Retirement planning rarely happens in a perfectly straight line. You may spend years consistently contributing to a 401(k) or IRA, only to encounter a job loss, unexpected medical expenses, a divorce, the need to care for a family member, or another financial setback. Suddenly, the retirement goals that once seemed achievable can feel much farther away.
If your retirement plan has gone off track, the important thing is to reassess your situation and determine what you can do from this point forward.
Start by getting an accurate picture of where you stand today. Review your retirement account balances, savings, debts, expected Social Security benefits, current expenses, and anticipated retirement needs. Avoid focusing exclusively on what you “should” have saved by now. Your current numbers provide the starting point for your updated strategy.
Next, look for opportunities to rebuild your savings rate. If you reduced or stopped retirement contributions during a period of unemployment or financial difficulty, consider gradually increasing them as your finances recover. Even relatively small increases can make a difference when compounded over several years. Workers age 50 and older may also have opportunities to make catch-up contributions to certain retirement accounts, subject to current IRS rules.
Your retirement timeline may deserve another look as well. Working an additional year or two could provide more time to save while shortening the number of years your portfolio must support you. Delaying Social Security may also increase your eventual monthly benefit in certain circumstances. However, these decisions should be evaluated in the context of your individual finances, health, employment situation, and retirement goals.
Spending is another area to review. Rather than making drastic cuts across the board, identify expenses that could be reduced without significantly affecting your quality of life. Redirecting those dollars toward retirement can help you regain momentum.
Finally, resist the temptation to compensate for lost time by taking excessive investment risk. Pursuing unusually aggressive returns could expose money you will soon need to losses from which you have less time to recover.
A setback does not mean you should abandon retirement planning. It means the plan needs to change.
If your retirement strategy has been disrupted by unemployment, reduced income, unexpected expenses, or another financial challenge, schedule an appointment with us. We can help you evaluate where you stand today, reconsider your timeline and priorities, and develop practical steps for moving your retirement plan forward again.
