Seniors who have not saved extra for retirement, and who still own homes, can turn to their homes as a source of income. For some, this could mean renting a portion of their space as a separate apartment. For others, it could result in taking on a roommate. Both can be fraught with risks.
In fact, if you've reached age 65 with little-to-no retirement savings, you're in good company. Some reports claim that as many as 42 percent of Americans retire with $10,000 or less. But there's some good news. Even if you have no retirement savings at age 65, there are things you can do to change that.
30% of Retirees Have No Savings -- Here's Why That's a Problem.
13 percent of Americans 60 years or older did not have any retirement savings as of January 2020. The share of individuals without retirement savings increased with the younger age groups, and among individuals from 18 to 29 years old, 42 percent did not have retirement savings.
With the average monthly benefit at $1,523, retirees who rely on Social Security to pay for all of their living expenses are on very tight budgets. There are plenty of discounts and perks seniors can take advantage of once they do retire, allowing them to live a rich life with limited funds.
If an elderly person has no money and no family to assist them, and they encounter a health emergency that prevents them from living alone, they may become a ward of the state. A guardian will be assigned to help make decisions about their living situation.
Running out of money usually means that you have used up all of your retirement savings and your home equity and are left with whatever income streams you might have — Social Security or a pension if you are lucky.
It's never too early to start saving, of course, but the last decade or so before you reach retirement age can be especially crucial. By then you'll probably have a pretty good idea of when (or if) you want to retire and, even more important, still have some time to make adjustments if you need to.
Can You Collect Social Security at 62 and Still Work? You can collect Social Security retirement benefits at age 62 and still work. If you earn over a certain amount, however, your benefits will be temporarily reduced until you reach full retirement age.
How much retirement should I have at 60? A general rule for retirement savings by age 60 is to aim to have about seven to eight times your current salary saved up. This means someone earning $75,000 a year would ideally have between $525,000 to $600,000 in retirement savings at that age.
On average, Americans have around $141,542 saved up for retirement, according to the "How America Saves 2022" report compiled by Vanguard, an investment firm that represents more than 30 million investors. However, most people likely have much less: The median 401(k) balance is just $35,345.
1. Mississippi. The Magnolia State may be a viable choice as you plan your retirement and look for a place to settle down. It has mild winters and costs less than the national average to live here.
While mortgage rates are currently low, they're still higher than interest rates on most types of bonds—including municipal bonds. In this situation, you'd be better off paying down the mortgage. You prioritize peace of mind: Paying off a mortgage can create one less worry and increase flexibility in retirement.
But if you can supplement your retirement income with other savings or sources of income, then $6,000 a month could be a good starting point for a comfortable retirement.
Just how much does the average 60-year-old have in retirement savings? According to Federal Reserve data, for 55- to 64-year-olds, that number is little more than $408,000.
That goes for savings, too: just 5% of millennials and 13% of baby boomers are prioritizing their retirement savings, according to a recent survey by Time2play. Additionally, 44% of millennials and a third of baby boomers have no retirement savings at all.
Probably the biggest indicator that it's really ok to retire early is that your debts are paid off, or they're very close to it. Debt-free living, financial freedom, or whichever way you choose to refer it, means you've fulfilled all or most of your obligations, and you'll be under much less strain in the years ahead.