Reduce Debt Increase Wealth

No Savings for Retirement

October 16, 2022 MIsterchuck Season 3 Episode 135
Reduce Debt Increase Wealth
No Savings for Retirement
Show Notes Transcript

What to do when have little or no retirement savings. First this must be identified early so that changes can be made. More than half of Americans have less than $ !0,000 saved for retirement. 

 Article Links:

https://findcontinuingcare.com/blog/how-to-retire-with-no-money

https://machenwealth.com/blog/real-life-examples-of-what-happens-when-you-fail-to-save-enough-for-retirement

 https://www.thebalance.com/retiring-without-savings-at-60-years-old-4161009 By Rebecca Lakepe

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Contact: ReduceDebtIncreaseWealth@Gmail.com
Wanting Budget Spreadsheet Place Spreadsheet as Subject
All other inquires place topic into Subject.

Charles McDonald:

Hello, I'm your host, Mr. Chuck, I retired accountant turned truck driver, I reduce my debt in a relatively short period of time, debt reduction to achieve financial freedom takes commitment, confidence, determination. No savings for retirements what to do when have little or no retirement savings, versus must be identified early so that changes can be made. More than half of Americans have less than 10,000. save for retirement. If you're listening to this podcast because you have a debt problem, continue to listen, because this is important also. Because once you get your debt problem under control, your next problem will be saving for your retirement. And this episode is going to focus on why you should

Unknown:

do that. I have links

Charles McDonald:

in my show notes to three articles that are non me referring to. And the first article comes from makin wealth management, real life examples of what happens when you fail to save enough for retirement. And these are from financial advisors with clients that they worked with. So number one, you need to keep working until you die. Rather than contributing to his accounts during his 50. John was making withdrawals of $2,000 per month on his fourth that $100,000 balance. Having worked with John for over 15 years, we had the same kind of talk every few months. I told him John your spending and lifestyle needs and adjustment. This is not going to work. He would always say I know Tom, but the business is getting better. And that will take care of everything that counts were growing slightly despite the withdrawals, then came the crash. The balances are much lower today. John well into his 60s had taken a full time job when he should be looking at his retirement

Unknown:

options.

Charles McDonald:

So if you don't adjust your spending earlier in life, and you use your savings to pay for things you're buying, you're gonna run out of money. Let's just have that one. Number two, you drown in debt instead of planning for the future. I have a couple of clients of mine who didn't have enough money saved for retirement, they have fallen short of their goals because of spending what they couldn't afford, and borrowing to make up the difference. After not saving enough money to pay for two other children's weddings, they decided to put both of them which were pretty close together on credit cards. By the time I met them, there were 10s of 1000s of dollars and credit card debt while their children are saving for their future and doing the best to get started in their lives. Without a care on the world. The parents are struggling to get by working longer than they plan to and then swimming in debt because they wanted to help out their kids by paying for two dream weddings that no one could really afford. And first place. Focus at those of you who are drowning in debt. And if you're working on reducing your debt, very good. You want to get rid of your debt before you start your retirement. Three you leave your family with financial emotional stress. Tony is two brothers owned a small family business. This business supported Tony's growing family of six. And he thought that when it was time to retire came, he could sell the business to live on the proceeds. He thought wrong. Yeah, he did because he was in business was his two brothers, he was going to sell a third of the business. So that's a problem there. But this is not even outside of that. Tony saved very little outside of the business when a heart attack forced him to retire sooner than plan. Tony did not receive the amount of money he thought he'd get from the company support hay and his wife. Tony lived the rest of his life puttering around his workshop and died in peace after his death sadly through their children's support or financially and otherwise, Mary suffered from the emotional stress of limited cash and financial pressure. Your retirement age was $300 in the bank. I was referred to a couple Glen and Mary Glen and Mary spent money as soon as they hit their bank account and never learned a budget or lived beneath their means at 59 and 47. They only had say $5,000 and a 401k had no pensions. Oh 10,000 on their own their goals and 250,000 on their mortgage and had $300 in the bank, I helped them create a budget and marry change to a higher paying job. But their indiscriminate spending and lack of savings, put them a long way from retirement, it Throw your financial future away. Okay, that's all I'm gonna do, you're already have children that will support you in your old age. And you'd have to sell your home because you can't afford to stay there no longer and you gotta move in with your grown children, and have them support you. Or you need to die by age 72 a lot younger, because that's only the amount of money you have to live to. So planning for retirement is important. And nobody seems to be doing it. Everybody's in debt. And why are we in debt, because we have a society that's focused on buying, selling you Thanks. Everybody wants to sell you something, everybody wants you to buy their product, you know, a bigger, more expensive home, a bigger, more expensive cars, whatever it is, everybody's trying to sell you something on our economy is based on people buying spending money is not based on new saving money. And with the rate, the federal government is spending money, inflation going up, the banks have way more cash and they know what to do with. That's why the savings anthers rate is not going up. The banks don't need the money, they got more money, and they know what to do it, they can't lend it all out. So that is the long term problem. But this is focus on your personal life, you need to take care of yourself and your family first. So if you're working on paying down your debt, that's the first thing you need to do. When you think about retirement, you want to go into retirement with little or no debt. That way that frees up more money, instead of making a mortgage payment to car payments and paying off credit cards. He can use that money to live off of thus stretching your savings, so you can live longer and a happier lifestyle. What do you do when you're going into retirement with a lot of debt? I was about 60 to 63 when I realized I had to pay off my debt. And I did, I paid off my $135,000 in debt roughly, and three years, eight months. And I did it by using my plan that I'm telling everybody about in this podcast, it can be done. So now I'm looking at going into retirement with no debt, income from Social Security. And I have a pension from the government where I worked for the government. So I'm not too bad. I'm gonna be making about 50% of my income monthly that I'm used to bring in home by working. And of course, we're past age 65. Actually, I had to work till 66 To qualify for full Social Security benefits, and out works past that. So what are you going to do? If you're in your 60s, you're looking at little or no retirement savings? What should you do? Well, the first thing to do is get your data and control. Us the tracking. Tracking is the engine that drives your personal finance.

Unknown:

Use your budget to control

Charles McDonald:

your spending and keep control of everything that's going on at your control center. Have an emergency fund so you can quit using credit cards and build up your emergency fund so that you have more than enough to get by on because maybe the first few months, there might be an adjustment of using having less income to live off of it might take you a few months to get used to living on a lesser amount of income. That's what my planning is. So I build up my savings account my emergency fund, so I have some buffer there. So what else can you do reduce spending and streamline your budget? You're nearing retirement age and scant savings a detailed budget may help you stay above water. But it's important to devise a financial Plan as much as lead time as possible in addition to selling physical possessions and downsizing your home. The following cost cutting measures can help you create a rosier retirement outlook. Sell your car and use ride sharing service to eliminate car payments and insurance bills. Or sell all your extra cars and only keep one car and increase the deductible on your insurance. The younger you are the sooner you do that, the more money you can say discontinue your landline telephone and acquire the cheapest possible cell phone plan. Raise the deductible on your homeowners insurance policy to low premium costs. Take advantage of senior discounts. Sign up for Medicare as soon as you're eligible to reduce out of pocket health care costs. Choose to neg products over name brand merchandise, make inexpensive home improvements that increase energy efficiency and reduce energy bills. For example, purchase a programmable thermostat or replace the attic insulation, a not replacing it you just add to it I did date stuff years ago. I'd have done that years and years ago. And well occasionally I have to replace is not all that expensive. But I've been saving money on utilities for years paying down debt. If you're heading into retirement with that based aesthetic about paying it off when you have some extra bucks. Use my debt reduction plan is what you got to do. But while it may be tempting to funnel all extra money towards relieving debt, as equally important to maintain a financial cushion for emergencies, use my plan because my plan has that built into it where you are building up your emergency fund. And once you get access, all you got more money emergency fund than what your stated set amount is, you use the extra to pay down debt. If you have financially assisted adult children or grandchildren in the past, consider Qurban is general generous impulse communication will go a long way in helping your loved ones. Understand your shift towards predatory priority ties in your financial future. In other words, take care of yourself before you take care of your kids and grandchildren. You got to look out for number one first. Is it common to be 60 years old without retirement savings according to the Federal Reserve, roughly 13% of Americans aged 60 or older, don't have any level of retirement savings and 2020 just 48% of those a 60 year olds so they felt that their retirement savings were on track. If you don't have an employer sponsored plan, what else can you do? I'll do an IRA. And that was from the balance 60 years old and no retirement savings. And how to retire is fine, continuing care.com How to retire with no money. These are links in my show notes. More than 60% of Americans are getting retirement age was less than 10,000. Save and 46% have absolutely no retirement at all. And I read somewhere else 48% don't give a crap. How much money do you need to retire? If you have no debt?

Unknown:

more the better.

Charles McDonald:

People are living longer and ever and even need even more money in retirement. And expert estimates 28 times your annual income do you have that much saved? I know I don't. However, it's not all lost in their option regarding retirement for you. Even if you hadn't saved a large amount of money, you just need to approach the retirement a little differently. Here's some ideas and how to go into retirement without savings can you live on so six kurti alone. The average security payment was 1417 a month. And I get more than that. So I don't know to receive social security must have worked at least 10 years. But the more years the better. They were average income over 40 years. I think that's 35 years, so many years won't work. You don't work or count to zero which will drastically lower your mount your benefit. And that's what I'm looking at. I worked about 14 years for the state local government. So I have 14 years of zero on my social security. So that's lower in my amount. So I get the down there Double whammy because I have to I lose Social Security benefits, because I'm getting a fake benefit, which is not enough to live on. So I'm getting a double whammy. And still, so if you don't have enough money to retire, the most common thing it's gonna happen is you're gonna have to work instead of retiring. So you want to work at your main job, as long as you possibly can. Don't retire when you're 62, don't retire when your full benefit age, you might have to retire when or start drawing Social Security at age 70, to get the maximum amount, but he still might still have to continue to work after age 70. So if you don't want to do that, then you need to do two things, get your debt under control and get it reduced down as close to zero as possible, and increase your retirement savings. So even if you're in debt, and you're trying to get your debt under control, do not stop saving money for retirement, keep putting money into your 401 K through work, if you have that option, keep putting money into a Roth IRA, a traditional IRA that is 100% tax deductible, until you have at least a million dollars and these retirement plans and probably not going to have any too much of a tax related problem. So I don't suggest putting into a Roth IRA, until you have at least a million dollars saved up. Because you're not going to be any have any tax related issues. Until then now, everybody's different. So maybe he might have a tax related issue. But it's highly unlikely. So you want to defer your taxes as long as possible. So that you can earn the most money through your investments for as long as possible. So that's what he should do. If you're 860 or not, his get rid of stuff you don't need, get rid of stuff you need, but don't use, reduce your spending over all, that's what you got to do. If you're age 50, you can be a little more moderate. If you're a really extreme and you're retired already, and you're living in a four bedroom house, three bath, and there's you and your spouse, you don't need that big home, maybe you should consider selling and downsize and and while you're in that process, you should consider moving to a place that were the cost of living may be cheaper than where you currently are. And that's getting harder and harder to find. For me, I lived in the north my whole life. I want to move somewhere where it's warm in the winter, I don't want to be shell one snow in the wintertime. I had enough of that. But the places that are cheaper to live for me or north of where I live, and then his soda, Minnesota, North Dakota, and as a lot colder, and those places, and they get a lot more snow than what I'm used to. I want to go south, and it's getting tougher to do so. So that's my dilemma. What's yours? Gonna say that most people are struggling to pay off debt. If that's the case, then you need to continue working on that. Continue building up your emergency fund, and continue at least some making contributions to any retirement plan that you have. If you have an employer that offers a 401 K, you need to contribute at least two to 3% of your income. You won't even miss it. And if your employer is matching, you need to contribute the maximum amount that they will match. Because if you're not, you're leaving money on the table, they're giving you that benefit. And the benefit is they're matching what you're putting in to that 401 K, that 401 k is going to grow much faster. If there's 10% going and you're putting in five your employer's put them five 10% is a whole lot more than 1% or zero, or even 2%. So take advantage of what your employer is offering you. That's number one. If you don't have a employer sponsored plan, then you need to put in a little These 2000 A year and to a traditional IRA, and do it as early in the year as possible. So part of your debt reduction plan should include making contributions to your IRA, building up your emergency fund, building it up past the amount you need, make some payments on your debt, and put some of that money into a traditional IRA. I never mentioned that before, because I never really thought of it. But that could be part of your debt reduction plan, and it should be part of your debt reduction plan. I'll be back in one moment with my final thoughts. If you want to contact me to request my spreadsheet for the budget, or leave a comment or ask a question, you can send it using my email, reduce debt, increase well@gmail.com. reduce debt, increase wealth is all together no spaces. If you'd like to ask a question, quick question in the subject. If you'd like to request my monthly budget, put Brett spreadsheet in the subject matter if you want to leave a response of any kind is put a comment in the subject manner, I will get back to you as soon as possible. We all are gonna get old and we're all gonna retire some day, he can retire on your terms, which is the favorable way. And in order to do that you need to save for retirement, the earlier you start in life to save for retirement, the more money you're gonna have, which is gonna allow you to do more things you want to do in life, once you retire, your major expenses are gonna be taxes, and health insurance. If you can't afford to pay that, on the money that you're getting on a regular income basis, monthly basis, you're gonna be struggling, you're going to be struggling to pay for your medicine, you're going to be struggling to pay for your food and for your housing cost. So start saving early, keep your data under control, stay focused, you will do much better, when the time comes. They're there, everybody's gonna have a point where you want to stop working to enjoy life, everybody's going to come to a point where you're unable to continue working. Maybe you don't feel safe, maybe you get tired too quickly. We all wear down it's called getting old. And it's a fact of life. And if you don't have any children who you can move in, and that will take care of you where maybe your children live far away, you don't want to move there, you want to stay in the same area. Or if you don't want to sell your home and downsize and move someplace cheaper, where you don't know anybody you got to save for your retirement and long term investment is the way to do it. If you don't know anything about investing, you should get yourself a financial planner, a financial advisor, a fiduciary that will help you make those decisions. You just tell them how much money you can set aside every month. And they will make the investment decisions for you based on your age and your threshold for risk. Some people are very young have no threshold for risk, I had a lot of risks. I took a lot of risks and like gain I made up for what I didn't set aside because I was higher risk investments. As you get older that's got to become a less risky investments because now when you get closer to retirement age, you need to start preserving your money, your capital, so that you have it available to use when you need it. So a fiduciary financial planner is the way to go. They set a fee and you pay a fee quarterly monthly whatever it is based on how much you have invested with them. Stay away from stockbrokers because they're gonna charge you a commission and only way they make an income is by trading stocks and bonds. And if they're not trading, they're not making money so they're gonna make trades for you that may not be the best. They're in Not looking out for you. They're looking out for themselves. I'm sure that's not true for all of them. But generally speaking, stay away from commission based advisors. So get your debt under control is, number one, keeping your debt under control. Saving for retirement is what you should be focused on primary throughout your whole life. You know, raising your family, teaching your children the same thing so that they don't struggle when they get old. I know you'll be dead and gone. And we have thinking I really don't matter. But it really does. If you teach your children early in life, how to manage money, how to take care of themselves, they'll be much better off and you'll be glad you did. So