A backup plan. Unforeseen circumstances often complicate retirement plans. You could be laid off, develop a health problem, or have to care for a frail relative. "Don't fall in love with a date," advises Barnash. "Don't fall in love with a certain lifestyle." Maintaining good health and insurance for disability and long-term care can help mitigate some of these risks. But as a last resort, you may have to downsize your standard of living. "I would recommend that you think about the minimum that you really need to live on and be comfortable—the cheapest house and car that you would be comfortable in," says Rappaport. "Budget for the minimum standard of income at which you would be happy."
Kresh recommends developing a "two-sided budget": On one side, you list fixed basic expenses like food and housing costs and on the other, discretionary spending like entertainment and vacations. Then you can cut back on the latter column in tighter years.
A new job waiting in the wings. Working just one extra year gives your retirement savings more time to accrue, lets you delay tapping your nest egg, shortens the period your savings will need to last, and allows you to get higher Social Security checks for life. And many jobs also provide valuable health insurance.
"In general, delaying retirement is always a good thing financially, but it's not always a good thing emotionally," says Kresh, who recently had a client who grew tired of playing golf four times a week after retiring. "When you're accustomed to working all the time, you have a lot of time to fill in retirement." Kresh thinks that most baby boomers should consider not retiring until age 70 for the best results.
Of course, not all employers covet older workers, who are typically more experienced but also more expensive and prone to health problems than their younger counterparts. "It's really important to keep your skills up to date in case you need to work longer," says Rappaport.
If you can find a job you enjoy, even one extra year of work can raise your standard of living throughout your retirement. Says Neiser, "Working longer is one of the best remedies for the retirement anxiety and fear that exists today."