Retiring without savings!

[jaks364]

I read that almost half of Americans over 45 have less than 10K saved for retirement. And a third of those over 55 have nothing at all. What are people in this boat supposed to do. Anyone in this situation? Hm....

[cschin4]

That sounds scary. But, I guess people scrimp by in whatever way they can.

[Reggie]

Oh my!! I get very stressed at my lack of retirement savings and I'm nowhere near this bad. Just wow

[Joan.of.the.Arch]

Well, each of my parents did that. They have gotten by on Social Security, or in the case of my Dad, SS plus a small pension. They both live more thriftily than most people here can imagine. After selling her small house, Mom was using the profit to help sustain her in a studio apartment.

My father has lived with my sister for the last 12 years, which surely keeps his expenses down. He could have continued to afford an apartment in my city, but the southern coastal climate and presence of grandchildren and great grandchildren make my sister's home more attractive.

My mother moved last month from her studio to my other sister's home. In this case it was not because of money, but because of needing help with things like shopping and appointments. But it probably will help her to afford some of the things that might make her aging a bit more comfortable.

I do worry more about people of my own generation and those younger. I think we tend to have higher standards, higher expectations.

[kyoko]

This is really scary, too.
I heard that the number one fear of many people used to be a public speaking, but now it is to outlive money...

[corn18]

My mom lives on $1,200 / month social security and she is very happy. No debt. Even saves a little each month. Small house. Great neighbors. Makes a little on the side grooming a dog or two now and then. She's happier than I am making 20 times that.

But to your question, she was scared to death of retiring. Dad was a spender and they had too much debt. When he died, she got that all paid off and she is now very frugal. But not unhappy frugal. I am happy for her.

Tom

[jpham540]

Yea I definitely don’t want to be in that position. That’s why I am investing now rather than later. I got 35+ more years before I retire or maybe early if I hit the jackpot . Also I don’t plan on relying on SS and government fund because I will probably not get it. If I do get it, it will just be a bonus.

[disneysteve]

I read that almost half of Americans over 45 have less than 10K saved for retirement. And a third of those over 55 have nothing at all. What are people in this boat supposed to do. Anyone in this situation? Hm....

This really isn't so surprising. I think we sometimes forget how many people earn very little. I hear callers all the time on the Dave Ramsey show who earn less than 30K/year, sometimes considerably less. So for them to retire on just SS isn't too tough. When you are used to only bringing home $2,000/month, you can get by okay once the kids are grown and the house is paid for. You don't need $2 million in the bank.

Also, these numbers are wrong anyway. They only count certain things as "retirement" savings. They count 401k and Roth but they don't count general savings and investments. They don't count the $300,000 we have in mutual funds. They don't count home equity so you could have a paid for $250,000 house, sell it and buy an $80,000 condo and live off the $150,000 profit after costs and moving expenses. They don't count pension plans. Although they are not as common as they once were, a lot of people still have them.

[HalfDozenDaily]

This really isn't so surprising. I think we sometimes forget how many people earn very little. I hear callers all the time on the Dave Ramsey show who earn less than 30K/year, sometimes considerably less. So for them to retire on just SS isn't too tough. When you are used to only bringing home $2,000/month, you can get by okay once the kids are grown and the house is paid for. You don't need $2 million in the bank.

Also, these numbers are wrong anyway. They only count certain things as "retirement" savings. They count 401k and Roth but they don't count general savings and investments. They don't count the $300,000 we have in mutual funds. They don't count home equity so you could have a paid for $250,000 house, sell it and buy an $80,000 condo and live off the $150,000 profit after costs and moving expenses. They don't count pension plans. Although they are not as common as they once were, a lot of people still have them.

Agree with you, Steve... my husband makes less than $50K/year and we're supporting a family of 6 on that. We live on a very tight budget, but I do make saving $$ a priority. Although in total we only have $14K in our bank accounts... but I keep on saving and am grateful that he has a nice pension plan through work. God willing the money i'm saving will continue to build up until the time comes to use it. But there is no way we'll have massive amounts of money saved.. In the end we're doing what we can.

[figuringmoneyout]

Sadly it's pretty common. From what I've seen of people doing this in my life they live really cheaply. Income comes from Social Security and sometimes a pension. If they have family then family pitches in to cover gaps and take care of things.

Frankly it seems terrifying! I'd hate to be in that position and hope to never be there when I'm older. Makes me want to save so much more now.

[bjl584]

My grandparents lived off of social security for years. My grandmother didn't work and my grandfather retired back in the early 80's. He had a minimal pension but never had a 401K or any other investments. When he passed in 2011 he only had around $30K between his bank accounts and cash that he had in the house. He basically sustained the household on a small pension and SS for nearly 30 years. He was always happy though. They lived simply and frugally.

[PRICEPLUS]

I made saving money a priority. It has become one of my "hobbies"! I play games with spending. How many days can I string together where I spend no money outside of my budget. I also like to see how long the twenty dollar bill in my wallet can go unbroken.
Think back to when you were a kid and you had so much fun with little money. I will have to depend on my ROTH and investments along with SS for my retirement. I am not living in fear of outliving my money though. I planned for 4% inflation a year and I am okay with my retirement fund progress. I also live with the adage...."If I can't pay for it cash then I can't have it"!
Mind you that is not the case with a house but with most things it works well.
I feel really bad for those who did not or could not save.

[JoeP]

My grandparents lived off of social security for years. My grandmother didn't work and my grandfather retired back in the early 80's. He had a minimal pension but never had a 401K or any other investments. When he passed in 2011 he only had around $30K between his bank accounts and cash that he had in the house. He basically sustained the household on a small pension and SS for nearly 30 years. He was always happy though. They lived simply and frugally.

This is probably generational, since my grandparents did pretty much the same thing. They didn't save a lot, but lived comfortably. At retirement, they depended 100% on a pension and SS, putting their trust in The System and seeing no need to save on the side. Problem is that when a certain president was up for re-election, they literally thought their social safety nets would be in jeopardy and that they'd be forced to eat cat food (yes, my grandma actually said "cat food").

Had they saved even 10% of their income into a dumb savings account over the past 40 years, they would not have had the need to fret. And worst case, they'd be able to afford the GOOD cat food!

[jaks364]

Where does your mother live?

My mom lives on $1,200 / month social security and she is very happy. No debt. Even saves a little each month. Small house. Great neighbors. Makes a little on the side grooming a dog or two now and then. She's happier than I am making 20 times that.

But to your question, she was scared to death of retiring. Dad was a spender and they had too much debt. When he died, she got that all paid off and she is now very frugal. But not unhappy frugal. I am happy for her.

Tom

Where is your mother living? How was she able to pay the debt down and still live on $1200 a month?

[jaks364]

What city did they live in?

My grandparents lived off of social security for years. My grandmother didn't work and my grandfather retired back in the early 80's. He had a minimal pension but never had a 401K or any other investments. When he passed in 2011 he only had around $30K between his bank accounts and cash that he had in the house. He basically sustained the household on a small pension and SS for nearly 30 years. He was always happy though. They lived simply and frugally.

Wondering where you're able to live on social security alone. Did they have to move to another city after they retired to make it work?