50 years old with no savings

Ducati52 said:
I think I would steer someone in this situation towards Dave Ramsey. While I certainly don’t agree with all of his philosophy, I think he’s a pretty good resource for someone who’s literally starting at square one. The broker/IRA seems more like step 5 or 6, when he really needs to start at step one.

However, please don’t take this as a criticism of your actions, which were very kind. Most would simply respond with something like, “spend less than you make” or “get a better job.”
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It's just a very difficult situation in which to try and help someone who is really behind the 8 ball. My impression talking with him was he probably wouldn't have done anything even if I gave him the name of a financial adviser. I don't know of any I would trust in the area.

Someone would have to do everything for him to get him started. I mean everything. I wrote down some steps he could take. It's up to him. Like others said, I can't do it for him. Pointing out the obvious like get a better job or spend less isn't really helpful to him. I'm afraid he's gone as far in life career wise as he is capable.

Spend less he already knows. He doesn't know how to invest what he could save, and he could save very little is my feeling. Almost an impossible situation, but I tried. I wish him luck.

Dave Ramsey I don't care for. So I never thought of him. It's hard for me to understand procrastinators as I am not one. However that doesn't mean I can't sympathize with his situation. I feel for him. I just didn't know how he could go on in a good way without trying to just lay it out for him and he can go straight to the source. He didn't seem like the type to me that had enough interest or willpower to listen to a Dave Ramsey.

He needed help and he needed it now. He knew he was in trouble and he reached out for help.
 
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I have friends who have no savings and are retired. They get excited if they have $5K (or less) in a bank account. I also have friends who haven’t a clue about investing and really find math bewildering. I don’t think they can learn to invest at this age. The OPs idea is straightforward. Put money away and don’t touch it. So many people blithely think they’ll live on SS and be just fine... it’s scary.
 
No sympathy for him. The stupid shall be punished. Give him the story of the grasshopper and the ant.
 
many of not the majority of Americans retire with little or no savings. There is plenty of government assistance . Extra help (medicare) pays insurance premiums, section 8 housing provides low cost housing, ( 30% of income ), food stamps .... etc... while this is probably not what he envisions for his retirement, his worse case scenerio is not horrible.

He is starting to ask questions and if he wants to can start to make some headway.

If I were helping him , I would have him research his likely social security benefit amounts, and work from there, start a tax deferred savings for both of them in a simple balanced fund with Vanguard.
 
You did the best you could under the circumstances. Maybe he'll take some initiative. It's NEVER too late to get started. Although I was always a saver, after my divorce at 40 I had 20 k left in my retirement plan and very little liquidity after paying to rid myself of a spendthrift. I had also been recently laid off, taking a 15k cut with my new job working for a lunatic at that. That company had no retirement plan.

I continued to look for better conditions & after a year I replaced my old income/ benes at the company where I happened to meet my thrifty now husband. We never carried any debt (fortunately he owned his home outright), saved like squirrels and still led a very enjoyable life. I expected to be weeded out in my 50s sometime, having seen it happen to many before me at various jobs and especially at my last one. Every raise went into my 401k and after maxing that out I dumped money for the rest into IRAs @ max & savings. At 56 I'd had enough of my company, and was being moved to a part of the company being sold (never good news). I saw my future contributions to my pension walking away, so put in for immediate early retirement. I do have 50/50 HC so I pay $600 and they do too. Also I had a small pension (80k) that I immediately annuitized $900/mo. My IRA is only 450k now but I won't be accessing it for a long time as we have a nice cash hedge. So, in 16 years we'd saved enough together to retire comfortably- and both early (him @ 62 now 72 and me at @56 now 59). Over that time neither of us were bringing in salaries higher than 80k, so I'm thinking I'm in the lower end of the financial spectrum in this forum. :LOL: I am no master investor compared to many, but even during just 16 years the constant investing at all prices in all markets paid off. I did of course benefit greatly from the good market over the past 10 years. We didn't retire wealthy, but we are doing fine. 3 years in I see no problems coming our way.

There are so many who won't, don't or can't plan for the future- many due to their line of work. My sister is in that situation, of course as a result of her own choices (bee keeper/ remover) . All you can do is hope to be able to help. (not being judgy- I should have attended college but didn't have any interest at the time- not my best decision)

I guess it is in my favor that I'm a born fretter, so always looked for jobs that came with good benes & worked very hard to move up as much as possible. I always had to know where my money was going to come from- and still do.
 
UnrealizedPotential said:
Dave Ramsey I don't care for. So I never thought of him. It's hard for me to understand procrastinators as I am not one. However that doesn't mean I can't sympathize with his situation. I feel for him. I just didn't know how he could go on in a good way without trying to just lay it out for him and he can go straight to the source. He didn't seem like the type to me that had enough interest or willpower to listen to a Dave Ramsey.
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I think referring him to Dave Ramsey is a good choice as well, but if he doesn't have enough interest or willpower to listen to someone like that - how in the world is he ever going to do anything with his financial future? Listening to a the radio or a podcast is about as easy as it gets. Ramsey's advice is solid (even if not always delivered well) - especially for someone like this.
 
You have work hard, work smart, and live smart. All three.
 
He is 50 so he still has time to put some money away. He needs a budget. He has to start and start NOW. Then be diligent to always put money away. Make it part of his budget. He has to account for every penny and find ways to put every penny away that he can. Get a part time job for a couple of years if possible to increase his income and put that away.

The longer he can work the better...... if he can work until 67 - 70 and use the next 20 years putting money away, he can retire with some dignity. He will not retire a millionaire but he will have something. He should use an IRA of some sort if possible to get some tax advantages that might help to give him more to put away.

The worst thing he can do is to do nothing.
 
Working as long as you like not a given

I don't think continuing to work be beyond 65 should be part of the plan. It will be nice if you want to and you can, but I planned to work until 70...and beyond, just because I enjoyed it and was perfectly mentally and physically able to. However, when I was 67 my company started planning for a merger and laid off 2/3 of administrative staff. I was one of those. In 45 years I had never taken more than a month or two to find another job, so wasn't worried, just annoyed. But after 9 months of going on constant interviews, passing all with flying colors and being advancing on to the next level of interviews and/or tests, I would be told that I was one of 3 or 4 "equally" qualified candidates and they would be making a decision soon. The one thing that was different about most all interviews this time, than in past years, was that I kept getting asked "how long do you expect to be with the company?" Which indicates they think I will be retiring (or dying) soon. I don't believe they asked younger people that question. If the finalists are all equally qualified, then they will be making a decision based on arbitrary factors like age, education, or just personal preferences. I'm sure I'm always the oldest and I never got the jobs.

After nine months of this, I just got tired of it and so retired with a lot less savings than I had planned on. I volunteer in my church office and do projects for friends and family because I miss using my computer skills, but the moral is that you cannot count on being able to keep working beyond a certain age, so don't make it a key factor in your retirement plan.
 
With so few years left, he should also look at cutting as many optional expenses as possible. This might have to include downsizing his home now since housing is often one of the biggest budget expenses. Reducing expenses now will also set him up for a lower cost way of living in retirement, something that will almost certainly be necessary.
 
I think the last thing someone with no savings at age 50 needs is a broker.

He needs a book ... and a friend to assist him.
 
I would suggest he put away the max he can in a ROTH and have his wife put away the max she can in a TIRA. If he puts away 12K/yr it's about 500K in 20 years. He can then let the TIRA go to RMD and supplement his and her SS. Let the Roth ride and grow unmolested. The Roth provides some insurance if disaster happens and someone gets Alzheimer at 85 or something. If you have 250K in a Roth at 70 you have 600K at 85 a nice amount to provide end of life care for 2 people. If he has 250K in a TIRA at 70 he can pretty well pull 1K/mo inflation adjusted out of that in addition to SS for the reminder of his life. I would use a 60/40 AA and re-balance yearly. 100% S&P at age 50 is too aggressive IMHO. He doesn't need a broker just a brokerage account capable of housing a TIRA and a Roth, a 2 fund portfolio like VTI and BND or the mutual fund equivalents.
 
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HNL Bill said:
+1. Some just follow the puritanical work ethic. Most can't fathom planning ahead and sacrificing spending now, for the future. Most can't/won't/don't look ahead 10+ years. Most can't understand how one of their coworkers can afford to retire early. "What will you live on?" is the most common question I'm asked.

So, I've transitioned from saying I'm retiring to saying I'm going to transition to being a professional photographer. I'm sure it will bring in a couple hundred a year!
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Same! I am semi-retired and am doing photography. It allows me to say I am doing something now that I am 50 and not in a 9-5 job. LOL
 
Elizrogers said:
I don't think continuing to work be beyond 65 should be part of the plan. It will be nice if you want to and you can, but I planned to work until 70...and beyond, just because I enjoyed it and was perfectly mentally and physically able to. However, when I was 67 my company started planning for a merger and laid off 2/3 of administrative staff. I was one of those. In 45 years I had never taken more than a month or two to find another job, so wasn't worried, just annoyed. But after 9 months of going on constant interviews, passing all with flying colors and being advancing on to the next level of interviews and/or tests, I would be told that I was one of 3 or 4 "equally" qualified candidates and they would be making a decision soon. The one thing that was different about most all interviews this time, than in past years, was that I kept getting asked "how long do you expect to be with the company?" Which indicates they think I will be retiring (or dying) soon. I don't believe they asked younger people that question. If the finalists are all equally qualified, then they will be making a decision based on arbitrary factors like age, education, or just personal preferences. I'm sure I'm always the oldest and I never got the jobs.

After nine months of this, I just got tired of it and so retired with a lot less savings than I had planned on. I volunteer in my church office and do projects for friends and family because I miss using my computer skills, but the moral is that you cannot count on being able to keep working beyond a certain age, so don't make it a key factor in your retirement plan.
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I think that's good general advice. However, in the case of the 50 year old with no savings it's not so much his job would be in jeopardy because of cutbacks or age discrimination but because of his body not holding up. The 50 year old is self employed. But his work is not very physical so he has a shot at it.
 
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Unfortunately, a knee-jerk reaction is that a man who hasn't planned ahead and is 50 years old may not be able to do what is necessary to retire nicely. He hasn't shown the foresight or diligence. Good luck to him. He's going to need it.
 
Doc0 said:
I would suggest he put away the max he can in a ROTH and have his wife put away the max she can in a TIRA. If he puts away 12K/yr it's about 500K in 20 years.
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As mentioned earlier in this thread, I can't see why a Roth would be better than a tIRA. If he can afford to put away $12K after taxes and still cover his living expenses, he is likely at a higher tax rate now than he will be when he retires.
 
To leave or take SS

The SS left on the table between 66-70, if you wait to take it at 70, is significant. Though you get a little more monthly by waiting, it would take years to break even, if you lived that long. Might it not be best to take it when eligible and put it all in savings? If you then need that extra $1k/mo (on avg) to live on you will have 20-30 years worth to draw on from that savings.
 
Elizrogers said:
The SS left on the table between 66-70, if you wait to take it at 70, is significant. Though you get a little more monthly by waiting, it would take years to break even, if you lived that long. Might it not be best to take it when eligible and put it all in savings? If you then need that extra $1k/mo (on avg) to live on you will have 20-30 years worth to draw on from that savings.
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I would say maybe, but maybe not. Since no one can tell the future everything is just a guess. If he took SS at 62 and invested it, what happens if something happened to him and he could no longer work in a few years? But if he held off on SS, and worked as long as he could, he would have the flexibility of taking SS when he absolutely needed it and his payment would be higher.

It would be a bad situation if was forced to rely only on SS at age 63, or 64 if he could no longer work. It's a risk. Pretty much everything in life is a risk.
 
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Bad Rationale

The rationale that many people use is that "the government won't let me starve, so they'll take care of me". The effect of 50+ years of a welfare mentality in this country, and a continuing nanny state. They see others getting what they consider to be oftentimes unfair payments, so why shouldn't I?
 
Taking SS early, at 62-63, if not needed, would be considerable loss, if you were still working because you would be penalized for making over a certain amount. But at full age (66-67) you can continue working and make all you want, without penalty, and the difference between what you'll get monthly at full age and waiting till 70 is not as big a difference as it is at 62. As the average difference between SS at 66 and at 70 is $1k or less. That's $48,000 you're leaving in the bank. You will not be able to take that $48k in lump sum at 70, so will get it $1-2k/mo, but no interest earned. Eventually, if you live long enough, you were earn more overall by waiting, but it could be 10-15 years past 70. I guess it just depends how a person feels they want to manage their budget, but I didn't want to gamble I'd live past 82 when total SS would begin to be more for my having waited till 70.
 
Our observation is that there are essentially two groups. Those who are financially responsible, forward plan, and prepare for retirement. Then there are those that live for today, and suddenly find themselves about to retire with limited resources and income. I do not think that this will ever change despite all the books, articles, etc.

As the saying goes...you can lead a horse to water but you cannot make it drink.
 
TrophyWife said:
What do you all think about encouraging him to buy a small condo if he is in a low cost of living area? It seems like at least, he would be building some equity and possibly pay it off over the next 20 years
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I think this is a big one and depends on his current rental situation.

For example, if he's currently renting a 2k sq ft single family home for $2.5k/month and is willing to downsize to a 700 sq ft condo which might be $1.75k/month PITI+HOA, he'll end up paying less per month (which can be put in an IRA) and build equity.

If he pays off the condo in 20 years by age 70, he'll be in much better shape IMO than if he continues to rent.

But again, this depends on his location and current rent. And his willingness to change his housing situation.
 
VERY FIRST STEP: He needs to learn to pay himself first, preferably 10%, but 2% is a good start and a thousand times better than 0%. After mastering Step One a few months, a tIRA is a possible second step.
 
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