Soon-to-Be Retirees: 5 Things You Should Do

The nation's financial woes have those close to retirement fearful about what all the turbulence means for them and their futures. Robert Pagliarini, author of "The Six Day Financial Makeover," offer five tips on what soon-to-be retirees can do ensure their financial futures are less bleak in the midst of the credit crisis and global market trouble.

Check out his tips below.

Salvage Your Investments

With every day and every 100-point drop, people are thinking that they won't be able to retire in the next couple of years as planned. What you have to do and do it immediately is to protect your investments. Depending on where you are and how close you are to retirement here is specifically what you need to do.

Pagliarini recommends that whether you are in retirement or it is a few years away, you should immediately put five years of living expenses in cash and put this in a money market account. Once you do this, then you should allocate your remaining investments as follows:

If You're in Retirement:

35 percent stocks
65 percent bonds

If You're Two to Three Years Away From Retirement:

45 percent stocks
55 percent bonds

Make a Budget

That's extremely important now. What you need to do is list out all your monthly expenses and see which ones are the real priorities, the ones that you have to spend money on. And then look at the other ones, the ones that are maybe a little more negotiable and check off the ones that are more negotiable and see if you really need to spend money on those things.

Turn a Hobby into Income

So many people think that when they retire their income has to stop and that's not necessarily the case. What you can do is if you have a hobby, you have a passion, something you're really interested in ask yourself "Could I possibly make money from it?"

For example one person is a mechanic on airplanes and will be retiring soon. He's happy to retire but would like to make some extra money. He's thinking about starting a part-time handyman business. Another friend was an interior decorator before she retired. She loves arranging flowers and is going to work at a florist a few days a week.

If you love surfing the Internet and are good on the computer, there is a huge need for virtual assistants and online researchers. You can work from home and make $15 to $50 an hour.

Stay on the Job Part-time

Instead of cutting the cord completely during retirement, one option if you think you might not have enough money to retire completely, what you can do is talk to your boss, talk to Human Resources and see if you can work part-time after your retirement.

You still might be able to get all your health benefits and get your 401k matched. So you're sort of easing out of retirement instead of walking out and never coming back.

Work Longer

This is the tough one. And if you can not work longer that's great but if you're in a position where because of the market activity lately you think you may be in a position where you might not have enough income well I would recommend you starting to think about working an extra couple of years.

Don't Panic

You may still have more than enough to retire comfortably. Before you have visions of working until you're 92, run the numbers. Here's a two minute calculation to see where you stand:

(a) What will your annual expenses be during retirement?
(b) How much will you get each year from Social Security and/or company pension plans?
(c) Multiply your investment accounts by 4 percent.

If your combined income from (b) and (c) is more than your expenses from (a), you're not in bad shape. If it is less, consider cutting your retirement expenses or doing one of the other tips above.

The PERK System -- The Quickest and Easiest Way to Cut Your Expenses

So you want to reduce your expenses and save a little more each month? Oh, what's that? You don't want to create a budget? I don't blame you! Budgets take forever to create and nobody sticks to them. The PERK System is easy (dare I say fun?) and most people I work with have been able to reduce their expenses by several hundred dollars a month in about 20 minutes. A much more detailed version of this strategy and other money-saving and investing tips are discussed in my #1 bestselling book, The Six-Day Financial Makeover (yup, that was a shameless plug—sorry, OK, not really).

Enough talking. Let's light this candle. The PERK System is just two steps:

Step 1

List all of your expenses and add them together. Include recurring monthly expenses (e.g., rent) as well as those that occur less frequently (e.g., auto insurance).

Step 2

Now the fun part! Next to each expense write either P for Postpone, E for Eliminate, R for Reduce, or K for Keep:

Postpone – These are expenses that you can put off for a while. For example, a house remodel project, vacation, or new car purchase.

Eliminate – These are expenses you can completely eliminate, such as a gym membership you never use, premium cable channels you never watch, or newspapers you subscribe to but never read.

Reduce – Any expense that you are willing to cut back on qualifies for Reduce. For example, if you go out to lunch every day at work but are open to bringing a lunch twice a week, mark the expense Reduce. In this case, you are reducing the frequency of the expense. Likewise, you could continue to go out to lunch every day, but go to less expensive restaurants. Both situations reduce your expense.

Keep – Many fixed expenses, such as rent, insurance, and food are necessary and should be marked Keep.

Now recalculate your revised expenses. Voila! It should be less than when you started. So that's it! If you've followed along, you're thinking one of two things: This is amazing. In the time it takes to watch a re-run of "Three's Company," I've slashed my expenses. Now I'll be able to save more each month. Or you're thinking this was a waste of time because you weren't able to cut your expenses at all.

If you're in the first camp, congrats! Go forth and prosper. If you're in the second camp, it means you wimped out and didn't Postpone, Eliminate, or Reduce. Usually this means you weren't aggressive enough. Your Netflix account, umpteenth shoe purchase, eating out habit, and trip to Vegas are not Ks. If you are serious about cutting your expenses, go back through your list and start replacing the Ks with Ps, Es, and Rs.

Of course, sometimes all those Ks really are Ks. If you're completely tapped out where all of your income goes to necessities, such as rent, insurance, food, and transportation, there may not be much you can do with your expenses. Instead of focusing on your expenses -- where it seems there's nothing you can improve -- focus, instead, on your income. Think about it. If your expenses stay the same but you're able to boost your income by $100 or $200 a month, all of this extra money can be saved. If you'd like to learn how to convert your hobbies and passions into extra income, as well as other financial tips, you can sign up for my free newsletter by going to Good luck!

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