Prescription for Today's Economic Uncertainty

Many people are over-indebted, over-fed and living in a fast-depreciating house. Savings rates, although improved, are paltry. It's time to return to the practice of thrift and leave the culture of debt behind. If there is any lesson to be learned from the current economic uncertainty it is that we can no longer rely on gains from our assets to adequately provide for us. We need to focus on what we can control-spending less and saving more. Building a bigger nest egg is our best hope for accumulating enough assets to finance our lifestyles over a 30- to 40-year period. To accomplish this, we must live well below our means and save the difference. Even if you are years away from retirement, start saving now. For every 10 years you delay saving for retirement, you will need to save three times as much each month just to catch up. Put savings at the top of your expense list and pay yourself first. Take full advantage of the match your employer offers in your retirement savings plan. Never leave free money on the table. If you are just a few years away from retirement and determine that you'd rather build a bigger safety net than rely on stock market returns to get you through, think about working longer or working part-time after you've retired from your full-time job. You may even consider a second career. Leaving your nest egg to grow for a longer period may mean you won't have to alter your lifestyle later on. If you are already in retirement and are concerned that your spending level might jeopardize the longevity of your assets, then a retrenchment plan may be in order. Scrutinize your expenses, cut back the "fluff" and find expense-cutting ideas in books and magazine articles. Find ways to have fun with little or no money. Find a cause you have passion for and get involved. It will cost you more time than money. Running retirement projections as often as I do, the variable that seems to threaten the longevity of retirees' assets more than any other is their spending level. What retirees seem to worry most about is outliving their assets. Turn worry into action. Spend less, save more and measure your goals periodically to assess your progress. If you don't manage it, you can't measure it. It's never too late to start. It's only too late if you don't start at all.