Planning for Retirement in a Tough Economy

As the unsteady economy continues, planning for retirement may seem to be more difficult every year. However, with common sense and determination to stay with it, you can make it comfortably through the tough times. Here are some tips I used:

Start as early as possible
It's never too soon to launch your retirement plan, no matter what your age. Once your career is on track and you have steady income, begin setting aside money every payday for future needs. If your company has methods for you to save by payroll deduction, take advantage of them. Contribute the maximum amount possible and look into company matching programs.

As retirement time nears, add to your nest egg
Once you've set up your plan with regular payroll deductions, money market purchases and/or bank deposits, steadily increase the amount you're putting into the savings. One reason is to anticipate continuing inflation that will eat into the value of your nest egg.

Investments as part of retirement funding
When saving for retirement, consider making it mostly fixed-income investments. They include bank savings accounts, money market, annuities and others that have no risk of losing value due to stock market fluctuations or other factors. To be sure my retirement nest egg wasn't severely reduced by poor stock market results, my investment portfolio included 80 percent in fixed-interest and 20 percent in variable investments.

Continue working after age 65
As retirement time gets closer, you may be concerned that you may not have enough money put aside. In addition to your savings, take inventory of what steady income you can expect, including Social Security and company pension. If you believe the total income won't be sufficient, consider staying on your job or working part-time for up to five more years. The advantages, in addition to being able to add to your savings, are that you would gain eligibility for higher pension and Social Security payments when you do retire.

Plan to live on less after retirement
Consider downsizing your home and car. With less income after I retired, I began scaling back on living expenses. With children grown up and gone, my house became an empty nest and heavy financial burden. I sold it and moved to a modestly-priced apartment. Paying rent was considerably cheaper than home ownership, with the responsibilities of mortgage payments, utilities, maintenance, repairs, taxes and other high expenses.