Retirement approaching and you haven’t saved enough? Your options are limited

Americans’ habit of spending and not saving is about to catch up with them.

We’re still operating as if we were our parents, who worked their entire lives for a company who then provided them with a pension for life, as well as health insurance and other retiree benefits.

Those days are long gone. Very few companies offer pensions to new employees, and even few provide retiree benefits. Today is the age of 401(k) and IRA and companies turning over to their employees the responsibilities of saving for and living through retirement.

Still, people aren’t saving nearly enough for retirement, despite the fact that many people are living longer and may even live just as long in retirement as we lived in our working lives.

And, if you think your Social Security check will be enough to support you, you  may want to reconsider. The average monthly Social Security check in 2017 is only $1,360. (Keep in mind that the program was never intended to be a retirement savings program – the goal was to be a sort of protection for workers and retirees.)

The good news is that not all is lost if you haven’t saved enough. But you’d better be prepared to deal with the consequences – and your options may involve a lower standard of living in retirement or working longer than expected.

Jeremy Keating, investment advisor at Capital Income Advisors in San Diego, says he sees the problem of people nearing retirement who haven’t saved enough more often than you might think.

“At that time we are not financial planners, we are crisis managers,” he says. “You have left no time.”

So, what are the solutions? Keating says the first is to work longer than you originally planned to earn additional income. Whether it’s a full-time or part-time job, it will allow you to delay drawing down your retirement accounts.

Keating  says he has clients who stop working because they are sick of the grind. They retire and become consultants. “They can earn wages, but are not stuck in a 9 to 5,” he says.

The additional benefit: “Every dollar you are earning is money you are not spending,” he says.

Keating says retail is always an option for retirees, but that doesn’t mean they have to go to work for McDonald’s or be a greeter in Walmart. They may have a hobby and can work for a retailer to take advantage of the benefits or discounts. For example, someone interested in golf may take a part-time job in a golf shop.

There are lots of options. “Sometimes people don’t expand their horizons on how they can earn money doing something they like to do,” Keating says. “There are so many websites. If you can do it online, why not?”

Another option: “They can always downsize and simplify,” Keating says. “If you have two cars, go down to one. You don’t need all these expensive toys. Even if they are  paid off, there could be extra expenses, like insurance.”

“Simplification is going back to how much do you really need in your life,” he says. “I’ve read more articles that say the simpler your life is, the easier your life. You are not bogged down with all this stuff. The idea is to become more minimalized than typical family that used their house as an ATM to buy all this stuff.

“If you  have to downsize anyway, I give advice to start living that way before you retire so it is not a shock when you have to,” he says.

David Evans, president of Evans Financial in Shreveport, La., gives similar advice. “I tell them you need to do this un-American thing where you live beneath your income,” he says.

Evans says he’s seen many people with expenses beyond their earnings. “I’ve seen people at 24 or 25 years old making $2,400 ( a month) but their bills were $2,700.”

To help them get on track, he says, he will help them analyze their debt.  “We’ll look at their house payment, car payment, what do you owe on credit cards.”

Evans says he had one couple as clients who had $30,000 in credit card debt and income from two pensions of $4,000 a month. “I said with that debt you are being strangled,” he says.

“You have to think outside the box,” he says. “You are paying out $2,500 in credit card payments and not deducting a lot of it. I refinanced the house, the cars and the credit cards for 30 years. If we finance for 30 years, it’s not paid off till you’re 90, but you’re drowning right now.

“Instead of payments being $2,400, they were $600,” he says. “They were able to put money back into savings.”

Evans says some investment advisors are only looking at what mutual funds to put their clients’ money into. They have to look at the debt to see if there are other issues, he says.

Keating agrees that you have to think outside the box in you have not saved enough.

“I give counter-intuitive advice and tell them to refinance for 30 more years,” he says. “Why do refinance for 15 years. Keep payment as low as you can. God doesn’t care if you die with a mortgage on your house. What good is it to pay off your house and not live a great life, unless goal is to turn house over to kids.”

Keating says he is one of the first to say pay off your mortgage, but different situations require different strategies – strategies that some people may think are unconventional.


This article is for informational purposes only, and is not intended to provide any financial, tax, or legal advice. Before making any financial decisions, we encourage you to speak with qualified professionals.