Carrie Schwab Pomerantz

In a recent column I talked about the positive reasons for postponing retirement. But to a lot of folks today, merely postponing retirement now seems like a pipe dream. As they've watched their net worth decline, some are convinced they'll never be able to retire at all.

Is there anything you can do to keep your retirement dreams alive? I say yes. Just keep doing much of what you've been doing to prepare for retirement -- only with more effort and for a longer period of time. Whether you're concerned about watching your retirement savings dwindle or you're behind and need to catch up, I believe these steps will help you focus today so you can still think about retiring someday.

1. Take a Fresh Look At Where You Stand. To determine how close you are to your retirement goals, first tally your assets (what you own) and your liabilities (what you owe) to come up with a net worth statement. Here's how:

-- Make a list of your assets: bank accounts, home equity, the current value of investment accounts (including retirement accounts), business interests, cars and other personal property, and the accumulated value of insurance policies.

-- List your total liabilities: what you owe on your home, credit card balances, car payments and any other loans.

-- Subtract your liabilities from your assets to come up with your personal net worth statement.

It can be as simple as doing the math with pencil and paper. Or use an Excel spreadsheet that you can easily update. Whatever the method, having a realistic idea of your net worth can be your reference point as you take the following steps.

2. Create a Budget and Stick With It. Take a hard look at what you earn and what you spend. If you've let your budget lapse, bring it back into focus by following this simple formula:

-- Divide your expenses into two categories, nondiscretionary (the must haves) and discretionary (the extras). Put debt reduction and savings at the top of your nondiscretionary expense list.

-- Track your spending for 30 days, comparing your projected expenses with what you actually spend.

With this detailed spending picture, it will be easier to find ways to cut back. Start by focusing on discretionary items such as eating out and entertainment. Try negotiating cable and phone costs or your credit card rates. These small economies can add up quickly.

Carrie Schwab Pomerantz

Carrie Schwab Pomerantz is a Motley Fool contributor.

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