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I’m 60 and have NO Retirement Savings – Can I Get Back on Track?

Last week on the post Over 50 – No Pension, No 401(k) – What Now?, Ted left a comment that got to the heart of what that post is all about:

“I am 60. Lost my primary home through foreclosure . Just filed bankruptcy. Have been a full time realtor for 20 years . Crash of 2008 took me down. Now starting over. I do have college degree, health is good.

I still have an income property with no equity and it needs work. I do hustle with side jobs, real estate is coming up. Don‘t really want to retire.

Can I still get back on track? Thank you . God bless everyone. Ted”

I started writing a response to Ted’s question, but quickly realized that it was morphing into a full-blown post. I’ve also been aware for a very long time that Ted is hardly in this boat alone. There are quite literally millions of people in this situation, and for more reasons than we can imagine. With Ted’s permission, I’m providing my response through this post (Thank you for giving me this opportunity Ted!).

I claim no status as a retirement expert (if there even is such a person) but here is a multi-step action plan that I believe will help Ted and others facing similar circumstances.

Attitude and outlook

You’re going to be around people who will be living the full retirement life, so you’ll need to adopt the right attitude and outlook. I’d start here:

  • Let go of the idea of full-retirement. From where you stand right now, it’s a burden you can’t afford to carry.
  • Assume you will be working for the rest of your life.
  • Embrace that you are not alone – millions of others are in the same situation.
  • Never be bitter toward those who can or have retired; bitterness is another burden you can’t afford to carry.
  • Recognize that you – and your life – have value and meaning apart from your financial circumstances, and vow to live your life to the fullest.

Adjust your retirement expectations

60 and have NO Retirement Savings
60 and have NO Retirement Savings
People in their 20s, 30s, 40s and 50s plan for – and fully expect – retirement at age 65. That is the retirement convention in our society, but there‘s nothing about it in holy writ.

In your own life, retirement won’t happen at 65, and probably not at 70 either. But 75 or 80 will hardly be out of the question. That gives you 15-20 years to prepare from where you are now! Let that be your time horizon, and pursue it actively.

At a minimum, there may come a time when you will be forced to stop working by physical limitations, and preparing for that eventuality should be your goal.

Lean into your strengths

You have your health, and that’s a solid foundation to build your life on. It’s better to have good health and poor finances than the opposite at just about any age.

Also, your recent foreclosure and bankruptcy – ironically – probably mean that you have no debt. If so, that’s a major advantage. Lot’s of people are going into retirement with substantial debt – that’s one problem you don’t have.

You’ve also been working in real estate for 20 years – real estate sales I presume – and even if the market never bounces back, that background gives you one gigantic advantage. As a real estate agent, you have learned to be an entrepreneur. You’ve learned to go out into the world and get business that you can convert into a paycheck. That is the most basic training for starting your own business of any kind. That also means you won’t be job dependent, which is very important at your age.

You also do side jobs, which demonstrates flexibility. This will be an essential quality since you probably won’t land a career type position at this point in your life.

A more tangible strength is your income property. You don’t give a whole lot of detail, but can you move into the property? My thought is that you occupy it, both as a place to live and as an opportunity to be “on site” to fix it up.

I’d make a plan to pay off the mortgage on the property in no more than 15 years. If you can, you’ll have either a) a debt free residence to live in, or b) a major asset to sell to raise retirement capital by age 75. Either outcome is a major positive.

Earning a living

So far, we’ve made two points on the work side: that you will have to plan to work the rest of your life, and that your 20 year real estate career has trained you for self-employment.

I’d try to start some sort of business – one with more stability than real estate sales – then either use your real estate business as a side venture, or your willingness to work side jobs as an additional source of revenue. Unless you can get a full-time job with decent pay and full benefits, you may need to rely on two or more income sources. You’re already well suited to that.

As to the business venture, I’d recommend that you gravitate toward some kind of work that you really like doing. If you have to work in your 60s and 70s, it will help tremendously if you do work that you like.

Start building retirement savings – YES – even now!

Lot’s of people would throw up their hands and give up on the idea of saving for retirement as a lost cause. Don’t let that be you! This is no time for fatalism! If you begin saving now, you’ll at least have something in 15-20 years.

Let’s say you start an IRA right now. If you max it out at $6,000 a year for the next ten years, you’ll have $60,000, plus accrued investment income, by the time you’re 70. If you’re married and both you and your spouse make the maximum contributions, you’ll have $120,000, plus accrued investment income, by 70. That may not be enough to fully retire, but at will give you a very large emergency fund that you can tap when extra funds are needed.

If you can build a successful business, you can save even more through self-employed retirement plans such as a SEP-IRA. That will allow you to effectively contribute up to 20% of your business income to the plan. (This is another point in favor of you having some sort of business of your own.)

You won’t be able to continue funding your retirement plans past 70 ½ in most cases, but you can continue to contribute $6,000 ($12,000 if you are married) into a Roth IRA. That will allow you to build your retirement savings for as long as you have earned income.

Social Security and Medicare

You can go on Medicare at age 65, and you should do so by all means. There are different schools of thought on Social Security however. One is that you should delay taking benefits until age 70, that way your monthly payment will be at the maximum level for your eligibility (it can be up to 32% higher at best).

The other is that you begin taking benefits as soon as you are able, which will provide more cash up front. Since your financial situation is uncertain, I’d take the benefits as soon as possible. There are two basic reasons:

  1. If you begin taking Medicare at age 65, but not Social Security, you will have to pay the Medicare premiums (about $100 per month per individual) out of pocket.
  2. Even if you don’t need the income immediately, you can use the Social Security benefits to help fund your retirement plan.

Your plan contributions cannot be based on your Social Security benefits, but the extra income will free up earned income for contributions. For example, you can make a full IRA contribution of $6,000 as long as you have at least that much in earned income for the year. Taking Social Security at 65 rather than waiting until 70 will give you extra cash flow for retirement contributions for another five years.

Back to the question: I’m 60 and have no retirement savings…

Your situation is far from hopeless. With a combination of a paid off income property, a solid cushion in a retirement plan, Social Security and Medicare, and even a small income from a side job or side business, you may find yourself living in a very comfortable semi-retirement by the time you are 70.

Not perfect, but not bad either. And one other thing that you probably already know better than most of us…stay out of debt! That’s yet another burden you can no longer afford to carry.

Do you have any advice you can offer Ted and others in the same situation? Do you disagree with any recommendations I‘ve made? (Please note: if your comments are critical, judgmental or condemning of Ted, they WILL be deleted.)

( Photo from Flickr by Tax Credits )


14 Responses to I’m 60 and have NO Retirement Savings – Can I Get Back on Track?

  1. Hi Kevin,

    Another idea is to relocate to a foreign country where the cost of living is significantly lower. Many baby boomers are finding their dollars go further in places such as Ecuador,Uruguay Panama, Chile, Belize, etc. This solution isn’t for everyone, due to family considerations, but the idea of working beyond 65 isn’t for everyone either.

    In Ted’s case, as a real estate agent, he could use his already well developed skills to find foreign real estate for prospective American buyers who are desiring to relocate. He could establish a website catering to American clients and conduct group real estate tours. He could write articles for publications such as International Living.

    Just our thoughts and we wish Ted the best.

  2. Hi Steven and Debra–As usual your thoughts are constructive and out of the box. And I think that out of the box is becoming more important for regular people. I don’t know if Ted is in a position to make an overseas move, but if he could that sounds like a real niche.

    He would benefit from learning Spanish, and from making some trips to the country of choice before making the actual plunge.

    One caveat though is that some countries have required asset minimums and some stiff health insurance qualifications. They don’t want Americans coming down and using national resources freely.

  3. Hi Kevin,

    As an addendum to our previous post, we just received an email link from International Living (IL). They are sponsoring a contest in which the winner and their spouse will enjoy a paid vacation to Granada, Nicaragua. The ideal applicant will be retired, or near retirement age, and from the United States or Canada. IL pays for air fare, accommodations, and provides $1500 for expenses. Applicants need to upload a youtube presentation on why they would like to retire overseas and avail themselves of this opportunity to explore Granada. They ask the winner to write of their experiences while there and if the work is published the winners will be compensated for their efforts in addition to the other perks. Full details of this offer may be found in the following link:

    http://internationalliving.com/win-a-dream-retirement-overseas/

  4. There is some pretty motivational information in this article, especially in the begining and I liked that. It is not always to late for anything and you really have to know where you are, what your strenghts are and act accordingly. I also cannot stress this enough, you should stay out of debt, regardless of age or circumstances.

  5. Hi Dan–You’re right on the money with the debt problem. With no debt, you’re free to do what you need to do to go forward. Debt keeps you tied up with old obligations, and you can’t move forward. I’ve often thought that getting out of debt is 30-40% of retirement planning, for reasons too numerous to list here.

  6. Another thought to free up income is to own a vehicle in retirement that consumes low to no gas. A conventional engine may get 25MPG, whereas a hybrid may get 50MPG. If you go 5000 miles per year, that is significant. The cost for the conventional car (based on $4/gal gas) is $800/yr. The cost for the hybrid is $400/yr.

    This is but one example of cutting costs wherever possible.

  7. Hi Tim – Excellent, excellent point. If you are on a low or fixed income, a doubling of gas prices would hit you harder than it would other people. Minimizing living expenses is the under-appreciated other half of retirement planning.

  8. I have no idea how old this thread is, so I don’t expect a response. I am in the same position, being 64 with no retirement savings, owing to a bankruptcy and some bad decisions. I have worked for myself for most of my career.

    It IS possible to begin receiving social security retirement funds as early as 62.

    If you do that, however, you cannot — as seems to be suggested here — simply take the money and save it, while you continue to work. There is a fairly substantial limit on how much you can earn and still draw full retirement funds. Meanwhile, you have cut the amount of social security you will receive over the long run substantially. (After hitting the “official” age of 66, there is no limit on what you can earn.)

    So, if you expect to earn a respectable amount of money, it might be best to do what you can to delay retirement, rather than taking it as soon as possible, as Mr. Mercadante suggests. Medicare may cost $100 a month, but, considering that I am paying almost $800 monthly for health insurance now, the $700 reduction is a huge savings itself!

    I have still not completely unraveled this incredibly complicated matter. Some sites I’ve visited suggest that these rules don’t apply, or apply differently, to self-employed people. Ugh.

    I’ve made an appointment to meet with someone at the SS administration. (I’m packing a lunch and carrying two books.) Friends tell me this is just about the only way to get any clarity. And don’t go thinking I’m an idiot. I have a PhD! Actually getting that — the project of my middle-age crisis — is another reason I’m out of money. So, maybe I am an idiot.

  9. You’re correct about Social Security being reduced by earned income. I think two dollars of earned income cancels one dollar of social security income, so if you get $1,000 a month at 62, but earn $2,000, you won’t get your benefits.

    However, that ends when you reach your age of “normal retirement”. If you’re 64, your normal retirement age will be close to 66 (It maxes out at 67 for those born after 1960). In the post I suggested saving your Social Security benefits for retirement savings, but should have pointed out the age factor.

    Delaying Social Security is an excellent idea, especially if you are in good health and able to earn a living without it. You can increase your benefit by waiting to age 70.

    One other thing I do want to suggest…don’t make Social Security your only game. I realize it’s more important with no pension and retirement savings, but you should also be concentrating heavily on ways to earn more money. Not just for survival, but also for saving for later.

  10. Anyone starting a business in their 60s is not likely to earn enough from it in their sixties to make it worth losing the social security bonus by using early benefits as income to replace higher savings from the business earnings. I would urge everyone in Ted’s situation to be very cautious and to make waiting until age 70 for social security their highest priority. The ideas in this article will help, but social security is certain to be the only reliable and significant source of regular income for anyone who has reached age 60 with no retirement savings, despite their best efforts in earlier years, so it must be maximized. If a small business eventually takes off, the higher income from it will not arrive until one’s late sixties or early seventies, and it may not last into one’s eighties and nineties, due to failing health in later years, or competition, or a general economic downturn that requires customers or clients to cut back on their purchases of goods and services. If failing health causes one to want to sell a business as a going concern, the timing may be perfect or it may be unfavorable, selling into a booming economy or a depression. It is one thing for a 30-year-old to plan to retire on business income after 30 years, with time to make adjustments if the business fails, but quite another thing for a 60-year-old to plan on retiring at age 80 or 85 from the income or sale of a business that is only getting off the ground at age 60.

  11. Hi Michael – If you don’t mind me saying this, that’s a pretty dim view of life. You’re not offering much in the way of hope or a roadmap to the many people who are in this situation. And I disagree with your conclusions, not the least of which because I’ve seen too many people thrive in their 60s and 70s.

    There are a few factors I think you’re overlooking:

    1) Attitude is huge – if you think you can, then you can.
    2) Necessity can force you to make things happen, and to make them work.
    3) Most businesses are service related today, they don’t require physical strength, and you can often get them up and running in a year or two.
    4) It’s amazing what you can accomplish when you set your mind to it.
    5) Though there are always obstacles, there are also unexpected windfalls and opportunities once you start moving forward.

    Think about it – if you have no other choice, what do you do? Do you roll over and quit, or do you come out swinging? I think you do what you have to do, and that’s pretty powerful by itself.

  12. you are so right Kevin… I am 60 years old and feel very young and full of energy… I divorced in 2008, we were both real estate agents, I worked for our family business before that, so never any retirement, but my x husband worked for a company that went bankrupt so his retirement was taken over by the fed govt and I draw 1/2 of that every month 327.(started in 2012) which will end when my x dies.. he is now 64..I work for an atty in OKC and a lot of the ladies in that office work into their late 60’s and recently a woman who was 78 was working there.. left that job and went to another one… so it really does depend on your attitude and the people you surround yourself with … shut out the negative thoughts and go for it …I don’t own a home but live in a very nice 4 plex in a small community in the middle of OKC.. my rent is $360 per mo and I have told my landlord I will probably be here forever…its working class people and college students mostly ..I paid off my car.. and try to keep my credit card debt very low..I would like to invest monthly because my income is fairly high to have such low monthly expenses sometimes my monthly commission checks are large, plus base salary.. my problem is taxes are taking so much of the income because I dont own property …I didnt participate in 401-k at work because a lot of people were saying its not a good investment because of the low value of the dollar and a stock market crash would take it ..? anyway as you can see I know very little about investing but I’m very excited to learn.. I just don’t trust many people when it comes to investments because my credit union referred me to their investment advisor who wasn’t good at all..however I’m not afraid to take a higher risk investment because of the time frame any advice would be appreciated …

  13. Hi Gigi – I like your idea of “so it really does depend on your attitude and the people you surround yourself with … shut out the negative thoughts and go for it” – that really is the truth.

    As to your tax problem, maybe you can look into starting a Solo-401(k). You can deduct up to $23,000 from your income to fund the plan. You don’t have to invest the money just yet, but just accumulate it for later but taking advantage of the tax benefit now. I agree with you on the dollar and the stock market. But if the market takes a big slide, like 50% or more, you might jump into index funds then ride the market up later. It’s not a guaranteed return, but the current market is looking too rich and wobbly at this point. If you do get into the market in the future, make sure that you keep a generous amount in fixed value/income investments, like CDs, Treasure Bills and money market funds too. You can’t afford to 100% in stocks.

    Be sure to do some reading up on investing between now and then. You should always be comfortable with where you’re putting your money.

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