'I’m working my butt off': This 66-year-old works 11-hour days, has no savings or 401(k), and lives with roommates — here's how to start building a nest egg ASAP

In your 60s, no savings? How to build a nest egg

Maryann O'Connor, a single mom who adopted and raised three kids, envisioned a comfortable retirement. However, her reality tells a different story.

“I’m working my butt off,” the 66-year-old told CBS News.

O'Connor has no savings, 401(k), or even an emergency fund. She works two jobs, sometimes up to 11 hours a day.

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“It's been a matter of life and death,” she remarked, reflecting on her financial struggles. “I [had hoped] to be retired, playing the piano again, just enjoying my life.”

Instead, O’Connor sold her home and purchased a smaller one, which she now shares with two other women.

It's increasingly common for Americans to continue working into their golden years. According to the Pew Research Center, approximately one-in-five Americans aged 65 and over were employed in 2023, a figure that has nearly doubled compared to 35 years ago.

Saving for retirement isn't just a good idea — it's essential. And it’s never too late to start. Here’s how to begin building your nest egg.

Track your expenses

Data from the U.S. Census Bureau highlights a concerning trend: about 50% of U.S. women aged 55 to 66 have no personal retirement savings. The situation is slightly better for men, with 47% in the same age bracket also without retirement savings.

Understanding where your money goes each month is the first crucial step in effective financial planning, especially when preparing for retirement.

Start by tracking all your expenses for a month. You can do this using a simple spreadsheet, a budgeting app, or even a notebook.

Categorize each expense as either a necessity — such as rent, groceries, utilities, and healthcare — or discretionary spending, which includes things like dining out, entertainment, shopping, and hobbies.

This detailed categorization gives you a clear visual of your spending habits, highlighting areas where expenses can be reduced. For instance, you might notice you're spending a significant amount on takeout meals or subscription services that you don't fully utilize. Cutting back in these areas can free up money.

With this information, create a budget that prioritizes savings and debt repayments. Allocate a realistic portion of your income to retirement savings, aiming to increase this over time as you eliminate unnecessary expenses.

Regularly reviewing and adjusting your budget ensures you stay on top of your financial situation and avoid getting into unnecessary debt.

Build a safety net

While the allure of growing your nest egg through investments is strong, you might want to consider establishing a solid financial cushion first.

CBS noted that O’Connor didn’t have enough savings to cover an emergency. And she’s not alone. A Bankrate survey revealed a concerning statistic: only 44% of U.S. adults could cover an emergency expense of $1,000 or more using their savings.

Having an emergency fund is essential for financial security — it can prevent you from relying on credit cards or loans during tough times, helping you maintain financial stability and peace of mind. This cushion will provide a buffer in case of unexpected events like job loss, medical emergencies, or major car repairs.

The ideal size of an emergency fund can vary depending on individual circumstances, such as job security and personal financial responsibilities.

Personal finance expert Dave Ramsey suggests having an emergency fund that can cover three to six months worth of living expenses.

Invest for retirement

Investing is a crucial aspect of retirement planning, enabling your savings to compound and grow over time. However, it involves several important considerations to navigate effectively.

One factor is understanding your time horizon. Generally, the longer you have until retirement, the more risk you might be able to afford, as you have more time to recover from potential market downturns. Conversely, if retirement is near, you might prefer safer, more stable investments.

Next, it’s important to assess your risk tolerance — how comfortable you are with the potential ups and downs in your investment values. If significant fluctuations in your investment balance cause you undue stress, you might prefer investing in lower-risk, more stable assets. Understanding your risk tolerance is key to building a portfolio that you're comfortable with over the long haul.

You can explore different investment types, each with different risk levels and growth potentials.

Stocks are equity investments that represent ownership in a company and offer the potential for high returns through capital gains and dividends. However, they are also subject to market volatility and company performance.

Bonds offer fixed coupon payments, though they are sensitive to interest rate changes and their prices can still fluctuate. Meanwhile, exchange-traded funds (ETFs) and mutual funds can provide investors with exposure to diversified portfolios across various assets — just be mindful of fees.

Real estate presents another option, as it’s a well-known hedge against inflation and offers the potential for a passive income stream through rental properties. It’s also more accessible than ever before, as individual investors can gain access to institutional quality real estate portfolios through real estate investment trusts (REITs) and crowdfunding platforms.

Investors should also explore the benefits of tax-advantaged retirement accounts like 401(k)s, Traditional IRAs, and Roth IRAs.

If the array of options seems overwhelming, you might want to consult with a financial professional to help tailor your investment approach to your specific circumstances and goals.

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