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 the link below this video. I've received countless emails and I get this question in the live Q&A show that I do every other Monday here on YouTube. What do I do? I'm in my 50s. Some folks may be even in their 60s. I've got nothing saved for retirement or maybe very little. Is it too late for me? Should I just give up? What is my plan? What I want to walk through in this video are seven things that I would do if I were in that situation or 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 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 it's a movement that's been around, I would say, roughly about a decade. But the basic idea of the FIRE movement is, hey, I can save a lot of money, think 20%, 30%, 40%, even perhaps more of my income. And 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 the motivation, which is part of what goes on in the FIRE movement, and apply it 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 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. 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 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 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 forum. Again, there are others. But it's an example of how you can get tied in. Now, keep in mind, there are 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, the willpower, the motivation that you'll learn from these forums 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 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 to 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 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, 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 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 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 going to have sort of a knee-jerk reaction, like, well, I can't do that. I'm not going to move, and 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 as part of the retirement. This gives you the potential to save big, big money. And that's why I don't think we should just gloss over it and sort of just say, oh, I can't do that. 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 a very simple calculator that kind of shows you, based on the assumptions, how long it'll take you to retire. So this assumes someone has got an annual income of $50,000, saves $6,000 of it, so it's just over, I guess, 12%. Annual expenses are $44,000, just the difference. And assuming an 8% 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 $500 a month, so they could double their savings from $6,000 to $12,000. 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 too long for you. The point here is not that this is your situation. The point to make is, we need to think about 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 get rid of a car, get rid of the insurance, save that money and shave 10 years off the time it would take us to retire, maybe that's something that becomes a little more real. Again, every situation is different. You may go through this 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. In 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 that maybe saves you 50 bucks a month. It 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 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 your seventh streaming service that maybe you can think about maybe getting rid of if you're like me anyway. But look at all of those sort of 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 weren'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 just imagine we need $3,000 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, we can just multiply it by 12 to get $36,000. That's what we would need annually. And as a rough rule of thumb, using the 4% rule, we'll multiply it by 25. And that tells us how much we have to save, $900,000. If we were to multiply that by 4%, it would get us back to that $36,000 a year. So what happens if we follow the one and done method, but maybe we don't find a lot of savings, let's say instead of 3,000, we reduce that by, we'll say 200 bucks. So now we only need 2,800 a month times 12 times 25. Remember, it was 900,000. Well, now we've, by making what seemingly is a relatively small change in our spending, saving $200 a month, we've reduced what we need to save to retire from 900,000 down to 840,000. That's a drop of $60,000. It's something in my book I call the boomerang 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 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 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. 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 gonna be a lot of financial goals that we're all 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 should get the priority? And this is where I very much disagree with Dave Ramsey's approach. I will say if you're 20 and you're 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 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% and get them onto a credit card. There may be a balance transfer fee of typically 3%, but you're gonna enjoy 0% 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 what I think are the best balance 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 100% focus on debt. Yeah, you wanna 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 much easier to do that if the interest rates you're paying on your debts are reasonable and low. The third thing I'll mention when it comes to prioritizing, and it's gonna 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 gonna do anyone any good to get to 65 or 70 and not be able to support yourself because you've loaded up the 529 for 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 controversial view, but I firmly believe you gotta get your own financial house in order first before you can help others. All right, number five, and this isn't gonna 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 side 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 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 can just go to the calculator. I can give you an example. Let's imagine you need $5,000 a month. That's $60,000 a year times 25. That's $1.5 million. But let's now imagine you find a lifestyle-friendly way to make not even a lot of money. Let's just say $1,000 a month. That reduces what you need from your investments to 4,000. That's $48,000 a year times 25. We've just taken that $1.5 million number we were trying to hit down to 1.2 million, all because we earned an extra $1,000 a month doing some sort of side hustle or 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 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 gonna 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. I talk 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 maybe they have friends and family that they feel are doing better than they are. And you get on Facebook and you see someone else that's talking about some big vacation they're taking and that's not you. It's very easy to let negativity build on itself. And so I think it's really important to stay positive. I would wanna surround myself with good friends and family, maybe folks that are in the same situation as you are and you work together to encourage each other 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 Reddit. There's also a 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. I think that's worth checking out. There's another one called Choose FI. And listening to these shows and participating in these online communities can help motivate you. When you're having a bad day, maybe it gives you an outlet to talk about it because there are gonna be times when you get down on yourself. I get that. You're gonna wanna stay positive. You're gonna wanna 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 wanna 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'm on to 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 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 gonna give you three to consider in just a minute. But the reason I think it's important is the tools that are free are really good. And part of the mindset that we're gonna 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 Empower, 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, cash flow. The thing that I like about this tool for our purposes though is it has a pretty robust retirement planner. And I mentioned things like a side income. You can model all of that. You can come here and say, okay, I'm gonna work during retirement. I'm gonna make, I'll just put in $1,000. We'll make it $6,000 a year. It's gonna start when I'm 65. I'm not gonna keep doing this forever. I'll do it until I'm 75. I really enjoy it. And you can model that into your retirement plan. Oops, I guess I gotta 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 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 Google's version of Excel. 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 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 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 this journey over your 50s and 60s, saving for, again, 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 in 15, certainly 20 years time. So there you go. Hope that helps. If you have any questions, leave them in the comments below. I'd be happy to help you out any way I can. And until next time, remember, the best thing money can buy is financial freedom.