What do you think about when you hear the word retirement? I think of beaches, golf courses, getting up, and doing whatever I want. Well, I can tell you due to poor retirement planning and lack of saving and investing many people are now finding they are spending their golden years in retirement misery.
Can You Help Us Out?
About once a month or so I have someone ask me to help them out with their finances or ask me to help out someone they know with their finances. We have been very fortunate in our lives and we like to help others if we can. I had a chance to sit down with a senior couple not too long ago to try and help them out with some general budgeting advice. They were retired but had run out of money just a few years into retirement.
99% of the time I am working with newlyweds or young families so this was a new experience. It was worse than I had expected and discovered that this “retired” couple could not live as they had hoped in their later years and were living a life of pure misery instead of joyful freedom from work and money.
Retirement Planning Gone Bad
It is a lot easier to help people out earlier in life. We can set a budget and plan things out to get out of debt, reduce spending, and increase investments. It’s not rocket science it is self-control and most people just need a little help with a plan.
So what do you do when you sit down with a retired couple with no revenue streams other than social security and their commitments are above what their social security pays each month?
We obviously couldn’t go back 40 years and start over. This one was going to be tough.
So What Went Wrong And Why Did the Money Run Out
This sweet couple simply didn’t save enough. They thought social security and medicare would be the solution to everything and would be just fine as long as they made it to their late 60s.
They don’t have anything else saved to live on because of changes in jobs and challenges in the family they had already pulled out all their retirement savings. They never paid off their consumer credit cards and loans and have to try and pay that off now.
Every month they end up short with no way to catch up. They showed me a $55 medical bill that went to collections. I asked them if they really couldn’t even pay $55 and they said no. I asked them what they do when they come up short and they told me the answer I wished I didn’t hear….credit cards…which they also can’t pay off. They are just trying to shift things from one place to another, just like many people do.
Can’t They Just Down Size Their Home To Save Money?
I wish I could tell them they need to sell a house or a car, but they are already living in a basement apartment of one of their children. They don’t have to pay rent, and they do help with the utilities when they can, but most times they don’t have enough for that.
“Unretirement” – Back To Work
The only way to get out of the situation was to increase income. I told him he would have to get into the workforce again. It wasn’t a surprise, but they had hoped to avoid it which was impossible. It took a very long time even to find a part-time job.
It was a struggle physically because he was used to a desk job and now had to do some manual labor as part of the job. That didn’t last very long and he worked on finding another job.
It is really hard and humiliating to lose out on jobs to an 18 or 19-year-old that doesn’t have much work ethic yet, but knows how to work computer software programs faster and can learn technology much faster than an older generation. He finally found a spot at a bank next to kids that were the same age as some of his grandkids.
The training took much longer and was frustrating to the bank and to the older gentlemen but he finally got it down. Once you are out it is very hard to go back in. Plan on it taking much longer than you expect.
Covering the Monthly Costs
They are able to pay for 100% of their costs right now, but it’s only covering what they were spending on credit cards each month. They still have no extra income to get ahead and can’t afford a car repair or any medical situation.
How Many Others Are in Retirement Misery
My grandparents had more than enough to make it through their retirement years, but they had amazing pensions that were covering them, plus they had made a ton of investments in life.
My parents are also retired, well my mom will be retired after this year we’ve gone over their numbers and they are more than set for the rest of their lives.
Have you checked with your parents? Are they going to depend on you to make it through life? Might want to start checking into it.
I checked with some other folks in our area and was disturbed to find that some are in a similar situation as this other couple I worked with not too long ago.
I Thought Social Security Would Carry Us
I heard that over and over. I thought I had saved enough and that social security would cover the costs. Most of the couples have been downgraded to smaller houses. One was a doctor, another a college professor/auditor, and the last an engineer. The engineer is totally set and has passive income from several rental properties and has way more than enough money to last him and pass some on to the family.
The college professor/auditor who is in his 80s is living on social security until it runs out and then uses credit cards to make it the rest of the month. Then he pays off the credit cards with the next month of social security. There is no way out of this cycle for them. He is too old to enter the workforce and already downgraded their home to get some cash to help out. He stopped paying a 12-year-old boy to cut the lawn so he could save $40 a month. No one likes to see an old man trying to cut his lawn so luckily we can solve that easily and help a neighbor out.
The doctor is set. He could live in a mansion but is playing it safe and got a smaller home because they don’t want to take care of something bigger. He has a golf membership on the course we live on and golfs every day. He runs 5 miles a couple of times a week and looks 20 years younger than he really is. He had a plan and stuck to it. They can do whatever they want in life.
Work Until I Die
The first gentleman we started with pretty much said he will have to work until he dies. He has no other choice at this point. What would have happened if they decided 40 years ago to set money aside and stick to it instead of building up debt? How different would life be now? He is also dependent upon his health holding up for him to continue to work.
I’ll Save For Retirement When I Get More Money
We suck at saving, well most people do, just read this that came out last week on our savings rate as a country. No bueno.
The main point of the gentleman I was helping was that he just planned on adding money to his retirement later on. The next job he would make more money and start investing or once the car was paid off he could add some more beyond the 3%. There was always some excuse to justify waiting to save until it was too late.
So instead of enjoying time off, traveling every so often or just being able to spend time with the grandkids they will never get a break.
This happened to an accountant, who of all people should know better, so with social security slowly disappearing for many of us decades from now…how do you feel about your chances?