We’re in Our 70s With Only $120k in Savings. How Do We Make It Last?

[Pelican Press 0]

This is the hidden content, please

• Sign In
• or
• Sign Up

We’re in Our 70s With Only $120k in Savings. How Do We Make It Last?

Financial advisor and columnist Brandon Renfro

I’m 72 years old and my wife is 70. Over the years, some of our financial decisions were not the best, but we have enjoyed 45 years together so far, having two sons and now two daughter-in-laws and five grandchildren. Our problem is that because we wanted to give our sons the best of everything as a head start in life, we now struggle with borderline problems in our twilight years.

Due to health reasons, we both are retired and unemployable with no other income than Social Security, which allows us to save maybe $1,000 a month. We also have savings of about $120,000 in just a regular savings account. I like your thought process and was hoping you might be able to help us feel better about the future.

– Phil

Congratulations on having the ability to look back with pride on the life you’ve provided to your family and enjoyed alongside them. I think there’s a lot to be said for that. I’m half your age and hope that I can do the same when I’m 72. I’m always quick to remind people that the money isn’t the point … it’s what the money does for you. It sounds like it’s done for you exactly what it’s supposed to up to this point.

There are tradeoffs, of course.

This is the hidden content, please

• Sign In
• or
• Sign Up

allows you to identify those tradeoffs, measure their impact and make the choices that allow you to achieve the best outcome as you define it. There are a few things in your question that stick out to me that may provide some planning opportunities in light of your situation.

Do you have financial planning questions you’d like help with?

This is the hidden content, please

• Sign In
• or
• Sign Up

.

Rethink Your Savings Ratedata:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==

A couple in their 70s meets with a financial advisor to discuss their savings rate and financial plan.

If I understand your question correctly, it sounds like you and your wife save $1,000 each month. It’s certainly possible that this is a good idea, and it may even be necessary. However, if we were talking in person, I’d dig a little deeper to find out why you’re pocketing this cash.

Here’s why that sticks out. The average

This is the hidden content, please

• Sign In
• or
• Sign Up

benefit as of November 2023 is about

This is the hidden content, please

• Sign In
• or
• Sign Up

. If you and your wife both collect that amount then you’re saving about 28% of your ****** monthly income. Even if you and your spouse both collect the maximum Social Security benefit (and I strongly suspect you don’t), you’d be saving over 10% of your ****** income at 72.

Perhaps the reason you’re saving this money each month is more of an emotional response or a ******* that you could overcome. If you don’t need to be saving that much, “freeing” yourself from that psychological burden and the accompanying financial strain could provide significant relief on both fronts.

Story continues

Again, I’m not saying that you should stop saving – I don’t know why you are in the first place – but I would encourage you to think very critically about why you’re saving that much. (And if you need more help managing your finances before or after retiring, consider

This is the hidden content, please

• Sign In
• or
• Sign Up

.)

Where Do You Keep Your Money?

It’s also worth taking a hard look at where and how you hold your savings. A savings account won’t provide much interest, although

This is the hidden content, please

• Sign In
• or
• Sign Up

are currently paying over 5% (as of January 2024). I’m sure you’re a pretty ************* investor. But, even a diversified portfolio of mostly

This is the hidden content, please

• Sign In
• or
• Sign Up

and

This is the hidden content, please

• Sign In
• or
• Sign Up

(CDs) could boost your savings without adding too much risk.

I’m not sure what your experience with investing is. However, it’s possible that with some self-study or a little guidance you could become more comfortable with adding a little equity to the mix as well. This could significantly increase your long-term returns.

Just be mindful of the increase in volatility. Investing too heavily in equities during retirement could expose you to unnecessary risk and a significant loss in the value of your portfolio during market downturns. However, investing too conservatively could lead you to deplete your assets early.

For some context, a portfolio of

This is the hidden content, please

• Sign In
• or
• Sign Up

is generally regarded as the classic retiree portfolio. In other words, you are currently “invested” extremely conservatively by normal standards.

Between 1926 and 2021, a 60/40 asset allocation posted an average annual return of 9.9%,

This is the hidden content, please

• Sign In
• or
• Sign Up

. While that doesn’t mean you can expect a 10% return every year, it does show you how investing – even conservatively – can help you over a longer timeline. (And if you need help creating an investment plan, consider

This is the hidden content, please

• Sign In
• or
• Sign Up

.)

Bottom Linedata:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==

A retired couple in their 70s reviews their investment portfolio.

A tight budget with little savings is hard for anyone. It’s undeniably ******* with constrained employment prospects. But again, money spent on providing a happy home for growing children and a 45-year marriage is a good use of it, in my opinion.

Based on your question, these are the two major items I’d look at first. There are probably additional factors to consider as well that aren’t apparent from your question. Your housing expenses (or equity you can access) and

This is the hidden content, please

• Sign In
• or
• Sign Up

(possible move for lower taxes?) may be big ones, for example.

Tips for Finding a Financial Advisor

This is the hidden content, please

• Sign In
• or
• Sign Up

doesn’t have to be hard.

This is the hidden content, please

• Sign In
• or
• Sign Up

matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals,

This is the hidden content, please

• Sign In
• or
• Sign Up

.

Avoid the temptation to sign up with the first advisor you speak with. It’s a good idea to interview several advisors and ask them about their

This is the hidden content, please

• Sign In
• or
• Sign Up

, areas of focus and whether they abide by

This is the hidden content, please

• Sign In
• or
• Sign Up

.

Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. 

This is the hidden content, please

• Sign In
• or
• Sign Up

.

Brandon Renfro, CFP®, is a SmartAsset financial planning columnist and answers reader questions on personal finance and tax topics. Got a question you’d like answered? Email *****@*****.tld and your question may be answered in a future column.

Please note that Brandon is not a participant in the SmartAsset AMP platform, nor is he an employee of SmartAsset, and he has been compensated for this article. Questions may be edited for clarity or length.

Photo credit: ©iStock.com/shapecharge, ©iStock.com/FG Trade

The post

This is the hidden content, please

• Sign In
• or
• Sign Up

appeared first on

This is the hidden content, please

• Sign In
• or
• Sign Up

.

This is the hidden content, please

• Sign In
• or
• Sign Up

#70s #120k #Savings

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up