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What to Do When You Can’t Retire

These Happy Golden Years

There are two keys strategies to planning for retirement: The first is to start early, and the second is to save.

“Living within your means after you retire is living within your means before you retire,” Craig Brimhall, vice president of retirement wealth strategies at financial planning agency Ameriprise, explains. While this is universally considered the best practice, what can you do if you’ve mismanaged your finances – something more Americans are guilty of, as evidenced by more and more studies?

MainStreet consulted the experts to see if those who had reached retirement age (which remains, as of press time, age 65), but were in dire financial straits could do anything to expedite the process. We found that while their options are limited, there are ways to improve their finances.

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Keep working, but downgrade.

“This may seem obvious, but you’re going to have to work longer than you planned,” Richard Barrington, certified financial adviser, says bluntly. Fortunately, many prospective retirees forget that the longer they work, the less they’ll need to save. Although on the flipside, as Barrington says, “you can’t do anything to increase your life span.”

The silver lining here is that you may not be stuck in your current job. Income from a part-time job may be enough to alleviate a shortfall in assets, Brimhall says. “Oftentimes, a little bit of money will take off a huge amount of pressure,” he says, explaining that people can slowly segue into retirement.

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Stay committed to your goals.

If you do need to maintain a full-time job, or your salaried position is too good to give up, stop yourself from adopting an exit mentality.

“Don’t approach your job as if you are winding down,” Barrington says, explaining that a passive approach to work can cause you to be passed up for higher paying positions, or cost you a raise that could expedite your retirement. Instead, manage your career as if you are in it for the long haul. “Be aggressive and go for every opportunity your company offers,” Barrington says. “You might as well make the most of it.”

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Keep an eye on expenses.

Maintaining a monthly income is only one piece of the puzzle.

“It may be easy to say, ‘I’ll go out and deliver pizzas,’ but in many cases that’s just not practical,” says Tony Walker, author of Worry Free Retirement. Instead, Walker advises those looking to retire to focus on driving down monthly expenditures. “You’re only ever going to have so much fixed income at your disposal,” he says.

Cutting costs can be simply done. Walker suggests using the library more often, shopping at Goodwill or consignments shops, or shutting your hot water heater off intermittently. Changes can even be as a small as buying cheaper bread. (“It makes better toast,” Walker quips.) Check out this MainStreet article for more ways to save.

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Evaluate your mortgage.

Those looking to take drastic measures should consider taking out a reverse mortgage on their home.

Reverse mortgages allow homeowners to borrow money from banks against the equity of their home, and because the loan hinges on the value of your home, repayments on reverse mortgages are not required until your house is no longer your principal residence.

Of course, the downside here is that taking out a reverse mortgage means you won’t be able to leave your house to your children.  The bank, instead, will recoup the loan, plus fees when the home is sold. And if there’s anything left, your kids will get it. As such, Walker says “reverse mortgages are a great resort, but they should be a last resort.” Another option Walker suggests is selling the home and renting it out during retirement.

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Change your perspective.

Recent studies indicate that retirement may not be all it’s cracked up to be. Consider this study published in the Journal of Economic Perspectives that found that the sooner you retire, the sooner your memory and cognitive abilities begin to decline. An Ameriprise survey released last month also found that retirees these days are less likely to feel as if they are living out the golden years of their dreams. It also found that fewer Americans are using age to determine when they retire.

“We’re seeing that a lot of people actually quit and then contract back,” Brimmhall says, explaining that many people who can retire often don’t due to financial anxieties, fear of health care costs or even a personal desire to stay in the workforce. “People these days understand longevity. They say to themselves, ‘I’m not going to just golf the whole time.’”

Brimhall suggests would-be retirees adopt the same type of attitude. “Retirement is a 20th century phenomenon,” he says. “These days, many people are starting to rethink it.”

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