Larry Marfise, the athletic director at the University of Tampa, was just starting his career when he decided it was important to begin saving for retirement — he saw older people who never got to follow their dreams to travel and enjoy their later years, and he didn’t want that to happen to him.
Now at 66, decades after he began saving, he’s still working — but because he wants to. He has two sons in college, and a wife with similar savings values, and he’s accomplished all he’s wanted to through the years. There were times when he had to stretch his income to have food, shelter, clothing, money for his goals as well as retirement savings, but he made it work.
“At this age, it relieves a lot of pressure and tension,” Marfise said. “We don’t have to worry about eating cat food and other things you hear people doing to survive.”
Marfise has a point — not everyone is prepared for retirement in their 60s, let alone decades before when they’re at their peak earning years or just starting out in the real world. Unfortunately, people sometimes don’t realize they haven’t saved enough until it’s too late. Near-retirees, for example, had the least amount of money saved for retirement than any other group in a 2015 Wells Fargo survey: Americans 60 and older had about $50,000 stashed away while people 55 to 59 had three times as much. Americans of all ages said their biggest financial regret was not saving for retirement earlier, according to a survey by personal finance website Bankrate.
The landscape of the retirement years has changed as well — traditionally, you would expect most people to retire between 62 and 65 years old, but these days people are working through those years, said James Nichols, head of consumer solutions group at New York-based financial services firm Voya Financial. Sometimes, that’s because they never had the opportunity to save for retirement when they were younger. Women age 65 and older are perhaps most susceptible to this predicament, Department of Labor data shows. Women, especially those divorced or unmarried, face financial hardships, possibly because they lost money in the 2008 financial crisis or because they had to leave the workforce to care for their family.
See: It’s worse than you thought: Americans are drastically under-saved for retirement
There’s hope for boomers, though, even for those with little to no retirement savings. If they’re in the position to work longer, they can do so while building up a bigger nest egg and delaying Social Security benefits. Every time a preretiree postpones Social Security benefits by another year, the initial amount they receive increases about 8%, experts said. If married and in need of assistance, the spouse earning the lesser of the two should take Social Security beginning at 66 if possible. Choosing to begin withdrawals between the ages of 62 and 65 while still working could reduce the benefit they receive, experts said.
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Now also is the time to think of the impact of health-care costs on your retirement, if you haven’t already — deductibles, premiums and other expenses could eat into your savings accounts. A 65-year-old man would need $72,000 and a woman of the same age $93,000 in order to have a 50% chance of enough savings to cover their health-care expenses in retirement in 2016, an Employee Benefit Research Institute (EBRI) report found.
And 60-somethings should reconsider the general rule of thumb, that as you get older your portfolio mix should favor bonds and forget stocks. Though how much risk you can tolerate absolutely matters — you should be able to sleep well at night without worrying about the stock market — following the general rule of thumb of downgrading equities simply because of your age could be counterintuitive to your long-term investing goals, especially as more people live longer than they did decades ago. Keep one to three years’ of income in cash and short-term bonds so that you have liquid assets, but then invest in equities so that your assets continue to grow, said Robert Braglia, a financial adviser in New York.
“You are not investing for the next five years but rather for the 10th, 15th and 20th year,” Braglia said. “And that is not really any different than investing when you were younger.”
Wondering what your savings should look like during a major money milestone? Send your questions to personal finance reporter Alessandra Malito.