Investing for Retirement When You Have Little or No Savings

Daniel Penzing
Written by
Last update:

Any Savings Are Good Savings — Especially in Retirement

One of the main reasons that Americans have so little saved for retirement is that they simply haven’t started early enough. The good news is that it’s never too late to start saving for retirement. If you’re in your late 40s, early 50s, or even your 60s and you haven’t saved anything for retirement, there’s still time to catch up.

In fact, making a start now will actually put you ahead of the pack.

According to a recent Wells Fargo survey, 45% of survey respondents said that they plan to save more as they get older, with more than half the respondents giving themselves three years to get their finances in order.

It’s never too late to start saving for retirement. For most people, the earlier you start saving, the more time your money has to grow. Even if you’re ready to retire, you still need money to pay everyday living expenses. Why not start saving now so your money has as much time as possible to grow?

Here are a few things to think about as you start saving for retirement:

If Nothing Else, You'll Need a Great Big Emergency Fund

As you’re learning to invest for retirement without a lot or any savings, you need to create a big emergency fund. After all, the biggest investment in any retirement plan is the one you have going for yourself by living within your means and saving for emergencies.

Having a big emergency fund gives you options. Those options include figuring out a way to take a temporary or part-time job if you lose your primary income. You can also use the extra money to take a mini-retirement, a temporary withdrawal from the retirement accounts.

No matter how you plan to use an emergency fund, it is significant to your long-term financial future.

Invest in Others

Another way to invest for retirement if you don’t have a lot of savings is investing in others. If you’ve got some money to spare and you’ve got people in your life who need it or could use it, a great way to invest for retirement is to help those who need it most.

It's Never Too Late to Save and Invest

The most important thing that you can do when you are young is to have a fund that will see you through retirement. This can be done by having a good income, adding extra savings, or having a mixture of both.

There is no age at which you can't invest and save, and if you are of the mind that it is too late to save now, then you will set yourself up as a failure when in fact, you can start doing it right away.

There is little that you can do to reduce your pension, but you can always improve on things like bills and debt.

Why It Can Be Easier to Save and Invest Near or in Retirement

As you have probably heard before, saving and investing in your 20s will allow you to retire much earlier in life. Also, if you start investing early, you have a lot more time to let your investment earn money and compound, which is why many people say that the earlier you start, the better your chances are of having a secure retirement.

But you may be wondering how investing while you have very little or no money is possible.

You may have to make some sacrifices. At the beginning, you may have to invest a very small amount per paycheck until you build it up. If you want to be really ambitious and frugal, you might attempt to live as cheap as possible so that you can invest all of your money toward retirement.

After all, retirement security is one of the most important aspects of your life. So if you really want to make it happen – even if it means making some big sacrifices — you should try it.

Should You Invest?

Before we go any further, you should ask yourself whether you really need to invest while you’re still in your 20s or if you can wait until you have a little more money to invest.

How to Begin Saving and Investing Near or In Retirement

Suppose you suddenly realize that you have a few months before retirement. What do you do? Naturally, you might feel pressure to make the money grow quickly and be disappointed that you failed to start saving earlier.

Naturally, if this happens it’s a little too late to do much about it; however, there’s still much you can do.

You can start by taking a look at your spending. You will need to reduce certain expenditures so that you do not need as much income. You can start by analyzing your needs carefully.

You might need to re-examine your investments. It’s possible to look at selling some of them and treating the sales proceeds as income.

You can also start by investing in some new avenues; you can’t simply let the money sit there when it could start increasing.

Then, you will need to find ways to increase your earning potential.

Taking control of your financial situation is the key to placing you in a good place.

Creating a Savings and Investment Strategy Late in Life

Most retirement savings discussions focus on what’s going on most of the time: people who begin saving for retirement early enough in the working years to become adequately prepared for retirement by their mid-60s, and whose families and lives have remained peaceful and predictable for the period leading up to early retirement. People who begin saving for retirement late, or whose lives have been violent, chaotic, or impossible to predict are left out of the discussion.

Most family tragedies happen in the mid-40s and the mid-50s, and you are living a very secure, predictable life in your mid-60s, it’s easy to assume that lives have always been peaceful and predictable…but the sad truth is that this is true of only a small minority. For most people, a 50 year marriage, a stable family, and a 20 year career haven’t been a natural part of their family life or experience. Instead, they have been a result of a lot of luck, a lot of sacrifice, and a lot of safety planning and sacrifice.

In a good economy, in a good marriage, in a good career, in a good family, the retirement savings discussion usually seems quite distant. In a bad economy, in a bad marriage, in a bad career, in a bad family, the retirement discussion can seem to be imminent.

An Example of What You May Be Able to Do in Just a Few Years

Retirement saving is the most important method of longterm income replacement. Your social security will help you out if you are in dire need or are too proud to ask for help.

Here, I’m talking about saving for retirement as and investment, or lump sum savings.

For many of us, the time to start saving for retirement is now, but if you have nothing to save, or if you are just starting on your career, you may wonder what kind of saving you should do.