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5 Exercises to Rehabilitate Retirement Funds

Aug 22, 2023

Market downturns. Unexpected medical bills. Investment setbacks. Numerous Americans who believed they’d amassed sufficient savings for a relaxed retirement are now unexpectedly striving to replenish their depleted reserves due to unforeseen calamities.

Can one still secure a prosperous retirement after such setbacks? Absolutely, but rejuvenating a retirement fund later in life demands strategic planning and certain decisive actions. Begin your recovery journey with these five strategies to bolster your retirement savings.

1. Slash expenses to rebuild savings. Budgeting sounds boring, but it is essential to building a tightly woven nest in which to accumulate retirement savings—as opposed to a loosely constructed one that lets unneeded expenses slip through the cracks. Remember that small changes add up.

According to HSBC’s Global ReportThe Future of Retirement: A Balancing Act, the majority (81%) of working-age people have had their retirement savings abilities significantly impacted by a life event. As a general rule, most households should plan to accumulate six months of living expenses for these types of unforeseen circumstances (such as a job loss or health emergency) with the goal to avoid treating retirement accounts as cash if and when emergencies arise. And, of course, once an emergency fund is in place, extra money can be funneled toward retirement savings.

2. Create additional income opportunities. In addition to Social Security, consider creating a second income stream from a side business, seasonal, or part-time job. Ten or 15 years may not be much time to build an extensive retirement portfolio, but it is more than enough time to develop two or three or more income streams. In some cases, what starts as a side business becomes a second career, with many people working and even starting new businesses past age 65. So consider options now so that the new venture might be self-sustaining by age 65.

3. Reduce debt. Recent studies have shown that Americans are carrying higher debt levels into retirement than ever before. In many cases, eliminating debt is a more effective way to improve cash flow than putting an equivalent amount into savings—especially within 10 or 15 years of retirement. Once debts are gone, that much more money can be funneled into savings.

4. Delay retirement. Pushing retirement for two, three, or even five years allows extra time to accumulate what are sometimes much-needed funds.

5. Invest cautiously. When there is not a lot of time left to accumulate, it may feel like a good idea to try a high-risk/high-return investment—but less time to grow a portfolio also means less time to cover large losses. A shorter timeline and less money with which to play likely means that it is time to take a walk on the conservative side of investing.

Focus Now on Improving Retirement Fund Health

Rebuilding a retirement fund isn’t something anyone should have to do on their own. According to the HSBC report, respondents with average incomes who sought professional financial advice for retirement planning have significantly higher retirement savings compared to those without a financial adviser. Don’t be left navigating the future on your own. Ensure a secure retirement by seeking the expert guidance you deserve by contacting your CRI tax advisor with any questions you may have about rehabilitating your retirement nest egg. They’re ready and able to help you exercise your best decisions to meet your upcoming retirement needs.

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