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I cannot say that I was surprised when my mom told me her retirement savings had dried up. After all, she was never particularly adept with money. Scratch that, she is one of the worst overspenders I have ever met. If she could buy on credit or get her payments stretched out, she would -- even though she knew better. Now, after several attempts at revamping her money perspective, we came up with a 4-step plan to get her retirement savings recuperated as quickly as possible.
She is going back to work
Thankfully, my mother's experience as a part-time music teacher, allows her to reenter the workforce with little hassle. She is picking up piano and vocal students to teach in her studio that is in her home. She is able to use this income to jump-start her savings, living on her city pension and social security payments.
She canceled her credit cards
Since my mother is a chronic over spender, she had to do something she fought her entire life not to: cancel her credit cards. It was a hard fought battle, but once I showed her how much money she was losing by financing everyday purchases like socks and milk, she conceded.
She is investing smarter
We are focusing on short-term high-yield annuities in the interim, and investing in gold and silver bullion for the long-term. She is working with an independent financial planner to help her rebuild her retirement savings, but even with aggressive investments, she will still have to work for at least 10 more years.
She is branching out
Instead of locking her exclusively into stark annuity funds and bouillon, I convinced my mother (thanks to my real estate background) to get into real estate investing. We found an inexpensive four-plex not far from where she lives that she bought. From this investment, we estimate an additional net income of $24,000 a year, to boost her savings, and potentially invest in additional properties later.
The only way out of this dilemma for my mom was to diversify, and that is the same message I would pass along to others sharing her fate. If you are finding yourself in a position where you are out of time and out of money, it is time to re-evaluate your skill set, reenter the job market and diversify your earnings into several investments to rebuild quickly. It is working for my mom, and it can work for you too.
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