Do you have a retirement backup plan – just in case you are one of the many millions of people who don’t have a $1 million retirement portfolio by the time you turn 65? I’m not saying that you shouldn’t do your best to build the largest retirement investment portfolio you can. But I am posing this question to encourage you to have a backup plan, just in case your retirement savings don’t turn out to be quite as large as you had hoped.

Let’s say that by the time you retire, you have some money put aside for retirement, but not nearly as much as you need for a full retirement. What can you do?

Here are some suggestions…

A Lower Cost Lifestyle

If you won’t have the kind of financial resources that you will need in order to maintain your current standard of living in retirement, this is the obvious first choice. Adopting a lower cost lifestyle will eliminate the need for so much income, as well as the amount of investment capital is necessary to produce it.

Some ways to adopt a lower cost lifestyle include:

• Downsize your living arrangement.
• Move to an area where housing is much cheaper (this will be easier to do since you won’t be as job dependent)
• Get out of debt – loan payments raise your cost of living.
• Practice living frugally now, so you’ll be ready by retirement.
• Embrace family, friends and faith, rather than high cost entertainment.

The less money that you need to live on, the less you will need to save for retirement – which works extremely well if you unable able to save much at all.

Bonus: Adopting a lower cost lifestyle well before you retire can free up money to help fund your retirement savings between now and then.

Getting Out Of Debt

We just discussed this above, but it’s an important topic especially as it relates to retirement. In the past 20 or 30 years, people have gotten so comfortable living with debt during their working years, that they simply carry it right into retirement. But whether you have a lot of money or just a little, debt is a drain on a comfortable retirement life.

Think about it logically – if debt is a problem during your working years, how will it suddenly become an non-problem once you retire? Answer: it won’t, in fact it will become an even bigger problem. This will be true whether you have a mortgage, car payments, and certainly credit cards. Every one of those debt obligations will eat away at whatever income you have in retirement.

If you don’t believe that you will have a sufficient amount of money for your retirement years, paying off your debt may be the single best alternative strategy. The last thing you want to do is to spend your retirement years paying off debt from your working years. In fact, if retirement savings will be light, then paying off all of your debts should be a priority.

Bonus: Paying off debt now can free up your income to help fund your retirement savings between now and then.

Making Extra Money

Even the combination of living a low-cost lifestyle and getting out of debt may not be sufficient to enable you to retire in any sense of the term. You may need to combine those efforts with making extra money.

On the surface, that flies in the face of the whole idea of retirement. After all, who wants to work in retirement? And if you do have to work, is it even really retirement?

If you have little or no retirement savings, you may have to accept the very real possibility of semi-retirement, rather than full retirement. If you’re healthy and you have solid skills, that may not be a bad thing either.

You can think of semi-retirement as a time to do the kind of work that you really like, rather than work that you have done all of your life in order to pay your bills. The combination of a side business or a part-time job, along with a monthly Social Security check may enable you to live relatively well even without a substantial amount of savings.

Spend some time thinking about what kind of work you would actually like to do. The funny thing about work is that if you like doing it, it’s really not like work at all. That’s the kind of work you need to find.

Do some research to come up with work you might want to do in retirement. Use the time between now and retirement to get the venture started, whatever it is. You can have a nice side business built up by the time you reach your retirement years, if you start building it now.

Bonus: A side venture started now could also provide you with extra income to help fund your retirement savings between now and then. Are you seeing a pattern develop?

Building A Generous Emergency Fund

Even if you don’t think that you will have nearly enough money saved up to afford a comfortable retirement, save money anyway! Having a large emergency fund for retirement that you can tap for unexpected expenses can keep you out of debt and protect what income you do have for regular living expenses.

Yet another bonus: Once your emergency fund is large enough, you can begin shifting any additional savings into your retirement savings between now and then.

Do you ever worry that you will not have enough money to retire comfortably on?