I recently ran across a post on social media from someone who was scared. She explained that she had $0 saved for retirement and was approaching age 50. I could appreciate her fear. She was probably despairing, perhaps assuming that most people were in much better shape than she was, financially.
She's actually not that unusual. Many millions of Americans have little-to-nothing saved for retirement. That's never a good situation, but for many of them, all is not lost. Many still have time to vastly improve their future financial security. If you -- or someone you care about -- are approaching retirement with little or nothing saved, read on, because things may not be quite as bad as you thought.
Image source: Getty Images.
You're not alone -- millions have under-saved for retirement
Check out the table below, which shows how much workers in America have socked away for retirement per the 2024 Retirement Confidence Survey:
|
Amount in savings and investments* |
Percentage of workers |
|---|---|
|
Less than $1,000 |
14% |
|
$1,000 to $9,999 |
8% |
|
$10,000 to $24,999 |
7% |
|
$25,000 to $49,999 |
7% |
|
$50,000 to $99,999 |
11% |
|
$100,000 to $250,000 |
14% |
|
$250,000 or more |
38% |
Source: 2024 Retirement Confidence Survey.
*excluding the value of a primary home
See? Those are rather alarming numbers. About one in seven workers has less than $1,000 saved -- which is, in the context of retirement, pretty much nothing. Nearly 30% have less than $25,000 saved -- which is, for many people, less than they'd need in a single year of retirement. And nearly half -- 47% -- have less than 100,000 saved.
Sure, some of these workers are still miles from retirement, but plenty are approaching it soon.
How to make your retirement better -- starting now
Fortunately, there are multiple steps you might take to strengthen your financial condition -- even if you're retiring tomorrow. Here are some:
Save aggressively and invest effectively
|
Growing at 8% for |
$7,000 invested annually |
$15,000 invested annually |
$20,000 invested annually |
|---|---|---|---|
|
5 years |
$44,351 |
$95,039 |
$126,719 |
|
10 years |
$109,518 |
$234,682 |
$312,910 |
|
15 years |
$205,270 |
$439,864 |
$586,486 |
|
20 years |
$345,960 |
$741,344 |
$988,458 |
|
25 years |
$552,681 |
$1,184,316 |
$1,579,088 |
|
30 years |
$856,421 |
$1,835,188 |
$2,446,917 |
|
35 years |
$1,302,715 |
$2,791,532 |
$3,722,043 |
|
40 years |
$1,958,467 |
$4,196,716 |
$5,595,621 |
Source: Calculations by author.
If you're approaching 50, you actually have a significant amount of time before you need to retire. If your health and employer permit, you might work up to age 70. In those 20 years, you may be able to amass retirement savings of $345,000, $741,000, or even almost a million dollars.
You just need to be very diligent about it and also invest effectively. Since few of us will ever become stock market geniuses, consider just sticking with one or more low-fee, broad-market index funds. Simple index funds can be all you need to build long-term wealth.
Consider working longer
One powerful way to bolster your savings is to work for a few years longer than you initially planned. Each year that you keep working, delaying your retirement, you can sock away more money, and your already-invested money will have another year in which to grow. Your nest egg will need to support you for one less year, too, and you may be able to remain on your employer's health plan longer.
Aim to delay starting Social Security
Each of us has a "full retirement age" at which we can start collecting the full Social Security benefits to which we're entitled based on our earnings history. For most of us, that age is 66 or 67. (It's 67 for those born in 1960 or later.) If you start collecting your benefits early, your benefit checks will be smaller, but you'll collect many more of them. Delaying beyond your full retirement age will beef up your benefit checks by about 8% for each year until age 70.
Decide when to start collecting Social Security carefully. There are good reasons to start early or to delay. If you can delay, you'll end up with fatter checks for the rest of your life, and each cost-of-living adjustment (COLA) will be bigger, too.
Explore lots of possibilities
There are plenty of other ways to generate more income for retirement, too. You might take in a boarder for a short or long while. You might relocate to a less costly region -- or country. You might look into whether a reverse mortgage makes sense for you. If you have a life insurance policy, you may be able to cash it in for some cash. If you're still able and active when you retire, you might take on a side gig for a few years, too, for additional income.
No matter your age, it's smart to start (or continue) thinking about retirement -- and to come up with a comprehensive retirement plan. The more steps you take now, the more financially secure and comfortable you can be later on.
