more dramatic switch of assets than you did when you sold your car.
Go the Maximum on Your 401K Account — Especially if your plan is an employer-matching plan, this technique offers you a tremendous incentive to increase the dollar amount of your contribution.
Austerity measures are never easy, but we’re still in a difficult economy. Besides, doesn’t it make sense for us to expect no less of ourselves in the way of fiscal discipline than we do of our government?