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Jim Lentini: Get your retirement back on track

Posted: July 20, 2009 10:19 p.m.
Updated: July 21, 2009 4:55 a.m.
No matter where you thought you were on the road to retirement, chances are the recent meltdown of the economy has been a setback for you.

But there are steps you can take to get your retirement back on track. Here are five catch-up strategies to consider:

n Increase your savings rate - If you are a runner, a swimmer, or a golfer, you know that it takes extra effort to come from behind.

Playing catch-up for retirement takes the same effort. As the entire nation becomes more focused on financial prudence, take time to examine your own saving/spending equation.

Make it your goal to raise your savings rate. Start with tax-advantaged accounts, such as your workplace retirement savings account.

And don't forget to contribute as much as you can each year to an IRA. If you are over age 50, you can contribute $6,000 to an IRA, including catch-up contributions.

Even a small increase in your savings can make a difference. And, don't forget a Roth IRA if it fits into your personal situation.

n Invest with growth in mind - A bear market may have bruised your risk tolerance, but it's important to keep in mind that over the long term, both stocks and bonds have generated returns that have exceeded inflation.

There is no guarantee that these investments will continue to generate higher returns, but it's nice to know that history is on your side.

n Consider delaying retirement - While the concept of early retirement had great appeal during the prosperous 1980s and 1990s, the majority of working Americans today expect to work to age 65 or beyond.

Working longer can help your retirement income prospects in two ways: you can use the extra working years to help rebuild your savings and by working longer, you reduce the number of years in retirement over which you will need to stretch your savings.

And if you use these extra working years to significantly boost your savings rate, you may be surprised at how much better off you could be in retirement.

n Work part-time in retirement - Nearly 75 percent of today's workers expect to supplement their retirement income with part-time work. This way your part-time income will help keep withdrawals from tax-advantaged retirement savings as low as possible until you are required to take minimum required withdrawals at age 70 1/2.

n Maximize Social Security - Many Americans claim early benefits at age 62. This severely reduces benefits compared to full benefits paid between ages 65 and 67, depending on when you were born.

If you delay benefits beyond full retirement age, the annual amount you receive continues to climb until age 70.

Remember to always work with your financial advisor to determine which strategy is best for you.

If you can implement one or more of these steps in your retirement savings plan, it can do more than help rebuild your assets.

It can help rebuild your confidence as well. Discuss with your advisor about the strategies that make sense for your personal situation, and a plan that can put them into action.

Jim Lentini, CLU, ChFC, IAR is President of Lentini Insurance & Investments, Inc. He can be reached at (661) 254-7633. His column reflects his own views and not necessarily those of The Signal.


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