We know that it's hard to think much about the future when America is dealing with such a financial tsunami at the present, but tempting as it may be to do nothing until the dust settles, that approach is more likely to lead to mistakes that jeopardize your financial future.

You've heard us say it before and we'll say it again: You should be proactive with your money anytime, but especially during a crisis.

That goes double if you find yourself nearing retirement. If you're three to five years from wanting to hang it up, statistically, you have some heavy savings and investing to do in a short period of time.

Saving for retirement is not something we Americans do particularly well. Nearly 50% of American workers have set aside less than $25,000 for their retirement. (That might last one year … if you're lucky.) Even more shocking is the fact that many Americans over 50 have NO savings at all set aside for retirement!

Even those who have been saving and investing over the years have seen their situations change, often dramatically. The stock market, as measured by the broad-based Wilshire 5000 index, declined more than 40% from its peak in October 2007 to this past October. During that period, the values of equities in pension plans and personal portfolios fell by more than $7 trillion! Yes, trillion with a T.

To make matters even worse, more and more people are reducing their retirement savings in the midst of the current crisis. In what we can only call a very disturbing trend, 60% of participants have recently stopped contributing to their 401(k) plans!

Setting the Scene

We are not trying to scare you (actually we are!), but if you're within five years of retiring, you need to know the reality of your situation:

• You'll need at least 85% of your pre-retirement income in retirement to maintain your present lifestyle (we'll talk more about this in just a moment).
• Social Security payments won't be enough.
• You could outlive your assets. We're all living longer, so you must do what you can NOW to ensure the income you'll need.
• Many would-be retirees are delaying retirement because of the stock market and the economy.
• Healthcare costs are going UP and are likely to continue increasing.
• Fewer and fewer Americans can depend on traditional pension plans

6 Steps to Take Now

It's a little depressing, isn't it? But here's what you need to know: It's late, but it doesn't have to be too late!

Many retired callers to our national radio show wish they had done more (or any) pre-retirement financial planning. If you haven't already started to save, or, are realistically not going to have enough money for your retirement at your current rate of saving, here are some steps to take now to maximize what you DO have by the time you hit retirement age:

Step 1: Create a retirement budget. Figure out how much you will need in retirement, on an annual basis, so you know where you are and where you need to go. Click here for a comprehensive worksheet that we put together to help you out.

Here's a general example to help you see what we're talking about. In order to have a monthly retirement income of $2000 (in addition to Social Security benefits) with a 5% return per year on your invested money, you would need a nest egg of slightly less than $500,000.

Next: Step 2

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