I'm 65 With Only $120k Saved. Is It Too Late to Retire Comfortably?


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A low-savings retirement is one in which you don’t have enough money in your portfolio to generate a comfortable retirement income. For example, let’s say that you’re 65 and have $120,000 in a retirement portfolio. We’ll assume that this money is in a pre-tax 401(k). This won’t generate a livable income on its own. That doesn’t mean it’s too late to make plans, though, or that you can’t live a secure and comfortable life. But it will take some thought, sacrifice and planning.

Here are some things to consider in your planning. You can also get matched with a fiduciary financial advisor who can help you build and execute an appropriate and custom retirement plan.

As you approach retirement, no matter what your situation, the first thing to do is take stock of your income and assets. What will generate income for you? What level of earnings are reliable? What assets can you convert to cash? What benefits, pensions or other payments will you receive? Are you eligible for Social Security benefits?

For example, say that you own your own home. In this case, a sale or a reverse mortgage can often generate a significant cash boost to supplement your savings.

In this case, we’re assuming you only have two potential retirement income streams on hand: Social Security and a $120,000 401(k). So, we start planning from there. What income can you expect from each asset?

For your portfolio, this will depend on how you manage your money. This is a profile where an annuity might be a very strong option, as these can sometimes maximize the value of relatively small portfolios. For example, say that you begin to take retirement at age 70. A representative annuity might generate $1,081 per month ($12,972 per year). While exposed to inflation, this income is significantly higher than the roughly $400 to $600 per month you could expect from a 4% withdrawal strategy off the same amount.

For Social Security, unfortunately this is a profile where you likely won’t qualify for maximum benefits. Social Security is built to maximize benefits for higher-earning households: The more you earn while working, the more you collect in benefits, to a point.

Still, assuming you’ve paid into the program, your next step is to begin planning for your actual Social Security income. You can visit the SSA and get a report on your actual benefits and credits, or you can use SmartAsset’s calculator for a likely estimate. Once you know what you will receive, you can begin to plan for that income. Your actual benefits will depend entirely on how much you earned over your working life, and for how many years. However, by way of example, the average retiree received $1,907 per month ($22,884 per year) in benefits.



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