what happens when someone retires without any savings?
 

i just argued with a good friend. he was about to cash out his 401K for the second time. first time he did, he stated he was going to use the money to pay off CC debt. he bought a glock, a caltec...and some other BS. turns out he already did cash out for the second time. i had begged him to start another 401K with his new lame job. he did..but it is meager. $200, and he is mid 40's. he cashed out his 401k to fix a motorcycle, and his porsche.

i cannot see how he isnt effed! what? low income housing? work till he dies? who keeps a 70 year old around working? damn, i am annoyed, but i guess it really isnt my problem.

He's confusing his 401K with a savings account.

He'll become a ward of the state.... er, you and me.

He won't retire. He'll work until he dies.

The short answer is that you don't.

My grandfather's brother "retired" with essentially no savings. All he gets is social security and nothing else. He lives in low-income housing. He works 3 days a week at the local Publix behind the meat counter. He needs the job because after his rent utilities, and Medicare, he has no money left. I try to take him out to dinner whenever I'm down in Florida. He does have pride and self-respect, so he won't accept gifts, but he will accept a meal.

He made the decision decades before I was born not to save. He had no family so taking a job with no pension didn't bother him.

I, on the other hand started my 401k at 21. My company offers a generous pension (that is grossly overfunded, even in today's market). I started a Roth IRA earlier this year. My wife has a 401k and a traditional IRA. We have enough in our retirement savings to buy our house outright.

I can't imagine touching my 401k. The idea revolts me. I don't want to be like my great-uncle.

I did the same when I was 31. Left my job to freelance and needed the money. Very stupid move but I didn't know any better. My views changed drastically when I started listening to Dave Ramsey.

He's still young enough to get back in the game. Or else he is screwed. " He must do today what most people can't to have tomorrow what most people won't". Discipline backed with commit will get him there.

My younger brother is in a bad situation also. Sad thing is, he hasnt done anything 'bad' per say. He simply has had no chance to build a nest egg, let alone take money out of it. He does not live beyond his means, does not buy extravagant things, but he pays ALOT in child support, and although he makes decent money, he just has never been able to get ahead. Lives pay check to pay check. Really sux for him.
Life happens.

By the time we reach retirement age, they'll be turned into Soylent Green probably.

He better keep his Glock, so he can go pull off a heist or two. Wouldn't be the first gramps robber out there.

Being old really sucks. Being old and poor is even worse. Even being moderately well off will make things so much easier. Health care costs, hiring help around the house and even your families interest in you will be much better with a few bucks saved up.

A good portion of your income needs to go towards retirement. It can not be touched. It needs to come out of your income before you adjust to the income and feel like you are missing the money. It is fairly simple to take a raise and send it straight to the 401k. You won't even miss the money because you obviously lived without it before you got your raise ...

George

I work with a whole bunch of people who have the same thought process, they cant see saving today for when they need it down the road, they would rather spend every dime they can get their hands on right now.

Basically they are gonna work till they cant then live on what ever uncle sam gives them till they die, what a thought process...

If he is in his mid-forties he has at least 20 years left before retirment, and he is at the peak of his earning power no less.

He had better start saving like mad and get interested in buying stocks and bonds rather than guns and Porsches

I also see no issue with a working retirement either. My grandfather worked manual labor jobs until he was 84. Well, past the time that he needed too, but he liked the work, it kept him active and it was no stress.

Retirement, after all, is a fairly new concept in the history of humanity and before the 1920's or so, it was not so common. My Grandfather was born before that and had no anticipation of retirement. He also started working (also manual labor) when he was 12.

However, there is no reason you can't do BOTH: Save for retirement and work to keep active and for a little extra income. In my mind that is probably the best way.

These people are banking on the welfare state being there for them. I won't be.

I'm just gonna start a new defined-benefit pension plan, and retire on the contributions of current workers at that time. :D

Assuming TIAA-CREF doesn't go bankrupt, I'll have decent retirement as I've been putting into that (with significant employer match thankfully) since my first "real job" (after postdoc) in '95. That said, I don't see retiring until I keel over, hopefully not because I have to, but rather because I want to. I enjoy my work and it keeps my mind in the game.

Smart/responsible/informed people pay themselves before they pay their debts, beginning at the time they become independant from their parents. They invest what they've paid themselves with the goal of having that investment grow to provide income for them when their working years come to an end.

Those who do not do that, who live for the day, who borrow money at exorbitant interest rates (credit cards) so that they can have instant gratification in the form of all that they can't afford without going into debt, are doomed to a day of reckoning, which day smacks them across the forehead like a 2 x 4 and they realize then that their instant gratification comes with the cost of quite possibly ending up a ward of the state (dontcha Repub righties jus' luv that? :)), then groveling, pissing and moaning, ooooooooh!

So, I says to them, left, right or indifferent, buck up, fuch up - ya reaps whut ya sews.

If I had not retirement savings at all, I would start looking for a wealthy widow...There`s always a solution to financial problems ;).

Isn`t this description what is happening to America as a whole? This is more than an individual issue. The whole system of over borrowing has caused the economy to be where it is now, but still the govt. wants to borrow more...

YES! I'm a bit older than the average Pelican poster so it may be shocking to the younger than average Pelican poster that, once upon a time (when I was a little kid in the midwest) there was NO SUCH THING as credit cards! :eek: If you wanted to buy something you saved the money then bought it. There were "lay away" programs back then (which concept is coming back...duh :rolleyes:) where you put a pittance down to hold the purchase until you actually HAD THE MONEY (:eek: WHAAA?) TO PAY FOR IT!

Yeah well, we've become a nation where the acquisition of material things takes precedence and clouds what is elemental to true fulfilment of our spirit. Wouldst that we were attuned to those in the past who realized and waxed poetically about the woeful state of mankind - Wordsworth comes to mind:

"The world is too much with us; late and soon,
Getting and spending, we lay waste our powers;
Little we see in Nature that is ours;
We have given our hearts away, a sordid boon!
This Sea that bares her bosom to the moon,
The winds that will be howling at all hours,
And are up-gathered now like sleeping flowers,
For this, for everything, we are out of tune;
It moves us not.--Great God! I'd rather be
A Pagan suckled in a creed outworn;
So might I, standing on this pleasant lea,
Have glimpses that would make me less forlorn;
Have sight of Proteus rising from the sea;
Or hear old Triton blow his wreathed horn."

And, unabashedly I admit, upon reading these words again, tears come to my eyes.