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Retirement Without Savings

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Tuesday, April 27, 2021

Conventional wisdom says you should have about ten times your annual salary saved by the time you head into retirement. So, let’s say for argument’s sake, your first salary was $50,000 per year. That means that by retirement you should have about $500,000 saved.

The sad truth is that Americans are pretty far off the mark when it comes to hitting that target. On average, savings range from about $15,000 for younger adults, up to about $170,000 for those in their 60s. So, what if constant bills and other expenses prevent you from saving a meaningful sum for your retirement? If that's the scenario you find yourself in and you're on the cusp of retirement, don't fret. Here are some options for salvaging your senior years in the absence of having a nest egg.

Social Security

Social Security is designed to pay you for life, and a higher monthly benefit could make up for a lack of retirement savings. So how do you boost your benefits? Answer: Delay your filing past full retirement age, which is the age at which you're entitled to your full monthly benefit based on your personal earnings history. For each year you hold off on claiming benefits past full retirement age, the Social Security Administration will increase your benefits by 8 percent. That incentive is only in play until you turn 70, so if your full retirement age is 67, the highest raise you can snag is 24 percent. But still, that's a good way to boost a pivotal income source.

Part-time employment

Keeping busy with a part-time job is a great way to maintain some sort of income to cover bills and living expenses. Not only does it fill the gap of absent savings, but it keeps the malaise of the unproductive at bay. Working will give you something to do with your time, thereby preventing you from spending money that you can't afford to use, just to stay busy. Best of all, in today's gig economy, working part-time doesn't have to mean standing on your feet operating a cash register, nor does it have to mean going into an office. You can sign up for a remote job or turn a hobby like knitting or crafting into an online income stream. Like meeting strangers or driving around town? How about becoming a part-time Uber driver?

Homeowners can rent

Seniors are often advised to downsize during retirement, but if you have a larger home that's all paid off and is relatively affordable to maintain (say, your property taxes are pretty low), then hanging on to that home and renting part of it out could be a better bet. That way, you'll generate regular income to supplement your Social Security benefits.

You might also be able to enter into an agreement where a tenant pays reduced rent in exchange for helping with maintenance and repairs. These tasks might otherwise prove challenging as you age and could be costly to outsource.

Entering retirement without savings is far from ideal, but it's a scenario that a lot of seniors are confronted with. These solutions, however, could be your backup plan. You may need to cut back on spending, but the point is, you don't necessarily need to wind up cash-strapped and destitute because you don't have money in a dedicated retirement plan at your disposal.





Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associatesdoes not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Lawrenceville, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 800-367-3000 Visit our website: www.davidlerner.com

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