What to Do When You Have No Retirement Savings

It’s optimal to start saving for your retirement in your 20s and early 30s, but if you’re just getting started in your 50s, it won’t do any good to cry over spilled milk. A 51-year-old has no retirement and turned to Reddit (NYSE:RDDT) for advice.

“I have $36,000 in my 401(k),” the 51-year-old said. “I’m guessing I’ll have $250,000 when I retire.”

Several Redditors shared their advice in the comments.

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The 51-year-old has a history of contributing to a 401(k) and having to withdraw funds early when finances got tight. That’s why one commenter suggested establishing an emergency fund that can cover six to 12 months of living expenses.

“You need an emergency fund so you can stop using your retirement savings when a life crisis hits. Aggressively cut expenses,” the commenter said.

The next bit of advice will make it easier to build an emergency fund. Not only does cutting expenses give you more money to put into the emergency fund, but your monthly expenses also go down. Since emergency funds are based on your monthly expenses, cutting costs will reduce how much you actually need in your emergency fund to cover six months of expenses.

As a bonus, the 51-year-old should store the money in a high-yield savings account. That way, the money continues to grow at a decent rate.

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The 51-year-old anticipates retiring in 16 years, but that may not be the case with their current finances. A $250,000 nest egg is not enough. The 4% withdrawal rule comes to $10,000 per year, which isn’t enough to live on.

The only saving graces are that the 51-year-old should have their house paid off by then, and Social Security paychecks can help a little. However, the more beneficial option may be stretching the retirement age to 70. That way, the 51-year-old will have a few additional years to contribute to their portfolio without a mortgage weighing them down.

A portfolio can grow substantially once you put the monthly mortgage payments into your brokerage account. It presents a promising opportunity, and by working for a few more years, the nest egg doesn’t have to stretch as much to ensure the 51-year-old doesn’t run out of money.

“Retirement is a financial decision, not an age-related decision,” one commenter said.

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The hard truth is that the best way to build retirement savings and give yourself more options in life is to earn more money. That can come from developing new career skills that result in higher-paying jobs, picking up side hustles, or starting a business.

“Keep looking for better-paying jobs, reduce expenses, and your family needs your wife to work,” one commenter said.

The commenter also said to stay away from toys and collectibles. Ditching streaming services for all of the free media you can find at the library can also save money. The commenter also suggested downsizing the car and cooking at home to save money.

Saving money is great, but there is only so much you can save. Looking for ways to make additional money is the best way to turn around a downbeat financial situation.

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This article Starting From Zero at 51: What to Do When You Have No Retirement Savings originally appeared on Benzinga.com

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