You’re told all of your adult life to save for retirement. If you have a financial advisor, you probably saw charts that showed you how the money you save now can and provide a nest egg for future decades…and that if you don’t save, you’ll be scrambling once you are ready to retire. You may even join the ranks of the 20% of those over age 65 who continue to work, although some do so by choice and not necessity.
In fact, even though we hear a lot about those who stashed away retirement savings and now live the so-called good life, 21% of Americans have no retirement savings, a Northwestern Mutual survey found. An additional 10% only had $5,000 or less in savings.In an ideal world, we all would have enough funds stashed away for retirement but it’s just not the reality for everyone, especially in lieu of the COVID-19 pandemic and economic downturn.
So what can you do if you’re approaching retirement age and you find yourself with little to no savings? Here are a few strategies you can use:
- Maximize your Social Security benefits. If you qualify for Social Security benefits, you can receive a monthly Social Security payment. It’s not a ton of money–the average payout is $1,522 a month–but it is something. One way to increase your Social Security payment is to work longer. If you start to receive Social Security at age 62, you’ll get less of a monthly amount than if you work until or beyond age 67. If you wait until age 70, you’ll receive an even large amount, according to Investopedia. Always weigh the pros and cons of Social Security benefit payments, considering factors such as spousal benefits and longevity.
- Find ways to live a leaner lifestyle. We all need to cut costs from time to time. If you are approaching retirement with little to no savings, there’s a good chance you’ll need to re-evaluate how you are living to see where you can reduce expenses. Here are a few moves you can make to slash your budget:
- Use as many senior discounts as possible. AARP membership is inexpensive and offers several senior discounts with everyday retailers.
- Stick with cell phone use only instead of having a landline as well. Shop around for a more affordable cell phone plan.
- Get rid of your car and use ride sharing. Before you do this, you’ll want to do the math on how much this will save you. Cars have a lot of gas, insurance, and repair costs. If you don’t use your car a lot, then paying for the occasional ride sharing could save you money. If you use your car frequently, then you may need to hold on to that vehicle instead.
- Cut the cable cord. Explore streaming services that may be cheaper. Ask a trusted tech-savvy friend or relative to help with this if you’re not sure how to research your potential savings.
- Ask your utility company about energy-saving changes you can make to save money.
- Downsize or rent out part of your home. Is it time to move to somewhere more affordable? For many adults, this is a major way to cut costs. If you’ve lived in the same place for a long time, it can be hard to organize your stuff and get rid of the things you longer need. It’s a draining process, but it’s doable. You’ll also feel ready for a fresh start. If for some reason you can’t or really don’t want to move, then how about renting out a room to someone so you can recoup part of your rent or mortgage expenses? Other ways that retirees can reduce housing costs: They move to a more affordable state or foreign country. Here’s an article that shares more details on Portugal, Mexico, Panama, Costa Rica, and Colombia as affordable living destinations for retirees.
- Get a job. Wait, you just retired and now you have to think about job searching again? It doesn’t have to be a stressful, full-time commitment. Even 15 or 20 hours a week can make a difference to your bottom line and help give you a boost if you don’t have enough saved toward retirement. Depending on the company, you may even get benefits such as health care. Nowadays, it’s easier than ever to work from home as a tutor, bookkeeper, or customer service representative. That way, you avoid the commuting time and earn extra bucks. If you have a professional background, here are several careers that are more open to part-time work and that are a great fit for retirees.
- Pay off debt. If you still have debt like credit cards, cars, and student loans for your children’s education, pay off as much as you realistically can. You don’t want to pay off so much that you have zero emergency funds ($1,000 is at least a cushion to start with, although you should build up to more emergency savings). If you’re at a time now when you are still working and doing your best to pay off debt and stash away some money toward retirement, consider using half on debt and half on retirement funding.