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  • Writer's pictureRobert Ryerson

No Retirement Savings? 5 Things You Need to Do Immediately

Updated: Feb 9, 2023

Planning for retirement is a complex practice that requires consideration of a variety of lifestyle factors. Conventional wisdom suggests that individuals should save enough so that they can comfortably spend at least 70 percent of their annual salary each year in retirement. This means those who made $50,000 per year should have a nest egg of roughly $1.05 million ($35,000 per year x 30 years) assuming they retire at 65 and expect to live on living another three decades.

While it's best to start saving and/or investing as early as possible, not everybody has that opportunity. Whether you're in your 30s, 40s, or 50s and have minimal or no retirement savings, it's important not to panic and remember you're not alone. A survey in 2019, for instance, found that 64 percent of Americans were at risk of having less than $10,000 saved by the time they reach retirement age.

Below are five steps you should immediately take if you've put off retirement planning and plan to start saving.

Meet with a Financial Planner

While it's possible to formulate your own retirement plan and invest at your discretion, it's a lot more efficient to meet with a professional retirement advisor. Certified Financial Planners with an emphasis in retirement planning can provide you with a detailed picture of your financial situation and present ideas on how to decrease spending and increase savings. They'll examine all of your budget, assets (investments, real estate, and pending inheritances, etc.) and debts (mortgage, credit cards, student loans, car payments) and help you craft a realistic retirement timeline.

Financial planners can also help you better understand taxes and provide suggestions to minimize tax payments on income and other assets. Advisors such as retirement planners can be paid in a variety of ways, ie. client fees or commissions from selling investments. It's important to conduct due diligence on advisors to not only know how they're paid but to ensure they're the right fit. Ask people you trust for recommendations and meet with several candidates before making a decision.

Budget and Cut Costs

Creating a detailed budget is an integral part of a retirement plan and, fortunately, financial advisors can help in this regard. It's especially important to draft and adhere to a strict budget if you're behind on saving. Consider all of the possible expenses you might have as you age, including healthcare and housing costs. A HealthView Services Financial report in 2019 suggested that a healthy 65-year-old couple is likely to spend in excess of $385,000 on healthcare costs, not including long-term care, in retirement.

From there, you can increase your monthly savings by identifying ways in which to cut costs. Consider carpooling if you drive to work or eliminating streaming services and other monthly expenses that you can go without. You can save upward of $100 per month on unused food items with a proper meal plan.

Pay Off High Interest Debt

As important as it is to keep monthly expenses as low as possible and start saving immediately, you should first prioritize paying off high interest debt. By doing this, you'll eventually have more cash to save. Start with credit cards as they generally have the highest interest rates (18 percent nationally) and then work toward paying off car and student loans.

The avalanche method is a popular and effective method for paying off debt on multiple credit cards. To do this, make the minimum monthly payment on all but the one card with the highest interest and then pay down as much as possible (more than the minimum) on that card until the debt is paid off. Repeat this process until all debts are covered.

Get Another Job or Consider Working Longer

You may have to pick up a second job or work longer than anticipated if you have yet to start saving for retirement. Consider picking up a part-time job and directing all of your earnings, if possible, into a retirement account. Alternatively, you may have to adjust your planned retirement date and/or continue working part-time in retirement to supplement your savings.

By working longer, you might also be able to delay Social Security payments, which has its benefits. While you can collect Social Security at age 62, those who wait until they are 70 receive an annual credit of 8 percent, meaning that the eventual benefit you receive can be quite a bit higher, and that the future cost of living adjustments ( COLAs) will also be more meaningful.

Consider a Reverse Mortgage

Reverse mortgages aren't ideal, but might be an effective solution if you're already at or nearing retirement age and have considerable equity in your home. By taking out a reverse mortgage, you'll receive monthly payments or a lump sum from a lender via a line of credit. The loan doesn't have to be paid back until you sell the house, at which point the amount used is deducted from the sale.

"Reverse mortgages are becoming much more attractive now since the HUD got involved in 2015 and changed the laws," notes retirement specialist Jody D'agostini. "Tapping your home equity is a viable option if you have less than $10,000."

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