Five ways to make up lost ground

Published 12:28 pm Tuesday, November 16, 2010

If your retirement nest egg is less than you had hoped for — and many people have that issue, given the recent market turmoil — You may still make up lost ground. There are a variety of ways to put money away for retirement, but they all start with the need to invest regularly and, if you’re behind on your savings, to put away as much as possible.

Invest more – The simplest way to pump up your retirement accounts is to contribute more to them. This may mean increasing your monthly contribution, or it could include working an extra year or two to add to your retirement kitty and let your accounts continue to grow tax deferred. Pulling out of the market completely during volatile times may make recouping losses more difficult because you’ll likely miss out on gains when the market recovers.

Invest tax efficiently – Tax-deferred retirement accounts, such as traditional IRAs, if you qualify by income, and 401(k) plans and Simplified Employee Pension (SEP) plans, offer tax-deductible contributions and feature tax-deferred potential growth. Take advantage of the 401(k) plan at work, especially if your employer matches contributions.

See if you qualify for a tax-deductible traditional IRA, or a popular Roth IRA that provides tax-free income. If you have a business, even a part-time one, consider opening a SEP, which has generous annual contributions limits.

Find more money – If you have already helped pay for a child’s college education, add what you once invested for college to your retirement funds. If you trade down from a larger house to a smaller house, invest the profit. And if you max out your annual contributions to a tax-deferred account, consider investing in tax-deferred annuities or taxable mutual funds.

Invest for potential growth – Check your asset allocation and diversify your portfolio. If you have many years to go before retirement, you may be able to invest more of your money in mutual funds.

Time may help smooth out short-term volatility when you have five to ten years or more before reaching your goal.

Seek help – Your licensed financial professional can suggest appropriate ways to put money away to help make your retirement more secure.

Jeff S. Waters is a financial adviser at Waters Wealth Strategies.  He can be reached at 358-7126 or by email at