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I’m 59 with $42,000 in my 401(k), $77,000 in student loans, and no property — is my retirement doomed?

I’m 59 with just $42,000 in my 401(k), $77,000 in student loans, and no property — after a lifetime of steady work and past struggles, is my retirement doomed?

When you are 59, you are getting very close to retirement age.

Fidelity says you should aim to have eight times your salary saved by 60. Although this is quite a lofty recommendation, if you only have $42,000, you’ve likely fallen short of that milestone by a lot. This can be a tough place to be, especially if you don’t own any property and you also have $77,000 in student loan debt.

But many Americans are in a similar spot. Vanguard’s How America Saves report shows the median amount Americans have in defined contribution plans at age 55 to 64 is just $87,571.

That’s more than what you have, but still far short of what’s recommended or what Americans believe they’ll need for a comfortable retirement, according to one survey..

Sadly many of those approaching retirement or retired with low savings may also carry debt. Credit card debt is the most common type of debt in households whose head is 65 years old or older, per one government report, but student loan debt has increased among these households in the past two decades. The Urban Institute estimated that as of August 2022 around 7.2 million older adults (age 50 and over) in the country carry student loan debt. Among these borrowers, 8%, or 580,000 older adults, were delinquent on their loans.

And when borrowers default on federal student loans, their Social Security benefits may be reduced due to forced collections. Between 2001 and 2019, the number of Social Security beneficiaries experiencing this increased from approximately 6,200 to 192,300.

You have options to try to get back on track. Here’s what you can do.

When you are very behind on retirement savings, you have a few options for getting things back on track.

First and foremost, you need to start saving aggressively. If you have only $42,000 invested, that would produce around $1,680 per year in annual income in retirement if you follow the 4% rule. That limit is recommended to avoid draining your account too quickly. Depending on how much your monthly Social Security benefits will be, that may be not be enough income.

You should aim to save as much as possible to bring up your account balance, even if you have to take a side job, do some overtime, and drastically cut spending to do it. You may even need to make big lifestyle changes, like moving to a place with cheaper rent or switching to a less expensive car to free up more money to invest. If you want to know how much you need to save, a popular guideline says you will need 80% of your pre-retirement income each year to maintain your current lifestyle during retirement. Use the 4% rule and calculate how big your portfolio balance will need to be for you to safely withdraw an adequate amount each year.


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