50+ and Haven't Saved for Retirement? Here's What to Do

so you're 50 or older and you've saved little if anything for retirement what in the world do you do how do you get your retirement savings back on track that's the topic we're going to cover in today's video hey everybody my name is Rob Berger this is the Financial Freedom show where we talk about investing retirement and Financial Freedom if those topics are important to you I encourage you to subscribe to the channel I also send out a free newsletter every Sunday morning you can sign up for that with a link below this video I've received countless emails and I get this question in the live q a show uh that I do every other Monday here on YouTube uh what do I do I'm in my 50s some folks maybe even in their 60s I've got nothing safe for retirement or maybe very little is it too late for me should I just give up you know what what is my plan and so what I want to walk through in this video are sort of seven things that I would do if I were in that situation the things that I think can help you to get your retirement savings back on track so that you can have a comfortable retirement at a reason reasonable age so let's Dive Right In and the first thing I think in some ways maybe the most important is that I think it's really important to embrace the fire movement the fire movement fire an acronym for financial Independence retire early and uh it's a movement that's been around I would say roughly about a decade but the basic idea of the of the fire movement is hey I can save a lot of money think 20 30 40 even perhaps more of my income and uh maybe I'm in my 20s or 30s and I can retire in my 40s or 50s now I know you're in your 50s or 60s you're thinking Rob that ship has sailed for me I get it except that we can take the tactics and the strategies and and the motivation which is part of what goes on in the fire movement and apply it uh to our situation so that we can over a 15 20 maybe 25-year period catch up and get to where we need to be to have a comfortable retirement at a reasonable age so I really think it's important in in to embrace the fire movement in some way let me just show you a couple of examples real quick we'll start with Mr Money Mustache here's his site uh so Pete's the Blogger behind this site I've known Pete for a very long time he retired in his 30s he has great articles on this site that I think perhaps more than anything else are inspirational and and motivational but also include some good strategies and tactics there's also a forum on his site that I recommend and then there are a number of of uh places on Reddit that deal with fire or financial Independence the one I'm showing you is financial Independence and it's got just under 2 million members so this is a very active form again there are others but it's an example of how you can get tied in now keep in mind they're going to be 20 and 30 year olds on here complaining about work and saying I can't wait to retire when I'm 37. you can't let that get to you you've got to take the strategies the tactics uh The Willpower the motivation that you'll learn from these forms and from folks that are active in them and apply it to your situation the only other thing I'll mention maybe a quick pitch for my own book retire before my Mom and Dad I really didn't write this as a fire movement book it was really more of a do smart things with your money book at least that was my goal but the tactics we're going to talk about many of the tactics and strategies you'll see on those forums I write about in my book so that might be of use to you as well so that's the first thing embrace the fire Movement we can apply it to folks getting a late start in retirement savings now as we move on down the line to other ideas the first thing that comes to mind is that we've got a what we've got to reduce our spending as much as we can to increase our savings we want to get that savings rate as high as we possibly can well that's all fine and well but how do we do it and that brings me to the the second thing I want to share with you and that's I just call it think big I think it's really important to start with the big expenditures in our life yes you know there's the latte factor but let's start big and for most of us I think it's housing and transportation those are two of the biggest expenses I'm putting debt aside for a moment we'll we'll Circle back to debt in a minute those are the two biggest expenses I think certainly for us and I think for a lot of people and we really need to spend some time examining those expenses and figuring out how we can reduce those costs and I really think it's important to think outside the box just for a moment just you know put aside all of the limitations and start asking big questions what if we downsize now what if we move to a different house what if we move to a lower cost of living area we have two cars what if we get rid of one we have one car what if we get rid of that car these sort of big questions that if you're like me anyway you're probably gonna have a sort of a knee-jerk reaction like I can't do that I'm not going to move and I I need two cars but think through okay wait a minute what would be the consequences could we live with just one car my wife and I actually did that and neither one of us were convinced that it would work out well but I got rid of my car years ago and we lived for years with just one car and we're both surprised at how easy it was and it saved us a truckload of money now again every situation is different maybe you can't get rid of a car but we can think of other things maybe you can replace a more expensive car with a less expensive car maybe it's as simple as just figuring out a way to get your car insurance for less money maybe you can't move right now but you could put sort of the downsizing into the plan so that at some point maybe you move to either a smaller home lower cost of living area is part of the retirement this this gives you the potential to save big big money and that's why I don't think we should just gloss over and sort of just say oh I can't do that we can't we can't get rid of two cars and we can't change our housing again maybe right now you can't but I think it's worth going through it I'd like to show you something briefly I'll leave links to all of this by the way below the video this is net worthify it's very simple calculator that kind of shows you based on the assumptions how long it'll take you to retire so this assumes someone is got an annual income of 50 000 saves six thousand of it so it's just over I guess 12 percent uh annual expenses are forty four thousand just the difference and uh assuming an eight percent uh return on investments and you can see down here it's going to take them 35 we'll call it 36 years to retire now let's imagine we'll just get crazy and say they got rid of a car and that got rid of the insurance and the maintenance maybe there were some Uber rides that they had to pay for so they didn't save 100 of the cost but they saved a lot and let's assume they could save we added it all up it was five hundred dollars uh a month so they could double their savings from uh six thousand to twelve thousand so what would that do to the time it took them to retire they were at 36 years look at that now they're down to 26. still maybe two too long for you the point here is not that this is your situation point to make is we need to think about the money we can save in terms of the years it will take us to retire when we think about it that way I don't know if we could if we could get rid of a car get rid of the insurance save that money and and and shave 10 years off the time it would take us uh to retire maybe that's something that becomes a little more real again every situation is different you may go through this uh uh process and conclude you can't make any changes right now but I think it's worth seriously walking through each of those the housing and transportation costs and asking what can I possibly do to reduce those costs now that's number two number three deals with the small expenses and my Approach I call it the one and done method the idea is are there changes we can make just once that continue to save us money month after month after month I mentioned one earlier car insurance you know you shop around car insurance you find new car insurance and maybe saves you 50 bucks a month doesn't change your lifestyle at all car insurance is car insurance but you're able to save that and you save it month after month after month without any additional work you can do that certainly anytime you refinance debt to a lower interest rate that's going to save you money each month without changing your your lifestyle at all if you can reduce the cost of insurance go through and look at all of your subscriptions because they tend to sneak up on us we signed up for something and then we forgot about it and we haven't used it you know gym membership whatever it might be maybe it's a you're your seventh streaming service that you maybe you can think about maybe getting rid of if you're like me anyway but look at all of those sort of uh monthly expenses that you can make one decision one time get rid of them or reduce the cost doesn't change your lifestyle any you aren't using it anyway and then you can take that extra money and this is critical you want to take that money and automate it into your financial plan so that it automatically goes into your IRA or your 401k or perhaps to pay down debt this can make a big difference and I want to just show you briefly an example we're going to go to this calculator and let's imagine that let's just imagine we need three thousand dollars a month in retirement to live on in addition to Social Security well if that were true how much would we have to save well that's uh we can just multiply it by 12 to get thirty six thousand that's what we would need annually and as a rough rule of thumb using the four percent rule we'll multiply it by 25 and that tells us how much we have to save nine hundred thousand if we were to multiply that by four percent it would get us back to that thirty six thousand dollars a year so what what happens if we follow the one and done method but maybe we don't find a lot of savings we find a little let's say instead of three thousand we reduce that by we'll say 200 bucks so now we only need 2 800 a month times 12 times 25 remember was nine hundred thousand well now we've by making a what seemingly is a relatively small change in our spending saving two hundred dollars a month we've reduced what we are what we need to save to retire from nine hundred thousand down to eight hundred and forty thousand that's a drop of sixty thousand dollars it's something in my book I call the boomerang uh method it's because when you reduce your spending not only does that increase the amount of money you can save in this case we have another 200 we can save towards retirement but it also reduces how much we have to save before we can retire because we're now living on less so again if I were in that situation I would be going down the line line item by line item all my insurances all my debts and the interest rates I'm paying all of my subscriptions all the sort of monthly bills can I either get rid of them completely I just don't need them or at least reduce them and by the way feel free to experiment maybe you don't know if you want that extra uh streaming service well just turn it off for two weeks and then assess whether you miss it or not or cancel it you can always sign up again so that's the third thing it's what I call the one and done method I it it it's a way to deal with small expenses I think without driving yourself Crazy by worrying about every coffee you buy all right number four it's prioritizing there's going to be a lot of financial goals that were all uh dealing with and we need to get them in the right order and so I'll give you an example you may have debt that you're paying off at the same time you may have matching contributions for your 401k at work what what should get the priority and this is where I I very much disagree with days Dave Ramsey's approach I will say if you're 20 in your 20s and following Dave Ramsey's approach probably okay I guess but boy if you're in your 50s it could be a real problem you don't have time to spend the next decade just focused on debt that while you ignore matching contributions at your employer's 401k so I think the priority is very important and I'll start with the matching contributions if you have them at your work you absolutely have to do everything in your power to take full advantage of them you may not be able to just snap your fingers and do it today maybe it takes you a year or whatever to get to the point where you can save enough to maximize your employer's contributions but that has to be a priority I would put that as a priority over paying off certainly low interest debt of any kind for sure now if you have high interest debt I think the key strategy here one that we used was to use balance transfer credit cards to get that money off of credit cards that are charging you 15 or 20 or 25 percent and get them onto a credit card there may be a balance transfer fee of typically three percent but you're going to enjoy zero percent interest for 15 18 maybe even as high as 21 months again in the links below I'll leave a link to a list of of of what I think are the best balanced transfer cards but if you can do that and you can get your interest rates down then it helps you prioritize something like matching contributions over uh 100 focus on debt yeah you want to keep paying your debt down too and it's okay to pursue multiple financial goals at the same time I think that's normal but it's it's much easier to do that if the interest rates you're paying on your debts are reasonable and low the the third thing I'll mention when it comes to prioritizing it's going to be tough but remember we're talking to folks in their 50s or older who have fallen behind retirement savings you gotta prioritize yourself over other family members what do I mean by that I would not be saving for a child or grandchild's college education if my own retirement savings wasn't in order you're not going to do anyone any good to get to the to get to 65 or 70 and not be able to support yourself because you've loaded up the five the 529 for a a child or a grandchild those are certainly important things to do if you can but I really think you need to prioritize your own retirement savings first and once you get that where it needs to be then you can look to help other people with something like an education that might be a somewhat Contra controversial view but I firmly believe you got it you got to get your own Financial house in order first before you can help others all right number five and this isn't going to be for everyone but it's something that's helped me out a lot is that is to try to build a lifestyle friendly source of income now in my case I did that with this YouTube channel you may love to write and you can write for other websites and get paid to do that maybe you start your own YouTube channel maybe you start your own blog maybe you're in a business where you can do some Consulting on the site and you really enjoy it the point is whatever it might be if you can find a way to earn some side income particularly as you then transfer transition into retirement even if it's a relatively small amount of money it can go a long way in helping you retire on time again we're going to go to the calculator I can give you an example let's imagine you need five thousand dollars a month that's sixty thousand dollars a year times 25 that's a one and a half million dollars but let's now imagine you find a lifestyle friendly way to make not even a lot of money let's just say a thousand dollars a month that reduces what you need from your Investments to four thousand that's forty eight thousand dollars a year times 25 five we've just taken that 1.5 million dollar number we were trying to hit down to 1.2 million all because we earned an extra one thousand dollars a month doing some sort of side uh side hustle or a source of income doing something that we really enjoy and here's the thing it's not the kind of thing that I would wait until I retired to start thinking about if you're in your 50s or 60s now you've got 10 years before retirement 15 or 20. I think now is a good time to actually start thinking about it and what that might be and perhaps even starting to build that that side income if nothing else it can help you save even more money now as you prepare for retirement and help you pay down any debt that you have faster as well again I understand that's not going to be for everyone but I think it can be a huge benefit to trying to make up for lost time when it comes to retirement savings now number six stay positive this can be tricky uh I talked to a lot of people and they can really get down on themselves they hate the fact they didn't save more in their 20s or 30s and they have maybe they have friends and family that they feel are doing better than than they are and they get on you know get on Facebook and you see someone else that's talking about some big vacation they're taking and and that's not you it's it's very easy to let negativity build on itself and so I think it's really important to stay positive I would want to surround myself with good friends and family maybe folks that are in the same situation as you are and you work together you know to encourage each other uh and to make good choices as you try to catch up on your retirement savings I mentioned a couple of forums Mr Money Mustache and and Reddit uh there's also uh good podcast one that I was looking at just the other day is called catching up to fi catching up to fi is a podcast that's just recently launched and that's worth checking out there's another one called choose fi and um listening to these shows and and participating in these uh online communities can help you know motivate you and you know when you're having a bad day maybe it gives you an outlet to to talk about it because there are going to be times when you get down on yourself I get that you're going to want to stay positive you're going to want to stay motivated and keeping in mind this is even when you're starting in your 50s this is a marathon not a Sprint and so you really want to be in tune with how you're feeling about your finances and your future all right I know I've kind of rushed through a lot here but I want to I'm under the seventh and last one and that is I think it's really important to use the free tools that are available to help you understand where your finances are and um where you are where you stand in terms of your retirement Readiness there are a lot of paid tools some of which I use I think at least initially though I would stick with the free ones and I'm going to give you three to to consider in just a minute but um the reason I think it's important is the the tools that are free are really good and part of the mindset that we're going to need here is not to spend money on things we don't have to I'm not saying we have to nickel and dime everything but if there's free options available we should get into the habit of using those options rather than spending money on a different option so let me show you the three that I like probably my favorite I've talked about this in the past it's in power it used to be called personal Capital you can link all your retirement and taxable and bank and credit card accounts this can actually do everything it's got budgeting as you can see here uh cash flow the thing that I like about this tool for our purposes though is it has a pretty robust retirement planner and you know I mentioned things like a side income you can model all of that you can come here and say okay I'm going to have I'm going to work during retirement I'm going to make I'll just put in a thousand dollars uh we'll make it 12 we'll make it uh six thousand dollars a year it's going to start when I'm 65. I'm not going to keep doing this forever I'll do it until I'm 75 I really enjoy it and you can model that into your your retirement plan oops guess I got to make it 66 here we go and you can model that so there's a lot of different ways that you can model changes to your finances you can also model a change to where you live and how much you spend on housing as another example and it lays it out and gives you the probabilities that things will work out you can also include alternative plans as well so this is one that I like a lot uh and um and it doesn't cost anything the other one I'll mention is Google Sheets and I'll leave a link to this article this is actually written by tiller tiller is a paid budgeting tool which I love and I use and I think it's terrific but it's not free but on their site they have a list of 20 free Google sheet budget templates that you can use so you can just use Google Sheets which is you know Google's version of Excel and uh and you could track all of your expenses here now this wouldn't include a retirement planner like we saw with Empower but it would be a free way to track your expenses and your spending so I'll leave a link to that as well and the other one I'll mention is mint.com it's sort of a well-known free budgeting retirement tool online it's one that I used many many years ago they have an advertising model so they're going to show you credit cards and bank accounts that you could apply for you can just ignore all that use mint for free I think it's another good tool that you could use to keep track of your finances of course if you're already using something you're using Quicken or you're using tiller or you're using YNAB or some other tool I'm not suggesting you should change that but I do think if you can free is better and the tools that are free are are pretty good so I know I've run through this quickly there's a lot more we could cover there's a lot to learn and I guess I'll I'll close with that you'll always need to be learning new things that's why I think these forums and podcasts maybe hopefully my channel here on YouTube as well is something that you can stay in tune with as you navigate you know this journey over your 50s and 60s saving for again a a comfortable retirement at a reasonable age I absolutely think you can do it you can certainly make your retirement better than if you just stick your head in the sand and do nothing and I think if you embrace the fire movement principles you can actually have a great retirement financially speaking at a reasonable age easily uh you know in 15 certainly 20 years time so there you go hope that helps if you have any questions leave them in the comments below be happy to help you out any way I can and until next time remember the best thing money can buy is Financial Freedom

Channel: Rob Berger

Views: 56,880

Keywords: saving for retirement, catch up on retirement savings, start late finish rich, saving for retirement in 50s

Id: LJ0i2dCXZoI

Length: 22min 25sec (1345 seconds)

Published: Fri Apr 07 2023