No Retirement Savings at 60, 9 ways to retire with no money
No retirement savings. How to retire with no money.
So you have no retirement savings at 60. What do you do now? How to retire with no money?
Frugal Retirement Living Means Adjusting To The Little Money You Have Available. You will have to reduce your lifestyle or save money or do both.
Despite our best intentions, we face a variety of financial challenges throughout our working lives. And maybe you are the same as me and were not able to save much toward retirement.
It’s difficult to know what to do, and what lies ahead, so much of the financial information and advice catered to wealthier people.
Retiring with little to no savings can be difficult, but it is not impossible.
Living on a low fixed income can be challenging. The best way is to prepare beforehand as much as possible.
Retiring with little money in Canada means a tight budget. Also, consider any government credits and benefits for low-income seniors.
You can survive retirement without money in retirement savings if you are creative and strategic with the resources you have left.
In this post, I want to give you some tips and pointers on how this can be done. How you can prepare yourself.
Retirement Income Sources In Canada
But first, let’s determine what your potential retirement income will be.
Income after retirement is based on many things. Let’s have a look at the typical retirement income source in Canada.
GOVERNMENT RETIREMENT BENEFITS
- Canada Pension Plan (CPP) or Quebec Pension Plan (QPP)
- Old Age Security (OAS) Guaranteed Income Supplement (GIS)
- Surviving Spouse Benefits
PERSONAL RETIREMENT SAVINGS AND PLANS
- Retirement Savings Plans (RRSP, TFSA, RRIF, Annuity, Pooled Retirement Pension Plan PRPP)
- Personal Savings (House, Savings account, chequing account, stocks, business bonds, mutual funds, real estate rental property, etc.)
- Employment Pension Plan
- Extra income from working side-jobs
- Retiring Allowance from your employer
- Other Foreign Pensions from outside of Canada
In this article, I will assume that you are the same as I and don’t have any personal savings, and will depend on Canadian Government Benefits. Let’s look at it in detail.
How much you MAY receive
There are a bunch of other factors involved with all three pensions, the point is they can provide a solid foundation for your retirement income and should be evaluated and researched individually.
Basically, the formula is set to make sure that every Canadian gets the exact amount of money as each other in retirement and everything else they want to leave has to come from personal savings.
- BOTTOM LINE: The minimum wage as of October 2023 is $34,424 and the poverty line is $24,720 per year. Even if you don’t have enough retirement savings, the full OAS and GIS of $18,372 per year on top of the CPP average of $9,732 can give you a decent retirement income of $28,104.
Those numbers are for a single person. Couples will have even more.
Watch the “Canada’s 3 Pension Plans – How OAS, CPP, and GIS Work?” video to understand better how it works.
How to Retire With No Money
What to do if you are 60 and have no retirement? How to prepare for retirement when you already don’t make enough money to pay your bills let alone save.
There is no easy way out.
- BOTTOM LINE: You have to make a decision and find a way to live below your means, pay out all your debts, and save as much as you can.
Do not make excuses and go on a guilt trip. And oh boy, your friends, family, and especially children will try to sabotage you.
Control your money before it controls you.
1. Build Reserves
First and foremost, you need to build some reserve NOW.
You can do it by starting to leave as you are already in retirement on a much lower income.
FOR EXAMPLE: Let’s say you are making $3,750 per month now. Let’s assume that your retirement income will be $ 1,400 per month. The difference will be $2,350.
Take a hard critical look at your life and ask yourself: “If you had to RIGHT NOW would you be able to REDUCE SPENDING spending by $ 2,550 dollars a month?”
For most of us, the answer is NO.
If you didn’t manage to save by now, that means that your cost meets or exceeds your income.
Then you have a few choices.
N1: Take CPP earlier.
If you will have little or no income other than a CPP, OAS, and GIS pension after age 65, it is better to take CPP early (unless you receive social assistance) and continue to work.
N2: Reduce your cost.
Reduce your cost by
- paying off your home,
- paying off your debt,
- ask family members (children) that leave with you to contribute toward bill payments.
N3: Develop a part-time income sting.
Develop a part-time income string, that you can take with you into retirement. And to be clear you are looking for a part-time income that will pay you about $ 2,500 a month.
Think about what you can do. Learn a new skill if needed. Go to a site like upwork.com or fiverr.com and see what jobs are posted there, to give you an idea. Most of the jobs you can learn to do relatively quickly (PowerPoint, Photoshop, Final Cut Pro, etc.). Udemy is a great place to start learning a new skill.
Start to develop these skills now, so you can take them with you into retirement and start to develop a second stream of income now.
- If you start the second stream of income, save it so you have some nest egg built by the time you turn 65 or 70.
Many people find that having a part-time job during retirement not only gives an extra income but also gives satisfaction.
Download the FREE retirement-ready checklist PDF. This will help you to plan for your retirement in ways that you may not consider yet.
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2. Cut Back on All Your Spending
Cut back on all your spending except for what you really need. Pay attention to all that extra stuff that you buy will not make you happy in the long run anyway.
It’s ideal to have a bare-bones budget that suits your retirement income but leaves some wiggle room for spending and entertainment.
3. Pay Out Your Dept
Payout your dept. High-interest rate is a lousy way to spend your pension. Paying off your debt as soon as possible will be able to help you to leave a much better life in the future.
4. Reduce Housing Expenses
When you don’t have retirement savings, your choices become more and more limited as you age. If you don’t own your home outright (meaning any mortgage debt) and can’t make the payments, then you lose the choice of where you want to leave during retirement.
Don’t leave someone else retirement dream. Concentrate on what you can afford and move to another place/city/province where you can afford to pay rent.
The cost of rent or house payment for most of us is a number-one expense for most of our working years. So, it makes sense if you have an option to reduce or eliminate that in retirement you will leave much better on far less.
Selling your house and moving to a smaller apartment can free up substantial equity in your home. Considering the inflated housing prices today, it can provide you with a sizeable amount for your living expenses during retirement.
SOLUTION 1: Paying out a mortgage will be the number one priority, if you can’t do that, then downsizing into a smaller house will be another option.
SOLUTION 2: Take on a roommate. Perhaps it’s a friend or somebody in the same situation as you. Two of you can make housing expenses more manageable than one person on their own.
SOLUTION 3: Become someone else roommate. You can rent a room from someone else or perhaps a family member has a spare bedroom for you to stay in.
Pat Dunn started a private Senior Women Living Together Facebook group that connects potential roommates to save on rental costs and alleviate loneliness.
Canadian Golden Girls Facebook group was renamed Canadian Senior Ladies and has 945 active members.
5. Reduce the Cost of Living
There is a difference between living in Toronto and living in Lake Eliot.
6. Invest in Your Health
According to Eckler Ltd., an average 60 yr old Canadian is projected to incur out-of-pocket (not government reimbursed) healthcare costs of $3k to $15k per year as they age to 85 yrs (when costs accelerate).
Eckler projects a 60 yr old should have an average of $145k available today to fund these costs in the event they don’t have private health insurance.
7. Make Your Pension Income Count
Once you have Retirement income coming in, then you must make sure you are maximizing each and every dollar. You have to do everything in your power to keep your expenses below your retirement income that comes in.
This may be way harder than you think.
8. Make a Retirement Budget
After you get some idea of your retirement income and lifestyle start to calculate how much it will cost you to live where you are living now. If you can not afford it, start to look for a cheaper place with a low cost of leaving to live.
Do thorough research.
What You Get in Personal Budget Google Template
• It’s a Google Sheets-based personal budget template you can download it free for personal use
• All expenses are grouped into 9 different categories: Home Expenses, Transportation, Loans, Health, Gifts, Subscriptions, Savings, Daily Leaving and Miscellaneous.
• Each category has a detailed list. For example, Daily Leaving: Groceries, Personal Supplies, Clothing, Dollar store, Shoes, Eating out, Hair Salon, Pet food and others.
• Template visually shows how much you earn, spend, and save monthly.
9. Get Help
When you are trying to survive in retirement with no money, asking for help is often embarrassing. But, if you try everything to make ends meet ask friends, family, church, or local non-profit for help.
Consider going to a local food bank.
FAQ
What happens if you have no money when you retire?
You will…
➡ Lose the choice of where you want to live
➡ The burden of asking friends and family for money
➡ You will have to keep working
➡ The government will decide what happens at the end of your life
What Percentage of Retirees Have No Savings?
According to Federal Reserve, 45% of single retire and 21% of married retirees receive 90% or more of their income from CPP and this number is rising. 62% of 60-year-olds have less than $ 2,500 in retirement savings.
Pension payments (CPP, OAS, and GIS) provide 50% of what you need to leave comfortably. You CAN survive on this income but will have to sacrifice a lot.
So, if you are in this situation, please know that you are not alone. If you are getting close to retirement, there will be tips to help you survive.
Is an RRSP a good way to save 5 years before retirement with a low income?
No!
➡ Registered Retirement Savings Plans (RRSPs) are a way of saving money and getting a tax break at the same time.
➡ As a low-income person, you pay very little or no tax. So the tax break is of no use to you.
➡ Plus, the RRSP might hurt you later.
Why would an RRSP hurt me later?
When you retire, you might be better off than you are now.
As a low-income person, you will likely be getting:
– Old Age Security (OAS pension)
– Canada Pension (CPP)
– Guaranteed Income Supplement (GIS)
The Guaranteed Income Supplement can be worth a lot for a senior with little or no income other than the OAS pension.
If you have money in RRSPs, you have to start taking it out when
you turn 71. For every dollar of RRSP, you receive after age 65, your GIS goes down by at least 50 cents and 75% over the income range of $4,600 to $8,400 (of the income that GIS takes into account).
“Low-Income Retirement Planning“
Do you have to have money to retire?
The general wisdom is that you will need 70 to 80 percent of your current salary to maintain a similar lifestyle in retirement. Deduct the pension amount you will receive.
Don’t forget to have one year of living expenses in an emergency fund. You never know what will happen.
If you are planning to travel you need to save for it too.
Can you collect Canada Pension if you never worked?
You can receive a Canadian pension (OAS and GIS) if you are 65 years of age or older and have lived in Canada for at least 10 years – even if you have never worked.
Ontario Benefits For Low-Income Seniors
From eligibility requirements and payment amounts to what to expect when applying, this guide shares everything you need to know.
BOTTOM LINE: Your retirement sources whatever they may be will dictate what you can and cannot do financially when you retire. Before you reach that stage in your life do your research, get the low-down on numbers, create a mock retirement budget, and be prepared for what you can control.
What You Get in Personal Budget Google Template
• It’s a Google Sheets-based personal budget template you can download it free for personal use
• All expenses are grouped into 9 different categories: Home Expenses, Transportation, Loans, Health, Gifts, Subscriptions, Savings, Daily Leaving and Miscellaneous.
• Each category has a detailed list. For example, Daily Leaving: Groceries, Personal Supplies, Clothing, Dollar store, Shoes, Eating out, Hair Salon, Pet food and others.
• Template visually shows how much you earn, spend, and save monthly.
You can survive retirement without enough money if you are creative and strategic with the resources you have left.
Don’t give up hope!
Do you have any questions about retiring with no money? Let me know in the comments!
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