By Karla Sullivan
Most households are at risk of having to scale back their living expenses in retirement as result of the latest economic downturn. Individuals are being forced to re-evaluate their current financial situation and to make cuts if needed.
Under somewhat optimistic assumptions, an estimated 53 percent of working-age households in 2010 were not expected to have enough future income from Social Security; defined benefit, or DB, pensions; and private savings to maintain their standards of living in retirement.
Nearly every state comes up short in key areas that gauge retirement readiness: anticipated retirement income, major retirement costs, such as housing and health care, and labor market conditions for older workers, according to USA Today.
In fact, Americans are carrying more debt than in recent years. Studies have shown that half of the people aged 65 to 74 are still making a mortgage payment and carry credit card debt.
Other studies indicate that most people will continue to work past the age of 65. Men are living 11 years longer while the average age for women in this decade is twelve years more than last year.
So, what can you do to prepare for little or no savings on the other side of 40?
· Pay down debt and do not take on additional obligations.
· Relocate and downsize if you live in an area that has a high cost of living and property taxes.
· Budget your costs today and what you will need to retire.
· What are your Social Security benefits and at what age can you take them? Do you have a pension or 401 K?
· If you do not have a plan through an employer, sign up for one and contribute the maximum amount.
· Open a Roth IRA and contribute the maximum amount.
· Check into life insurance if funds are not available to handle final expenses or insurance is not an option through your employer
If in good health and able to handle a second job, consider taking one as it could contribute to future retirement savings.
Talk to a financial coach to discuss retirement planning and what you might do to meet your goals. They can provide a written plan to improve your assets.