Life can be full of curveballs, which can force your long-term financial goals, like retirement savings, to take a backseat. If this sounds like you, you're not alone. In fact, Thrivent's Retirement Readiness Survey found that nearly 44% of near-retirees have executed minimal to no retirement planning, leaving their golden years at risk. So, what happens if you have no retirement savings?
We'll explore how you can retire even without savings to rely on. We'll also provide a few immediate actions to start saving, even if it’s later than you intended.
What happens if you have no retirement savings?
You can still live a fulfilling life as a retiree with little to no savings. It just may look different than you originally planned. With a little pre-planning, relying on Social Security income and making lifestyle modifications—you may be able to meet your retirement needs. Let’s dive deeper into these options.
You may have to rely on Social Security
Many retirees with little to no savings rely solely on Social Security as their main source of income. You can
The
Knowing how much to expect from your monthly Social Security benefit can give you a clearer idea of if you can live on this amount. The Social Security Administration provides
Social Security income taxes:
How much will you owe?
How much will you owe?
You may need to make financial & lifestyle adjustments
If you determine you need more than Social Security income to meet your retirement needs, consider these options:
1. Set a detailed budget to minimize expenses
Living a low-cost lifestyle is an excellent strategy for anyone looking to stretch their retirement income as long as possible. By living off less now, you can free up more to save.
Having a spending plan is a great first step for reaching any financial goal. Start by taking your monthly income and subtracting your monthly expenses, then use your spending habits to
2. Downsize your home
If you find yourself with more expenses than income in retirement, you may need to make significant changes to lower your expenses, such as by
Though it can be difficult to sell your home and beloved valuables, the potential savings could be enough to add to your nest egg, especially if you move to a more affordable neighborhood or move in with loved ones. If you're buying a home, research beforehand to understand home prices in your desired area and the mortgage rates you qualify for.
3. Continue working
If you don't have enough money to retire, you may have to delay retirement. In fact, the Thrivent Readiness Survey finds that Americans are rethinking conventional retirement—30% of people plan to retire gradually, and 5% don't have plans to retire at all.
Whether you work part-time or continue working full-time, it doesn't have to be a burden. Working throughout retirement can keep you active, focused and refreshed, especially if you're doing work that you find fulfilling.
How to start saving for retirement if you're starting late
It's never too late to start saving for retirement. Consider these strategies to help you maximize your savings as you get closer:
Know your savings gap
Even if you feel far off from your retirement goal, having a savings target is still beneficial. What amount do you need to cover your expenses? Knowing this number can give you a better idea of your options to close the gap between your living expenses and what Social Security will provide.
Not sure what your number is? Try out our
Maximize retirement account contributions
If you're nearing retirement with little to no savings, put away as much as you can now. There are several tried and true ways to save with tax-advantaged accounts:
Take advantage of tax-advantaged retirement plans
You can usually start withdrawing from these plans as early as age 59½, but you often must begin taking
Open a traditional or Roth IRA
The two primary types of IRAs are traditional and Roth:
Traditional IRA
Roth IRA
- If you make less than the modified adjusted gross incomes (MAGIs) listed, you can contribute to a Roth IRA.
- If you make between the MAGIs listed, you can contribute but it will be a reduced amount.
- If you make equal to or more than the MAGI limit listed, you can't contribute anything to a Roth IRA. If this applies to you,
check out these alternatives .
Filing status | 2024 modified adjusted gross income (MAGI) to contribute to a Roth IRA |
Single or head of household | $146,000-$161,000 |
Married filing jointly | $230,00-$240,000 |
Married filing separately | $0-$10,000 |
Explore other investments
Whether you invest through an employer-sponsored retirement plan or a brokerage account, there are several ways to invest your money—depending on your risk tolerance and how close you are to retirement.
Stocks are considered a risky asset given their volatility. The potential for a high return makes stocks a great option if you're far from retirement and can ride out any dips in the market.
Bonds are loans to the government, corporations or municipalities that are paid back to you at a specified interest rate. Bonds don't have the same growth potential as stocks, but they are also exposed to less risk—making them a better fit if you're closer to retirement. But, the return on bonds is not guaranteed.
Certificates of deposit (CDs) are purchased in exchange for a fixed growth rate from a bank or credit union, making them a safe, low-risk investment—typically a high priority as you're nearing retirement.
Annuities are insurance contracts you can purchase in exchange for a fixed income. You can purchase annuities with no exposure to the market, providing predictability that many late-savers look for.
Get professional guidance with your retirement plan
No matter how close you are to retirement, you can still prioritize saving for it. A