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6 Steps to Consider Immediately If You’re 55 With No Retirement Savings


When you find yourself later in life without any retirement savings, you can feel like you’ve made a mistake or that the amount you need to make up is too great to make a dent. However, there is plenty you can do to help your finances get back on track and help you maximize your retirement years while you still can. Whether you’re calculating your expected retirement spending, maximizing your 401(k) contributions, or opening and funding an IRA, each step is integral to building a financial foundation for your golden years. If you need help saving for retirement, consider working with a financial advisor.

1. Calculate Your Expected Retirement Spending

One of the most daunting risks of retirement is the possibility of outliving your savings, which could require drastic cuts in both essential and non-essential spending. Estimating retirement spending is not only prudent but also an important step in ensuring a secure and comfortable retirement.

Keep in mind that as a retiree, you may find yourself compelled to make unplanned withdrawals from your investment accounts, potentially incurring penalties and adversely affecting the longevity of your retirement portfolio. Therefore, taking a meticulous approach to calculating expected retirement spending could help you preserve your standard of living and avoid financial distress in later years.

2. Fund Your 401(k) to the Max

Maximizing your retirement savings is a key goal for reaching your retirement benchmark. Your 401(k) provides a framework for saving and also offers potential investment growth over time. So by maximizing your contributions, you can substantially bridge the gap between your current savings and the ideal financial cushion that you will need to pay for your golden years.

To fully take advantage of your 401(k), you could consider reducing discretionary expenses or increasing income streams to free up more funds for allocation to your 401(k). Automating 401(k) contributions to coincide with pay periods can also help you ensure consistent savings without the need for manual transfers. Additionally, contributing enough to earn the employer match, when available, is an important first step.

3. Open an IRA Immediately and Fund It

Another way to boost your retirement savings is to open an individual retirement account (IRA).
This account can provide additional tax-advantaged opportunities for retirement investments beyond your employer-sponsored 401(k) plan.

If you are interested in doing so, opening an IRA is a straightforward process that can be initiated with a variety of financial institutions. The required steps involve selecting a provider, providing personal identification, establishing a funding source and choosing your investments. This is a simple process but you might need help in deciding what to invest in, given your unique situation.

4. Utilize Catch-Up Contributions

A senior reviewing his retirement savings goals.

If you’re age 50 or older, catch-up contributions could be a game-changer. The IRS allows you to contribute additional funds to your retirement accounts beyond the regular contribution limits, thereby accelerating your retirement savings growth.

To be eligible for catch-up contributions, you must be aged 50 or older by the end of the calendar year. The IRS outlines that for 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan. By contributing an additional $7,500 to your 401(k) over 10 years, you could potentially add over $111,000 to your retirement fund, assuming a 5% annual return. 

5. Calculate How Much You’ll Receive From Social Security

For many Americans, Social Security benefits are a cornerstone of their retirement income, providing a steady stream that reflects their years of hard work. To ensure a comfortable retirement, you should understand what you can expect from Social Security. To be eligible for Social Security benefits, you need to accumulate at least 40 credits, which are typically earned over 10 years of working.

To determine the amount you may receive from Social Security at retirement, a Social Security calculator is an invaluable resource. This tool provides personalized estimates by considering factors like work history, earnings and the age you plan to start benefits. You may want to consult with a professional to get a better picture of how much you can expect to bring home each year and how to plan accordingly.

Additionally, if you can delay claiming benefits until age 70, you could boost your Social Security benefits. Doing so can potentially increase your payments up to a maximum of 32%.

6. Find the Right Investments for the Next 10 Years

Long-term investment strategies are crucial for those seeking to build wealth over an extended period. Unlike short-term approaches, which may focus on quick gains through frequent trading, long-term strategies typically involve holding investments for several years or even decades. This approach has historically proven to be successful, as the stock market has returned an average of about 10% per year before inflation over the last century. The power of compounding returns plays a significant role in this success, as it allows gains to be reinvested and generate additional earnings over time.

As you look towards retirement, consider emerging trends as a strategy to diversify your portfolio. Sectors such as healthcare, technology and renewable energy are areas that analysts believe have strong potential due to demographic changes, technological advancements and the global shift toward sustainable energy sources. Incorporating investments in these areas, along with international exposure, can provide a balanced approach that is responsive to various economic conditions. Diversification not only helps to protect against market uncertainties but also positions investors to capitalize on growth opportunities in emerging sectors.

Bottom Line

A senior couple meeting with a financial advisor to adjust their retirement savings plan.

Your savings path for retirement will depend on a strategic blend of spending calculations, maximizing 401(k) contributions, opening an IRA and making investment choices. Taking and adjusting a combination of these steps can help you close the gap to pay for a comfortable retirement.

Saving for Retirement Tips

  • A financial advisor can help you build wealth by recommending a specific mix of investments for retirement. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • You can utilize a retirement calculator to estimate how much you’ll need in retirement so that you have a goal to shoot for.

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