How to retire with no savings

by Pop on March 27, 2011

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Thousands of Americans are doing it.

Have you read the news lately? Soon-to-be retirees have saved almost nothing for retirement. No doubt that means we’ll soon have homeless Baby Boomers begging for change on the subways!

Ok, the second part might not happen. But given the press that this recent Employee Benefit Research Institute report has gotten, you’d be forgiven for thinking so.

Make no mistake, the numbers are terrible. Only 44% of Americans have more than $25,000 in savings. About 54% of workers older than 45 have more than $25k. And of actual retirees, only 46% have more than $25k in savings.

Using the rule of thumb that you can draw down 4% of your nest egg in retirement’s first year—faulty, but it’s a starting point—$25,000 in savings gives you about $1,000 in income. With Social Security, you’re probably talking $14,000 per year, which is puts you in the ballpark of the incomes in countries like Libya and Panama, depending on how you’re making your comparison.

And yet, these soon-to-be retirees and actual retirees are in the United States. Which begs the question: How are they doing it? And is life really so bad for poor retired people?

The life of a retired non-saver

First, let’s look at actual incomes of retirees as clues. A 2005 report by the Census found that the median income of someone aged 65 and older in 2003 was about $24,000—or $29,000 in today’s dollars. That’s a pretty severe drop off from the median $49,000 income that people aged 55 to 64 had.

Those age 65+ are also taking less of an income as they age. The same report found that the median household took about $33k in income between 65 and 69, but by age 75, the median household had an income of only $19,000.

About 17% of those 65+ live in or close to poverty, which is about the same as the population as a whole, but that was skewed by those over age 75. The real old-timers had a near poverty rate of almost 20%.

But on average, their living arrangements were fine according to the report…most had furnaces, A/C, a full kitchen, etc.

No, you’re not working until you die.

You might have heard somebody say something to the effect of “I’m probably going to work until I die”. Either that’s been a conscious choice (no point in saving!) or it’s a “reality” they’ve come to as 65 neared and they hadn’t saved nearly enough.

Except that’s not what actually happens. According to the Labor Department, fewer than one in five workers over age 65 have a job or are looking for work. Once you get to age 75, only 7% or so fits that profile. Slightly sadder, most of that 7% is looking for work but doesn’t actually have a job.

Age discrimination might be part of it. But so could mental or physical disabilities and the generally weak job market right now.

Whatever it is, most Americans older than 65 are unable or unwilling to hold down a job as they age.

Quick! Picture your perfect retirement.

Close? No? Well, when you ask people to picture a perfect retirement, most people have at least something related to travel.

Unfortunately, retirees aren’t actually doing it, at least not any more than the rest of us.

According to the Labor Dept., older Americans (65+) spent about 400 hours—or 16 days—on average on “Other Leisure” time, which basically includes anything that’s not T.V., socializing, relaxing, and reading. Even if all of that leisure time was devoted to travel, that’s not any more than the three weeks of vacation you’re probably earning by the age of 30. So much for that round-the-world trip!

So what are they spending time doing? They’re watching T.V.—about 4.4 hours of it per day. That’s quite a bit higher than the 3.3 hours Americans of all ages watch on a weekend day. By comparison, the older Americans spent less than an hour per day on average with friends.

So, let’s try that again. Quick! Picture your probable retirement!

You can file that under Sad, but True.

It’s not about “Your Number”. It’s about how you want to live.

Once you hit age 50, your chances of being jobless start to rise rapidly. You don’t get to choose when you retire. The job market or your ailing body will decide for you. Most retired Americans are getting by on incomes that you’d probably consider appropriate for the Third World. And even if they wanted to work until they died, they can’t.

Social Security allows them to live adequately, but not richly, and certainly not in the ways you dream about.

That’s why you’re saving for retirement. It’s not so you can retire. It’s so your retirement looks more like white beaches and blue skies than Monday Night RAW.


{ 64 comments… read them below or add one }

Julian Clark March 12, 2016 at 12:46 am

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Sue June 21, 2016 at 12:41 am

On what Condition / criteria will they loan beside having a job?

God July 2, 2016 at 12:31 am

Actually Julian, God is a lie, and this story had nothing on evangelic lies except your post.

B Ritchie July 16, 2016 at 4:50 pm

I worked first for GE Silicones and then the business was sold to Apollo LLC. Worked 25 years in the plant, was ASSURED by the UNION (IUE 359) that I could retire. Made plans, raised a sick kid, and (Lo and Behold!!) the company decided two years later that they were going to DUMP the healthcare and pension benefits into a common slush fund (Legal) because they didn’t want to keep carrying us old retirees. Health benefits cut to almost nothing. Pension cut in half. Greedy people steal from the poor, but its all seen and is not hidden. To us, God is not a lie. We depend upon him much more than we depend upon Agnostics. So everything gets taken care of. So Sorry to be you.

Chris August 23, 2016 at 12:10 pm

I’m 37, unemployed and have no life savings. I’m probably going to be on disability next month, but if I’m not I’ll be working probably a minimum wage job. I have two college diplomas, one in film and one is social work, but neither of them are super helpful in finding full time work. The great thing about this article is that it looks like I’m going to be doing alright in retirement. I don’t have to adjust expectations because I’ve never really had anything. I’ve lived comfortably on 8,000 dollars a year so 14,000 sounds like a lottery windfall to me. I guess it’s all relative, but my fear of being absolutely poor in my old age instead of relatively poor seems misguided now.

Cherion October 2, 2016 at 6:04 pm

It is criminal what has happened to pension funds. CROOKS taking it for themselves as well as what happened in 2008 in pension funds and 401k’s. I do resent someone selling on here and then claiming God talk. Yeah right! Anyways I have made previous posts going back a couple of years and getting older but not much wiser! Except I do keep working on savings and finding creative ways to continue that but its basically just working alot! So started with $40,000 on first post and now at $72,000. I have posted some of my ideas and was hoping to hear from others so we could encourage each other as it can seem bleak but I just keep some to myself some is better than none and with working alot that keeps social security monthly check at a good level if i wait unitl 70.

Vicky Everest December 5, 2016 at 2:44 pm

I was divorced late in life from someone who was hiding his love and earned wealth and spent 15 yrs. trying to secure gainful employment but alas, still find myself in poverty. I came to this site, hoping to find out how someone who has little can wisely invest and improve their monthly allotment during their soon coming retirement years….really, didn’t learn anything helpful. I just really heard a bit of a “put down” and a “dismal” outlook via stats, so really no help.

WaWa December 27, 2016 at 11:55 am

cry babies

Wayne April 21, 2017 at 12:01 pm

I stumbled onto this site much in the way that I’ve stumbled through life, the wind blew me here. I am a low level Federal Employee who (this year, 2017) will be putting in his retirement papers as well as his papers to collect SSI the first day I can, (90 days ahead of) my 62nd birthday. Each situation is unique. I cannot give advice based on my particulars knowing that I’m a bit odd. I live alone, rent a studio apartment, have very little saved and have no dependents so there is little to bind me to anything other than my own whim and fancy. By dumb luck I currently live in Pennsylvania which is one of 12 states that do not tax Social Security or Pensions. I will retire on a combined monthly annuity of @ $2,100-$2,200 . The only things that stress me out are external ones and as I still mature even in my old age I’m getting better at dealing with that. I have never stressed myself out and I’m not going to start now. Am I a fearful of retirement? Hell no. As I stated above I’ve stumbled through life. Why start planning now? I’m not suggesting this to anybody. It works for me and to be honest with myself, I’m not going to change.

I’ve read every post from the bitter to the snarky to the content. We’re all different. I’ve been bruised and scarred just as everybody else has. Sometimes it’s been my fault, other times not so much. In any event the only thing I wish to convey is that happiness comes from within. Money, money, money has become a mantra within our society (and perhaps all others as well) and I think it sucks. I wish I were a millionaire but I’m not so I decided to spite those who dwell on money (and think I should as well) by being happy/content anyway. Your soul is up to you as well as peace of mind. I am spiritual (but not at all religious) and I suggest that everybody start there. Be flexible. Be tolerant. Be willing to adapt. Nobody is stuck and even though we are becoming smoldering geezers the world is still our oyster. We can live anywhere and adapt to anything and are limited only by our own inhibitions. Until God (or whomever) puts out a recall notice keep on truckin’ (sounds like a good song title). Stop looking out the rear view mirror…..look out the windshield and keep your pedals to the metal. Peace out.

Stephanie January 17, 2018 at 4:18 pm

I’m with you Wayne, I’ve decided to look out the windshield and keep right on trucking. Actually I copied your post and laminated it months ago, the world is sure our oyster and that’s a pure fact. I have no college degree, raised 4 children alone with minimal help after a divorce, came to a large major city homeless and I’m now living in the second home (had both built from the ground up and no down payment on either one). I have faith, I’m going to get my Social Security check at 62, eat, travel, live and love. I’m not afraid one single bit either. I’m so fortunate (blessed) that I bought my current house during the housing crisis and now it’s worth more than double what I owe. Keep on rockin’ it baby…baby….baby…baby!

ASKING ME August 1, 2019 at 8:49 am


Cherion November 28, 2019 at 1:39 am

It’s me again. Three years since my last post.wooza. Time just goes. This thread degraded to some mean folks. Hope the rest of you are in hanging in there. I try. Been busy work year. Retirement savings up to 126,000.00 now. Wish it was time but l don’t want to be older either

papilontravels December 31, 2019 at 5:16 am

Great reading and extremely comprehensive post – pretty much covers everything…

Cherion October 9, 2022 at 6:13 pm

Three more years!! Lol. Still working and trying to save. Have nearly 200,000 though l will admit some was given to me 12,000.00 plus stimulus money and some unexpected refunds another 1500.00 or so . I just keep putting unexpected money away and try to save from work too. Wait until 70 for social security. So about 6 more years. Hope you all are doing well.

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