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5 ways to get your retirement back on track

eunice_howard.top.jpgEunice Howard faced her own retirement roadblock. Here's how she got around it. By Scott Medintz, contributor

(MONEY Magazine) -- The road to retirement is positively littered with obstacles. Investment portfolios have been rear-ended; home equity, once a reliable supplement to savings, is deflated; job losses and pay cuts further impede progress. And all this on top of more quotidian bumps in the road: mortgage payments, college tuition, and the cost of health care, to name a few.

Not surprisingly, many people think the path is impassable: Nearly half of Americans worry they won't have enough money to retire comfortably -- up from 29% in 2007; and within the last year alone a quarter postponed the date when they'll quit, a 2010 Employee Benefit Research Institute (EBRI) survey found.

But the truth is, you can still get to your destination. "Not everyone is going to be able to retire exactly the way they want," says Denver financial planner Mark Brown. "But I talk to people all the time who overestimate the scope of their problem and underestimate their ability to do something about it."

Here are a few strategies for navigating five of the most common retirement roadblocks.

Roadblock #1: You're carrying a big mortgage

The problem: It used to be that Americans aimed to cross into retirement free of debt. But if you're in your fifties or sixties, chances are you aren't planning a mortgage-burning party anytime soon. The Joint Center for Housing Studies at Harvard says that 63% of homeowners ages 55 to 64 have mortgage or home-equity debt, up from 49% in 1989. In addition, a third of retirees carry credit card balances, reports the Federal Reserve. Such liabilities can be a dead weight in retirement -- you'll have to make the payments even if your expenses soar or your portfolio plummets.

Solution #1: Erase the debt if you can. Assuming you have cash savings in excess of the balances (besides emergency funds, that is), it usually makes sense to pay debts off around the time you retire. But zero out HELOCs and credit cards first. "You don't want a variable rate going into retirement," says Scottsdale financial planner Jacob Gold.

As for your mortgage, if you're two-thirds through the term, you're not benefiting much, if at all, from the interest write-off. And after taxes you're unlikely to earn more in risk-free investments than the cost of the debt, a recent Center for Retirement Research study found. That said, if you'd have to pull from tax-sheltered accounts to pay off the balance, you may want to consult a financial planner about whether doing so would be worth the tax bite.

Solution #2: Chip away at the balance. If you can't erase your mortgage before you retire, at least try to get it cleared early on, just in case your expenses go up later. Paying even a little bit extra while you're working can be powerful. If you have $154,000 and 10 years left on a $300,000 mortgage at 5.38%, paying just $150 more per month cuts one year and $5,000 in interest off the loan.

Solution #3: Trade down. Another way around your house debt is to downsize. Back when home values were soaring, selling for a mint and paying cash for more modest digs was a no-brainer. While you may still be able to buy a property outright -- especially if you're near the end of the loan and have lots of equity -- you'll probably have to settle for a lower price on your home than you once imagined. So talk to a real estate agent to find out what you might net and what that might buy you.

Things are more complicated if your equity is dried up and you've still got a long loan ahead. But even if you can't pay for a new place in cash, you can at least reduce your monthly nut by downsizing. (See below for details.) You'll save even more if you move to an area with lower housing costs.

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