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Ten tips on how to readjust after a retirement shortfall

On January 1, 2011, the first baby boomers began to turn 65. According to the Pew Research Center, every day for the next 20 years about 10,000 baby boomers will also be looking to retire.

At least, that is what 26 percent of the U.S. population will be thinking about for the next two decades. Whether or not they get to retire, when and as planned, is the question.

With the repercussions of the Great Recession—investment depletions, companies cutting back on pension plans, and a Social Security system in need of revamping—baby boomers and those of younger generations will need to plan adequately to overcome the potential shortfalls of retirement income they once relied on.

According Aon Hewitt's annual study, The Real Deal: 2012 Retirement Income Adequacy at Large Companies, the lump sum amount needed at retirement age to cover retirement expenses through an average life expectancy (87 for males, 88 for females) for employees who have the potential to work 30 years or more with their current employer prior to retirement , is 11.0 times their annual pay at retirement, presuming that 4.9 times their pay will be covered by Social Security.

However, Americans are largely financially unprepared for their retirement. The statistics are daunting. According to a 2009 survey by, 21 percent of all respondents said they have reduced their 401(k) contributions or personal savings in order to get by, and 61 percent said they always or usually live paycheck to paycheck, up from 49 percent in 2008. A full 36 percent said they don't contribute anything to retirement savings. According to Dallas Salisbury, president of the Alliance for Investor Education and the Employee Benefit Research Institute, one out of three working Americans does not have retirement savings beyond Social Security, and about 35% of those over 65 rely almost totally on Social Security alone.

To help you deal with the possible shortfall you may be facing, we’ve prepared 10 tips to help pull you through and to help you mend any cracks there may be in your retirement nest egg:

  • Don't panic.

    At one point many of us were riding high upon the great returns we were seeing in the stock market a decade ago.

    However, once the bubble burst, it is easy to let irrational depression replace irrational exuberance. Don’t let this happen to you. Just remind yourself to stay calm, tighten the belt if need be, and plan adequately.

  • Adjust your expectations.

    Charles Darwin is often misquoted as saying that it is the "fittest that survive."

    What he actually wrote was, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” Learn to adapt, to change your expectations because after life throws us curve ball s all the time.

  • Curtail your spending habits.

    For a while, some of us fantasized about retiring early and a lot of us were spending like there was no tomorrow.

    That’s all changed. When it rains it pours—extensive foreclosures, layoffs, and extended unemployment—all indicate that the forecast is one that should encourage all of us to begin saving now and to make purchases based on what we truly need, not simply want.

  • Increase your saving habits.

    The economic woes we face today should serve to remind us that maybe it's time we start saving again.

    Increasing savings will help make up for any current and future losses. Consider making maximum contributions to your employer’s 401(k) plan. Also consider annuities, which offer tax deferral and the opportunity for lifetime income.

  • Reconsider retirement.

    Although you may be disappointed that you can no longer retire as planned, it is better to simply roll with the punches and readjust.

    Be reassured that you are not alone. Millions of people like yourself are having to either postpone their retirement or even choose to “semi-retire,” that is, work part-time to make up for shortfalls in their savings, Social Security, pensions and investments.

  • Don't put all your eggs in one basket.

    Eleanor Roosevelt once said "Learn from the mistakes of others. You can’t live long enough to make them all yourself."

    Unfortunately, many of us have been witness to the mistakes of others over the last decade. There have been several examples of everyday folk who’ve lost their life savings due to circumstances beyond their control—Enron, Ponzi schemes, stock market crashes, bailouts. That’s why it’s long been wise to diversify.

    Although it may not ensure a gain or protect against market loss, going forward consider spreading the money you invest or save across a number of vehicles, so that you too don’t have to make the same mistakes others have made.

  • Review and revamp your portfolio

    As almost any financial professional will tell you, the game has changed.

    Many people are adjusting their asset placement — whether rebalancing the portfolio, going to new investments or moving more into fixed-return assets, such as fixed deferred annuities.

    Do some research, speak with a professional and then make an informed decision as to how to adjust your portfolio considering the economic forecast today and throughout your retirement.

  • Downsize

    Most of your life you’ve worked hard to build a home that accommodated all the changing needs of your children.

    However, if they have all grown up and are no longer living with you, your house may be a lot bigger now than what you need to keep you happy. So if you’ve long had your heart set on traveling the world, perhaps you should consider downsizing and using the proceeds to pay for those travel plans.

  • Get good recommendations

    While no one can see into the future, there are people who have the education, experience and tools to help you make informed decisions.

    Our agents are highly trained professionals who are always willing and ready to help.

  • Rest assured

    Ultimately, you have to remember, that the economy is fundamentally sound. Although the days of double-digit returns may not return for a while, if ever, we're in a recession, not a free-fall depression.

    Take solace in that we are all in this together and that sometimes hard times lead to good things like bringing us—your family, your friends—closer together. .