How To Retire With No Money

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Did you know that a 2019 study found 22% of adults in the US have less than $5,000 saved for their retirement years? What’s even more shocking is that another 15% have absolutely nothing saved for retirement and aren’t quite sure how they’re going to start saving either.

How To Retire With No Money

On top of that, as many as 45% of people think they will live longer into their retirement years than they will have savings or the financial means to support themselves.

So, retiring without any money to support a lifestyle obviously isn’t an ideal scenario for anyone. We want to make sure we have the financial means so that we can enjoy our retirement years without too much worry about paying for the necessities.

If, however, you find yourself in a situation here you’re closing in on retirement and you don’t really have much money set aside for it or maybe not even any at all you will need to find a way to support yourself and even retire with no money.

So, What Happens if You Don’t Have Any Money for Retirement?

When we retire, it means we don’t have to go to work anymore but it also means we’re putting an end to a steady stream of income for the most part. This is why having sufficient retirement savings is really important for almost everyone.

Once you stop working there are some expenses that cease however it is estimated you will still need up to about 80% of your pre-retirement income to support yourself in a similar lifestyle.

For example, if you (and even your spouse) have a combined household income of $100,000 prior to retirement then you will need about $80,000 every year to keep going once you are retired.

Without enough savings or a company pension plan you will need to either find a way to keep earning (to make up the downfall) or you will need to cut way back in your lifestyle.

Retired man sitting on the patio

For most people who find themselves without their own retirement plan, they end up relying on social security to support them during these years.

It’s estimated that about 50% of seniors rely on social security for about 50% of their income, while 20% of seniors rely on it for 90% of their total income during their retirement years.

For many years, baby boomers especially would rely on corporately funded pensions to supplement either most or all of their income during retirement.

Companies that provide these kinds of pension plans are pretty rare though, and employers are often leaving it up to their employees to fund their own retirements.

There are some government jobs that still offer pensions, however in some cases these kinds of jobs would have had a pension in lieu of contributing to social security so this means it could affect your eligibility for social security funding.


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Can You Retire Without Any Savings?

As mentioned, when you don’t have savings or a pre-determined retirement plan you will be relying mostly on social security during your retirement years. Living on social security can be a big adjustment for many people as it is often significantly less money than they are used to living on.

On average, a monthly cheque from social security is around $1,500 – and that is for the whole month. Many people are used to living on about double that, and if they don’t have any savings chances are people are living right to the extent of their means. Most people, they can expect social security to replace about 40% of their working years income.

When you take into consideration your expenses could increase in your senior years with medical conditions and other financial obligations, it can become clear very quickly that social security just is not enough to retire on.

So, How Do You Retire Without Any Money or Savings?

It may not be easy but there are a few ways you can retire without any real kind of savings or investments. It’s going to take careful planning and being very mindful of how you spend your money – which, if you lived right to your limits during your working years, this could be a very difficult transition for you.

Downsize Your Lifestyle

It will be very difficult to maintain the same level of lifestyle you had during your working years if you don’t have the financial means to support it.

With this in mind you will need to make adjustments to your lifestyle so that it fits within your financial means. If you currently own your house, you may find that you need to sell it and use the proceeds to fund your retirement years.

senior couple dancing intimately

If you are renting, you might want to consider downsizing to a smaller house or apartment to save on expenses.

In other areas, you may have forego having an expensive car or the extra luxuries like travelling.

The proceeds from the sale of your home could go towards your very own retirement fund and help make sure you have the money you will need in the years to come.

Additionally, some people who do not have any savings for retirement, or a pension plan, will end up selling their home and moving in with their adult children. This happens because downsizing is still just not enough and they drastically need to reduce their expenses.


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Taking on a Room Mate

If you are a single senior – either due to divorce or having lost your spouse – you may find that you need to take on a room mate or move in with one. If you own your house, you may want to talk to friends of yours and see if anyone is looking to reduce their expenses and share a living space.

Continue Working

Sometimes seniors continue to work part-time after they retire. This happens sometimes because seniors want to keep busy and do something to get them out of the house. However, in other cases this happens out of necessity because seniors needs to supplement their income as social security is just not enough to live off of.

senior man working in his office holding some cash

If you are familiar with the internet and are tech savvy, you may have the option to work from home so you don’t have to commute anywhere. However, if you want to get out of the house many retailers will hire seniors for part-time or seasonal work.

It’s important to consider the balance between working part-time and how much money you are bringing in because it could affect your social security.

If you have questions about how much money you can earn before it starts to affect your other income, you can meet with a financial planner to make sure you are able to take advantage of it.

Prolong Retirement Age

While many of us think we can retire at 60 or 65 years old, that may not be a reality if we don’t have the money to support it.

In the event you are not in the place financially you need to be to retire, you may find yourself prolonging retirement for a few years until you are in a better place financially or social security kicks in.


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What’s the Least Amount of Money Someone Needs To Retire On?

The answer to this question is a difficult one to answer with just one number. The reason for this is that the amount spent on living is different for everyone.

If you are spending $6,000 every month on living pre-retirement it’s hard to make an adjustment to living on just $2,000.

So you will want to take a look at how much money you are spending now and see what expenses will continue past your working years and which ones will cease.

computing expenses

From there, you can make a best and worst case scenario where you determine the least amount of money you will need to survive in retirement and a scenario where you are able to have the luxuries you want.

From there you can easily determine how much money you will really need to retire on, and you can measure where you’re at now and make a plan to get to where you need to be.

If you still have more than a few years until retirement you may want to consider talking to a financial planner to see how much money you should be trying to put away so you have something for retirement.


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The Bottom Line

Planning for retirement isn’t always a fun topic to talk about, and it’s definitely not fun to think you need to put money away for an unspecified future date.

However, by saving money now for your retirement you will be able to enjoy your senior years without worrying about how you’re going to take care of yourself.

Additionally, if you put away a little bit of money consistently and early on you can avoid having to put away a bunch of money as you get closer to retirement.

Working with a financial planner is the best way to figure out how much money you should invest or save now based on what you think you’ll need later on.