8 ways to start rebuilding your retirement savings

You are probably concerned that you won't be able to achieve the retirement that you envisioned. So where do you go from here? Work with your financial advisor to map out practical steps you can take now to rebuild your retirement savings. Here are a few ideas to review with a professional financial advisor:

1. Make sure you have an emergency fund.
Even though you're focused on retirement, you need a solid financial cushion that you can rely on in case of a job loss or other emergency. Conventional wisdom is to set aside three to six months of living expenses, but in today's economy you might want to save even more.

2. Don't give up on the markets.
What we know and what we feel can be two different things. For example, you know it's best to buy low and sell high, but market drops may make you feel like getting out. Resist acting on emotion, and keep a portion of your savings invested in the market. Why? Because stock prices are low and missing just a few of the best days in the market can have a significant impact on your returns.

3. Rebalance your portfolio to reduce volatility.
As you approach retirement, you want to control volatility in your portfolio and, at the same time, continue to grow your savings. Meet with a financial advisor at least twice a year to make sure you have the right mix of investments to address both goals.

4. Don't forget about tax diversification.
Consider having a blend of tax-deferred, taxable and tax-free investments, because tax diversification can be important when you retire. For example, if most of your income will be coming from a traditional IRA or 401(k) plan, every dollar you withdraw may be taxable. However, if you also have non-qualified accounts, such as investments held in a traditional brokerage account, or tax-free holdings, such as a Roth IRA, you may be able to more effectively manage the taxes on your retirement income. Keep in mind that in 2010, you'll have greater opportunities to convert your traditional IRA to a Roth IRA, and the income tax due on the conversion can be spread out over a two-year period.

5. Consider working longer.
It may not be what you'd envisioned, but by working longer you'll maintain your income and health insurance and delay making withdrawals from your investments. And by waiting to take Social Security you could qualify for higher payments. You might also consider working part-time for a few years after you retire.

6. Revisit your plan for withdrawals from your retirement savings.
The single biggest variable to retirement security is largely under your control: it's the amount you withdraw annually from your retirement accounts to meet your living expenses. Work with an advisor to project how long your money will last based on your desired income. Doing so will help you understand whether you'll need to reduce expenses during retirement.

7. Consider refinancing and invest the monthly savings.
Interest rates are at historical lows, so now could be a good time to secure a low, fixed-rate loan to reduce your mortgage expenses. Refinancing could leave you with more money to invest.

8. Don't leave old 401(k) plans unattended.
It's important to keep a watchful eye on all of your retirement accounts, including any 401(k) plans you may have left with a former employer. Move those assets into a Rollover IRA, where you and a financial advisor can attend to them properly.

Request a complimentary New Perspective¹ review today

Today's economy calls for a new conversation about your finances. Request a complimentary New Perspective review with an Ameriprise financial advisor and you'll receive a complimentary review of your financial situation plus practical steps you can take now to move ahead with confidence. There's no obligation to purchase any products or services.

• Fill out our form and an advisor will contact you, or
• Search for an advisor in your community and contact them directly

Download your guide: Preparing for your New Perspective review