When Is It Too Late To Have Nothing Saved for Retirement? (2024)

FAQs

When Is It Too Late To Have Nothing Saved for Retirement? ›

It is never too late to start saving money you will use in retirement. However, the older you get, the more constraints, like wanting to retire, or required minimum distributions (RMDs), will limit your options. The good news is, many people have much more time than they think.

Despite popular belief, it's never too late to start planning for your golden years. Of course, experts recommend beginning as early as possible, but even if you're a late bloomer to retirement savings, you can still make a difference for your financial future.

You may have to rely on Social Security

Many retirees with little to no savings rely solely on Social Security as their main source of income. You can claim Social Security benefits as early as age 62, but your benefit amount will depend on when you start filing for the benefit.

As many as 28% of Americans have nothing saved for their retirement, 39% aren't contributing to a retirement fund and another 30% don't think they'll ever be able to retire. That's according to a new GoBankingRates survey.

If you have nothing saved so far, start building your nest egg immediately. Consider changes to your plans, like working longer, holding down a part-time job as a retiree, or using your home as a cash source.

Without savings, it will be difficult to maintain the same lifestyle an individual had in working years. Some retirees make adjustments by: Moving into a smaller home or apartment. Reducing television or streaming services.

The $1,000 per month rule is a guideline to estimate retirement savings based on your desired monthly income. For every $240,000 you set aside, you can receive $1,000 a month if you withdraw 5% each year. This simple rule is a good starting point, but you should consider factors like inflation for long-term planning.

The study found that 57% of participants regretted not saving more, 40% regretted not buying Long Term Care (LTC) insurance, 23% regretted that they did not delay claiming social security benefits, 33% regretted not having purchased lifetime income payments, 10% expressed regret for having to depend financially on ...

Retiring with little to no money saved is not impossible, but it can present some challenges to your financial plan. Depending on where you're starting from, you may need to delay Social Security benefits, work longer, or drastically reduce expenses to retire with no money saved.

A general rule of thumb says it's safe to stop saving and start spending once you are debt-free, and your retirement income from Social Security, pension, retirement accounts, etc. can cover your expenses and inflation.

How much money do most Americans retire with? ›

The average retirement savings for all families is $333,940, according to the 2022 Survey of Consumer Finances. The median retirement savings for all families is $87,000.

“One in 2 people reaching retirement won't have enough and 1 in 4 seniors are in poverty measured by international standards,” Ghilarducci said.

Roughly one in seven Social Security recipients ages 65 and older depend on their benefits for nearly all their income, according to an AARP analysis. Unable to maintain the lifestyle of their working years, they trim their already trim budgets, move into smaller homes, or rely on the kindness of relatives to get by.

If you're an average earner, Social Security will only replace about 40% of your former income. So if you retire without any savings, you might end up effectively taking a 60% pay cut. At the start of 2023, the average Social Security benefit was $1,827 a month. That's an annual income of a little less than $22,000.

Elderly individuals who are unable to turn to family for financial support and have no money can become a ward of the state. This may be the case if the senior develops a health emergency and is no longer able to live alone.

Average monthly retirement income in 2021 for retirees 65 and older was about $4,000 a month, or $48,000 a year; this is a slight decrease from 2020, when it was about $49,000. In general, monthly income ranges somewhere between $2,000 and $6,000 a month.

But don't panic--it's never too late to start saving. You may still be able to secure a comfortable retirement for yourself, but you may have to make some tough choices to do so. Here are a few tips if you're getting a late start:Save as much as possible: The more you save, the more you'll have when you retire.

At age 50, you can start making extra contributions to your tax-sheltered retirement accounts (called catch-up contributions). Younger workers can only contribute $23,000 to their 401(k)s and $7,000 to their IRAs in 2024. But Americans aged 50 and up can contribute up to $30,500 in a 401(k) and up to $8,000 in an IRA.

Even if you're close to your retirement age, it's never too late to start saving. Rather than fear outliving your savings, take steps now to live better later.

If you retire with no money, you'll have to consider ways to create income to pay your living expenses. That might include applying for Social Security retirement benefits, getting a reverse mortgage if you own a home, or starting a side hustle or part-time job to generate a steady paycheck.