Author: Maurie Backman

At 60, if you have $1.2 million saved for retirement, you have more than double as much as most of your peers, according to Statistics Canada.

But even though that’s a lot of money, it’s important to manage your sizeable nest egg carefully. You could try to live off of dividend income from your portfolio, or draw down your total portfolio over time.

Living off of portfolio income alone

A 2024 CPP Investments survey found that 61% of Canadians are more worried about running out of money during retirement.

The nice thing about living on portfolio income in retirement is that you aren’t touching the principal, meaning it should, in theory, hold steady or grow rather than shrink.

But it takes a lot of principal to generate sufficient income to live on, especially when dividend yields are as low as they are today.

The average S&P 500 dividend yield is currently just 1.27%. Even if you assemble a portfolio of individual stocks with higher dividend yields, you may only be looking at 5%.

For a portfolio worth $1.2 million, that’s $60,000 in annual income, which may or may not be enough to maintain your lifestyle.

Of course, it’s not a good idea to keep your entire portfolio in stocks. A safer bet is to split your assets between stocks and bonds, which could produce a little under a 5% return. It is doable, but whether the income suffices depends on your income-related needs.

Keep in mind you’ll have CPP benefit, as well. With the average retired worker collecting about $808 per month or up to $1,433.00 if you delay receiving it, you could be looking at up to $17,200 in benefits annually.

When you combine these government pension earnings with your investment portfolio income that works out to just over $77,000 in retirement income, each year.

But there’s one big caveat: While living on your portfolio income allows you to preserve your principal investment portfolio, to a degree, neither growth of that portfolio nor income generated from the portfolio are guaranteed.

Market volatility means your stocks could fall in value, eroding your principal. Stock dividends aren’t guaranteed the way bond interest and principal are guaranteed, assuming you hold the bonds to maturity.

The other risk of an income-only approach is that you could lose purchasing power over time due to inflation, which drives living costs upward. Assuming the income you earn from your portfolio holds steady at $60,000 per year, this may be adequate when you start retirement, but find it doesn’t stretch far enough a decade or two into retirement.

The “total return” approach

Another option is to live on income and principal from your portfolio — the “total return” approach — as you whittle down your principal while enjoying dividends.

This is a more flexible approach. You can sell principal assets and take advantage of market gains. As your portfolio grows, a total return approach gives you access to more annual income, making it easier to keep up with inflation.

Here’s how this might work. Say you have $1.2 million and you decide to follow the 4% rule, drawing down 4% of your principal annually to ensure your savings last 30 years. In your first year of retirement, you’d receive $48,000 of annual income. If inflation then rises 2% the next year, you’d withdraw $48,000 plus another 2%, or $960, for a total of $48,960.

As your portfolio gains value, you can keep adjusting your withdrawals for inflation, making it easier to keep up with the cost of living.

The 4% rule is just a guideline. There are other factors to consider as you determine your withdrawal rate: market conditions, your investment mix, and your life expectancy.

For example, Morningstar found that a 3.3% withdrawal rate was optimal for retirement savings in 2021; 3.8% in 2022; and 3.7% in 2024.

This means that while the “total return” approach offers more flexibility, it requires an ability to constantly adjust to market conditions and your personal needs. It’s a good idea to enlist the help of a financial adviser who can help you adjust your withdrawals as needed.

In this approach, too, if your portfolio loses value, you may have to withdraw less temporarily until the market settles. It’s wise to have one to two years’ worth of living expenses in the bank so you can leave your portfolio alone for a period of time if need be.

It’s also important to have income-producing assets in your portfolio that help it gain value from year to year. Dividend and interest income could help offset market losses.

So all told, no matter which approach you take, the right investment mix is crucial.

Sources

1. Statistics Canada: Assets and debts held by economic family type, by age group, Canada, provinces and selected census metropolitan areas, Survey of Financial Security (Oct 29, 2024)

2. Y Charts: S&P 500 Dividend Yield

3. Government of Canada: CPP Retirement pension: How much you could receive

This article I’m 60, ready for retirement with $1.2M saved. I plan to live off dividend income — not sell assets. Is this really more risky than a ‘total return’ approach? originally appeared on Money.ca

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Canada doesn’t exactly have an official retirement age. Sure, there are age-related requirements you need to meet to be eligible for certain programs like the Canada Pension Plan (CPP) and Old Age Security (OAS). But otherwise, you get to decide when you want to retire.

Let’s say, for example, that you’re in your early 60s and you’re planning to retire within the next year. You earn $200,000 per year and you’ve built a substantial nest egg. But with your retirement now just one year away, you’re left asking yourself: Am I really ready to retire?

A Fidelity report found that the average age for retirement in Canada is 65 as of 2023, which is three years later than in 2003. But whether you’re younger or older than that, if you have one more year until your retirement kicks in, now’s the time to get serious.

Will you be ready to retire in one year?

You may be eager to retire for a variety of reasons, whether it’s burnout at work or the desire to spend more time with family. But before you make your decision official, make sure you’re ready both financially and emotionally.

First, look at your savings. A recent BMO report found that Canadians think they will need $1.54 million to retire comfortably.

That doesn’t mean you’ll need a $1.54 million nest egg to pull off retirement. You may have other income, like a generous CPP benefit, that allows you to get away with saving less. But it’s important to see what shape your savings are in, and also, how much annual income your savings will give you.

Remember, $1.54 million might look like a lot of money. But if you apply a 4% annual withdrawal rate to that sum, that gives you $61,600 in annual income, not including adjustments for inflation. Whether that will suffice for your retirement depends on what you want your senior years to look like.

It’s also important to estimate your retirement expenses — and make sure you’re accounting for unknowns, like home repairs or higher-than-expected health care costs.

Additionally, make sure you have a plan for how you’ll spend your time once you retire. Will you work a few hours a week to stay busy? Or maybe volunteer? Do some traveling? It’s important to make sure you have a concrete vision so you don’t end up unhappy in retirement.

In fact, according to Lifeline Canada, being socially active can also help curb the development of depression, so making sure you’re spending free time engaged in multiple activities, such as spending time with loved ones, exercise, hobbies and travel is vital to feeling fulfilled when you’re not working any longer.

How to make the most of your final year at work

If you’re retiring in a year, you may be excited to kick off that countdown, but it’s also important to make the most of your final months of having a job. Doing so could make you feel a whole lot better about your planned retirement date.

Here are a few things you can do to strengthen your finances ahead of retirement.

Boost your savings

First, if possible, work on boosting your savings as much as you can. You can make a higher catch-up contribution in your RRSP plan worth $32,490, or 18% of your yearly income.

CPP

It’s also a good time to think about when you’ll claim the CPP. Since you’re in your early 60s, you can begin to collect it. However, with each year you delay collecting it, your monthly payment will increase by approximately 8.4%, up to a maximum increase of 42% if you can wait until 70. That could be a smart strategy if you expect a longer life expectancy.

Update your investment portfolio

Another move to make when you’re a year out from retirement is checking up on your investment portfolio. It’s a good time to make sure you’re scaling back on riskier assets, like stocks, and replacing them with assets whose value doesn’t tend to swing as wildly, such as bonds.

Build your cash savings

It’s also smart to have cash savings on hand when you’re on the cusp of retirement. Aim for one to two years’ worth of expenses in cash, so you’re able to leave your investment portfolio alone in the event of a market downturn. A high-interest savings account is a great option for cash savings — not only will you earn money in interest, but your cash remains liquid and easily accessible.

Also, think about one-off expenses that could arise once you retire, like a major home repair or having to replace an aging car. You may want to pile onto your cash savings to prepare for those potential expenses specifically.

Reduce debt

It’s also a good idea to reduce your debt as much as possible ahead of retirement, as not having to pay debts allows you to stretch your retirement income.

But don’t assume you have to pay off every debt. For example, it’s a good idea to rid yourself of expensive credit card balances, but if you’re paying 3% or so on your mortgage and you still have a few years left, you may want to carry that loan into retirement.

Based on what high-interests savings accounts are paying today, it’s possible to earn more money in interest than what you’re paying on your mortgage if your rate is very low.

Sources

1. Fidelity: What is the ideal age to retire?

2. Lifeline Canada: Make social interaction a priority for seniors (Oct 3, 2023)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

There was a time when South Florida’s condo market was red hot. However, changes in regulations and increases in ownership costs have pushed many condo owners in the area to sell. However, the problem is that they’re now all selling at once.

Michael Leccese’s one-bedroom, two-bathroom unit at the Sian on South Ocean Drive in Hollywood, Florida, has been on the market for more than a year, and he’s dropped the price four times since listing it.

"It’s gonna take a while,” he told CBS News, in reference to finding a buyer.

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South Florida condo owners are struggling

A big reason Leccese is looking to sell his condo is that the overall cost of homeownership has risen. "I’m definitely taking a hit economically to support these types of expenses," Leccese said.

When Leccese first listed his condo just over a year ago, he priced it at $435,000. Most recently, he lowered it to $414,000 in the hopes of finding a buyer. He’s banking on finding one eventually.

"There’s a lot of condos on the market right now, so for a buyer it’s a great opportunity," Leccese said. "But you have to be an educated buyer."

Leccese isn’t the only South Florida condo owner to see his costs go up.

"A lot of people have seen their maintenance double. They’ve seen some of the assessments become extremely unaffordable. It’s definitely impacted many residents here in Florida," said Phil Gutman, President of Gutman Development Marketing President, in a Fox News interview.

Why it’s so hard to sell a condo in South Florida right now

Any time there’s more supply of a given commodity than there is demand, prices tend to fall. That’s what’s happening in South Florida right now.

Many condo owners are buckling under the weight of increased costs and are looking to unload their units. That’s created an abundance of inventory on the market.

Peter Zalewski, who tracks the condo market on his site Condo Vultures, said South Florida condo owners are selling in short order because they can’t keep up with higher maintenance fees and special assessments.

In January of this year, there were 25,000 South Florida condo units on the market. That number increased to 28,000 in April. In addition, Zalewski is predicting that 40,000 units will hit the market before the end of the year.

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Making matters worse, more condos are being built today because they went under contract three years ago, when the market was different. That’s only going to introduce more competition for condo owners who are desperate to sell.

A big reason condo owners in South Florida are being hit with higher costs is that new laws that were enacted following the tragic 2021 Surfside Champlain Towers collapse now require buildings to have extra cash reserves on hand to cover maintenance costs.

In Naples, Florida, condo fees were up 9.6% on an annual basis in January, reports Redfin. In Cape Coral, they rose 10.2%.

Adding to the problem is that almost 22% of Florida’s population is 65 and over. Retirees on fixed incomes can’t afford to keep up with the rapidly rising cost of condo maintenance.

But while it may be a bad time to sell a condo in South Florida, it could be a good time to buy or rent one. Buyers can benefit from lower prices and more inventory to choose from. Renters may even have more negotiating power given the number of condo owners who are trying to bide their time until they can sell.

However, it’s important to be cautious about buying a South Florida condo given the potential for not only hidden damage, but increasing costs.

Real estate broker Julia Ray of Raydiant Realty advises buyers to look beyond the listing price when buying a condo in South Florida. "Be very careful when you choose the building. Look at the history," she says.

It’s also important to get a structural reserve study on a condo building before making an offer on a unit. This ensures that there are adequate funds for long-term maintenance.

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Redfin puts median rent at $1,610, so if you’re paying $2,000 a month in rent, that doesn’t seem so out of line – especially if you live in a city with higher rent prices, or if you’re renting a larger unit because you need more than one bedroom.

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Housing is the largest expense for Americans. But if you’re spending $2,000 a month on rent and your take-home pay after taxes is only $4,000, you may be in a position where it’s tough to impossible to cover your remaining bills.

The popular 50/30/20 budgeting rule says 50% of your take-home pay should cover your needs, 30% should go towards wants and 20% is for savings and debt repayment. However, such guidelines are not realistic or wise for everyone, so don’t worry if you can’t meet those goals.

Your situation isn’t hopeless. But some changes may be in order so that you don’t fall behind on either your rent or your non-housing expenses.

How to cope when rents are high

One thing you can do is create a budget for yourself and try to identify areas you can cut back on. You can use one of several budgeting apps available to make this process easier.

Housing may not be one that immediately comes to mind. But if you live in a walkable area, it may be possible to get by without a car and rely on buses and the occasional rideshare.

AAA puts the average cost of owning and operating a new car at $1,024.71 per month. But even used vehicles can be expensive to own and maintain. So if you’re able to unload that expense, it could help.

You can also look into getting a side job to boost your income. However, if you’re 32 with two kids, your children may be on the young side. And that means childcare costs could eat into your side hustle profits. So you may want to focus on opportunities you can do from home, like data entry.

You can also see if your state has a rental assistance program you can apply for. You may, for example, be eligible for subsidized housing. Contact your local public housing agency to find out more.

Finally, do some research to see if moving to a different neighborhood results in lower rent prices. If you have children in school, moving may not be easy, as it could mean having to switch districts. But if you’re struggling to keep up with your bills, it may be your only choice for the time being until your income increases or other costs of yours start to go down.

Once you feel like you’re covering your basic costs, focus on building an emergency fund that will protect you from taking on debt in the future.

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Why so many Americans are rent-burdened

An estimated 21 million renter households in the U.S. are cost-burdened, says the U.S. Census, meaning they spend more than 30% of their income on rent. That represents nearly 50% of all renter households based on 2023 data.

Rents soared after the pandemic, and the reason largely boils down to limited supply and high demand. According to Zillow, the U.S housing shortage grew to 4.5 million homes in 2022, up from 4.3 million the year before. "This balance reached a tipping point when the Great Recession ushered in a decade of underbuilding and millennials — the biggest generation in U.S. history — reaching the prime age for first-time home buying. The result has been worsening affordability, now exacerbated by stubbornly high mortgage rates," it said in a press release.

The National Low Income Housing Coalition recently said the U.S. has a shortage of 7.1 million affordable housing units. Only 35 affordable and available rental homes exist per 100 extremely low-income renter households.

The good news is rents have been gradually decreasing over the past year and a half. The bad news? This makes multifamily housing less appealing to investors, according to Realtor.com, which could result in lower rental unit inventory going forward and, in turn, cause rent prices to go up.

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The administration under President Donald Trump has promised it won’t make cuts to Social Security, Medicare and Medicaid benefits. But the GOP budget plan appears to conflict with that notion.

On April 10, House Republicans narrowly passed a budget resolution that calls on the House Energy and Commerce Committee — which has jurisdiction over Medicaid — to cut $880 billion in programs it oversees over the next 10 years. In addition, the GOP wants the chamber’s Agriculture Committee, which manages the Supplemental Nutrition Assistance Program (SNAP), to find $230 billion in savings. Critics say achieving these budget goals would require deep cuts to these popular programs, which provide health care and food assistance to tens of millions of low-income Americans.

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In some parts of the country, such as Cuyahoga County in Ohio, the impact of cuts to these programs has the potential to be devastating.

“Medicaid and SNAP are the largest programs we run,” Kevin Gowan, head of Job and Family Services in the county, told News 5 Cleveland in a story published March 25. He noted up to 30% of the population uses Medicaid.

SNAP cuts could also devastate Ohioans, says Kristin Warzocha, President and CEO of the Greater Cleveland Food Bank. She told the broadcaster that the food bank served 424,000 unduplicated people in six counties last year alone.

“The last thing our country needs is cuts to SNAP,” she said to News 5 Cleveland.

A potentially dire situation

Roughly 72 million Americans were enrolled in Medicaid as of November. Meanwhile, an estimated 41 million people received SNAP benefits in fiscal year 2024. Given such high enrollment levels, cuts to both programs could have far-reaching consequences.

A reduction in SNAP benefits could leave millions of households without access to adequate food or nutrition. The Department of Agriculture reports a whopping 18 million households were food insecure at some point during 2023. And food insecurity impacted almost 18% of households with children that year.

Families removed from SNAP could lose a number of key benefits, including access to free or affordable school meals and the Summer EBT program, which can provide a subsidy to help feed children when school is not in session. Advocates also fear food programs not tied directly to SNAP could feel the ripple effects of any cuts.

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Meanwhile, cuts to Medicaid could result in millions of Americans losing access to critical care services. Low-income households unable to afford private insurance could find themselves plunged into an even deeper financial hole as they scramble to address health care needs as they arise.

Cuts to Medicaid and SNAP may also harm state economies, according to research from the Commonwealth Fund. Not only are employees who work for these programs at risk of losing their jobs, but the impact could trickle down to related businesses.

The Commonwealth Fund estimates that states’ gross domestic product (GDP) could be $95 billion smaller and total economic output lost would be about $157 billion, if Medicaid cuts come to life. SNAP cuts could cost states nearly $18 billion in GDP and total economic output could be $30 billion lower.

How to prepare for potential cuts

Although we don’t yet know the fate of Medicaid and SNAP, as well as how deep cuts might be, if you benefit from these programs it may be a good time to prepare an action plan.

Talk to your health care provider about medication assistance programs, and start researching marketplace health insurance plans to see if buying coverage is feasible. There may also be health clinics in your community that offer low-cost care or care on a sliding-scale basis tied to income.

At the same time, explore resources in your community for food access, whether it’s food banks, soup kitchens or programs run by local houses of worship. Local charities may also be able to provide assistance if you lose some of your food benefits.

You can also experiment with different ways to save money on food. That could mean taking advantage of a discount grocery store or turning to your local dollar store to load up on non-perishable supplies.

Finally, do your best to cut back on spending to free up more money for essential needs like food and health care. It may not be easy to do, as you may already be on a tight budget. But a close examination of your expenses might reveal a few small opportunities to cut back.

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It was an ordinary day for Pasco County, Florida resident Slawomir Odrzywolski. He had gone off to work on March 26 when he received a frantic phone call from his wife in the middle of the afternoon.

"Our house is destroyed," she told her husband.

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It turned out the county had accidentally pumped sewage into the couple’s home. And now, they’re dealing with the aftermath of a truly disgusting and disturbing mess.

A horrific experience

There’s a big difference between water damage in your home and sewer damage.

Water damage, if not treated promptly, could cause mold to form, among other things. But sewer damage is a whole different beast. When sewage gets into your home, it exposes you to a host of bacteria and parasites that could potentially cause different illnesses.

Think about it this way. If the idea of taking a bath in the pipes your toilet feeds sounds disturbing to you, then you don’t want a sewage backup in your home.

But unfortunately, that’s what happened to Odrzywolski. Pasco County was working on a sewer line in the area when sewage accidentally backed up into his and his wife’s home due to an error on their part.

The county tried to make it right. But Odrzywolski says, "It’s way not enough.”

County officials immediately hired a local cleaning company for $2,400 to perform the initial clean-up on Odrzywolski’s home the day of the incident. The county is offering Odrzywolski another $26,000 for further remediation plus $5,000 for incidentals.

Plus, the county says it will consider providing additional compensation if the contractor hired to fix the problem finds that the initial estimate won’t cover all of the necessary expenses to restore Odrzywolski’s home to its former state.

But Odrzywolski is doubtful the country’s offer will address the problem in full. He’s being quoted $16,000 just for necessary demolition work.

“Imagine, put everything back, the cabinets, flooring, all that for another $14,000? That’s impossible," he said.

In the meantime, Odrzywolski and his wife will be sleeping on their back patio until the situation is resolved, since they don’t feel safe in their home. It seems as though the county did not offer them temporary lodging while the remediation work is being done. It’s unclear as to whether their homeowners insurance policy offers this benefit, or what their homeowners coverage looks like.

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What to do if your home sustains damage through no fault of your own

Hopefully, you’ll never have to go through the same experience Odrzywolski did. But accidents can happen. And you could end up with property damage for a variety of reasons — a county construction vehicle could crash into a tree that hits your home, for example.

In a scenario like this, it’s important to address the situation methodically. First, assess the situation. If your home has sustained damage in a way that makes it unsafe, leave as quickly as possible. This was the case for Odrzywolski, and it may be the case if your home has sustained structural damage.

If you don’t have to flee, try to document the damage with photos. Also note the time of the incident and put any details you remember in writing.

Having your home get extensively damaged can constitute a shock. And your brain may not remember the details beyond the initial few minutes after the incident. So try to create a record of what occurred.

From there, there are some key people to call. First, you may want to notify local police. If it’s a situation where a county team of workers causes damage to your home and they acknowledge it right away, they might call the police themselves.

Next, call your homeowners insurance company and have them come out to assess the situation. You’ll probably need to file a claim, even if it turns out you’re entitled to be compensated for the damage from someone else. Your insurance company can help figure out who will pay for what.

Also, try to figure out if your home is habitable following the damage, or if you’ll need temporary housing. If it’s the latter situation, see if your insurance covers it. If not, you may want to ask for it as part of your compensation.

You may also want to contact a lawyer to discuss the situation and see if there’s legal recourse beyond an offer to repair the damage. For example, if there’s emotional distress to consider. Being displaced from your home could have other consequences.

If you work from home as an independent contractor, for example, and are forced to live in a hotel for several weeks while your property is being repaired, it could interfere with your ability to earn an income. That’s something you should potentially ask to be compensated for.

It’s also important to keep in mind that in some cases, property damage may be such that no amount of repair can restore your home to its original value. That’s something to document, too, so you can try to receive compensation.

Finally, retain receipts for all expenses you incur in the course of dealing with the damage. In a situation like the one above, it’s hard enough having to deal with the aftermath. You shouldn’t have to be out money because of someone else’s negligence. And if you find that you’re not being made whole, that’s where a lawyer comes in.

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If you’re a young adult and feel like your finances aren’t in order, you’re not alone. A 2024 Bank of America survey found that 52% of Americans aged 18 to 27 say they don’t make enough money to live the life they want, and that sky-high living costs are a top barrier to financial success.

Furthermore, adults in this age group are delaying major financial milestones, such as buying a house and saving for retirement. And 46% have to rely on financial support from parents and family just to stay afloat.

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Let’s say you’re 27 years old and ready to get serious about your finances, but are struggling to get by with the high cost of living. Here are some steps you can take toward securing your financial future en route to achieving major life goals.

Emergency fund

One of the most important things you can do right away is get started on an emergency fund. This is cash you can easily access in case something unexpected happens, such as losing your job. Having a cushion to fall back on can help prevent you from falling (further) into debt.

Many experts recommend stashing away three to six months’ worth of expenses, however, since you’re just starting out you might want to think a bit smaller. Personal finance expert Dave Ramsey, for example, recommends setting aside $1,000 at first. Over time, you can build up your emergency fund. Since this cash isn’t meant for everyday spending, it’s also a good idea to keep it in a high-yield savings account so it can earn interest.

Tackling debt

Take a look at your debt situation. You may already be on a payment plan when it comes to student debt or auto loan debt. But if you have any high-interest debt, including credit card debt, it’s in your best interest to pay it off as quickly as possible. The last thing you want to do is continue digging yourself a bigger hole. Come up with a plan to tackle your debt so you can get to saving. Drawing up a budget with this goal in mind may be helpful.

Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

Saving for retirement

Does your employer offer a 401(k) plan? If so, you can sign up and direct a portion of your paycheck, pre-tax, into an account and invest it in the market. This is a good idea especially if your employer offers matching contributions (up to a certain percentage of your pay), which essentially amounts to free money. It’s recommended you contribute as much as you can afford, at least up until the maximum employer match amount.

Otherwise, you can start building your retirement savings through an individual retirement account (IRA), which can also be invested in the market. Keep in mind there are yearly contribution limits for 401(k) and IRA accounts.

Long-term goals

At age 27, you still have most of your adult life ahead of you, but you may have long-term goals beyond achieving financial security. These can include starting a family, buying a home or simply generating as much wealth as possible. A financial adviser can help you plot a path toward achieving them.

Think about how your finances might impact your life goals. There are costs associated with many personal milestones, so look at the big picture in the course of mapping out your long-term plan.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

As of 2022, the typical American aged 75 and over had $130,000 in retirement savings, according to the Federal Reserve. However, Americans 65 to 74 had a median retirement savings balance of $200,000.

The reason older people have less money may boil down to the fact that by age 75, a lot of people have been retired for quite some time and have been steadily dipping into their nest eggs.

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On the other hand, there are people in their mid-70s and even beyond who continue to work. For some, it’s because their jobs are a labor of love. For others, it’s a matter of financial necessity.

Let’s say your father has hit 75 and he’s still plugging away at his desk job. Having just $31,000 saved for retirement, it’s natural you’re both worried about how he’ll get by. That frankly isn’t a ton of money, even for a shorter retirement.

But if your father still works and earns a comfortable salary of $70,000 a year, his situation is far from hopeless. And if he’s able to work a few more years, he has a prime opportunity to boost his savings.

The upside of working later in life

Axios analyzed data from the Bureau of Labor Services and found that almost 19% of Americans ages 65 and over were still working as of 2024. And that alone can help compensate for a lack of savings.

If your father is 75, it means he’s beyond the point where it makes sense to delay Social Security. In fact, he hopefully claimed Social Security at 70, since there’s no financial incentive to hold off on taking benefits beyond that point.

If not, encourage him to file right away and see how much of a retroactive benefit he can get. Those retroactive benefits max out at six months, but at least it’s something.

Meanwhile, if your father is collecting a $70,000 annual salary plus Social Security, he may have more than enough income to cover his expenses. At this point, he should, conceivably, be able to either save some of his salary and/or the majority of his Social Security income.

One thing you should know is that while there are age limits for traditional IRAs, they don’t apply for those funding Roth IRAs or 401(k)s. This year, your father can contribute up to $8,000 to his IRA or $23,500 to his 401(k) plan. If there’s a match in his 401(k), it’s worth capitalizing on it. It pays to save in one of these accounts for the tax benefits.

Of course, one thing to keep in mind is that if your father is 75 years old with a traditional IRA, they may already be on the hook for required minimum distributions (RMDs). With a 401(k), RMDs can sometimes be deferred if the plan holder is still working. Roth IRAs and 401(k)s do not force savers to take RMDs, though. In this case, your father may want to consider rolling over his traditional IRA into a Roth account.

Of course, given your father’s age, it’s important that he not invest any savings he builds too aggressively. He may end up wanting to retire soon, so he needs a good portion of his portfolio in stable assets, like bonds. Your father should also maintain enough cash savings to cover at least a year of expenses.

How much does it take to pull off a comfortable retirement?

A recent Northwestern Mutual survey found that Americans think it takes $1.46 million to retire securely. But the savings data above reveals that most people don’t have anywhere close to $1.46 million by the time they reach retirement age.

The reality is that the amount of savings it takes to retire comfortably depends on your needs and age. Someone who’s still working at 75 may not need as much savings as someone who decides to retire at 65.

Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

What someone in the situation above needs to do, though, is estimate their annual expenses and see how much savings it will take to cover them in the absence of a paycheck — because at 75, it’s unclear as to how much longer it will be possible to keep plugging away.

Now with regard to your savings, you may want to assume a 4% withdrawal rate. With $31,000 saved, that amounts to $1,240 per year, which isn’t a lot. However, keep in mind that’s on top of Social Security.

The average retired worker today collects about $1,980 per month, or $23,760 per year, in benefits. And with $1,240 from his savings, that would bring him to about $25,000 for the year.

However, someone still working at 75 may have delayed Social Security until age 70 for larger monthly checks. So your dad’s total income may be higher.

Running the numbers

Let’s say his monthly retirement expenses come to $2,800, requiring an annual income of $33,600. Let’s also say he’s getting about $2,600 a month from Social Security because he delayed his claim past his full retirement age of 66 — thereby boosting his benefits by 32% by waiting to take them at 70.

That leaves your dad with $31,200 per year. With $31,000 in savings, that gives you $1,240 per year, you still have a small shortfall to get to $33,600.

But if you can get your savings up to $60,000, a 4% annual withdrawal rate gives you $2,400 from your nest egg. Add that to $31,200 in Social Security, and you’re where you need to be.

Of course, this does mean doubling his savings. But it may be doable with some strategic moves. Your dad is 75 and is fortunate he has a grown child who cares about your financial well being — maybe your or another family member could allow him to move in for a few years to boost his nest egg. There may also be other expenses he can look into reducing.

Keep in mind, too, that he may have leeway to withdraw from his savings at a higher rate than 4% a year because he’s older. If you use a 5% withdrawal rate, $31,000 in savings gives him $1,550 per year. If you use a 6% rate, you’re looking at $1,860. And if you work with a financial advisor to maximize your savings and trim expenses, you may find that your dad doesn’t need to save so much more to get to a place where he can retire and cover his costs.

What to read next

• Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don’t have to deal with tenants or fix freezers. Here’s how
• Here are 3 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
• Trump warns his tariffs will spark a ‘disturbance’ in America — use this 1 dead-simple move to help shockproof your retirement plans ASAP

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.