The oldest Americans in the United States are significantly behind in retirement savings, as revealed in a recent study by GOBankingRates. Approximately 72% of respondents aged 65 and above have a retirement fund of $200,000 or less, which is considered insufficient in most cases.
Approaching retirement with such limited savings can be distressing. However, you can make several strategic moves to maximize your resources. For those with retirement savings close to $200,000, assessing your annual expenses and accounting for expected inflation growth is crucial.
Simon Brisk, CEO of Click Intelligence, advises seniors on retirement plans and recommends a thorough analysis. By adopting a more frugal lifestyle, you can allocate most of your funds to generate passive income. Investing in assets like bonds, dividend stocks, REITs, annuities, and crowdfunding can provide accessible and affordable income streams.
Additionally, consider leveraging your existing assets, such as renting out an unused car on platforms like Turo or leasing storage space in your basement, attic, or garage through Neighbor.com.
For those within the $50,001 to $100,000 range, which accounts for about 10% of the survey respondents, relocating to an area with lower living costs can be wise. This can result in long-term savings surpassing the expenses incurred during the move. Peter Hoopis, CEO of Peter Hoopis Ventures and a chartered financial consultant, suggests thoroughly researching potential cities, considering factors like crime rates, poverty levels, cost of living index, and AARP livability scores. Locations such as Lake Charles, Louisiana; Rock Springs, Wyoming; and St. Charles, Missouri, are highlighted as low-cost, high-quality options.
Around 20% of individuals surveyed reported having savings ranging from $10,001 to $50,000. While this sum can sustain you, it is crucial to consider downsizing and liquidating assets to generate cash flow during retirement. Danielle Miura, CFP and founder of Spark Financials advises exploring options like selling your home or opting for a reverse mortgage.
Additionally, individuals above the age of 65 should consider selling or partially selling their life insurance policies to boost retirement funds, pay medical bills, or cover long-term care expenses, as Brandon Selfors of Bridge Insurance Group suggested.
Unfortunately, the largest portion of survey respondents, nearly one in three, had less than $10,000 saved for retirement. Full retirement might not be feasible in such cases, and exploring part-time or flexible work options becomes crucial. Linda Chavez, CEO of Seniors Life Insurance Finder, emphasizes that working during retirement can still provide an opportunity to supplement income and enjoy your golden years.
Additionally, delaying enrollment in Social Security until 70 can maximize benefits. Jeff Wright, COO of Sagewell Financial, suggests creating a Social Security Administration (SSA) account to understand different benefit amounts and consulting experts to enroll on personalized terms.
Regardless of the amount saved for retirement, avoiding high-risk investments in pursuit of significant gains is essential. Greg Wilson, a chartered financial analyst and founder of Cha Ching Queen, advises focusing on spending and maintaining a healthy income-to-expense ratio. Decreasing expenses rather than resorting to risky investments with uncertain outcomes is crucial. Wilson cautions against gambling with high-risk assets like cryptocurrencies or trending biotech stocks, emphasizing the importance of slow and steady financial strategies.