You'll often hear that it's important to consistently fund an IRA or 401(k) over time. And the sooner you begin putting money into one of these accounts, the more opportunity you'll have to benefit from investment gains.
But maybe it was a struggle for you to build retirement savings. Maybe you had to cope with stagnant wages, expensive medical bills, and other costs that got in the way of building a large nest egg.
If you're nearing retirement with just $50,000 in savings, the reality is that you're frankly not in the best shape. The average 60-something has a retirement savings balance of $112,500, according to Northwestern Mutual. Even that, frankly, isn't a ton of money.
So if you have less than half of that, you'll need to be very careful about managing your cash reserves. But you should also know that you're not doomed to a cash-strapped retirement just because you only happen to have $50,000 socked away.
Don't forget about Social Security
Many people struggle to live on Social Security alone in retirement. But the reality is those benefits might help sustain you to a large degree.
The average senior on Social Security today collects $1,848 a month. That's over $22,000 a year. Even if you're only taking a few thousand dollars a year out of your savings because that's all you can afford, there's still another steady source of income you can fall back on.
Part-time work and frugal living could save your retirement
The long-time convention was to stick to a 4% withdrawal rate for retirement savings. So for a $50,000 nest egg, that would mean $2,000 of retirement income a year. Even with a decent chunk of cash from Social Security, that may not be enough to live on. But if you're willing to work part-time in retirement, you may find that you can get by quite well thanks to that added income.
You might also need to make some frugal choices in retirement to compensate for not having a ton of savings. That could mean downsizing to a less expensive home or limiting yourself to local travel instead of taking big trips.
You may also need to be mindful of smaller expenses, too. If money is tight, you may have to stick to one streaming service instead of having multiple. And you might have to mostly cook your own food rather than dine out regularly.
But that doesn't have to lessen your quality of life. If you learn to embrace those things, you can make the best of a limited income. That could, for example, mean broadening your cooking horizons and exploring new recipes you're excited to eat.
In an ideal world, you'd be retiring with a lot more money than $50,000. But if that's all you have to work with, don't assume the worst. With some reasonable lifestyle adjustments, you can set yourself up to enjoy a fulfilling retirement, even if you have to limit your spending.
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FAQs
Part-time work and frugal living could save your retirement
Is 50k a lot of money in savings? ›
Is $50k a lot of savings? $50k is a lot of savings and definitely an important milestone to celebrate. However, 50k will not be enough to sustain you in retirement, so it's important to find ways to invest and continue to grow that 50k.
How much savings does the average retired person have? ›
According to data from the Federal Reserve's most recent Survey of Consumer Finances, the average 65 to 74-year-old has a little over $426,000 saved. That's money that's specifically set aside in retirement accounts, including 401(k) plans and IRAs.
Can I retire at 65 with no savings? ›
You can still live a fulfilling life as a retiree with little to no savings. It just may look different than you originally planned. With a little pre-planning, relying on Social Security income and making lifestyle modifications—you may be able to meet your retirement needs.
What happens when you retire with no money? ›
Having no savings means that you will be forced to rely on your Social Security benefit for income in retirement. According to the Social Security Administration (SSA), among elderly Social Security beneficiaries, 12% of men and 15% of women rely on Social Security for 90% or more of their income.
Can I retire with 50k in savings? ›
So for a $50,000 nest egg, that would mean $2,000 of retirement income a year. Even with a decent chunk of cash from Social Security, that may not be enough to live on. But if you're willing to work part-time in retirement, you may find that you can get by quite well thanks to that added income.
How many people have $50,000 in savings? ›
Personal Savings in the U.S.
18 percent said their saving were at least $1000 but under $10,000, while 11 percent each had $10,000 to $49,999 and $50,000 or more saved up.
What is considered a good monthly retirement income? ›
Many retirees fall far short of that amount, but their savings may be supplemented with other forms of income. According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.
How much do most 70 year olds have in savings? ›
According to the data, the average 70-year-old has approximately:
- $60,000 in transaction accounts (including checking and savings)
- $127,000 in certificate of deposit (CD) accounts.
- $17,000 in savings bonds.
- $43,000 in cash value life insurance.
According to a data release from the SSA's Office of the Actuary, aged 62 retired-worker beneficiaries took home an average of $1,298.26 in December 2023. This works out to just $15,579.12 per month on an annual run-rate basis, which is only $519 above the federal poverty level for a single filer in the U.S. this year.
Roughly one in seven Social Security recipients ages 65 and older depend on their benefits for nearly all their income, according to an AARP analysis. Unable to maintain the lifestyle of their working years, they trim their already trim budgets, move into smaller homes, or rely on the kindness of relatives to get by.
How many retirees have no savings? ›
WASHINGTON—A new AARP survey finds that 20% of adults ages 50+ have no retirement savings, and more than half (61%) are worried they will not have enough money to support them in retirement.
Can you retire if you never worked? ›
Social Security has many different programs and types of benefits, including retirement, disability and survivor's benefits.
What do retirees do when they run out of money? ›
If you are already running out of money in retirement, consider part-time work, reverse mortgages, or financial assistance from family members or government programs.
How much money do you need to retire and never work again? ›
To account for this, experts suggest you multiply your desired retirement income by 25 times. So if you want to retire on $20,000 a year, you would need $500,000 saved to live comfortably and never have to work again. Retirement spending also depends on your lifestyle choices.
How do people afford to retire? ›
For most retirees, Social Security and (to a lesser degree) pensions are the two primary sources of regular income in retirement. You usually can collect these payments early—at age 62 for Social Security and sometimes as early as age 55 with a pension.
How much interest will $50,000 earn in a savings account? ›
4.75% APY: Opting for a 4.75% CD or high-yield savings account will earn you $2,375 in interest over the course of a year. 5% APY: With a 5% CD or high-yield savings account, your $50,000 will accumulate $2,500 in interest in one year.
At what age should you have 50k saved? ›
Here's how much cash they say you should have stashed away at every age: Savings by age 30: the equivalent of your annual salary saved; if you earn $55,000 per year, by your 30th birthday you should have $55,000 saved. Savings by age 40: three times your income. Savings by age 50: six times your income.
Is 50k saved at 30 good? ›
If you're looking for a ballpark figure, Taylor Kovar, certified financial planner and CEO of Kovar Wealth Management says, “By age 30, a good rule of thumb is to aim to have saved the equivalent of your annual salary. Let's say you're earning $50,000 a year. By 30, it would be beneficial to have $50,000 saved.
How long should it take to save 50k? ›
How long will it take to save?
| Savings Goal | If You Saved $200/month | If You Saved $400/month |
|---|
| $50,000 | 250 months | 125 months |
| $60,000 | 300 months | 150 months |
| $70,000 | 350 months | 175 months |
| $80,000 | 400 months | 200 months |
7 more rows