Retiring at age 65 with $0 saved is a tall order for many people.
Some folks may be able to retire successfully with no nest egg. Others may find that they can but decide to continue working for a while. And some may have no idea whether it’s going to work out until they make the attempt.
“Nothing is impossible,” says Terri Fiedler, president of retirement services at Corebridge Financial, a financial services company in Houston. “However, with very little saved, it will likely be much harder to live the life you envisioned in your retirement years.”
If you are thinking of retiring at age 65 with $0 saved, here are some strategies that you may want to consider:
— Create your budget.
— Scale back to a part-time job.
— Take a look at your home.
— Investigate reverse mortgages.
— Put off collecting Social Security for as long as you can.
— Get a financial team together.
[READ: Can I Retire at Age 70 With $500K Saved?]
Create Your Budget
If you’re setting out to retire with no savings, you need to form a plan, and you can’t do any planning without a budget.
“The first step is putting together a budget to see exactly what your expenses are,” says Misty Garza, certified financial planner and vice president at Bogart Wealth, a retirement planning service based in McLean, Virginia. “It might be uncomfortable, but you need to know exactly what your essential living expenses are because most likely you are going to need to cut out any discretionary spending.”
Once you have your budget mapped out, Fiedler says, you’ll want to create a plan on how you’re going to keep some money rolling in to pay bills.
“Retirement means different things to different people, so first define what your retirement goals are,” she says. “After you’ve set your plan, action is everything. You need to make sure you’re doing the things you laid out and continuously reevaluating your plan to ensure you’re on the right path.”
[Read: How to Create a Retirement Budget.]
Scale Back to a Part-Time Job
If you’re set on retiring without any savings, you could consider a semi-retired lifestyle where you continue to earn an income but work fewer hours.
“Many retirees find part-time jobs that are less physically demanding than their previous full-time positions,” says Pawan Jain, chartered financial analyst, certified financial planner and associate professor of finance at Virginia Commonwealth University.
Jain says a part-time job would provide some more income, and there can be other benefits such as social interaction.
So keep that in mind, and if you’re able to sink some of your part-time paychecks into savings, you can put money away for a time when you are fully retired.
Take a Look at Your Home
If you have a house, and especially if it’s paid off, you have a few options to consider.
— Downsize. Tapping into the value of your home could put you in a better financial position in retirement. You could sell your home and move into a smaller one, perhaps by paying cash and sinking the rest into savings. Or you could move into an inexpensive apartment. You might even consider moving in with a family member who would charge you little or no rent.
— Bring in a boarder. It sounds very 1930s, but somebody out there in your community is probably looking for a room to rent. You’ll need to charge a monthly rent that’s fair to you and your future boarder.
— Stay at home and do nothing differently. If the home is paid off, and you have a place to live, it may not make sense to complicate things. If you choose this route, it increases the need to budget carefully and possibly work a part-time job when you can.
Garza points out that maintaining a home in retirement with no money saved may be impractical due to costs associated with the upkeep.
Investigate Reverse Mortgages
Reverse mortgages have a bad reputation, but they can work out well for some people.
“If the retiree is house-rich but cash-poor, this is the scenario that reverse mortgages were designed for,” says Lisa Whitley, an accredited financial counselor and chartered retirement planning counselor in the District of Columbia.
Reverse mortgages can work in a variety of ways, but typically the homeowner will get monthly payments from their home’s equity for a set period or as long as they live in the home. The downside is that if you were to die in your home or sell it before moving into a nursing home, the reverse mortgage has to be paid back.
So if you are hoping to leave your house behind for family members, that probably won’t happen with a reserve mortgage. Still, it’s an option to mull over. But because of all the things that could go wrong, like foreclosure, you’ll want to read the fine print very carefully.
Put Off Collecting Social Security as Long as You Can
If you’re eligible for Social Security retirement benefits, you can start collecting them as early as age 62. But the longer you wait to begin collecting, up until age 70, the bigger your Social Security check will be.
There’s no advantage to collecting Social Security after age 70. Payments max out at that time, and you’d be throwing money away.
If you collect your Social Security check at age 62, your monthly check will be about 30% less than it would be if you wait until full retirement age, which historically was 65 but is now 66 or 67 (depending on the person’s birth year). If you can hold off until age 70, 8% is added to your Social Security benefits for each year you wait.
[Related:Average Social Security Benefit by Age]
Get a Financial Team Together
Many financial teams include a financial advisor, but yours doesn’t need to have one. Your financial team could include family members, friends and people at a senior citizens center or a church. You don’t have to ask for family or friends for money — just ideas.
“Some religious organizations have a benevolence committee that can help individuals who are in poverty or facing financial distress and need assistance with living expenses. If you are part of a church, one can seek out to see what help they may be able to provide,” Garza says.
If you’re not part of a church, consider nonreligious options. “There are also various social services in each city or state that you can look into,” Garza says.
For instance, Meals on Wheels delivers food, sometimes free and sometimes at full cost depending on your financial situation, to folks over age 60 who are in need.
You also may want to call 211, which can help connect you with essential community services.
“Most cities have food kitchens that are sponsored by various organizations that you can look into for hot meals to supplement any food needs you may have,” Garza says, adding that there are other ways you may be able to save money: “Dental schools can sometimes provide free dental care for individuals. Cosmetology schools offer free haircuts so their students can get experience.”
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Can You Retire at 65 With $0 Saved? originally appeared on usnews.com
