I’m 62-years-old, own my home but have only $105,000 in savings — and I’m concerned about the next 4 years. Is it a bad time to start investing for retirement?

Is it a bad time to start investing?

First and foremost, if you're trying to aggressively grow your retirement nest egg, there are only so many ways to do it. The Federal Reserve cut interest rates twice so far this year, resulting in yields falling on safe investments like CDs.

If you want to earn generous returns — a necessity to grow a nest egg quickly — you would most likely need to invest in the stock market.

Unfortunately, when nearing retirement, you usually start shifting away from equities and the risks they present. If you can't leave your money invested for at least five years or so, there's a big chance you'd have to sell during a market crash if you ended up needing to make withdrawals to cover your living expenses.

While this is always a risk, possible upheaval resulting from President-elect Donald Trump's promises to be a change agent can make over-investing in the market even more risky.

From proposed tariffs on imports and mass deportations to additional tax cuts and slashed government spending, Trump made it clear he won't stick to the status quo. And the impact of all of these potential policies can be hard to predict.

While Goldman Sachs is still projecting around a 9% rise in the S&P 500 in the coming 12 months — and the S&P did rally after Trump's presidential win — there are signs of potential instability.

Looming tension exists between Trump and Fed Chair Jerome Powell with regards to Trump wanting a say in interest rate decisions. And the continued uncertainty around inflation trends for 2025 doesn’t help.

Challenges in predicting how the market will perform are the very reason seniors are cautioned against putting too much in the market. A good general rule is to subtract your age from 110 and invest that percentage of your portfolio — but putting just 48% into stocks may not be enough to grow the nest egg you need when you have only $105K and only a few years left to save.

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What can you do to be ready for retirement?

Ultimately, you'll need to carefully consider whether you're willing to take on a little extra risk for the potential for higher returns. A lot of that decision is going to depend on your retirement timeline.

If you're planning to work until 70 and are eight years away from tapping your funds, you can take on a little more risk than if you're eager to leave work at 63.

It's also worth realizing that no matter how much risk you take, it's going to be a challenge to retire with the savings you need.

To end up with $500K, for example, saved by the age of 70 (which would provide around $20,000 in annual income for 25 years), you'd need to save just over $2,000 monthly — assuming you had your $105K invested too and earned a 10% average annual return on all of it. This return may not be likely given the recommended asset allocation for someone who is 62.

You may want to look into options like downsizing your home to free up some cash that you can partially invest in a high-yield savings account to balance out your risk, and will likely want to delay Social Security as long as possible until you reach 70 to increase your benefit amount. Looking into how much your benefit could increase can help you weigh your decision.