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Over 50 – No Pension, No 401K – What Now?

Let’s be honest, most retirement posts in the personal finance blogging world are aimed squarely at people in their 20s and 30s. Those over 50 are presumed to not exist. It’s almost ironic, isn’t it, talking about retirement to people who are so far away from retirement that it’s very nearly irrelevant while ignoring those for whom it’s right around the corner? And especially to those who have no pension or 401k.

Maybe it’s that the vast majority of people on the web are under 35, or maybe it’s just easier making multi-decade projections to a group of people so far from retirement that they’ll never remember any bad advice they’d gotten early in life. And in a different direction, all things are possible when your time horizon is 30, 40 or 50 years. Those magical retirement projections that’ll turn us all into millionaires just wouldn’t work without all those decades!

But what if you don’t have decades to accumulate a retirement fortune? What if you’re over 50 and retirement is just a few years away? If you don’t have at least a healthy six figure portfolio, how do you prepare for retirement now that the luxury of time is no longer available to work in your favor?

Get working on Retirement Plan B

Over 50 – No Pension, No 401K – What Now?
Over 50 – No Pension, No 401K – What Now?
Delay retirement. If retirement at age 65 isn’t a doable goal, move it out to 68, 70 or even 75. Not only will that provide extra time to accumulate additional funds for retirement, but it will also shorten the time period you need to cover. For example, assuming a lifespan of 85 years, you’ll need to accumulate enough money last for 20 years if you retire at 65. But delay retirement until 70, and you only need to cover 15 years. The longer you can work, the smaller your retirement savings need to be.

Ditch your debt – pronto! If you can’t raise the income, you’ll have to lower the outgo. If you won’t have a rich retirement plan to carry you in your golden years, then one of the single best courses of action you can take is to get to work on being debt free.

A disturbing trend is developing in which an increasing number of people are carrying higher debt levels into retirement than ever before. People are still paying mortgages well into their 70s! If retirement resources are on the slim side, you can’t afford to be one of the emerging elderly debtor class. Pound for pound, eliminating debt is more effective at improving cash flow than putting an equivalent amount into savings. This is especially true if you’re within 10 or 15 years of retirement. Equally important, once your debts are gone, you’ll have that much more money to put into savings.

Get started on a post-retirement career. Relatively few people will have the retirement resources by age 65 to live the classic life of an unrestricted full time retiree. (Most of the ones who will are already rich!) When we add to that equation the actuarial nightmare that is Social Security, a lot good people are going to be working a lot longer than age 65! Don’t dread it, embrace it!

You may not be able to continue on your present job, or even in your current career much past 65, but you have time now to develop a new career or to begin a side business. Get it going now, and build it up so that you can be fully self sustaining by the time you reach 65. Most people view retirement as an escape from work they hate, but if you’re doing work that you truly enjoy it won’t feel like work and you may even lose the desire to retire.

Develop multiple income streams. If you don’t have a rich retirement plan, you can add a good measure of security to your financial picture by developing multiple income streams. Plan on relying on Social Security, an income from a side business, seasonal or part time jobs and as many passive sources as you can develop. Ten or 15 years may not be a lot of time to build a big retirement portfolio, but it’s more than enough time to develop two or three or more income streams.

If you’re interested in developing additional income streams, either for retirement or to help prepare for it and fund it, check out my post on freelance blog writing. It’s the kind of work and business you can easily run well past retirement age.

Start saving as much as you can now! I’m of the opinion that most people accumulate the biggest share of their wealth during a single ten or 15 year period when all things financial are breaking their way. Saving at an early age certainly helps, but life can get in the way of even the best executed savings plans, especially when you have children. But if you’re past the child rearing years, and at a high level in earnings, you can make up for lost time much quicker than you think. You may not have the time horizon to accumulate a seven figure retirement plan but what ever you are able to save from this point forward will make life that much easier later. Never give up hope on this!

Even if you’re covered by a retirement plan (and especially if you’re not) the IRS allows people who are over 50 and within certain very generous income limits to deduct up to $6,500 towards an individual retirement account (IRA). Even if you have no other savings, stashing away $6,500 per year for 15 years will grow to $97,500 plus investment income. That won’t be enough money to retire to the beach, but it will provide a nice cushion to back up paychecks from Social Security and any job or business income you have later on.

What ever you do, don’t speculate! There may be a strong temptation to “make up for lost time” by plowing money into risky investments looking to make a big hit. But it’s far more likely that you’ll get clobbered for trying. Since you have a shorter time horizon and less money to play with, keep your investment choices on the conservative side of the investment universe. Yes, you have less time to grow your portfolio, but you also have less time to cover large losses.

Stop worrying about it. We often forget that our lives are what we do everyday, not the grandiose plans we hope to achieve. While a generous retirement plan might make you more comfortable, it won’t necessarily make you happy—and that’s the real goal throughout life. Work on the non-financial aspects of your life—your health, your relationships, your faith, your hobbies and your passions. Those are the elements of life we truly crave, but often ignore in favor of financial pursuits because we mistakenly think they can be bought with money. The better your health, the stronger your relationships with God and with people, the happier you are, the more you live your passions, the less important money will be.

 
What would you suggest to a person over 50—or even over 40—who will be unlikely to accumulate a rich retirement plan by the time they reach 65?

( Photo courtesy of Robert Couse-Baker )


64 Responses to Over 50 – No Pension, No 401K – What Now?

  1. This is such a good topic.
    Maybe unfortunately so. According to stats, most folks in their 20s and 30s aren’t even thinking of retirement.
    But it’s all in how you look at it. Don’t look at it like you can’t retire, look at it as a time to explore a new career. I just read a story of a woman who earned her degree and began teaching at age 55. She started a whole new career.

  2. Matt, I completely agree and that’s the point of the post. There’s so much emphasis on the accumulation of money in regard to retirement, that I think we’re missing the need to continue to live life to the fullest to the very end.

    In addition, a pure money chase prepares poorly for the business of living every day, because the prize is always a higher number. Though the post is specifically targeted at people over 50, it really applies to most people, since statistically most people won’t have anywhere near enough money for full retirement and will need to find other ways to survive.

  3. On the point about living life to the fullest, I agree … but I think you haven’t gone far enough. People NEED to find work (maybe as a side job now, or full time work if possible) that is in alignment with their passions and personal talents. If your work isn’t in alignment with your passions and talents, you are no where near your potential for providing value and maximizing your income.

    I don’t agree with some of the other advice. Eliminating high interest debt is good. Getting rid of low interest debt is counter-productive to building wealth.

    What IS important is that you have A financial strategy and that you stick to it … rather than just trying to follow rules of thumb or the emotional whims of the moment. That is the problem. People don’t even have a “Plan A” much less a “Plan B.”

  4. John, Well put! If we get into work we’re passionate about, that blends with who we are and want to be, retirement becomes a moot point. Saving money for our “golden years” will mostly be for the purpose of accumulating funds for emergencies or to level out income fluctuations. That’s pretty much what we should be doing for all of our lives, from one end to the other.

    The “wall” we construct at age 65 is largely of our own making. We should be out happily accomplishing until we draw our last breath!

  5. My suggestion: don’t forget to take care of yourself. As you get older a healthy body is at least as important as a healthy portfolio, and especially if you don’t have a healthy portfolio you are going to need a healthy body to continue to be productive in your golden years. Delaying retirement and having a post retirement career work much better if you still have good mobility and energy. I hear many do not choose to retire, people often “retire” when a health issue forces them to, ready or not.

  6. Chris, Very true. Health is the unsung preparation when it comes to retirement. Maybe the assumption is that if we have enough money, our bodies will take care of themselves.

    Better to hit 65 with good health and no money, then with money and poor health. At least with health, there’s an excellent chance of earning an income. With poor health, money can disappear quickly.

    We often forget that money is a tool, not a goal.

  7. What have you been doing with your life to be over 50 and have no retirement savings? Very poor planning, I say. Anyway, the best way to look at it is as a game or challenge. How much can I sock away before I retire. I have always looked at any problem as a challenge to overcome. Not as something too hard or hopeless to try. … In this case, you need to build cash flow/passive income. I disagree with the idea that you have to be conservative. I think you are so far behind, you will need to take on more risk to have any hope of catching up for 50 years of doing nothing right. The 3 best places to take that risk are the stock market, real estate and your own business. Sticking money in a money market or bank savings account will never get you to a secure retirement this late in your life.

  8. Ken, the purpose of the post is to address the fact that there are millions of people over 50 who for what ever reason haven’t been able to salt away money, or enough money, and what can be done to fix it. We’re trying to address it in a positive, non-judgemental way.

    Real life isn’t life as it exists in the financial press or even on pf blogs. People do go through career crises, face illness, care of loved ones, or yes, excercise less than perfect judgement. But that’s all part of life, isn’t it?

  9. My husband and I are just over 50, and while we have some money saved, it isn’t much. And since we’re both in struggling industries (him: homebuilding, me: newspaper), and have two kids in college, now’s not a very liquid time, cash-wise. I’d like to share an important point for many people: If you have kids, and you had them in your 20s or early to mid 40s, you will not be supporting them much past your mid-50s. If you are helping them through college, as we are, know they’ll be done and on their own in five or six years from the start date, in most cases. I know my kids are going to do everything they can to avoid living with us any longer than necessary once they graduate. They’ve told us as much (they’re independant types). That means we’ll have much more of our income at OUR disposal than we have had since the first child came along. We’ll be power-loading the IRAs those last few working years as well as paying any remaining outstanding debt. Just something to remember.

  10. Michelle, thanks for sharing your story. From what I’ve seen, it’s more common than many like to believe. Not everyone’s career is an elevator ride to the top, and it’s often difficult for people in their 20s and 30s to imagine that anyone might arrive in their 50s without being on their way to a seven figure retirement plan. But that’s what can happen when you’re busy taking care of everyone’s needs–like your children.

    I agree, it’s not a time for despair. You’re looking at it in the right way, that once you’re kids are done with college, you’ll have significant resources to concentrate into retirement. All we can do is all we can do with the circumstances we have to work with. Best of luck to you and your husband!

  11. I’m sorry, but “work” is not my idea of “life.”

    I want to STOP working, not hear that I have to work till I’m so old and feeble that all I have left is sitting around waiting for various “health” “care” “providers” to do a total cashectomy on all I struggled to put together in my aging years. That’s not retirement, that’s serfdom.

    Our society is simply refusing to deal with longevity in intelligent, compassionate ways. Elders should be encouraged not to work, but to be elders, and there should be a significant safety net for that.

    Work means selling your time for cash, living or planning to live hand to mouth in a cash-based society which has monetarized everything from the water we drink to our very homes. All so that a small cadre of overseers can make a huge profit on us all.

    This is an appalling outrage, and although I am in my 50s, with good savings, I consider telling people, “Well, you’ll just have to work till you’re 80! Get used to it!” the opposite of “out of a rut.” This is the same old feudal rut, imposed on longer lives, and leaving no hope of escape.

    I don’t WANT work in my old age. I don’t WANT to be passionate. I want to be quiet, wise, and centered. Not scurrying around with the latest iCrap and a bunch of Boomer baloney that says You Are What You Earn, and that if your days consist of just being here now, you aren’t as valuable as those irritating types constantly running in the hamster wheel of consumption, image, and addiction to way too much excitement, energy, and activity.

  12. Mikke–what’s your Plan B if you have a financial catastrophe prior to turning 65? That’s what this post is all about. I’m not advocating working INSTEAD of saving, but there have to be options for those who don’t have the fat bankrolls for full retirement. In other words, the post is addressed to the majority of people.

    If you have a $1 million saved by 65, what happens if there’s a run of double digit inflation?

  13. Could be a part time job, a business or some form of passive income source, or a combination. It will depend on your individual motivation and talents. This is why they should be developed well before age 65.

  14. @tempo dulu

    You hit it pretty well there mentioning that it’s easier said than done. Investing, or in this case; developing multiple streams of income, this is the part that calls upon your financial intelligence. Your creative side. If you were to ask me what my streams are going to be, I’d respond with stocks, commodities, webpage ownership, and other forms of intellectual property.

    @Kevin M

    This is something that left me thinking quite a bit. I must say, you have left upon the blogosphere, a very rock solid point. Most of us do write about investing in ways that are tailored for youth. We’ve completely neglected the elder demographics who may be completely devoid of any assets at all (It’s been said that a huge chunk of baby boomers are entering retirement in debt. Mon dieu!) Their time is a lot more valuable than ours, given their lack of time that’s remaining!

    And it’s tough. There’s little to long term like we could in investing… And it would call upon them a larger demand of financial intelligence. And in the case of the indebted retirees, we’re already ahead of them in that regard.

    Shucks.. That’s a terrifying thought…

  15. Like Michelle, we entered my husband’s fifties with a small retirement fund. He just retired at 60. In that ten years we put away a good chunk It is possible.
    If inflation goes wild? We will all be in the same boat- won’t we?

  16. I don’t get a 401k or any program from work so set up my own Roth IRA and maxed it out. As you get older a healthy body is at least as important as a healthy portfolio, and especially if you don’t have a healthy portfolio you are going to need a healthy body to continue to be productive in your golden years. Delaying retirement and having a post retirement career work much better if you still have good mobility and energy. I hear many do not choose to retire, people often “retire” when a health issue forces them to, ready or not.

  17. Hi Sarah–Good point about maintaining health, and equally good idea with the Roth, not only does it give you an opportunity to accumulate money for retirement, but you’ll be able to withdraw the money without tax consequences. That’ll be extra cash flow. I think it’s important to have some sort of retirement stash even if it won’t be enough to fund a golden retirement. It will be an enormous advantage to have a large financial reserve, especially if you’re still job dependent. The relief from stress alone will be significant, in addition to having extra resources.

    If you have Social Security, Medicare, a supplemental health plan, a full- or part-time income and a decent amount of reserves, you should be OK even without a pension or large retirement account. Living within your means is also the critical other half of retirement that rarely gets discussed. Most retirees that I’ve known over the years haven’t had fat pensions or retirement plans, but lived well because they learned how to live on the cheap. That’s a very real investment as well because it’s acquired by habit and that takes time to build, just like a retirement plan does.

  18. Can we get a discussion going with actual #’s and facts? Spouse and I are in our mid-50′s. Youngest kid just graduated from college (debt-free ’cause we financed it) and is now back living at home. We’ve only got about $650,000 in retirement funds right now and still owe $150,000 on our house. Youngest kid wants to go to law school and we can’t fund that, pay off our house and fully fund our retirement.

    If anyone has any suggestions, we’re all ears. Thanks much.

  19. I’m one of those people that Ken is referring to. I am early 50′s have little savings, do not own a home, have an old car, have a low paying job, have some debt, was laid off and out of work many times and took care of my mother with Alzheimers for 9 years. I am worried, as I should be, that I have nothing for retirement. I live in a sparsely furnished apt and am currently looking for a new job. It is a scary world for me. I’ve found out I suffer from depression and anxiety and realize I’ve done things wrong. The future doesn’t look bright for me, especially since I am alone and do not have any children. I’m trying to save and everytime I get something set aside my car breaks down. Its a vicious cycle for me and my nerves are shot.

  20. Hi Mary–Then I’d recommend that you follow the steps in this post. But in addition, think hard about what you really, really (really) want to do with your life that you might be able to make money with, and concentrate on developing it.

    Ideally, it should be something you like to do. If you start now you’ll have at least 10 years to build and perfect it. If you like what you are doing you can quite literally do it for the rest of your life. It won’t be retirement in the traditional sense, but it will be a better life, and that should always be the goal.

  21. I am 60 . Lost my primary home throgh foreclosure . Just filed bsnkrucy. Have been a full time realter for 20 years . Crash of2008 took m down. Now starting over. Ibdo 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 pcming up. Don’t really want to retire.
    Can I still get back on trsck? Thank you . God bless everyone. Ted

  22. I have a career that I love as a nanny, but the benefits and retirement plans aren’t included. SO my 22 year career has kept me afloat, but without any retirement funds. I am 45 and would love to work until I am 70ish, but physically I doubt it will be possible. Have a bit of money coming from an inheritance but nothing to keep me from worrying about how to fund my old age. Would love to hear comments or a new blog post from people at retirement age of 60 or older who did not have a strong retirement funded and have made it work and are surviving their wise years!

  23. Hi Dee–With Ted’s permission, I will be adding a post this Monday (2/18) in which I will put forth my ideas on what he, at age 60, can do handle his retirement needs. Everyone’s situation is a little bit different of course, but his situation is increasingly common. I think the new post will stimulate some ideas.

    Please check back!

  24. hello..everyone..am 50.. yea.. i ve been really depress because..how my life turnout..but i try not to let it get me down.. am a former teacher..cause my mom got sick and i came back to town..to help my siblings with her..I have bout 24,000 in teacher retirement savings.. and am eligible to buy time since am vested..i have a small business.. i never had children..or ever married…i regret it.. kinda late now..but..i ll i can do is my best to be positive..and hope for the best….but getting back to retirement..its an annuity ,the retirement vehicle that is…does anyone have any suggestions about moving it..or should just keep it there..?..i do have a house..that am currently renting.. and am guessing in ten years..i may make around 50,000..if i sell it..to cut back..i live in my office/shop..i converted it to a nice apartment..(is that drastic?..naw i think its smart)..my business maybe in 10 years can sell it for 50,000..i hope to have at least 250,00 by age 65..i wonder how much that would be..in monthly payments….?…some of us made wrong mistakes..some of us..never could make it..even though we try..or maybe not try hard enough..in any case..life is worth living.. we have to make the absolute most of it..afterward..we are just taking memories..not money..so its great we all are motivating each other..

  25. Hi Mario–You actually have a lot going in your favor. You’re 50, so you still have 15-20 years to prepare for retirement. You’re single with no kids, which means you have no dependents and no kids to put through college.

    You also have a rental property, a businsess and your teacher retirement savings, so it’s not like you’re starting from scratch. My suggestion is that you save as much as you can for retirement (or even outside of it) and concentrate on paying off any loans you have on the rental property. When you turn 65 you’ll also have Social Security, and that will help.

    Also, rather than selling your business, could you continue to work for as long as you’re able? $20,000/year in income will be worth more than a $50,000 windfall from selling it.

  26. My wife and I have no extra money due to our income level and how much we owe. We only have our house payment and a car payment and then all the other kinds of bills everyone else has. The bottom line is that we have never had the kinds of income that our friends seem to have had. I do not know, honestly, what we could have done differently through these first 27 years of marriage. What do people like us do when we do not have ANY retirement money saved and no way of saving because of the small income we now have? We have our health (for now) but we know that retirement is coming sooner than later. We have always paid our bills and only have always had just enough to get by paycheck-to-paycheck. I really wonder what we are going to do. With social security not promising to be there for us (even if it is, the reports we get from the SSA tell us that its only going to be about $1,027.00 per month.) I do not feel very good about all this and really do not know what to do. I hate the thought of being retired with no or little income and have to drive to a senior center to get our meals or having someone deliver them to our house one day in the future. I volunteer occasionally at the local center and see all those seniors a lot of them very unhappy. I don’t want to turn out like them but I see it coming. My mother is 78 and her health is failing. And its really sad to see her sitting at that center just to get her meals.

  27. Thank you Kevin for the link to 60 and Have No Retirement Savings-Can I Get Back on Track?

    It seems as if attitude is all there is to it. I just do not want to be a burden to my children or anyone else. Only looking for answers and a little hope. DanB.

  28. Hi Dan–Yes, attitude has a lot to do with it. I don’t mean to minimize your’s or anyone else’s situation, but when your back is to the wall, there’s no choice but to keep going forward. You have to put the gloom and doom out of your head and become relentless. If you do, you’ll find there’s more than hope.

    I always think of my grandparents, they had no pensions or 401k plans, but they lived well until the end of their lives. They did what they did all their lives – they worked, they saved and they stayed out of debt. They always had a nice house, a refrigerator full of food, gas in the car, money in the bank and money in their pockets. There was nothing magic about turning 65. But they lived into their 80s and 90s and were never a burden to anyone.

  29. Thank you so much for your advice. My story is that I married young had kids in my 20s. Was always the breadwinner. Kids are grown now. When I tried to save something always came up so I had to dip in it. I’m 51 make just over 100000 per year have about 75000 in a 401k but that’s it. My biggest mistake was buying a no money down house about 6 years ago which in 2 years plummeted so my mortgage while current is under water. I have 2 mortgages and the monthly total payment on both is 3000. if I sell I will be paying the bank still after the sale. I do plan to work until I’m 65. I’m healthy and exercise regularly. Any ideas for me? I’m divorced.

  30. Hi Joanne – Your situation is far from hopeless. You have a high income and an excellent start on your 401k. Your two biggest problems are the house and the fact that your 401k probably won’t be large enough to meet all your income needs by the time you’re 65.

    I see three possible strategies here:

    1) Maximize your 401k contributions from here on, though that will be tough with the $3000 house payment.
    2) Work to pay down your mortgage(s) to the point where you can sell the house without having to write a check at the closing table. Then trade down to something with a far smaller payment, and direct the savings into your 401k.
    3) Start working on a career or business idea that can provide an additional source of income in retirement. It may only need to be part time and only for a few years, but it may cover any income weakenesses you have in retirement.

    I’d say accomplishing #2 should be the priority. Right now you have too much income going into shelter, and that’s the problem you need to fix most. Everything else will get clear once you do.

    I hope that helps! Please seek other opinions where you can, mine is just one of many.

  31. Thank you good advice. Forgot to mention that I bought in the height of the period when home prices were high. So my combined mortgage balance is around 436000, which includes my 2nd mortgage of 79000. I feel so overwhelmed at times. I like your idea about working on trying to increase my income so will pursue that diligently and try to save more in 401k.

  32. Just wondering what on earth will happen to me. I wasn’t am American citizen, but lived there from the age of 3 till I was 35 years old. Met someone, fell in love, moved to the UK, had a child, but haven’t worked in this country. I’m 51 now and am completely supported by my “boyfriend” which sounds ridiculous after 16 years, but he’s afraid of marriage, so we never did, although we’re still together. He hasn’t paid anything towards a pension for me, obviously I wouldn’t qualify for any sort of help from the government here if anything ever happened to him. Also, because I left the USA, I have lost a lifetime of Social Security benefits. Don’t have any work experience except for house cleaning and I can’t really do that anymore because I have back problems now. Will I end up living as a bum and die?

  33. Hi Sue – Have you spoken with your boyfriend about this? If not, you really need to. You probably also need to get the opinions of 2-3 people who you really trust and are close enough to your situation to give objective advice.

    It’s my understanding that you are eligible to receive both Social Security and Medicare as long as you have worked and paid into the system for at least 40 quarters (10 years). It’s cumulative, so if you haven’t reached 40 quarters, you still have time to return to the US and make it up.

    Alternatively, you should investigate the public benefits that will be available in the UK, or what you need to do now in order to become eligible. You should also begin earning and saving any money that you get. Maybe you can convert a hobby or passion into a revenue stream. Also discuss saving some money your boyfriend provides in an account in your own name. You shouldn’t be in a position where you have no money at all.

    You’re in a tough spot, so it’s time to be open and pursue any options you have. Inaction is the worst course at this point.

  34. Thanks for answering Kevin. Yes, yes and yes, I’ve talked to him about it. He just says to have faith in him and not to worry, that it’s not in his destiny to die, so I’ll be fine. In regards to the USA and the SS system, I lost my green card when I stayed out of the country for over 1 year and was told I had to be a resident to ever get it. Basically, I was very stupid for not becoming a citizen, I just never thought about it. I will try and save some money, but my goodness, I’d probably have to save at least half a million, which doesn’t seem likely. Also, even though he supports me, I don’t really have any of my own money, he just lets me use the ATM card to buy food and gas.

  35. Hi Sue – I don’t mean to pry into personal matters (but then you are asking), but on the part about your boyfriend saying “He just says to have faith in him and not to worry, that it’s not in his destiny to die” – we just lost my nephew at an early age. No one expected him to die either, and it was very sudden. The point is, none of us know what our destiny is, how it will play out, or when our number will come up. Please tell him that you need something more tangible in recognition of the many years you’ve been in a devoted relationship with him.

    At a minimum, he should name you the beneficiary of a large life insurance policy (on his life) that you will pay (with his money) with your ATM card (to make sure that it’s paid consistently).

    I don’t mean to contradict your boyfriend – obviously I don’t know him – but I put my trust in God alone. None of us are in a position to make guarantees about anything, particularly how long we will live or the provisions for our loved ones in the event of our deaths. That’s why there are insurance policies and financial assets. At 51 you should not be left in the dark about your future financial survival.

    I don’t know you, but you are reaching out for help, and I would implore you to take this matter with the utmost urgency. Time is getting short and you have no answers. As an adult in an apparently committed relationship you deserve nothing less.

  36. I agree most times the older generations are left out in the personal finance blogs. But from working in the investment industry I see many of them at age 45-60 with only 50-100k for retirement, if that. Many need to look at pushing the retirement back or not retiring completely sort of semi retire with part time work.

  37. Hi Thomas – I think that that $50-$100k that you’re seeing is a lot more typical of the average person, way more so than the million dollar babies that magazines like Money Magazine portray as the norm. This is just my opinion, but I think the greater need is to address the more typical person approaching retirement, not the best cases. The best cases may be prettier, but they’re not entirely relevant to the average person who is far more likely to enter retirement having to make compromises.

    Part of the problem is fundamental – those best prepared for retirement will be those who begin preparing early in life. But that’s also the time of maximum distraction. Along the way, there are children, divorces, job losses and financial crises. By the time a person reaches the age where retirement is on the horizon, they are already “damaged goods” from a planning perspective. I’d much rather reach out to that group. The ones with the high six and seven figure investment portfolios don’t need advice anyway!!!

  38. Just a kind word to “Ken” who wrote: “What have you been doing with your life to be over 50 and have no retirement savings? Very poor planning, I say.”

    Ken, “stuff” happens in life. I was the only child with two elderly, very elderly parents. I chose to live at home to better tend to them. I supported myself with writing and so early retired at 62. I did most anything I could do so not to put them in a nursing home.

    I refinanced twice the house so to be able to pay for proper nursing care around the clock. I eventually lost my mother, lost the house and filed Chapter 7–all in one month time. All this took its toll on my health still 4 years after the fact.

    I asked no one for help because God gave me His strength and grace–not Uncle Sam or anyone else’s uncle. The experiences I learned were many, but primary was not to judge anyone else until I walk in their moccasins.

    I also learned to be a little more compassionate.

  39. Hi Ladywiz – I’ve come to realize that sometimes people have overwhelming circumstances that prevent them from leading the “recommended” lifestyles. There’s a mindset that we can be masters of our own destinies, and while I believe we do have some control over the future, it’s far from absolute.

    As to Ken, let’s try not to be too judgemental. There are millions of people who share his outlook – I know because there was a time when that was mine too. We should consider ourselves blessed to have developed enough humility to see past that. A lot of that thinking is societal/indoctrination, and some of it comes from having avoided the kinds of hardships that would create humility in the first place.

    At this point in my life – and in my faith walk – I’d rather be dirt poor and humble, than sitting in judgement from the comfort of the ivory tower. Eventually, you do come to realize that life isn’t perfect, that people make mistakes, and there but for the Grace of God go I.

  40. I am terrified. I am 52, earn about 75K a year, and am about to get divorced and move back to Pennsylvania.

    We were in a lawsuit 15 years ago that put us in $100,000 of debt. Since that time my husband has been depressed and has been out of work more than at work. I have worked hard (sometimes 3 jobs) and went back to school at 45 to increase my income to make up the difference, pay off our house and debt.

    My husband is 64 and has no plans of going back to work. Tells me he wants to collect SS at 65 and maybe get a part-time job. We each have about $60,000 in retirement funds and we own our home worth about $350,000.00. We also owe about $30,000 in credit card debt.

    If I stay married I know he will not participate in saving for my retirement and will buy junk off the internet and play his lottery and keep spending as fast as I can bring money into the household.

    I will have to split the proceeds of the home with him and am not sure if I will be required to pay alimony. I am good with money, but I also own 2 horses, a dog and 2 cats that will be my responsibility.

    Is there any hope that I will be able to retire ever? Have thought about taking the proceeds of the house and buying something that I could flip for a fast turnaround and if I could do it a few times maybe I could get a place where I could keep my horses at home – board is expensive – about $550 a month for 2 horses. That or maybe getting a place where I can have my horses and a rental unit that would provide the income needed to pay the remaining mortgage.

    Already have a second job planned – a color consulting business, but it will take time to build and won’t ever be big money. Figure I can pull in an extra $1000 a month with this. A place for me and my horses will run at least $300 K.

    Just don’t know what to do or how to figure it out. I am sick thinking that I may need to give up my horses. I never had kids and I have had them since they were babies. Giving them up would kill me.

  41. Sounds complicated, there are a lot of human nature issues involved. I think you need to consult with an attorney, especially one in Pennsylvania, since that seems to be where you’re headed.

    For what it’s worth you’re better off than a lot of people. You have a house, some money saved and a good income, and you’re only 52. It mostly sounds like you need to set a course and follow it for the next 13 years or so.

  42. Thank you Thank you Thank you! I found a ray of Hope from You for the first times in three years…I will post my story in a few days :) – 58 yo single female & College grad/ recent new empty nester who has been on temp disability for 5 years! Intact thank all of you :)

  43. 49 yr old married woman here, new business, no 401k, pension or property owned. Two years ago, fed up with corporate politics, I resigned a six figure income and cashed out of my feeble 401k to start my own business. I’ve got about 30k in a savings account, do not own any property and a 16 yr old heading for college in a little over a year. His tuition is covered by a plan I bought years ago. I figure saving 32k per year from here on would set my husband and I up for retirement, am I a fool? I worry every day to the point of crazy. The rut consumes my brain 24/7. I feel like the rate we are going will end up under a bridge. PS: Have about 55k in debt including a zero interest car loan. Is this really me approaching 50?

  44. By the way, our combined income is about 120k with 6k per month expenses. Do I have a prayer of ever retiring?

  45. Hi Leslie – “Is this really me approaching 50?” – that’s a question a lot of people ask themselves these days! It’s a variation on the question “What will I be when I grow up?” That question used to be restricted to kids and teenagers, now I think it follows us all our lives!

    I think you’re worrying too much, and that won’t help your dilemma one bit. You have a few things going for you, like a healthy income and relatively low expense level that leaves more room for savings. It also appears you have your son’s education covered.

    Loosely, I’d focus first on paying off the 55k in debt, even the part that’s zero interest. Debt payments consume income, and paying them off leaves you with more money to save. Pay it off out of your paychecks, and leave your savings intact – you may need that. The acceleration of debt payments will help prepare you to increase retirement contributions – and it seems that’s a weak spot in your finances. Once the debts are paid you simply redirect payments into retirement.

    With an income of 120k, I’m guessing you’re losing maybe 30k to taxes. That will leave you with 18k per year to contribute to retirement, which isn’t bad at all. I’d look for ways to lower your 72k in living expenses to free up more for retirement. The payoff of your debts will help with that.

    Plan to delay your retirement to age 70 – that will give you about 20 years to save and invest. It will also increase your Social Security benefits substantially, and lower the amount of time you will be drawing funds out of retirement savings.

    One caveat – don’t be over agressive investing in stocks. The market is looking rich at nearly 16,000 DOW, and if there’s a major slide, you won’t have a lot of time to recover the loss.

    Your business presents two opportunities. Depending on what kind of business it is, you may be able to sell it for a substantial windfall. If not, you may be able to downshift it into a side business to supplement your retirement income once you retire from full time work.

    Overall, with some planning and effort, you should do fine.

    Does that help?

  46. I am 51 no retirement saved, none. Home will be paid off in 10 yrs. Home will be worth about 150,000. Primary home. Have a new chance to start a 401 k at new job, Im a waitress. They match up to 8%, fully vested after 3 years…..,,,should I start the 401k plan now at the age of 51? Or is an IRA better? Married with 18 an 11 yr. Old sons….. oldest doesnt have college on his mind, youngest probably will….. whats the best option? Been a waitress gor 30 yrs. But first chance gor a good 401k.

  47. I can’t see what dates these were posted, but in reply to Jim who has 650,000 funds – if you can release those funds you can buy six houses which you can rent out and on which it should be possible to clear £500 net on each house – permanently – oh and this goes up as rents rise. Use your imagination. Oh and when in 10 years the value of the houses practically double ………….. there is plenty of money around – we just need to tap into it

  48. Hi Jean – Though I’m not sure of the numbers you present, I do think that well priced small residential income properties are one of the very best ventures for a would be retiree. Not only will it provide a cash flow, but it’s laregely self-adjusting where inflation is concerned. That’s an issue most retirement planners largely ignore.

  49. This doesn’t take into account Corporate America’s mandatory retirement at 50 program.

    Unless the government is willing to set up work camps for those 40 and older who lose their jobs, everyone will have spent what meager crumbs they have managed to save since their 20s (I’ve always been miserly and never spent up to my income when I had it).

    Every article talks about boomers retiring at age 65 to free up jobs for Millennials. But what about the Boomers that are only 50. I am hardly some doddering old lady but that is how the world is certainly making me feel by insisting on calling everyone over 50 a “Senior.” I would argue that I have way more computer knowledge than the average kid that gets hired over me.

    End of rant.

  50. I don’t think you’re necessarily ranting, at least not without reason. Turning 50 these days, or even approaching it, is like the employment kiss of death. There just aren’t a whole lot of options. If the millenials think they have it tough in their 20s and early 30s, just wait until they start hitting that half century mark. It will be even worse if they haven’t established themselves in a solid career or built a firm financial base.

    I think it comes down to building skills, and/or building a business. Both will keep your options healthy for the rest of your life. It’s not the world or even the economy that’s excluding people over 50, but a system infatuated with youth – not the least of which so it can pay lower wages. That’s a dilemma that affects all age groups.

  51. 5-2014 Not sure when this thread started. Seems would be good place to offer tips and support to late start retirement savers. Wish I would have started way earlier but have to have the belief later is better than not at all. Started close to age 48 and 55 now and have almost $45,000. Will keep going at it as long as I can. I’ve turned into somewhat of a tightwad because every thing I spend money on now I take from the future sli purchases are considered carefully. Cut back on everything it helps! Once you get the ball going you think of other ways. I even check out movies from the library as it is free. I’ve opened up bank accounts because they give me money. Any unexpected money goes to savings like a little tax return etc. That money will earn some money. it will all count

  52. Hi Cherion – Pat yourself on the back for starting to save when you did. $45,000 may not seem like much money for retirement, but it’s a whole lot better than having none at all. At a minimum, it’s a solid emergency fund for retirement, and you’ll need one of those. But keep building it up and maybe postpone retirement until you turn 70. You might be amazed at how large it will get by then. Meanwhile, work on ways to have extra income in your retirement years, that way you aren’t completely dependent on your savings alone.

  53. This is the best article I’ve read on retirement. EVER. Thank you Kevin for finally writing something that truly applies and that truly matters. You’ve confirmed all that I’m doing and thinking. And YOU are the first to do this.

  54. Wow Barbara, I’m speachless! In a way your comment is a sad testimony to the times. A lot of people SHOULD be writing about this, not the least of which since it’s not at all an uncommon experience. But too much of what’s out there in the media, the financial press and even on blogs is canned/recycled feel-good crap that paints a perfect picture of life. Reality however, often takes us in a different direction, and I’m not sure people know how to cover that.

  55. Husband and I are both 51 years old and very late with taking care of personal finances. For the past few years, we have lived frugally, and now have yearly income of $75K plus benefits, and about $6000 in emergency savings. We have paid off every last penny of debt and have good credit ratings. My job is going to HSA-based health insurance in 2015 so I will have to save $5000 for that and keep it filled every year. I currently have $40K in my 401K and contribute 4% with a company match of 2%. I plan to increase this to 8% over the next few years. We give about 1% of our income to charity.
    However, we rent and do not own a home. We also expect to help our two children (aged 18 and 15) through college, giving each at least $5000 a year for four years. (Totalling $40000 over the next 7 years).
    I plan to work until age 70. I will get a tiny ($100 a month) pension from a past part time job, social security of about $2000, and the rest has to come from what I save in the 401K.
    I want to buy a modest home soon, with a 15 year mortgage, and I am a first time homebuyer so should be able to do it with $5000 or so down.
    Any advice?

  56. Hi Irene – It sounds like you’re on the right track. You don’t mention what your husband is doing in the cause of financial security – is it over and above what you’re doing, or are you including that?

    One thing I would be on the lookout for, more because you are both over 50, is the potential for over-consumption. That owes to the twin financial burdens of paying for your kids in college and buying a house, especially one with a minimum down payment. You could be entering a period of high consumption that will compete heavily with your retirement planning. I’m not saying that will be a problem, only that the dominos could be lining up that way. Buying a house creates unexpected expenses, and actually, so does college. (BTW, excellent job keeping a lid on college costs – I’m presuming they’ll be attending community colleges?)

    Two questions: 1) Can you get the kids to help pay for college, and 2) why are you planning to buy a house, especially since you’ll soon be empty nesters?

    This is just my opinion, but if you’re going to buy a house with a minimum down payment, that’s not a whole lot different from renting. It’s risky in todays economy, even if the bank says you’re qualified for the loan.

  57. Thanks for the quick response. My oldest is enrolling in a bachelors degree program where she does 2 years at Community College (costs about $5000 a year), then 2 years at a State University ($15,000 a year last time I checked). Yes, she will have to get a job and/or financial aid for the last two years, but I am going to encourage her to never take more than $10,000 in student loans. My youngest really dislikes school and may and up doing a job-oriented community college associates for auto repair, computer help desk, culinary, etc. so I don’t foresee big expenses for him.

    My husband has been disabled for 3 years and is a stay-at-home-dad for now, but wants to start a photography business, and I don’t include that in our financial planning. Any extra money he makes will be put into a vacation and travel fund for us.

    We want our own home so that we don’t have to pay rent forever. I know we will need an emergency fund ($10K is what I plan to have)to cover all of the usual home repair, and that we’ll have to pay annual taxes on it. Do you think that waiting until we have a full 20% down makes it better than renting?

  58. Wow, you’re really well planned out. I completely agree on the $10,000 student loan limit. That’s basically a modest car loan in size, and far more reasonable that the norm. I get what you’re saying on the owning part. If you can put 20% down and use a 15 year loan, you’ll be mortgage-free by the time you retire. That’s a huge advantage, but just make sure that you buy beneath your means, not above it, so you’ll always have room in your budget.

    My reason for challenging you on the $5,000 down payment is that we’re really living in a time when you have to minimize debt. It’s a completely different economy than it was 10-15 years ago. You’re heading in the right direction across the board, and I’d hate to see you and your family ending up being “underwater” on your house when the next recession hits. I know that people have played the minimum down game for decades, but this isn’t a minimum down housing market, not any more. I hope you don’t take offense…

  59. Thanks for the encouragement. I definitely plan to wait until 70 which will give me about $1,500 (as current projection). Paying off debt to reduce monthly expenses. Squirreling away as much as I can and earning some interest on CD’s (don’t really want to do the stock market).Even since my first writing I have increased to nearly $48,000. What I suggest to some is get an extra job somewhere and designate that money for retirement savings. I work on Saturday’s even though I would prefer not to so my motivation is putting that money into retirement. Just get creative to where you can save. Cut back phone bill. Starting somewhere helps.

  60. Hi Cherion – Your advice is solid. I like the idea of creating a dedicated income stream to fund your retirement. That should build up the money quickly, as you’ve confirmed by the $3,000 increase in your savings in just a few months. I’ve actually written on creating dedicated income streams to payoff debt and to pay for health insurance, but the retirement connection is brilliant (thank you).

    The good thing about using a part-time job for this purpose is that you can change the job from time to time to avoid boredom. You can also take time off every now and again so you don’t burn out.

    It’s a perfectly rational and responsible strategy to fast-forward savings, contrasted to a world where people only seem interested in easy solutions.

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