03 Apr Not Saving for Retirement? Start Your Side Hustle
Not Saving for Retirement – Here’s what your “Golden Years” will look like
Not saving for retirement? What would your retirement look like without savings? That’s not as crazy a question as it may sound. A 2019 research study from Northwestern Mutual found that 22% of adults in the U.S. have less than $5,000 saved for retirement, while another 15% who have no retirement savings at all. The same survey reported that, on average, people think there’s a 45% chance they’ll outlive their savings. Clearly, that’s not an ideal scenario.
Here’s the Reality of Not Saving for Retirement
Retirement means the end of a steady income, which is why having a nest egg is so important. You may need up to 80% of your pre-retirement income once you stop working. So, for example, if your annual income was $100,000 when you were working, you will need up to $80,000 per year in order to maintain your lifestyle when you’re out of the workforce. Without savings or a pension plan (which are rare), you would need to either continue earning money or cut way back on your spending.
For many people who enter retirement without any saved cash, their only source of income ends up being Social Security. The Center on Budget and Policy Priorities reports that for half of the seniors, it provides 50% or more of their income, while about 20% rely on it for 90% or more of their income.
Not Saving for Retirement Means You Will have to Survive on Your Social Security Check
With the average monthly Social Security retirement benefit check at $1,509 as of June 2021, it can be a big shock to seniors who were used to bringing in much more. On average, Social Security replaces only 40% of a retiree’s pre-retirement earnings. Although there are ways to maximize it, Social Security still functions best as an adjunct to personal savings.
When you consider healthcare costs like Medicare premiums, basic living expenses like food and housing, personal debt, and other financial obligations many seniors carry, it’s clear why living solely (or mostly) on Social Security simply may not work.
You Will Need to Downsize Your Lifestyle
Not saving for retirement means it will be difficult to maintain in retirement the same lifestyle that you had in your working years. You may need to make adjustments such as moving into a smaller home or apartment; forgoing extras such as cable television, an iPhone, or a gym membership; or driving a less expensive car.
For many seniors, downsizing to a smaller house is not enough. They need to sell their homes and move in with their adult children. Without a new home to purchase, the sale of a house can, one hopes, provide a good nest egg.
You May Have to Live with a Roommate
Seniors who have not saved extra for retirement, and who still own homes, can turn to their homes as a source of income. For some, this could mean renting a portion of their space as a separate apartment. For others, it could result in taking on a roommate. Both can be fraught with risks.
Being a landlord is fine if you don’t mind sharing space, but if you are the type of retiree who values peace and quiet and doesn’t like to share, renting a room could be a bitter pill to swallow. Another option is to take a reverse mortgage on a home, although doing so can be costly and complicated.
You May Never Be Able to Retire
If you have not saved money for retirement and are not willing to overhaul your lifestyle, then retirement might not be an option for you at all, particularly if Social Security isn’t enough to live on. Many people forego retirement and work for as long as possible, largely because they don’t have enough saved.
You May Need to Continue to Work Part-Time
To keep up with your basic expenses in retirement you might need an extra income stream. This means continuing to work 40 hours or at least having a part time job. However, working is not feasible for all seniors, especially those in poor health. And really, do you want to keep working when you should be retired and relaxing in life?
The Answer? Start Your Side Hustle now and Secure your Retirement
Retiring without savings requires a lot of sacrifices. Social Security does not provide enough money for most people to maintain their pre-retirement lifestyles, so retiring with that as your sole source of income will require big changes.
If your current money situation doesn’t allow you to save for retirement, there is an easy answer – Start a Side Hustle. Your side hustle allows you to have a new stream of income. This new money allows you to put the money aside for retirement! The best part of an online side hustle is that it is passive income. It means you don’t have to commit more hours to an employer and a part time job.
Your side hustle will earn money 24 hours a day. Change your retirement trajectory by starting your side hustle today!