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No savings at 60? Here’s what I’d do immediately

It’s fair to say that having no savings at 60 is not an ideal financial situation. With retirement just years away, there isn’t a lot of time to build up a retirement pot that can provide you with income in your later years.

That said, if you act immediately, there could still be time to build up some savings and save yourself from State Pension misery. With that in mind, here are three simple moves that could help you save your retirement if you’re 60 with no savings.

Cut out expenses and start saving

If I was in this situation, the first thing I would do is start a last-minute savings plan. Here, I’d draw up a list of all my expenses and try to cut out as many as possible so that I could save more. For example, I’d cut out unnecessary expenses like Sky TV and I’d look to see if there were cheaper plans for my mobile phone, insurance, and utilities.

I’d also look to maximise my income by asking for a pay rise, picking up some extra part-time work, or maybe even hiring out a room on Airbnb. The more money coming in, the more I could put away for retirement.

Save into a SIPP

I wouldn’t just save my money in any old savings account though. I’d open a Self-Invested Personal Pension (SIPP) account and save into this, as my savings would be topped up by the government as a reward for putting money away for retirement. This is called tax relief.

Basic-rate taxpayers are entitled to 20% tax relief meaning that if you contribute £80 into a SIPP, the government will top this up to £100. Contribute £800, and it’s topped up to £1,000! So, by saving into this type of account, my retirement savings would instantly get a boost, improving my financial situation dramatically. 

Build a passive income

Finally, within my SIPP, I’d invest my money in assets that pay out regular income in order to build up a passive income stream. Examples of these kinds of assets include:

  • Investment funds: many funds offer yields of 4%-5% meaning they can provide a much higher level of income than a savings account

  • Investment trusts: many trusts pay out income on a quarterly basis meaning they are well suited to retirees seeking regular income

  • Dividend stocks: these pay their shareholders a cash payment on a regular basis (usually twice per year) and many offer fantastic yields. For example, Royal Dutch Shell shares currently sport a yield of around 6% while Aviva offers a yield of over 7%

By investing in these types of assets, I’d receive regular income in retirement that would complement my State Pension income.

Hitting 60 with no savings can be scary. However, if you put a retirement savings plan into place sooner rather than later, you may still be able to salvage your retirement. The key is to act before it’s too late. 

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Edward Sheldon owns shares in Royal Dutch Shell and Aviva. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.