Summary of "Frugal Friends Podcast Episode: What To Do If You Have Nothing Saved For Retirement"
Podcast Information:
- Title: Frugal Friends Podcast
- Hosts: Jen Smith & Jill Sirianni
- Description: Controlling your spending is challenging. Each episode of Frugal Friends aims to help you gain more control over your finances through frugality, minimalism, debt repayment, and achieving financial independence, all while sharing a few laughs.
- Episode: What To Do If You Have Nothing Saved For Retirement
- Release Date: June 24, 2025
Introduction
In this compelling episode, Jen and Jill address a critical financial concern: having no savings for retirement. Originally recorded in March 2023, this top-performing episode resurfaces to provide timely advice for listeners grappling with insufficient retirement funds.
The Reality of Having Nothing Saved for Retirement
Sole Reliance on Social Security
Jen begins by highlighting a sobering statistic: "Almost half of Americans don't have a retirement savings" (07:07). Relying solely on Social Security is often insufficient, as it typically accounts for only about 40% of one's pre-retirement income.
Jen (10:03): "Social Security is best as an additional income piece, not something you could solely live off of."
Downsizing Lifestyle
Jill discusses the necessity of downsizing to manage finances effectively in retirement.
Jill (12:30): "Downsizing your home or car can be a great frugal solution, but if it's forced due to lack of savings, it can be a tough reality."
Taking on a Roommate or Moving In with Family
Both hosts explore the option of having a roommate or moving in with adult children as a means to offset living expenses.
Jen (14:29): "If you're forced to move in with your children, it can place an unexpected financial burden on your family."
Continuing to Work Part-Time
Jen emphasizes the practicality of part-time work to supplement Social Security, suggesting that it not only aids financially but can also provide fulfillment.
Jen (16:02): "Planning to work part-time in retirement can help maintain your lifestyle without being miserable."
Potentially Not Retiring at All
Jill warns that without adequate savings, some individuals may need to continue working full-time indefinitely, especially if unforeseen circumstances arise.
Jill (17:36): "Retirement without a plan requires sacrifices and might not allow for the lifestyle you hoped for."
Strategies for Starting Late with Retirement Savings
Drawing from an article by The Balance, Jen and Jill offer seven actionable tips for those beginning their retirement savings journey later in life.
1. Play Catch-Up Contributions
Maximize your 401(k) by contributing the maximum allowed, especially if you're over 50. Jen encourages taking full advantage of catch-up contributions.
Jen (25:00): "Anything that has a limit has a limit for a reason. Take full advantage of those contributions."
2. Identify How Much You Need to Save
Understanding your financial needs is crucial. Jen breaks down the 4% rule to estimate the necessary retirement savings.
Jen (25:57): "If you're planning on living on $40,000 a year, you need around a million dollars saved."
3. Manage Investment Risk Appropriately
As you age, it's essential to adjust your investment portfolio to balance risk and security.
Jen (29:42): "A target date fund will self-allocate and rebalance for you, simplifying the investment process."
4. Open a Roth IRA
Jen stresses the importance of diversifying retirement accounts by opening a Roth IRA in addition to a 401(k).
Jen (36:08): "If you're not maxing out a 401(k), open a Roth IRA anyway."
5. Buy Adequate Insurance
Protecting against unexpected events through insurance can prevent financial derailment in retirement.
Jen (36:23): "Consult a certified financial planner to determine the right insurance for your situation."
6. Pay Down High-Interest Debt
Prioritize eliminating high-interest debts to free up more funds for retirement savings.
Jen (37:22): "Focus on paying off debts above 5%, ideally above 10%."
7. Prioritize Your Retirement Over Child Expenses
Jen and Jill discuss the tough decision between funding children's education and securing one's own retirement.
Jen (42:35): "The best gift you can give your children is your own financial retirement security."
Jill (43:35): "Freedom as an adult child is invaluable."
Addressing Emotional and Practical Concerns
Emotional Impact of Financial Decisions
Jill underscores the emotional toll that financial insecurity can have, especially when it forces lifestyle changes like downsizing or living with family.
Jill (12:30): "Having to downsize can be a bitter pill if it's not your choice."
Preparing for Medical and Caregiving Needs
Both hosts acknowledge the inevitability of medical issues and caregiving responsibilities in retirement, emphasizing the need for financial preparedness.
Jill (50:09): "Unforeseen medical issues are a significant concern that can have financial and emotional impacts."
Actionable Steps and Resources
Financial Reset Course
Jen promotes their Financial Reset Course, designed to demystify investing and provide practical steps for building retirement savings.
Jen (63:06): "You just need to start. Our course at frugalfriendspodcast.com/reset can help you get started."
Recommended Books
They recommend insightful books to deepen financial understanding:
- Rich AF by Vivian Tu
- I Will Teach You to Be Rich by Ramit Sethi
- Buy What You Love Without Going Broke by Rachel
Jen (56:56): "Our favorite book is Rich AF by Vivian Tu or I Will Teach You to Be Rich by Ramit Sethi."
Listener Engagement and Personal Stories
Bill of the Week
The hosts share a listener's success story in managing bills and reducing debt, illustrating practical applications of their advice.
Jill (46:23): "Knowing the resources available and making wise financial decisions can help eliminate debt without severe financial strain."
Lightning Round: Biggest Retirement Worries
Jen and Jill candidly discuss their personal fears about retirement, adding a relatable and human touch to the conversation.
Jill (50:09): "Facing medical issues and the potential need for caregiving are significant concerns for me."
Jen (52:24): "My greatest fear is having to retire alone, following the losses in my family."
Conclusion
Jen and Jill conclude by reiterating that "every little action counts" in building a secure retirement. They encourage listeners to overcome hesitation, start saving and investing, and utilize available resources to ensure financial stability in their golden years.
Jen (56:27): "You are smart enough to invest for retirement. Start today."
Notable Quotes
- Jen (10:03): "Social Security is best as an additional income piece, not something you could solely live off of."
- Jill (12:30): "Downsizing your home or car can be a great frugal solution, but if it's forced due to lack of savings, it can be a tough reality."
- Jen (36:08): "If you're not maxing out a 401(k), open a Roth IRA anyway."
- Jill (43:35): "Freedom as an adult child is invaluable."
- Jen (56:27): "You are smart enough to invest for retirement. Start today."
Final Thoughts
This episode serves as a crucial guide for individuals who find themselves starting their retirement savings journey later in life. Through practical advice, personal anecdotes, and actionable strategies, Jen and Jill empower listeners to take control of their financial futures, ensuring that their golden years remain truly golden.