How to Play Catch-Up Amid a Shortfall

Note: This video is part of Morningstar's 7 Days to Retirement Readiness week special report.

Christine Benz: Hi, I'm Christine Benz for Morningstar.com. If you're playing catch-up on your retirement portfolio, don't beat yourself up. You're in good company, and there are ways to bridge the gap. You won't necessarily have to work until you're 90.

One of the most effective ways to bridge a retirement shortfall is to delay retirement. Even an extra year or two of work can make a huge difference in the viability of your plan. You'll be able to continue saving, you'll delay your portfolio withdrawals, and you may also be able to delay filing for Social Security, which enlarges your eventual benefit. A later retirement can be a win-win-win, at least from a financial standpoint.

But not everyone will be able to continue working. We may encounter health problems, or we may need to care for our spouses or aging parents. Or we could lose our jobs before we're ready to quit. In a study that asked people when they expected to retire, many people retired before that anticipated date. For that reason, it's important to make sure that "working longer" isn't the sole plan to make up for a saving shortfall.

One key way to make up for a retirement saving shortfall is to find ways to reduce your in-retirement spending. You might downsize homes, for example, or relocate to a cheaper part of the country. You might also consider working part-time in some capacity through retirement, because bringing in even a small amount of income reduces portfolio withdrawals. Of course, those decisions aren't just financial; they also affect your quality of life, so it's important to consider these decisions from all sides.

Thanks for watching. I'm Christine Benz for Morningstar.com.