Last year, Chan moved from San Francisco to an apartment in Contra Costa County to save on housing costs. And she doesn’t plan to ever stop working. It’s her best way to support herself and hopefully save enough to one day visit her mother — who is now in her 90s — in Hong Kong, she said.
“While I can still have the job, then I want to work,” Chan said, although she said that she wishes she had another option. “Maybe I’ll quit if I win the lottery.”
Chan is not alone. According to federal data from the Government Accountability Office (GAO), about half of households nationwide with a worker aged 55 or older had no retirement savings. And like her, more seniors are staying in the workforce longer, downsizing and depending more than ever on family and social services to meet essential needs.
But if you’re already approaching your 60s and don’t have much saved, what options are available for potentially changing that?
KQED reached out to financial advisers and groups that serve seniors to better understand what older adults with fewer savings in the Bay Area are doing to make retirement possible.
In the Bay Area, inequalities before and after retirement
Planning for retirement is even more difficult for low-income older adults — only 15% of this group report having anything saved at all.
The GAO also found that lower-income workers are effectively shut out from workplace retirement accounts, such as 401(k)s. By contrast, higher earners consistently have greater access to these kinds of accounts and usually receive larger employer contributions.
And the Bay Area’s high cost of living makes preparing for retirement even more complicated, said Vanessa Merlano Sittauer, director of Santa Clara County’s Department of Aging and Adult Services. “We need to talk about retirement [in] the greater context of what it’s like to live in a place like the Bay Area,” she said.
Sittauer points to data from the research publication Silicon Valley Index that shows that more that 40% of renters ages 18-64 across the South Bay and the Peninsula are severely rent burdened — meaning that at least half of their monthly income pays housing costs. For residents older than 65, that number climbs to 67%.
But if living in the Bay Area means spending more on housing — along with childcare, transportation, healthcare and almost everything else — younger people are asking if it’s even possible to retire here when not much is left over at the end of every month.
What does retirement planning with less time look like?
Starting to plan for retirement in your 50s can feel overwhelming, said Matt Gellene, head of Specialized Consumer Client Solutions for Bank of America. “But the first and most important step is to be honest about your full financial picture,” he said.
“Take a full inventory: what you have saved, what you owe, what you expect from Social Security, and what you want retirement to look like,” he said.
Plan out your spending — and debt payments
Think carefully about the debt you have now, Gellene said. “High-interest debt can erode retirement readiness faster than many people realize,” he said. “Paying down that debt in the years before retirement reduces the monthly income you’ll need to cover fixed costs once you stop working.”
Even setting a realistic monthly budget now that limits lifestyle expenses can help down the road. Many Bay Area public libraries offer free workshops with financial advisers who can help you figure out what you can start cutting back on now.
United Way Bay Area, known by many in the region for its free tax filing services, also runs a network of free financial coaching centers known as SparkPoint.
There are centers in San Francisco, Alameda, Contra Costa, San Mateo and Marin counties, where financial coaches can help with making plans to achieve long-term goals like reducing debt and growing savings.
Know your options if you need to continue working
Seniors who feel they are not ready to leave the workforce but are looking for a job with more flexibility can also contact Self-Help for the Elderly, a nonprofit organization that provides seniors in San Francisco, Santa Clara and San Mateo counties with housing, food and other social services.
“We train older workers as home health aides, housekeepers and restaurant workers,” CEO Anni Chung said. Seniors who are trained as housekeepers, for example, can work a few hours a week for several different clients. Multiple trainings for this older worker program are held throughout the year.
Remember healthcare costs
Another huge retirement expense to consider is healthcare costs. Seniors with Medicare may still have to pay monthly premiums and deductibles, depending on what coverage plan they sign up for. Medicare Part A, which does not charge monthly premiums and covers major hospital bills, still comes with deductibles that beneficiaries pay if they are admitted to the hospital.
Other Medicare options can cover additional medical expenses, like lab tests and medication, but those plans come with monthly premiums. And researchers have found that out-of-pocket healthcare expenses increase significantly for Medicare recipients in the last years of life, and most individuals are considered high-need, high-cost patients prior to death.
You can start preparing for medical expenses now with a health savings account, or HSA. This kind of savings account “offers what we call triple tax savings,” said Gellene from Bank of America. “Your money goes in pre-tax, it can grow tax-free if you invest it and you can withdraw it tax-free for qualified medical expenses.”
And if you can save a little more in the next few years, there may still be some options to make what you have grow. If you have one, Gellene recommends maxing out your 401(k) — that is, contributing as much as the IRS allows you to — especially if your employer offers a match.
“That’s essentially free money, and you don’t want to leave any of it on the table,” he said.
Think about where you’ll live
At a recent affordable housing fair in San Francisco, several seniors had the same question for Anni Chung, from Self-Help for the Elderly. “Either their spouse or other family members have passed away, and they can’t keep up with the rent just on their own.”
When the biggest expense is housing, Chung and her team help seniors apply for affordable housing via San Francisco’s Dahlia portal, where eligible residents can enter different lotteries for affordable apartments or studios. The available units listed can sometimes be smaller than where seniors lived when they had a full-time job, Chung said.
Some financial advisers shared with KQED that often, clients are able to bring their living expenses way down when they plan for retirement far from California. The state consistently ranks as one of the most expensive places for long-term care services. For example, the median monthly price for a private room in a nursing home in California is about $15,000 — compared to roughly $10,000 in Ohio and $7,600 in Texas.
Another option for some seniors is moving in with their adult children. In many circumstances, this is an ideal arrangement for all parties. “They take care of each other, and it’s one big happy family,” Chung said. But even in these cases, she said it’s important to set up clear expectations about living together — especially if a family is already living in a smaller Bay Area apartment.
And even if actual cohabitation isn’t on the table, it’s still important to maintain family connections and support, Chung said. “If living with family is complicated, then the seniors would rather have their own place but still have a good relationship with the family,” she said.
If someone has little savings in the bank but was able to buy a home earlier in their life, they can also look into home-sharing programs like Home Match. This program in San Francisco, Alameda, Contra Costa and Marin counties connects homeowners with folks looking to rent a room or an accessory dwelling unit on their property.
As they figure out next steps, Bay Area seniors should remember they can consult — and lean on — groups like Self-Help for the Elderly, Chung said. “We need our seniors. We don’t want to see them have to move,” she said.
“They worked hard here. They should enjoy their golden years here.”
