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If you retired in 2021 or before, your nest egg might have seemed big enough to carry you into eternity. But the downturn of 2022 sent stocks deep into bear territory and annihilated the crypto market. At the same time, interest rates soared to 20-year highs as a remedy against inflation that remains at a 40-year high.
Today, you might be watching that once-proud nest egg dwindle with terrifying speed as you stress about having no money in retirement.
If you’ve already retired and your accounts are shrinking faster than you ever thought possible, consider the following options.
Stop, Breathe and Call a Professional
If you’re struggling to make your money last in retirement, it’s not necessarily because you planned poorly, but seek professional help the second time around — you probably won’t get a third crack at it.
Money struggles come with high stress and grinding anxiety, especially when you’re not earning a paycheck. Considering your situation, you’re susceptible to making emotion-based financial decisions that will probably only dig you deeper into your hole.
Before you do anything, seek out the services of someone who specializes in your situation like a:
- Certified financial planner (CFP) with expertise in retirement planning
- Chartered retirement planning counselor (CRPC)
- Retirement income certified professional (RICP)
- Chartered retirement plan specialist (CRPS)
Are You Retirement Ready?
Sell, Move or Downsize
If you own a home, you probably gained a good amount of equity thanks to the record hot market that defined the last few years. If you’re house rich and cash poor, you might have to bring some balance to that equation even if you had planned to age in your home.
Rising interest rates are squeezing buyers out of a cooling market. According to Forbes, home prices are already lower than they were in the spring — but lower only from their historic highs. You still have time to cash in on the appreciation that the pandemic market built.
That leaves the options of downsizing to a smaller house, downsizing to renting an apartment or — if your lifestyle and sale price allow for it — moving to a place with cheaper housing and a lower cost of living.
Consider a HECM
Reverse mortgages can give some retirees a way to access their equity to use as income and pay their expenses while remaining in their homes. They’re not for everyone, and it’s an industry teeming with misinformation, so if you’re considering it, consider a Home Equity Conversion Mortgage (HECM) first.
HECMs are the only reverse mortgages insured by the federal government. They’re available only through an FHA-approved lender, and there are rules and qualifying factors that are different for different homeowners, but they can give you a financial out and let you keep your home. If you meet certain qualifications, you can even use money from a HECM to purchase a primary residence.
Are You Retirement Ready?
Take On a Housemate or Become One Yourself
The right housemate can take pressure off your budget and brighten up your life with the gift of good company — but how do you find the right housemate?
Senior Homeshares is designed specifically for older adults — retirees, empty nesters, widows and widowers, etc. — looking to move into someone’s home or have someone move into theirs. It’s a full matchmaking service powered by an algorithm designed to find you just the right housemate for your lifestyle and situation.
Sell or Borrow From a Life Insurance Policy
If you have a permanent universal or whole life insurance policy, you might be able to borrow from it to pay for your daily needs. They’re often called cash-value policies because they have a cash value that builds over time.
According to Guardian Life, every insurer has different rules, but many will let you borrow from your policy. No money comes out of your policy — the insurer lends you the money with the policy’s cash value as collateral. You can typically borrow up to 90% of the policy’s value, and unlike most loans, you don’t have to say what you plan to do with the money and there’s no set repayment period.
It is a loan, so you are charged interest, but the money that you leave in your policy earns interest in a tax-favored account.
Re-Enter the Workforce or Pick Up a Side Hustle
Although it’s easy for going back to work to feel like taking a step back, you might have to create a new income stream — at least until the market rebounds — to protect what you have left. The following sites are designed specifically to help seniors and retirees looking to re-enter the workforce or start a side gig, either from home or on-site:
Are You Retirement Ready?
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FAQs
You may need to make financial & lifestyle adjustments
- Set a detailed budget to minimize expenses. ...
- Downsize your home. ...
- Continue working. ...
- Take advantage of tax-advantaged retirement plans. ...
- Open a traditional or Roth IRA.
If you run out of money in retirement, there are still options for you to get enough money to live off. However, you may need to make lifestyle changes that reduce your quality of living, such as going from a house to an apartment or selling your car and walking to places.
What to do if you are 60 and have no retirement savings? ›
Experts say you should have 10 times your income saved to retire by age 67—here's what to do if you aren't yet there
- Estimate your retirement savings and income needs. ...
- Stay relevant in the employment market. ...
- Write out your retirement strategy. ...
- Catch up on your savings using tax incentives. ...
- Seek professional financial advice.
Unless you have a secret plan to get free money or you're lucky enough to hit the lottery, not saving enough for retirement will leave you scrambling to get by in old age. At the very least, you'll need to work longer or make serious adjustments to your lifestyle to get by.
How many people retire with no savings? ›
Nearly 2 in 5 Retirees Have No Retirement Savings.
Is 60 too late to start saving for retirement? ›
So no, it isn't too late to start. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. Regardless of what you commit to saving now, it is unlikely that your savings alone will support you. I don't say that to be discouraging.
What is the $1000 a month rule for retirement? ›
The $1,000-a-month retirement rule says that you should save $240,000 for every $1,000 of monthly income you'll need in retirement. So, if you anticipate a $4,000 monthly budget when you retire, you should save $960,000 ($240,000 * 4).
How long will $400,000 last in retirement? ›
Safe Withdrawal Rate
Using our portfolio of $400,000 and the 4% withdrawal rate, you could withdraw $16,000 annually from your retirement accounts and expect your money to last for at least 30 years. If, say, your Social Security checks are $2,000 monthly, you'd have a combined annual income in retirement of $40,000.
How long will $500,000 last in retirement? ›
Yes, it is possible to retire comfortably on $500k. This amount allows for an annual withdrawal of $20,000 from the age of 60 to 85, covering 25 years. If $20,000 a year, or $1,667 a month, meets your lifestyle needs, then $500k is enough for your retirement.
How many 60 year olds have nothing saved for retirement? ›
About 27% of people who are 59 or older have no retirement savings, according to a new survey from financial services firm Credit Karma. To be sure, that's the same share as the overall population, yet boomers have less time to save for retirement given that the generation is now between the ages of 59 to 77 years old.
For most retirees, Social Security and (to a lesser degree) pensions are the two primary sources of regular income in retirement. You usually can collect these payments early—at age 62 for Social Security and sometimes as early as age 55 with a pension.
What is the least amount of money you need to retire? ›
Some experts say to have at least eight to 10 times your annual salary available to you once you enter retirement. Others say you need at least 65% to 80% of your pre-retirement income available to you each year. There are also general savings recommendations by age, and, finally, there's the 4% rule, too.
How much do most Americans retire with? ›
The answer depends almost entirely on you, your habits now and your plans for later,” the financial services firm noted on its website. Data from the Federal Reserve's most recent Survey of Consumer Finances (2022) indicates the median retirement savings account balance for all U.S. families stands at $87,000.
Is it normal to have no savings? ›
Up to a third (34%) of adults had either no savings (or less than £1,000) in a savings account. Around six in 10 (61%) UK adults save money either every or most months. Almost two-thirds (65%) of people believe they wouldn't be able to last three months without borrowing money.
How many Americans have no savings? ›
As of May 2023, more than 1 in 5 Americans have no emergency savings. Nearly one in three (30 percent) people in 2023 had some emergency savings, but not enough to cover three months of expenses. This is up from 27 percent of people in 2022. Note: Not all percentages total 100 due to rounding.
Can I retire at 60 with 300k? ›
£300k in a pension isn't a huge amount to retire on at the fairly young age of 60, but it's possible for certain lifestyles depending on how your pension fund performs while you're retired and how much you need to live on.
How much money should a 70 year old have to retire? ›
How Much Should a 70-Year-Old Have in Savings? Financial experts generally recommend saving anywhere from $1 million to $2 million for retirement. If you consider an average retirement savings of $426,000 for those in the 65 to 74-year-old range, the numbers obviously don't match up.
