This 66-year-old works 11 hours a day, has no savings and lives with roommates – how to build a nest egg at home as quickly as possible

Maryann O’Connor, a single mother who adopted and raised three children, envisioned a comfortable retirement. But her reality tells a different story.

“I work hard,” the 66-year-old told CBS News.

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

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“It’s a matter of life and death,” she noted, reflecting on her financial problems. “I was (hoping) to retire and play the piano again and just enjoy life.”

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

Increasingly, Americans continue to work well into their golden years. According to the Pew Research Center, about one in five Americans aged 65 and older were employed in 2023, a number almost twice as high as 35 years ago.

Saving for retirement isn’t just a good idea – it’s a necessity. And it’s never too late to start. Here’s how to start building your nest.

Track your expenses

U.S. Census Bureau data highlights a disturbing trend: About 50% of American women ages 55 to 66 have no personal retirement savings. The situation is slightly better for men – 47% in the same age group also have no retirement savings.

Understanding where your money goes each month is a crucial first step in effective financial planning, especially as you prepare for retirement.

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

You can classify each expense as necessary — such as rent, groceries, utilities, and healthcare — or as discretionary, such as eating out, entertainment, shopping, and hobbies.

This detailed categorization gives you a clear picture of your spending habits, highlighting areas where you can cut back. For example, you might notice that you’re spending a significant amount on takeout or subscription services that you’re not fully using. Cutting back on these areas can free up money.

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

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

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Build a safety net

While the allure of building savings through investing is strong, it’s worth considering creating a solid financial cushion first.

CBS noted that O’Connor did not have enough savings to cover emergency expenses. And she’s not alone. A Bankrate study revealed a disturbing statistic: Only 44% of American adults could cover emergency expenses 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 difficult times, helping you maintain financial stability and peace of mind. This cushion will provide a buffer in the event of unexpected events such as job loss, medical emergencies, or major car repairs.

The ideal size of an emergency fund may 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 of living expenses.

Invest for retirement

Investing is a key aspect of retirement planning, allowing you to build and grow your savings over time. However, to navigate effectively, there are some important things to consider.

One factor is understanding your time horizon. Generally, the further you have until retirement, the more risk you can afford because you have more time to recover from potential market declines. Conversely, if retirement is near, you may prefer safer, more stable investments.

Next, it’s important to assess your risk tolerance—how comfortable you are with the potential ups and downs of your investments. If the large swings in your investment balance are causing you undue stress, you may want to invest in lower-risk, more stable assets. Understanding your risk tolerance is key to building a portfolio that you’ll be happy with over the long haul.

You can explore different types of investments, each with different levels of risk and growth potential.

Stocks are capital 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, although they are sensitive to interest rate changes and their price can still fluctuate. Meanwhile, exchange-traded funds (ETFs) and mutual funds can give investors exposure to diversified portfolios of different assets – just be aware of the fees.

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

Investors should also investigate the benefits of tax-advantaged retirement accounts such as 401(k), traditional IRAs and Roth IRAs.

If the array of options seems overwhelming, it’s a good idea to consult a financial professional to help tailor your investing approach to your specific circumstances and goals.

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This article is for informational purposes only and should not be construed as advice. It is provided without warranty of any kind.