As many people have personally experienced, those people who are closest to retirement are one of the groups who have been hardest hit by the economic downturn. That means there are adult children who are particularly worried about the state of their parents’ finances, and are looking for ways to be able to help them out - even though they’re not in great financial shape themselves.

A recent discussion at CNN Money looked at helping out a 50-year-old parent who doesn’t have any retirement savings, but the problem is even greater for adult children with parents approaching their 60s.

Some of the problems involve actually convincing your parent that they need to be serious about saving for retirement - for the double reason of their own financial security and making sure that they don’t later become dependent on your finances. Parents don’t usually like to learn from their children, no matter how old they are, so the advice is to introduce the idea of retirement savings as tactfully as possible and with an information focus - educate them (carefully) about 401(k)s and how they could be saving more. Encouraging a parent to set up automatic deductions from their wages to put into savings is also a useful step. But above all, remember they are your parents and probably the hardest of all to advise.

Unfortunately, it’s probably too late for those who had planned to retire in the next couple of years and have just discovered the retirement savings have been so dramatically reduced that they will now have to work a few years longer - but for the next generation of workers, there are a few things you can do to try to avoid such a scenario. Of course, nobody has a crystal ball to see the economy of the future but The Simple Dollar does have some realistic suggestions on tactics that will help lower the risk of the same thing happening:

• Contribute a bit more than is “theoretically” needed to your retirement plan. Adding an extra 1 or 2% won’t make a big difference to your current lifestyle but the compounding effect will definitely help in retirement.
• Change your investment strategies throughout your life. Investing more aggressively when you are younger is fine; as you approach retirement, change your mix to be more conservative - you no longer have the time to wait for the economic cycle to go back in your favor. Some retirement plans will do this automatically for you if you choose their “target retirement fund” options.
• Don’t put any of your money into an investment that you don’t understand or that seems to risky to you. And don’t be afraid to ask plenty of other people for help and advice.
• Assume that you will also do some part-time work in the early years of your retirement, so there will be some additional income to help you out at the start. This is becoming increasingly common as people are still active and healthy when they reach retirement age.

As we’ve seen, the old way of planning financially for your retirement has left many people in serious trouble, including postponing retirement or simply having to make do with less. Experts are now giving lots of tips for re-planning your retirement funding to avoid some of these issues and tips include:

• Make sure your retirement investments are balanced and mixed. Try to spread the money across two or three different strategies.
• Balance your portfolio in regard to yield and risk. Leave some in quality bonds or treasury bills (which don’t provide much yield, but are secure) and invest some in higher-performing (but higher risk) stock funds.
• Consider investing in municipal bonds rather than government bonds, especially if you fit into a higher tax bracket. You get decent security but a much better yield on your investment.
• Take particular notice of stocks that usually provide good dividends. These tend to be in consumer industries which continue to do well even in more difficult economic times. If your stocks give you a good dividend income, this offsets the risk of their value falling.
• Don’t be afraid to consider alternative investment strategies like real estate investment trusts or inflation-protected securities, but of course get good advice before you invest.

The recent share market plunges have had huge effects on retirees, or more particularly on the funds that should be funding their retirement. Money Magazine recently gave advice on how to deal with the sudden (and massive) drop in value your retirement portfolio may have sustained, particularly if you are already retired and needing to use this money to live on.

One important thing is not to panic and change your investment strategy out of stocks and into safe (but low yielding) funds - it’s too late for this to have a positive impact. Instead, you should focus on how you can live now on less and calculate how much you can safely withdraw from your retirement portfolio to live off while still having the best chance that your funds will not run out.

For example, if you’re fairly newly retired you should be calcuating that your funds need to last you for 30 years. Experts suggest that if you withdraw 4% of the total in the first year, and then a similar amount (but adjusted for inflation) every year thereafter, this fund should last 30 years. However, if the value has dropped dramatically, you should now recalculate the 4% value based on the current worth and that might mean making lifestyle changes like forgoing a vacation, getting part time work or selling assets.

It seems that the annuity policies that were not popular during the 90s are now being seen as a good alternative for at least part of your savings to fund your retirement.

What is an annuity policy? Basically, you pay in a lump sum, and in exchange get an income either monthly, quarterly or annually, for either a set number of years or for the rest of your life. This payout might be fixed or it might be variable depending on portfolio performance - you can choose.

What are the advantages of an annuity policy? Security. You know how much you’ll get and for how long (possibly forever, and if you live to a particularly ripe old age, this is a real bonus). You can also add on particular options that you might find attractive - for example you could get a higher payment if you become disabled or need care. And for other additional fees you are also able to protect yourself against any negative investment performance.

And what are the downsides of an annuity policy? Some of the added extras can cost quite a bit, so do your calcuations carefully and decide if the payoff is worth the extra cost. And the obvious downside, although nobody wants to talk about it, is if you don’t live very long, you don’t get a very good deal.

This is not quite our dream - retiring from our main job but then continuing to work, at least part-time - but it’s becoming a reality for many Americans. In theory, carrying on with some part-time work rather than stopping entirely does seem a bit appealing financially, especially if it means continued medical insurance benefits. It could also make for a good transition between working and retired life, and help retirees continue to feel useful even if they are not working in a full-time “career” position.

The idea of working during retirement has become so popular that there are now many websites devoted to the concept.

Some of them include job listings for positions which are “senior-friendly” or actively encouraging the employment of retirees or near-retirees. Many companies actively promote the employment of such people because of their wealth of experience and good work ethic. Other websites include resources to help you change into a different line of work if you don’t want to continue in your original career. And there is also information available on which particular locations are likely to support semi-retired workers, if you want to move somewhere to settle down.

If retirement age is sneaking up on you — or has already caught up with you — you may be considering a move to a different city. After all, you’re not longer held down by a job or school district, so it’s time to shop around for the best place to live out your golden years. To help you make that decision, Forbes rounded up America’s most affordable retirement cities:

• Salt Lake City, Utah: The country’s fifth most-affordable city to retire in, Salt Lake has nearly 16 doctors per 1000 people — more than the national average — and a growing economy fueled by young workers.
• Houston, Texas: As the country’s fourth most-affordable retirement city, Houston offers beautiful weather, affordable housing, and a bustling economy. It was also voted the country’s Best Place to Buy a Home.
• Minneapolis, Minnesota: The twin city is the country’s third most-affordable retirement city, with a bustling art scene and rich nightlife options.
• Dallas, Texas: Dallas is the country’s second best retirement city, offering retirees low taxes, amazing weather, and a very strong economy. Southern hospitality doesn’t hurt, either.
• Columbus, Ohio: If you’re looking to stretch your dollars for high quality of life, the Columbus is the place to be. More than 20 percent of the city’s population is over 65, attracted by the city’s low cost of living and very affordable housing.

If you’re among today’s mid-twenty or early-thirties work set, you may view retirement as being a long way off. That’s true, of course, since you have at least thirty to forty years before the big 65 rolls around. But that doesn’t mean you shouldn’t start saving today. In fact, if you begin to save right now, compound interest will work hard for you, letting you retire on a much larger chunk of change.

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It’s becoming increasingly common for only one half of a couple to retire first, leaving the other to work for longer- in fact, statistics suggest that only 20% of couples both retire within the same year. Rather than causing conflict, this is actually a good opportunity to test-run retirement in a financial sense, as long as you follow some of these tips:

• Check on health-care: make sure the retiring partner will either be covered by Medicare (after age 65), their former employer’s plan (sometimes possible for up to 18 months) or the working partner’s plan.
• Check on Social Security: taking it earlier might be a disadvantage when the working partner retires, depending on who was the bigger earner. Check on future implications carefully.
• Re-examine the household duties: the non-working partner should take care of more of the home duties while the other half continues to work. Negotiating this could be tricky depending on how duties were shared while both were working.
• Make sure the retiring partner stays active: either through social clubs or outings, volunteer work or a part-time job.
• Consider changing spending habits: look into which activities and expenditures have been making up a large part of your budget while working and see what adjustments can be made - for example, maybe only one car is necessary now instead of two.

photo credit: Ange Soleil ( a.k.a Tweng )

Headlines seem to always highlight how unprepared we are for retirement, making even the recent college graduate feel like he won’t save enough to retire before 90. The good news is that you, everyone, can save enough to retire, even on a low income.

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