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.

"You really don't need to begin saving for retirement before you reach sixty. At that point, simply save 250 percent of your income each year and you'll be able to retire comfortably at seventy." -Jonathan Pond

My current 401k has a note at the top of the page when I log in and it says at my current rate of savings, I'll have a retirement income of $48k per year. Luckily, I have another IRA and my wife has both too. My folks just completed their first year with both of them retired and are living on about 1/4 of what my dad made when he was still working. They'll be fine, but they really, really saved and invested well and they're still trying to not spend more than 1/4 of my dad's previous income. I hope I can get there.

Just so

To summarize. They're Focked.

The problem is that there are millions of people doing the same thing so bottom line is we are all F'ed.

I could never see not working- at least not for an extended period of time unless I was in my 80's or more...

My father is retired, and for the life of me I don't actually know what he does all day. Works around his house, goes and helps out friends with odd jobs and what not. I don't get it.

'Retirement' for me would be not working and doing all the stuff I'd always wanted to do while younger but couldn't because of the bills. Unfortunately that kind of behavior would drain a retirement fund quickly, so thus I would probably work part of the year to fund vacations.

My parents don't have this problem (of draining their retirement funds) as they never go anywheres on vacation, ever.

:-/

Several anecdotal examples...

http://www.nytimes.com/2005/06/19/national/19retire.html

I used to focus on saving a ton for retirement. I still put it away, but I'm starting to see the beauty of needing less.

All the little saver ants are gona have the big ole green grasshopper make their retiresments WORTHLESS...

If you plan on retiring in 10 or more years...it just ain't gona be pretty.

Look at the numbers..

$20,000,000,000,000.00 in debt. If C&T and HC get through there won't be a vibrant economy. You will be standing in line to see a MD, You will be living in low rent housing, you will be standing in line for food, and electricity, gas and water service will be subjet to "brown outs"

Someone tell me why it ain't gona be so?

Because it's all going to be over on Dec 21, 2012!

Don't worry, be happy.

Here is how I see retirement: 20 or 40 acres with a pond or two, living off the land growing tomoates, fishing, hunting and fixing old cars in my 6 car garage.

I could buy this place for cash already, and have cash left over from the sale of my NJ house. And I wouldn`t care living in the middle of effen nowhere (but my wife would...).

(private lake/pond) real estate Homes for sale in Bernhards Bay NY 39 Acres With 2 Private Ponds! property properties, lakefront, waterfront

Aurel,

Sounds wonderful but the property taxes are going to be a killer.

Property taxes are $2,500 a year. I could live with that, and much better than the $8k+ I am paying now in NJ.

I start my first 401k oct. 1st. Can't wait to never cash it out.

There is a reason why I am buying (cash) a good sized piece of land out in the middle of no-where that has its own water, solar/wind powered where you can survive on your own for almost no money.

With my three 401k's (which were combined a few years ago) (and thank God they have now started rebounding), cash that I will have when I sell my house and savings elsewhere I could almost retire now. Am coming up on 57 and if I can work another 4-5 years can retire. Am planning on spending the time restoring old cars, motorcycles and airplanes. Taxes on the place are $400 right now, so workable.

Am not planning on Social Insecurity being here to support me, especially after the announcement on the news today.

The Associated Press: Early retirements strain Social Security system

~~~~~

Early retirements strain Social Security system

By STEPHEN OHLEMACHER (AP) – 3 hours ago

WASHINGTON — Big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that's happened since the 1980s.

The deficits — $10 billion in 2010 and $9 billion in 2011 — won't affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.

Applications for retirement benefits are 23 percent higher than last year, while disability claims have risen by about 20 percent. Social Security officials had expected applications to increase from the growing number of baby boomers reaching retirement, but they didn't expect the increase to be so large.

exactly! we are in the same boat. my wife would freak.....

You're right.
Good news for you. ;)

I'm counting on my wife's children to support me in my old age. Won't THAT be a great plan for me;)

retire.........no, my truck doesn't need new tires :eek:

401's thats a funny one also, I am sure those of you who actually have something in one, you took a hard hit and also your bubble might have popped, duh, fancy that.

At 61, am I worried, ahhhhhhhhhh last time I checked, I did wake up this morning and after sitting thru a wkend of CE, here I am.

My words of wisdom for all you grasshoppers, pay attention to the details............
float like a butterfly, but sting like a bee.

After being self employed for most of my adult life, basically living by the sword, I can't imagine not always making money, its so easy, why would anyone worry about that one??????

Can I retire if I want, yes but why?????? I can do anything I want, in fact I have been doing everything I wanted all my adult life.

Are there compromises, absolutely but the last time I checked, working for someone else, isn't that a huge compromise?????

Dueller, what do you think Social Security is??????????

If you are anywhere close (within 5-8 years) of retirement, your investments should be fairly low risk to avoid market variations messing up you retirement plans. This should be staged, the closer you get. Yes, you could lose out on a rally, but you'll also miss out on a big hit, like we just had.

George