ZERO Savings at 50?

[AARPLynne]

Saving for retirement is an important part of your financial planning. We asked financial experts to share their money-saving tips to help you get on track to retire on time, even with no savings at 50.

What steps are you taking to secure your financial future? Watch the experts then share a bit of your own advice or goals!

[jrj90620]

1.Become so cheap,like myself and most of my relatives,that you only buy when the price is really low.The idea of going to some fast food place and paying the posted price is totally foreign to me.

2.Don't invest in the common stock of bankrupt entities,like the U.S. govt.In other words,don't keep your savings in Dollars or Dollar promises,like CD's,bonds,cash,etc.

3.Invest your savings in real assets,like stock of great companies,a house,real estate,etc.

4.Don't borrow money,except for a house.That means you  pay for a car now,no financiing.Same for any home improvements,etc.You should use credit cards for the rewards,but always pay every month so no interest charge.

5.Eat at home.Eat out a max of once a week,using coupons or discounts.

[jsarnow]

     My response to this list of suggestions is:

1.Don't retire until such time that you don't have to be cheap.

2. When you invest in CD's or "cash" you have the implied support of the US government with FDIC insurance. US bonds are a safe as our government. If you really believe that the US will go bankrupt, invest in gold and bury it in the backyard.

3.Fine.... invest in great companies that regularly (annually) increase dividends.

4. Borrow money for your house and little else....but maybe include education expenses if appropriate.

5.Eat at home??? See #1 above.

John

[kns1520]

Many good suggestions.
If available, why not buy a car(one's preferred choice) for a Zero% 5 yr.financing from the dealer and invest the money?

[calico12]

Hi,

I've found that many things can happen to any retirement that are beyond your control, i.e. savings lost due to hospital bills, company with retirement program goes bankrupct and you lose your retirement, etc. Another thing to understand is that after 50 far too many employers will not hire you, regardless of your expertise and experience.  To many interviewers fear you taking their place as you are more qualified than them.  Sounds rediculous, doesn't it.  Well, it happens.  I know.

If by 50 you have little or no savings, no retirement plan, little income coming in, have medical issues preventing employment, etc. than you are going to have great difficulty in saving enough money to retire on, even if you don't plan to retire until age 65.

Example:  A very simple example.  You want $40,000 per year retirement.  To do so, you need a minimum of $1,000,000 that earns at least 4% interest and pays out 4% and the principle must be safe.  You need this to safeguard your investment/savings.  Most seniors do not have a fraction of this saved/invested.  If you are able to work and can find work, even part time, do so. Don't waste money on cable TV, cell phones, eating out, pay for childrens bills or co-sign for their loans, or things to out do your neighbors, etc.  You can't afford them and you don't need them.  Don't use credit or debit cards. Every dollar counts.  Don't invest in the stock market, purchase anuities, etc. Those with little money very rarely make anything in these endeavors and you can lose every dime.  Use instead banks, savings and loans, etc, to save money in.  Put as much money as you can (first, save enough in regular savings for easy access) into CD savings plans.  Don't put everything in one CD.  As interest rates climb, put some more money in these CD's, too.  It's called ladder savings.  Plan, plan, plan.  I planned my retirement at age 14. Honestly.  It worked and I retired at age 40 from the military.  This retirement allowed me to find work I liked and with people that I liked.  But, companies do closed their doors.  After the second one closed, I was past age 50. What I said earlier occurred. Fortunately, we saved before age 50 and some since.  We've been lucky in that we have no mortgage or any other loans.  But we planned to do this and kept in mind that the unknown can hit and change everything.  If you are married and both are healthy, both might need to work and you can save one of your salaries.  You might have to skrimp for several years until you get to the age to apply for Social Security.  If you have a company pension, 401K, etc. but know it won't be sufficient to retire on, do some of the things above.  Use government assistance.  After all, you've paid taxes and now you need some assistance.

I hate to be negative.  But, there is also a positive in knowing the situation you are in.  One can still plan for and have a better retirement if one sits down and realistically looks at their situation. Talk with your spouse, adult children, close friends, even banks.  They may have the right idea that works for you.

Good Luck!

Don't give up!  There is always something you can do.

[jrj90620]

The U.S. govt is not going broke,it's already there.I guess they could start selling off Nevada or national parks,but that's not likely.Even after a 9 year economic recovery,govt is running huge deficits.China,Russia and others are dumping U.S. currency and bonds. and buying money(AKA gold).They know the U.S. govt could never pay back its debts,in current purchasing power Dollars.Gold is recognized money for over 5,000 years.The current Dollar dates to 1971 and has had a major decline since.Anyone not aware of all this is either totally in the closet.

[2Papa]

My future is covered, if I can recall where I buried the proceeds!

[AnthonyA12903]

The most important thing to do before retiring - Make sure that your debts are paid off, particularly your mortgage,car loan, and credit card(s). Mortgage payments are the largest payment a consumer makes each month. How to do it? Every paycheck, put money aside to pay off your mortgage and credit card sooner. For example, if you have a mortgage of 1200, pay 1500 or more each month. Pay it off sooner and you'll be happy you did. Don't add anymore bills on your credit card unless you're willing to pay it all at once.

Also, if your house is too big (children have grown and left), then think about downsizing. Sell your house and go to a smaller house. Hopefully, the money from the sale can help pay off the mortgage of your new house and leftover money can go toward your retirement.

Live under your means because that's how it's going to be in retirement, but if you do it wisely, you won't even notice it. If you've got 3000 coming in every month, try and spend less than 3000. In order to do this, do a budget - sit down and see how much your expenses are - like credit card, mortgage, utilities, food, transportation, clothes, restaurants, entertainment, etc. Make sure you include all of the expenses. In another column, write down how much you make each month. Then subtract the expenses from the amount you made. See how much is left over. If you have debt - you pay it off with the leftover money. If you don't have debt, then you save that money.

I like the idea of my money earning more money - so we've done this in our household:

1) Solar panels - we invested in solar panels several years ago. We only pay 5 dollars a month during 8 months of the year (the snow months we pay usual). Each year, the panels earn over 4000 dollars worth of electricity. It's like getting money in the bank. When the electricity rates go up, you will be glad you have solar panels.

2) We invested in dividend-paying stocks, like Proctor & Gamble, Merck, etc that are solid and have good dividends (3% and above); they are a good way to go if you don't mind the ups and downs of the stock market (I've learned to ignore it - read the book "Contrarian Investing"). We've used TDAmeritrade at 7 dollars for each transaction (buy/sell), but there are other stock brokers online.

3) We invested in long-term CDs (5 year) that give the highest interest rates. The interest goes into your bank account. The more in the CD the more you get per month: It's like getting paid every month.

4) Read up on retirement, investing, and also don't be afraid to take classes in it. You'll be glad you did, because you'll enjoy your retirement better when you've planned ahead and there's money saved on the side.

But the bottom line is- have a plan to save. Save enough money to be able to put into a CD, stock, etc that can pay you dividends or interest.

PS If you have college-age children and are helping them with college, that also needs to be put into the formula. However, I think the children should pay some of that back when they find jobs, but that's another story..