Baby Boomers Are Overwhelmingly at Risk of Falling Short in Retirement

We often hear that older workers are alarmingly behind on retirement savings, and data from the Stanford Center on Longevity further drives home this point. An estimated 30% of baby boomers have no money at all saved for the future, which means they have limited time to catch up.

Even boomers who have been saving aren't in such great shape. The median saving balance among boomers born between 1948 and 1953 is $290,000. For those born between 1954 and 1959, it's $209,246. And while those numbers might seem decent, remember that most financial experts advise withdrawing from savings during retirement at an annual rate of about 4%. This means that someone with $290,000 in savings is looking at $11,600 in annual income, while someone with $209,246 is looking at $8,370. Granted, these numbers don't take Social Security into account, but given that the average beneficiary in 2019 will collect just $17,532 in annual income, that doesn't paint a particularly encouraging retirement picture.

If you're nearing the end of your career without much savings to show for, it's imperative that you step up your game. Otherwise, you'll risk struggling financially during retirement -- that is, if you get to retire at all.

Salvaging your golden years

Being an older worker with little to no savings is hardly an ideal situation. But if that's the reality you're facing, there are a few key steps you can take to improve your long-term financial outlook. For one thing, start saving as much as you can in a tax-advantaged retirement plan, whether it's an IRA or a 401(k). If you're 50 or older, you can save $7,000 a year in the former or $25,000 in the latter.

Now if you're not in the habit of saving anything, going from an annual retirement plan contribution of $0 to $25,000 overnight might seem like an unrealistic jump. But if that's the case, save something, because it will make a difference. For example, if you're 60 years old and set aside $400 a month over the next 10 years, you'll wind up with a little more than $66,000 if your invested savings generate an average annual 7% return during that decade-long window.

Another option to consider? Work longer. Extending your career by even a couple of years could work wonders for your nest egg, as it means not only getting a chance to add to your savings, but also getting an opportunity to leave your cash reserves untapped for longer. Going back to our previous example, if you were to work until age 72 and save that same $400 a month for 12 years instead of 10, you'd wind up with about $86,000, assuming that same average annual 7% return.

Adjusting your retirement expectations

While playing some last-minute catch-up is a good way to avoid struggling financially during your golden years, if you're late in your career without much savings, you might need to accept the reality that your retirement might play out differently than you initially expected it to. For one thing, you might have to downsize your living space, move to a less expensive part of the country, or make other lifestyle adjustments to account for your lack of savings. Along these lines, you should prepare for the possibility of having to work part-time in retirement to generate some much-needed income.

None of this needs to ruin your retirement. Quite the contrary -- if you go in prepared to make lifestyle changes, you'll have an easier time adjusting to your new set of circumstances. And if you know you'll need to work in some capacity, you can take the time to find a money-making opportunity you actually enjoy (as opposed to being forced to bag groceries or file paperwork for that much-needed side income).

No matter what steps you take to compensate for your lack of savings, know this: If you're a baby boomer with little to no money set aside for the future, something will have to give. But if you ramp up your savings game and make lifestyle adjustments, you can turn an otherwise dire situation into a manageable one.

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