Feeling Hopeless at 60 with Only $15,000 Saved? Here’s How You Can Secure Your Retirement
By Brandon Renfro, CFP®
As a 60-year-old contemplating retirement, the stress of having just $15,000 saved can understandably feel overwhelming. However, it’s crucial to reframe your situation. Instead of fixating on the low savings balance, consider evaluating your overall retirement readiness. You might be more equipped for retirement than you think. Let’s break this down into actionable insights that can help ensure a comfortable future.
Understand Your Income Needs
Begin by determining what income you’ll need during retirement. Many people discover that their retirement income needs are less than their current earnings, especially if they plan to downsize or relocate to a more affordable area. Doing this math effectively sets the stage for your retirement plan.
For instance, since you mentioned that you’ll receive an 80% pension from the state of Massachusetts, that’s an important aspect to consider. In Massachusetts, pension benefits are typically exempt from state income tax. This means you are effectively saving 5% right off the bat.
The Pension Advantage
Pension plans can significantly bolster your retirement finances. If you need 90% of your current income and are receiving 80% from your pension, you’re closer to your goal than you might have realized. This base income is a solid foundation to build upon.
Reassess Your Retirement Timeline
While you may be eligible to retire in three years, evaluate the potential benefits of working longer. Each additional year of employment not only adds to your income but may also enhance your pension payout. Massachusetts pension calculations often consider your highest earnings over a set period—extending your career could positively impact this figure.
Explore Alternative Income Sources
If you’re open to it, consider finding a part-time job after retiring from your current position. For example, if you currently earn $100,000 a year and then retire to collect $80,000 from your pension, even a part-time job earning $30,000 would increase your total income to $110,000. This combination of pension and supplemental income can significantly improve your financial outlook.
Budgeting and Reducing Expenses
To further secure financial stability, take a hard look at your expenses. You might discover opportunities to permanently reduce spending, such as downsizing your home or simply making lifestyle changes that promote frugality. A smaller living space or relocating to a less expensive area can lessen not only your current financial burden but also the income you’ll need in retirement.
The Importance of Seeking Guidance
Don’t hesitate to engage with a financial advisor who can provide personalized guidance as you navigate these crucial choices. They can help you develop a comprehensive retirement strategy that considers your unique situation, goals, and overall financial picture.
Additional Considerations
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Social Security: Ensure you include any Social Security benefits you may be entitled to in your income calculations. The timing of when you claim these benefits can have substantial effects on your overall retirement income.
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Emergency Fund: Maintain a liquid emergency fund to address unexpected expenses without derailing your retirement plans. This fund should ideally be stored in a high-yield savings account, allowing it to grow while being easily accessible.
- Continued Learning: Keep abreast of investment and retirement strategies by browsing reliable financial resources, including tailored articles like this one from Extreme Investor Network.
Moving Forward Together
Remember, while it’s great to have savings, your retirement doesn’t hinge entirely on it. Focusing on multiple income streams, reducing expenses, and leveraging your pension can create a more secure financial future. Take a moment today to evaluate your strategy and consider reaching out to a financial advisor who can help you further refine your retirement picture.
For those ready to take the next steps in their retirement planning, our tools at Extreme Investor Network can match you with vetted advisors tailored to your needs.
Feel empowered to turn your “hopeless” feelings into actionable steps toward a secure, fulfilling retirement.
Brandon Renfro, CFP®, is a financial planning columnist who provides insights to help individuals navigate personal finance, investments, and tax topics. Have a question for Brandon? Reach out and let’s tackle your financial concerns together.