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3 Things to Do if You're in Your 50s With No Retirement Savings

By Kailey Hagen - Mar 20, 2020 at 6:15AM

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It's time to get serious about retirement planning.

We tend to think of 50-somethings as getting close to retirement, but for those who don't have any savings, the sight of the finish line can be more anxiety-provoking than exciting. If you fall into this group, it's unrealistic to expect that you'll be living in the lap of luxury, unless you win the lottery. But saving enough to cover your basic living expenses may still be possible if you plan carefully.

You'll have to make some significant changes, both to your lifestyle today and to your retirement plan. Follow the three steps below to get your retirement back on track.

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Image source: Getty Images.

1. Trim back your budget as much as possible

Saving for retirement is impossible if you don't have extra cash you can set aside every month, so finding that spare cash is a crucial first step. Try to do that by making small lifestyle changes first, like cutting back on discretionary purchases. This includes dining out and paying for streaming services. You should also look for ways to reduce your essential expenses, like keeping the thermostat a few degrees higher or lower than normal to reduce your electric bill. 

If you have high-interest debt, prioritize paying that down so you can use the cash you're currently putting toward debt repayment for retirement savings once you're debt-free. A balance-transfer card or a personal loan are great options for getting rid of credit card debt. You might also try refinancing installment loans, like student loans or car loans, to get a lower monthly payment, though if you extend your loan term, you'll end up paying more overall. 

When small changes won't do it, you can try more drastic moves, like moving to a smaller home in a more affordable neighborhood. It's not ideal, but it's worth it if it enables you to build a nest egg that you can rely on. 

2. Seize every opportunity to increase your income

Regardless of how much you can cut your expenses, you should try to increase your income as another means of generating more cash for retirement. There are several ways to do this. The easiest is to negotiate a raise at your current job or try to get a promotion so you can get more money coming in without having to spend more time at work. You could also try switching employers if you can get a more competitive offer elsewhere.

When that isn't an option, you can try working overtime at your existing job or taking on a second job. This could be a job with regular hours or a side gig that enables you to choose when you'd like to work. If you decide to go with the latter, you must remember to set aside money for taxes and pay them quarterly because you don't have a regular paycheck the government can take money from. 

3. Redo your retirement plan

In all likelihood, you're not going to be retiring in your 60s if you're in your 50s without any savings. So if that was part of your original retirement plan, you'll have to make some changes. And if you've never created a retirement plan before, now's the time. 

Start by estimating how long you're going to live, figuring high just in case. Then, figure out approximately how much you expect to spend per year in retirement. You can choose your preferred retirement age to start with, but know that you might have to change this if your chosen age proves to be unrealistic. Use a retirement calculator to estimate how much your retirement could cost. If it asks, use 3% per year as your inflation estimate and 5% to 6% per year for your annual investment rate of return. Your money might grow more quickly than this, but you want to be prepared in case it doesn't.

When you have your total estimated retirement costs and your monthly savings goals, subtract any money you plan to get from Social Security, a pension, or a 401(k) match to figure out what you must save on your own. Try to save at least this much per month if you can after making the budget changes discussed above.

If you can't save as much as you need each month, delaying retirement can help. This gives you more time to save while also decreasing how much you need to save. If you plan to delay retirement, make sure you're prioritizing your health. A serious illness could prevent you from working longer even if you'd like to. By eating right, exercising regularly, and developing healthy ways to manage stress, you can reduce the risk of being forced into early retirement.

Your company might offer a 401(k) for you to keep your savings in, or you can open an IRA on your own. Adults 50 and older may contribute up to $26,000 to a 401(k) in 2020 and $7,000 to an IRA. These contribution limits may go up over time, so check on them every year to see how much you're allowed to contribute and max them out if you can.

If you're in your 50s without savings, retirement might not be what you'd hoped when you were younger. But you still have time. Follow these three steps and check at least once per year to make sure you're still on track.

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