In a perfect world, a perfect retirement is possible. You’ll be just enjoying beaches and relaxing under the sun. Retirement is the time when your life begins. Unfortunately, that is just a dream. What we have in reality is somehow far from that dream and might even have a bleak of possibility that life will end in retirement. There is no way to put a happy face in reality of what your future will be because you are entering retirement at age 65 with no savings at all.
You are not alone. According to the 2017 Retirement Confidence Survey conducted by Employee Benefit Research Institute, many workers lack retirement confidence and feel stressed about retirement preparations. Only 24% baby boomers said they are confident that they will have enough savings that will last their entire retirement. The situation is even more challenging for women who will likely live longer than men. It means the nest eggs of women should be able to support them longer.
But don’t lose hope, there are still some few ways to improve your chance of having comfortable golden years. Some of them might not be easy to do, but a little effort will eventually pay off later.
What can you do to attain a satisfiable standard of living even if you have no retirement savings at 65?
Solution 1: Take charge of your health and healthcare
Healthcare is one of the major reasons why people struggle in retirement. This expense can even derail your entire retirement. According to a recent Fidelity Investment Study, a retiree can expect to spend about $245,000 or more on health care expenses. Face the fact, that’s a hefty amount you need to pay out of your pocket, and you don’t even have that many savings yet.
So the first thing you should do is come up with a healthcare strategy. How will you face your medical care needs once it arises in your retirement? How can you protect your savings against the staggering cost of medical bills?
Improve your health literacy. Know how you can manage your health in a better way. Track your medical history and see how you can avoid the health risks that you have. Leverage on the healthier side of lifestyle to keep yourself healthy. Being healthy will keep medical expenses at bay.
Utilize different healthcare options. Once you hit 65, you will be eligible for Medicare. Medicare will take care of your healthcare expenses which are very helpful in managing the costs, but it does not cover everything. You may be required to pay premiums on some part of your Medicare to enhance your coverage. You can buy a supplemental plan for Medicare to pick up the tab that the original Medicare did not cover. The out-of-pocket costs that will be left after Medicare has paid its share can still be more expensive than the additional premiums you’ll pay for the plan. You need coverage so you’ll have something to rely on paying your medical bills instead of depleting your savings.
Solution 2: Gather all your power to save
It is no brainer and not a secret at all. Saving is still part of the solution when you are cramming to sack up more money into your retirement fund. Yes, you have saved before, but this time, you have to do it extraordinarily, do it like there’s no tomorrow. Bring out all your willpower to be able to save as much as you could. Normally, one could save as much as 10% to 15% of pay into retirement accounts, since you don’t have the accumulated savings of someone in that position, you need to go beyond that range and strongly push yourself to save way even more than that.
This solution can be painful as it will require you to cut most of your present living expenses and change your lifestyle. It is tough, but there’s no other way around it. Just look at the brighter side, if there’s no pain no gain. If you are successful in stashing as much money as you could into your retirement savings, you can tidy up a helpful sum in your retirement.
Will being a speedster saver can make up the amount like if you have years of saving 10%-15%? Of course not, but doing it will give you a shot to attain a comfier post-work life than entering retirement without any savings at all.
Solution 3: Work longer
Being 65 with no savings, the combination of solution 2 and solution 3 can be your best shot at achieving a comfier and more secure life in retirement. Even if you do these solutions, you might still need to make some adjustments to your standard of living or downgrade something to sustain your retirement needs.
Working longer can also improve your retirement prospects. It can help you save more, and the savings you accumulate will have more time to grow, thus boosting the size of your retirement nest eggs. And because you are working, you can delay the time of withdrawing your Social Security benefits. Note that you can get 7% to 8% growth in your benefits each year you postpone your withdrawal. Wait until your full retirement age, which is age 70, before starting to withdraw so you’ll have a larger and better amount of benefits.
Also, working longer means you’ll still under the healthcare benefits that your employer provides. It can save you a lot of money paying your healthcare needs.
But what if the scenario is that you won’t be able to continue to work longer because of some reasons such as health issues. If that so, work hard to save as much as you can while you still have the opportunity.
Solution 4: Exhaust other resources
How awesome it will be if we are in a perfect world and we don’t have to make any sacrifices or experience any challenges just to have a successful retirement. Unfortunately, in our real world, we have to make the most of what we have, to grow our nest eggs and find ways to have a sustainable retirement income.
You can consider tapping into your equity by turning your home into money and fuel your retirement fund. You can downsize your home and opt for smaller one. That way you’ll also be able to save on maintenance and repair costs on smaller houses. If needed, consider a reverse mortgage.
Relocating to an area with low-cost of living is also a great idea. If you are willing to make such move, you’ll be able to stretch your savings and make it last longer.
Hope that you were able to pick up a buzzer beater solution to your retirement savings problem. One last suggestion, you may want to consult a financial or retirement planning advisor to help you find more ways to pump up your retirement nest eggs. They will be able to provide you a more comprehensive take and more personal solution to your financial challenges.