The Back-to-Work Boomer Financial Recovery Guide

Millions of older Americans now have the experience firsthand: A longtime job suddenly evaporates. Months, even years of unemployment ensue. Eventually, a lower-paying job is found and gratefully taken. But what now? How to make up for the setbacks in retirement savings?

Here's the good news. Experts agree that through a disciplined combination of cutting expenses, working more years, being creative and making some investment changes, boomers who've taken a bath still have time to fix their finances. In the words of Dallas-based financial planner Erin Botsford, author of The Big Retirement Risk: "Take a breath. You will survive and deal with this."

So consider these six steps to move yourself back toward financial stability.

1. Don't panic, but get real.

If you're recovering from unemployment, a cool head and clear thinking are important. You may also need to revise your retirement assumptions. "Catching up is really going to take a strong assessment of what's going on and what your outlook looks like," says Sheryl Garrett, founder of the Garrett Planning Network, a group of fee-only financial advisers. "Most of us spend 100 percent of what we make, and it took us years to grow into that lifestyle. Now we're going to have to make adjustments working backward."

2. Forget 65 (if you can).

Sixty-five may still sound like a magic number for retirement, but most financial experts agree that boomers fortunate enough to be working again should try to work until 70, if at all possible. Not only do the extra years of income give you more time to pad your 401(k), they help you maximize your Social Security benefit. For every year you delay taking benefits beyond full retirement age, Social Security increases by 8 percent, up to age 70. And if you like your work, why not keep doing it?

Married couples who need additional income may have another option: tapping into one partner's Social Security. There are many creative ways to coordinate benefits, particularly if one spouse is older and earns substantially more than the other.

Next page: Keep saving and review your investment strategy. »