Riding the current investment markets to retirement can be a wild ride indeed.  Those who are approaching that golden age of retirement may find themselves with a retirement pot with substantially less gold than they had first calculated.   How can those near the end of their working careers make the most of their savings?

 

1. Diversify Your Retirement Savings

 

It seems that the word ‘diversify’ is overused with investment advice, but the meaning cannot be overemphasized enough.  Just like your mother always told you, you should never put all your eggs in one basket.  Diversifying is an investment strategy that optimizes your investment choices so that you capitalize on high returns while saving your wealth in tougher economic times. 

 

How do you diversify if you have lost a little or even a considerable value in your retirement savings?  If you have an employer sponsored 401(k), you could re-distribute some of your retirement savings into a low-cost IRA.  You can have more investment options and choices than with a 401(k) and receive some of the same tax advantages. 

 

For those with some years left to invest, a Roth IRA may be a good option.  Roth IRAs receive contributions after-tax, so the great benefit is taking distributions tax-free after retirement. 

 

2. Write Off Your Retirement Losses

 

You can write off losses from taxable investments from your income taxes.  Though you cannot deduct losses from traditional retirement accounts, such as 401(k) or a traditional IRA, you can deduct losses from a Roth IRA, which is a taxable investment.  This strategy requires selling the taxable investment and claiming a tax deduction of up to $3,000 on your tax return for the calendar year.  Losses greater than $3,000 can be carried forward into the next calendar year. 

 

3. Cut Expenses and Save More

 

One way to cut your retirement investment losses is to save more.  That means biting the proverbial bullet and reducing your expenses so you have more disposable income you can contribute to retirement savings.  Here are some ways you can start padding your retirement savings today:

 

• Maximize your 401(k) contributions – Have you opted for the maximum 401(k) contribution out of your paycheck?  Workers over 50 can contribute up to $22,000 of pre-tax earnings starting in 2009, and the cap is likely to increase year after year.

 

• Cut food & beverage spending – You can put $1,000 into savings in a year if you cut your morning latte.  Save another $2,500 – $3,000 if you bring your lunch to work rather than eating out every day.

 

• Household – Cable TV, internet, and phone costs eats away over $100 per month, and as much as $300 per month, depending on the service.  Reduce or even eliminate your cable service.  Eliminate your landline phone and stick with just a cell phone.  Find other ways you can save on household utilities.  The thousands you save each year can go back into rebuilding your retirement nest egg.

 

Your retirement investment value at the time of your retirement is all the value you shall receive.  Do what you can until then to make it the best value possible for your leisure years.  And as always, consult with a qualified retirement wealth manager like www.kenhimmler.com or retirement asset management company at www.iamllc.biz to help you make the best decisions about your retirement savings.

 

 

Authored by Kenneth Himmler, Sr.

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