First of all, fret not and leave the panic for later. You know that you are behind in your retirement savings plan. It is great to realize it now than later: The key is to stop procrastinating and start at once to solve the roadblock ahead. Reaffirm how much Savings is enough for your retirement once more. While it is a known fact that people who wants to retire early have to save up more money, the same situation lies ahead for people who started later or fall behind their retirement plan. For both scenarios, time is of essence.
What we wish to adopt here is a disciplined and diversified approach by doing 3 things:- Aggressive saving, wise investing and delayed retirement.
Stronger emphasis on Saving. Put a stop to the temptation to invest more aggressively as a first tendency to catch up. To close the gap, the safer bet would be on saving more aggressively instead. How much of this gap you can cover will strongly weigh on how much you’re behind and the number of years you have until retirement. Start by committing more of your earnings into savings, as much as you can manage.
Revise your monthly budget to see how spending can be further curbed. Rein in your spending. Chip away at wasteful habits, before looking at expenses that is lesser importance. These include less partying, less drinking sessions, cutting down on extravagant meals etc.
Wise investing. Since savings by itself can only bring you that far in your retirement goals, it is prudent to have a careful thought-out roadmap for investing. For a person in his forties for example, he may opt to emphasis on safer instruments: 50% equities, 40% bonds and 10% cash. A bad move would be to dump much of your cash into stocks to make up for lost time, since volatility might just burn and wipe out your nest egg instead of building upon it.
Postpone retirement, or working part-time after retirement. Working for another few more years does not have to be a drag, or obstacle in your life plan. In reality however, quite a number of retirees are extending their retirement age or even working part time because they enjoy remaining active, both socially and mentally. With income still rolling in, it means that you are still adding to your retirement nest egg, and delaying tapping into it for at least another extended period of time.