How To Start Over At 50 With No Money?

Every day we struggle with different life choices. There are choices in life that can pave the path, which can foster and nourish our future; unfortunately, there are choices in life that can lead us to hit the rock bottom. When J.K Rowling famously recounted, “Rock bottom became the solid foundation on which I rebuilt my life”; it became an eye-opener for everyone who wishes to start over again. No matter what age you are in, each day is a new chapter for everyone. Therefore, here is a brief and direct tip on how to start over, especially if there are no funds left in your bank account.

If you want to start over again, especially if you are in your 50’s already, you must initiate with making improvements on how to rebuild yourself, stabilize your income, neglecting bad habits, and lastly, prepare for your retirement plan. Taking care of your body and mind throughout this process will make it easier to refresh and reboot your life again. 

Nobody says it was easy to start over again. The feeling of frustration and pressure will take over; however, you may not know that sometimes you need to sink down, as this will launch you to greater opportunities. Therefore, you better sit back and grab a piece of paper and pen to write down these steps on how to bounce back from setbacks.

9 steps on how to overcome setbacks

For all the baby boomers out there who suffered from bankruptcy, being laid off from work, divorce, and many other reasons; make sure you know how to bounce back and shake off all the bad vibes from the past by doing these step-by-step guide on how to forge ahead.

Step 1: Set your goals and plans

When you are planning to start over again, you must define what are your plans and goals that you want to achieve for this comeback. Do you want to retire with lots of money in your bank account? Or Do you want to live in a three-story house? Well, these are really good and ambitious goals that you need to work on. This is important that you have your set of goals, especially if you are starting over because this will give direction to your new life. 

Step 2: Think ways on how you can achieve your goals

Once you have set your goals in your mind, you may now start thinking ways on how to execute your plans. In your case, if you are starting again with zero balance in your account, you should focus more on how to gain money because money can buy everything except time and respect. Therefore, you may jot down or create a concept on your mind on how to make it. Otherwise, consider the following steps below as your guide in achieving your goals.

Step 3: Look for a work that you are passionate about

When you are planning to start over again, the first thing to do on your list is to look for a job. Not just looking for a job, but it must be a job that you are passionate about. It will greatly influence how you will do the job since when you love what you are doing you will lose track of the time; therefore, you can work longer without feeling drained or bored at work. For example, you have a passion for baking bread, cakes, and other pastries; therefore, use that skill and make yourself productive to start up a business.

Step 4: Grab employer benefits

If you have decided to go back working in the corporate world, you need to take advantage of the benefits of your company such as offering a retirement plan or partaking in matching contributions. For instance, your employer asks you to put 2% of your monthly income; therefore, your employer will match that giving you a total contribution of 4%. This means that you instantly double your money; so, make sure you contribute enough next time (without sacrificing your finances) to get the match.

You may check this helpful site about employer matching contributions. This is a great company benefit that helps attract employers and keep their top talents. This employer match is literally free money that can make a big difference in your savings by the time you will retire.

Step 5: Track your expenses

Once you have found the job you are passionate about doing; therefore, this is now the perfect time to talk about your expenses. When you are starting from scratch, you must learn how to settle for less, just for now. It does not mean that you will settle for less forever since you are just starting over again, you need to earn money as quickly as possible. Therefore, in order to do it, you must trim down your expenses by renting in low-cost living options, cooking at home instead of dining out, and unsubscribing to rarely used subscription services that may add up to your monthly bills.

It is very important to know where your money goes so that you can find the areas of your expenses that need to be reduced.

Step 6: Open a savings account

By this time, you must have earned enough money to build up a savings account. You must deposit with at least six months covering all your daily living expenses on it.  When you are starting over, securing a savings account is the most important thing you should NOT forget to do, and you must not look at it as an optional way to save money. It feels so encouraging to save more money as you see your balance grow each day.

Step 7: Buy a house

By this time, I think you have saved enough to consider buying a house. This will protect you from abusive landlords who keep on increasing rental fees. However, buying a house means that you will also consider the maintenance and upkeep costs; therefore, make sure that when you buy a house, keep the mortgage payment affordable, so that it will not hurt or aggravate your other finances for savings and other utilities.

You may also consider getting a home warranty plan to cover the parts and components of your home and appliances. On the other hand, look for a better location that requires a little to no lawn maintenance requirements. If you prefer buying a condo, make sure you are aware of the association fees that could increase over time for public shared areas. 

Step 8: Prepare for retirement plan

Aside from building up a savings account and partaking in match contributions, you may also consider the so-called Individual Retirement Account (IRA) to prepare for your retirement savings plan. Before you submit yourself to this kind of retirement plan, make sure you know the plus and minuses so that you are prepared for the consequences by the time you are hitting the retirement age.

Pros:

  •  Earnings grow on a tax-deferred basis that can be startup anytime
  • It can be easily put up without any help from a financial advisor
  • Have a variety of investment options such as Netflix, Apple, Inc., mutual funds, and Certificate of Deposits (CDs)
  •  Can be converted to Roth IRA (later on, we will take about this popular Roth IRA)

Cons:

  • It has a limited contribution maximum as you age
  • For instance, you are only allowed to deposit a maximum amount of $5000 if you are 49 years old and below or a maximum amount of $6000if you are 50 years old and above
  • IRAs have a low contribution rate. Especially, if you begin the IRA retirement plan during your declining years; therefore, the contribution may not be enough
  • Withdrawal may begin at the age of 70 ½. This means that if you withdraw early, you will face penalties

So, we have mentioned a while ago that the traditional IRA can be converted to the Roth IRA, which is more a popular choice. You might be wondering what is the difference between these two. 

Traditional IRA

Roth IRA

Early Withdrawal Rules

  • Withdrawal age may begin at the age of 70 ½  unless you meet the qualifications for the exception. If not, your contributions and earnings will be taxed and subjected to a 10% penalty
  • Your contributions can be withdrawn tax and penalty-free at any time.
Pros
  • The deductions on your contribution will depend on your income level
  • Contributions can be withdrawn anytime
  • Withdrawals are tax-free even to your beneficiaries if you have decided to pass it on
Cons
  • Deductions may be phased out
  • The ability to contribute to higher incomes is phased out

If ever you wanted to convert from traditional IRA to Roth IRA, here are the qualifications to become eligible for IRA contributions:

  • Your adjusted gross income (AGI) has to be under $95,000 a year. In addition, you can’t earn more than $110,000 if you still wish to enjoy benefits. 
  • If you filed for taxes as a married couple filing jointly, then it’s a little easier: $150,000 for the both of you. This means $75,000 each. Your contribution amount is reduced by 30 percent or 35 percent (if you’re older than 49) until you no longer qualify at $160,000 for joint filers.

Step 9: Do not risk for big investments

Okay, so, after you have prepared and planned for a retirement savings plan, it is an instinct to find other ways on how to grow your money. Therefore, you have decided to take risks on investments and stocks in the hopes that higher returns will make up for the lost time. However, I must say that this trick might be too risky, especially, if you have just started over again.

I would recommend going with slow and steady growth and be keen on measuring investment risk so that if you really wish to put up money on investments, you can choose the right and the wise one accordingly. Avoid risking your money from the so-called fast-easy investment schemes or to investments that seem to be risky to avoid frauds.

Takeaway:

As a rule of thumb, when you have started to save up again and get a retirement plan, avoid taking early your social security. Try to wait until you reach the age of 70 before you enjoy your benefits since you will get more than that, rather if you withdraw them earlier. That is why Step# 1 plays a vital role in this process of starting again from scratch.

Therefore, if you are starting over at the age of 50, you need to wait until your 70s to begin your benefits. For instance, if you are married or you were married for ten years, you may accumulate your ex-spouse’s benefits. Just make sure to look for alternatives, before you decide to start your benefits early.

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