Retirement Savings: How to Retire With No Money
If You Have Little Retirement Savings, Then Read This
“I have no retirement savings. How do I stop working?” “How can I pay my mounting medical bills?” “Am I going to have to work as a Walmart greeter?”
I often receive e-mails from readers struggling to get by. Mounting expenses make it hard to pay the bills each month, let alone put aside money for retirement.
If you’re in this group, you’re not alone. Around four in 10 Americans have less than $10,000 in retirement savings, according to a recent survey. A shocking 13% of respondents have stashed nothing away. (Source: “Survey Finds 42% of Americans Will Retire Broke — Here’s Why,” GOBankingRates, January 16, 2019.)
I would love to say, “Sign up for one of my trading advisories.” We designed these services to generate large, fast profits. A well-timed options trade can generate a windfall for investors.
Honestly, though, I couldn’t sleep at night giving out that advice. Desperate investors make bad decisions. That can—and often does—result in huge losses.
Unfortunately, you won’t find a magic formula to build an overnight nest egg of retirement savings. It doesn’t exist.
That said, the situation is far from hopeless. By taking steps today, you can dramatically improve your financial position in five or 10 years’ time. It’s still possible to enjoy retirement on your terms.
Here’s my last-minute retirement savings game plan:
Earn Extra Income: I know working doesn’t sound too enticing, especially if you’re older. But even a little extra income can make a big difference in your retirement plans. And you don’t need to stock shelves at Costco either. Love kids? Consider tutoring. Good with dogs? You can make good money pet-sitting. My neighbor always had a talent with a camera; he now makes a five-figure income working part-time as a wedding photographer. This small business funds his retirement while he gets to do what he loves.
Write a Monthly Budget: Most people don’t create a monthly budget. Most people don’t track their expenses. And most people are broke. You don’t want to be “most people.” Writing out a budget each month is the only way to get a handle on your finances. It allows you to control your money rather than your money controlling you.
Slash Expenses: Review your budget and figure out where you can slash costs. Do you have a cable TV package? Maybe basic cable will do. Do you have a home phone and a cellphone? Now might be time to get rid of the landline. Do you have too much life insurance? Aside from replacing income and covering funeral costs, you don’t often need to buy expensive policies. Making a few changes here could save you thousands of dollars each year and add a lot of breathing room to your finances.
Use Cash: Credit and debit cards make paying for things convenient. Too convenient, in fact. When you pay for things by card, it doesn’t trigger anything in your brain. That makes it easy to overspend. But when you pay for items with cash, it actually sparks pain receptors in your prefrontal cortex, and that uncomfortable moment makes you reconsider impulse purchases. When I switched from cards to cash, my monthly spending dropped 12% immediately.
Consider Moving: Where you choose to live can make or break your retirement plans. If you live in high-cost states like California or New York, then you can trim thousands of dollars from your monthly budget by moving. Not to mention the savings from state income and property taxes. Take a look around: you can find dozens of states with lower housing prices and taxes. In these places, your retirement savings will go much further.
Invest Your Savings: The biggest mistake retirees can make? Betting the farm on a risky investment strategy to play catch-up. One bad bet will end your chances of a comfortable retirement. Instead, stick to high-quality investments. If you’ll need money soon, look at bank certificates of deposit or a high-yield money market account. Interest rates have risen substantially in recent years, so you can often find great yields by shopping around. If you have more time on your side, consider blue-chip dividend stocks. High-quality businesses often raise their payout every year. These payouts can grow into substantial income streams, given a few years.
If you’re approaching retirement with little savings, I have good news and bad news. The bad news is you’re in a tough spot. You don’t have time on your side and you’re going to have to make big moves if you have any hope of a comfortable retirement.
The good news? You should have hope. I’ve met dozens of people who have turned their finances around even at an older age. By making a little extra money, starting to track your expenses, and investing in high-quality opportunities, you can get back on track.
You just need to follow a last-minute retirement savings game plan.