'I’m working my butt off': This 66-year-old works 11-hour days, has no savings or 401(k), and lives with roommates — here's how to start building a nest egg ASAP

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

“It's been a matter of life and death,” she remarked, reflecting on her financial struggles. “I [had hoped] to be retired, playing the piano again, just enjoying my life.”

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

It's increasingly common for Americans to continue working into their golden years. According to the Pew Research Center, approximately one-in-five Americans aged 65 and over were employed in 2023, a figure that has nearly doubled compared to 35 years ago.

Saving for retirement isn't just a good idea — it's essential. And it’s never too late to start. Here’s how to begin building your nest egg.

Track your expenses

Data from the U.S. Census Bureau highlights a concerning trend: about 50% of U.S. women aged 55 to 66 have no personal retirement savings. The situation is slightly better for men, with 47% in the same age bracket also without retirement savings.

Understanding where your money goes each month is the first crucial step in effective financial planning, especially when preparing for retirement.

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

Categorize each expense as either a necessity — such as rent, groceries, utilities, and healthcare — or discretionary spending, which includes things like dining out, entertainment, shopping, and hobbies.

This detailed categorization gives you a clear visual of your spending habits, highlighting areas where expenses can be reduced. For instance, you might notice you're spending a significant amount on takeout meals or subscription services that you don't fully utilize. Cutting back in these areas can free up money.

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

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

Build a safety net

While the allure of growing your nest egg through investments is strong, you might want to consider establishing a solid financial cushion first.

CBS noted that O’Connor didn’t have enough savings to cover an emergency. And she’s not alone. A Bankrate survey revealed a concerning statistic: only 44% of U.S. adults could cover an emergency expense 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 tough times, helping you maintain financial stability and peace of mind. This cushion will provide a buffer in case of unexpected events like job loss, medical emergencies, or major car repairs.

The ideal size of an emergency fund can 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 worth of living expenses.

Invest for retirement

Investing is a crucial aspect of retirement planning, enabling your savings to compound and grow over time. However, it involves several important considerations to navigate effectively.

One factor is understanding your time horizon. Generally, the longer you have until retirement, the more risk you might be able to afford, as you have more time to recover from potential market downturns. Conversely, if retirement is near, you might prefer safer, more stable investments.

Next, it’s important to assess your risk tolerance — how comfortable you are with the potential ups and downs in your investment values. If significant fluctuations in your investment balance cause you undue stress, you might prefer investing in lower-risk, more stable assets. Understanding your risk tolerance is key to building a portfolio that you're comfortable with over the long haul.