Over 50 with zero retirement savings? 9 steps to take now

For most people, the way it's going to happen is some simple steps.

If you’re in your 50s and 60s with no retirement savings in sight, you’re far from alone.

According to data from the U.S. Census Bureau’s Survey of Income and Program Participation, 49% of adults 55-66 in 2017 had zero personal retirement savings.

But just because it’s common doesn’t make it okay — nor is it impossible to start accumulating that nest egg once you’re older than 50.

“Please catch yourself every time you say, ‘Oh, I can’t possibly do that,’” podcast host and financial expert Suze Orman wrote in AARP The Magazine. “I have a feeling that attitude is what got you to this point without any retirement savings. Enough. Please stand in your reality: Building more retirement security is both kind and necessary for you and your family. The more you’ll be able to support yourself, the less you’ll need to lean on loved ones, such as adult kids.”

Once you’ve decided you’ll try, here are some other steps you can take right now:

Evaluate your Social Security situation

Start with a hard look at your potential Social Security income, Frank O’Connor, vice president of research at the trade association Insured Retirement Institute, told The Atlanta Journal-Constitution.

“A good first step would be to set up your free Social Security account at ssa.gov. You can see estimates of your Social Security benefits at various retirement ages and then assess how long you can realistically expect to continue working to have a clear picture of your expected Social Security income.”

This assessment should motivate you to wait until the full retirement age of 70 to begin collecting.

“The longer you wait to start benefits the higher your payments,” O’Connor said. “Also find out how much pension income you can expect to receive, if any — most private sector employees can no longer expect to receive pensions from their employers. Once you have a good idea of the income you can expect in retirement, it’s time to look on the expense side and realistically estimate how close your retirement income will be to your needs.”

Make a budget and identify ways to save

Instead of hoping the high-risk situation will solve itself, take a look at your spending and come up with a realistic budget that includes money for savings. It should include what you need for basic, nonnegotiable expenses like rent and insurance.

“Look very hard at any optional expenses such as recreation or eating out that you can cut down or eliminate,” Illinois-based certified financial planner Alexandra Baig said on the blog for Hometap, a Boston-based property investment company.

Create an emergency fund of six months of your monthly salary

“A lot of people make the mistake of entering retirement without emergency savings, assuming that unexpected circumstances where you or your loved ones may require urgent cash are behind them,” said Jonathan Dash, chief investment officer and founder of Dash Investments, on the WiserAdvisor blog. “However, retirement is as unpredictable as any other time in your life. And your late 50s and early 60s are a critical time to build emergency savings for your retirement if you do not have sufficient funds yet.”

Target six months of your monthly salary for this separate account, “stored in a place where it can grow and at the same time, be easily accessible without incurring any penalties or lengthy procedures,” Dash said.

Put your home equity to work

When you don’t have ample retirement savings, you shouldn’t “tap your home equity to pay for school,” Orman wrote for AARP. “If you don’t have a retirement nest egg, you need to use your home equity for your future. Downsize today and you can invest your gain from the sale into retirement accounts.”

Limit new debts

“Debt after the age of 50 can be very tricky,” Dash said on WiserAdvisor. “The interest payment on your loans or credit cards can be detrimental to your retirement savings plan, especially if you are already running short of funds. It also disrupts your savings growth and forces you to shell out money that can otherwise be saved or invested.”

Older adults should strive to stop using credit cards, according to Baig.

“Don’t put anything on a credit card that you cannot pay off in the same month to avoid wasting money paying high interest,” she said. “This will maximize how much money you can commit to retirement investments.”

Also, avoid incurring debt to help finance higher learning for a child or other relative.

“If you don’t have any retirement savings, you’re not to borrow one penny for a child’s college education,” said Orman, who is also the author of “The Ultimate Retirement Guide for 50+.”

Quit high-interest cards first

Note the APR on each of your current credit cards.

Joshua Mungavin, shareholder and financial planner at Evensky & Katz/Foldes Financial Wealth Management, told Market Watch that if the APR is high, such as 20% or more, you should prioritize paying it down while amping up your retirement accounts. For lower APRs, such as those at 3% or 5%, continue repaying debt. It can be a lower priority.

Max any retirement account contributions through your workplace

“Your late 50s and early 60s is a great time to maximize your contributions for your workplace retirement account as well,” Dash said. “If you have a 401(k) account, a 403(b), or a 457 account, you can increase your contributions to the maximum limit allowed for the year. Contributing to these plans will help you put off taxes until withdrawal. Moreover, since workplace accounts allow an additional catch-up contribution to people over the age of 50, you can save up a substantial amount of money in your last few years before retirement.”

If you can’t get anywhere close to maximizing the allowable contribution of $22,500 in 2023, “at the very least, contribute the amount the employer will match,” Baig said to Hometap. “If you can live without the current tax deduction and your employer offers a Roth 401(k) option, contribute to that instead of the traditional.”

Don’t spend your retirement savings prematurely

When you are able to accumulate a nest egg, resist the temptation to start spending it ahead of retiring, Dash said, and not only because such early withdrawals can incur tax penalties.

“Withdrawing money prematurely can impact your financial discipline,” he said. “It interferes with your monetary routine and gives you a false sense of financial security that only lasts for a little while. The long-term consequences of withdrawing money from your retirement corpus sooner than necessary are far more serious. You may have to live a restricted lifestyle later or compromise on your wants in retirement. Your loved ones can also suffer and you may have to borrow money in your golden years to stay afloat.”

Keep trying

If your analysis of your situation indicates a huge shortfall, don’t freeze.

“Look at where you can cut back today to start saving aggressively,” O’Connor said. “Some savings is always better than none.”