{"id":5978,"date":"2015-06-24T18:25:38","date_gmt":"2015-06-24T22:25:38","guid":{"rendered":"https:\/\/aspire-canada.com\/?p=5978"},"modified":"2017-02-19T11:44:24","modified_gmt":"2017-02-19T16:44:24","slug":"what-retirement-without-savings-looks-like","status":"publish","type":"post","link":"https:\/\/aspire-canada.com\/?p=5978","title":{"rendered":"What Retirement Without Savings Looks Like"},"content":{"rendered":"

What Retirement Without Savings Looks Like<\/h2>\n
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\"retirement<\/p>\n

In a perfect world, the perfect retirement is where life begins.\u00a0But for people like Debra Leigh Scott, there\u2019s the very bleak possibility that retirement is where life might end.<\/p>\n

\u201cSuicide is my retirement plan,\u201d Scott, a 60-year-old adjunct professor, said in an interview with Vitae. \u201cUnless you have a spouse or partner, you\u2019re looking at dire poverty in old age. In addition to poverty, you\u2019re looking at getting no additional work because of your age, or you\u2019re looking at dropping dead in the classroom.\u201d<\/p>\n

Scott, a divorced mother of two grown children, has been teaching for over a quarter century but never received the tenured position she hoped for. After years of financial struggles \u2014 including the loss of a home \u2014 she has no money saved for retirement.<\/p>\n

Fewer Americans than ever before are adequately prepared financially to retire. In a survey earlier this year by\u00a0the Employee\u00a0Benefit Research Institute and Greenwald and Associates, 28 percent\u00a0<\/span>said they have\u00a0less than $1,000 in savings and investments poised for retirement. A 2014 Federal Reserve survey paints a more discouraging picture: 31 percent of non-retired respondents have zero retirement savings\u00a0\u2014 19 percent of them ages 55 to 64.<\/p>\n

Scott\u2019s story is a real-life reminder that paints a painful portrait most people would rather avoid. With their golden years well ahead of them, many people assume there will be enough money stored\u00a0up to retire without a hitch. And they don\u2019t even want to think about considering the alternative.\u00a0But for many adults behind on retirement savings, they might be unaware of the realities of retiring without enough money in the bank.<\/p>\n

Read: 15 Ways to Retire Earlier<\/a><\/em><\/strong><\/p>\n

Is Retiring With No Savings an Option?<\/h2>\n

Opinions vary on how much money people need in retirement to sustain their current lifestyle, but\u00a070 percent to 80 percent of pre-retirement income is often recommended. If your household is at the national median of $54,000 per year, for example, you\u2019ll need to save up enough during your working years to have $37,100 to $42,400 annually at your disposal during retirement.<\/p>\n

\u201cThat might be enough if you\u2019ve paid off your mortgage and are in excellent health when you kiss the office goodbye,\u201d CNNMoney wrote. \u201cBut if you plan to build your dream house, trot around the globe, or get that Ph.D. in philosophy you\u2019ve always wanted, you may need 100 percent of your annual income \u2014 or more.\u201d<\/p>\n

If that money isn\u2019t there by the time you retire, that ideal\u00a0retirement \u2014 world travel, time spent with family, and a life of leisure, relaxation and hobbies \u2014 will have to come with some major downgrades to compensate for your lack of savings.<\/p>\n

1. You\u2019ll need to live off your Social Security benefits.<\/h3>\n

The average Social Security check for retirees is $1,287. \u201cSocial Security can help boomers make ends meet during their golden years, but for many, it won\u2019t be enough,\u201d wrote Donna Fuscaldo of Fox Business. If you\u2019re single and qualify for Supplemental Security Income, you might be able to barely live off Social Security and SSI,\u00a0but if you have any extenuating expenses, like a mortgage or supporting adult\u00a0children\u00a0returning\u00a0to the nest, you cannot.<\/p>\n

2. You might have to get a roommate.<\/h3>\n

Steve Vernon of CBS MoneyWatch offered the example of a single, 65-year-old woman with a $50,000 annual salary \u2014 and no savings or assets to invest<\/a> \u2014 looking to retire. \u201cTo help cover her living expenses, one option<\/a> she may want to consider is the \u2018Golden Girls\u2019 solution of\u00a0sharing living quarters\u00a0with other people in her situation,\u201d he wrote. \u201cIf she owns her house, she may want to consider renting a room to bring in more income.\u201d<\/p>\n

If personal space and quiet are important to you, new retirees with no savings might not have the patience or inclination to go the roommate route \u2014 though Vernon noted that this arrangement could reduce feelings of loneliness common in elderly people. Rooming with adult children can be a more comfortable alternative and can bring family closer together.<\/p>\n

Related: Retirement by 40: Is it Doable?<\/a><\/strong><\/em><\/p>\n

3. You\u2019ll have to alter your lifestyle and spending.<\/h3>\n

If Vernon\u2019s hypothetical retiree wants to retire full time at age 70, \u201cshe\u2019ll need to focus on buying \u2018just enough\u2019\u00a0to meet her needs and be happy. Most likely this will be a struggle, unless she has paid off the mortgage on her house, which will make things a little easier,\u201d he wrote.<\/p>\n

4. You might have to continue working.<\/h3>\n

You could delay retirement until 70, which is completely realistic for a healthy senior. \u201cOthers, who can\u2019t live off of Social Security alone, will need to find ways to\u00a0supplement their incomes\u00a0with part-time work,\u201d according to Mike Dang of The Billfold. A good idea in theory, but will you earn enough money<\/a> in those few years to actually retire on?<\/p>\n

\u201cEventually she\u2019ll need to reduce her living expenses, though, because chances are good she won\u2019t be able to work much past 80,\u201d Vernon wrote. \u201cMany people might groan at the idea of working into their 70s, but our hypothetical retiree really doesn\u2019t have much of a choice unless she\u2019s able to dramatically reduce her standard of living.\u201d<\/p>\n

5. You\u2019ll need to consider downsizing.<\/h3>\n

Selling your big house or car and downgrading to smaller, more affordable living arrangements and transportation can save money. If every decade of your working life has been to dream bigger and bigger, however, scaling down smaller and smaller in retirement might seem a bit anticlimactic.<\/p>\n

6. You could end up homeless.<\/h3>\n

In all honesty, ending up homeless is not far from reality for people with zero savings or assets to their name.\u00a0But in some corners of the world, it\u2019s a way of life for a number of baby boomers.\u00a0A 2014 Harper\u2019s article brought this sad fact\u00a0to light as \u201ca growing trend of older Americans for whom the reality of unaffordable housing and scarcity of work has driven them from their homes and onto the road in search of seasonal and temporary employment across the country,\u201d Lynn Stuart Parramore wrote of AlterNet. These displaced seniors have no choice but to keep working as RV-roaming nomads in whatever farm, factory or amusement park that will have the \u201cworkampers.\u201d<\/p>\n

Read: 13 Types of Alternative Investments<\/a><\/strong><\/em><\/p>\n

Start Saving for Retirement Now<\/h2>\n

It\u2019s never too late to begin a retirement savings plan, no matter what stage of life you\u2019re in. Here are retirement savings tips for different age groups:<\/p>\n