No Retirement Savings at Age 60

What if you have no retirement savings and you’re 60 years old?

To get an idea of how far you can go with a late start, look at this recent article from an investment firm’s newsletter. It shows how much someone who’s 55, earns $80,000 a year and has no savings might accumulate in a 401(k) by age 65 under a variety of scenarios.

For example, if the hypothetical 55-year-old contributes 6% of pay, gets 3% annual raises, receives a 3%-of-salary employer match and earns an investment return of 8% a year, he’d have just under $150,000 at 65. That seems eminently doable, and while hardly allowing for a lavish retirement, certainly beats doing nothing.

At the other end of the spectrum, if our imaginary 55-year-old follows the same scenario as above except each year manages to make a Herculean contribution of $16,500 to his 401(k) plus a catch-up contribution of $5,500 (the current maxes for this year), he’ll end up with a much heftier balance of just under $445,000.

These figures aren’t guarantees. Raises and investment returns could come in lower, and hitting big savings targets year after year isn’t a cinch either.

You’re not doomed to a grim post-career existence because you’re starting to save at a relatively advanced age. If you’re willing to make an all-out effort, you can still salvage a decent retirement — and live a heck of a lot better than if you just play Lotto.

While that pedal-to-the-metal effort should start with revving up your savings rate, there are many other things you can also do, ranging from retiring later, working part-time in retirement and delaying Social Security to boost the size of your payments. If you own a home, you can also look into turning your equity into spendable cash while still living there by taking out a reverse mortgage.

Related Information in Prosperity News

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