Discipline bears fruit over time when discussing the retirement savings. But if you’re like many people who are still working but are closing in on retirement, there is still hope for a happy retirement. A recent Consumer Reports Retirement Survey, of more than 24,000 online subscribers, found 6 steps that work to obtaining a satisfied retirement.

1. Live Modestly

   This was the top “best step” listed by retirees who said they were highly satisfied with their lives; 39 percent said they did not spend beyond their means. One way to rein in spending is to create a budget using store-bought software such as Quicken or a free online service such as BudgetPulse (https://www.budgetpulse.com/). Those programs help you track your spending and your progress toward meeting saving goals by consolidating your financial data from banks, credit-card companies, and brokerages.

2. Maximize your savings

   Even if you don’t have a defined-benefit plan, regularly contributing to a 401(k), 403(b), IRA, or other investment vehicle pays off, our satisfied retirees told us. (Saving too little was a regret of 27 percent of dissatisfied retirees.) At 50 and older, you can put as much as $22,000 into a tax-deferred, traditional 401(k) plan or after-tax Roth 401(k) or their 403(b) equivalents in 2010.

3. Reduce debt

   Thirty-eight percent of retirees owed $25,000 or more on their mortgages. But 74 percent of retired respondents who were free of major debt reported being highly satisfied with their retirement. For greater peace of mind, pay off your debts before retiring. Even a low-rate mortgage can be a burden if other expenses rise and your income-producing assets falter. Notably, debt-free retirees had a higher median net worth than those with debt: $843,000 compared with $717,000.

   In the current economic environment, accelerating payment of your mortgage can be a wise investment. Most certificates of deposit, bank accounts, and other safe savings vehicles are paying less than 2 percent, so putting your money into additional payments on a 5 percent mortgage instead offers a better return (though you’ll give up some tax deductions on mortgage interest). By making extra principal payments, you can whittle down your loan’s interest cost and term handsomely. For example, adding $100 per month to payments on a 30-year, $150,000 mortgage with a fixed rate of 5 percent reduces the total interest by almost $35,000 and cuts the loan’s term by 6½ years.

   I agree on this one! My husband and I participate in an accelerated mortgage program. Not only is it nice to make our mortgage payments weekly and the life of the loan is reduced significantly, but we’ll also save over $40,000 in interest!

4. Don’t invest too conservatively

   Taking on even a moderate amount of risk pays off. Median net worth for retirees who said they took a middle-of-the-road approach was $836,000 vs. $671,000 for conservative investors. Notably, the difference in net worth between self-described moderate and aggressive investors was relatively small: a $57,000 advantage for the more aggressive. The lesson: You don’t have to go out on a limb to get the best return. Diversification will help reduce your risk.

   I will have to let my husband know the results of this one. Being so close to retirement, he believes in investing agressively to play catch up on the missed years. With a relatively small advantage I don’t think it is worth it. I fear there would be potentially much more to lose if their was another crash. What’s your thought on this one?

5. Study your options

   When you design your dream retirement, also devise a Plan B in case you’re forced to retire early or can’t sell your home (a predicament of 8 percent of surveyed retirees). Your alternative plan might include a more restrictive budget or a different retirement location. To determine your Social Security benefits at different ages, go to www.ssa.gov.

   A major issue will be health-care coverage. You can move to your spouse’s insurance plan, find a new job with health benefits, extend your own employee coverage under the COBRA law (go to www.dol.gov and type “cobra” in the search box for details), or look for private health insurance. If you go that last route, try to get group coverage through professional or other membership associations.

   What about becoming an expat for Plan B? I heard their are some nice places to live on way less money. Anyone have experience with obtaining healthcare as an expat?

6. Take the intangibles seriously

   Stress affected overall satisfaction in retirement even more directly than net worth, our survey found. A quarter of retirees cited nonmonetary stresses such as family relations, poor health, a loss of identity, and boredom. So before you retire, develop hobbies and line up volunteer work, trips, or part-time jobs. Strengthen your personal connections outside the workplace. And, of course, do what you can to maintain good health.

   I agree on finding a hobby before retirement. I have seen too many people get bored. But I have also seen people enjoying their retirement thru volunteering.

Retirement planning is not solely based on a person’s financial net worth. The survey found a happy retirement was about the same between those with a net worth of $500,000 and $1 million. Having more than $1 million did not make a notable difference in their level of happiness either. And if your net worth at retirement will be lower than $500,000… or even lower than $250,000, more than 50% of retired individuals were still statisfied with their retirement.

Are you ready for retirement? Just in case, do you have a plan B?

(photo credit: Mississippi Family Law)