In light of the current government shutdown, it has come to everyone’s attention that 78% of American workers live paycheck to paycheck. This caused me to wonder if retirees do the same exact thing? Do they live social security check to social security check? Pension check to pension check? Annuity check to annuity check? Investment/Interest/dividend check to investment/interest/dividend check?
Note: Please don’t leave any comments about the government shutdown (they will be deleted). That’s NOT what we are talking about here. We’re talking about being so financially strained, whether working or retired, that your whole world depends on your very next guaranteed check.
I sorta live from my social security/pension/interest check to the next one. I plan my whole month around these checks directly deposited into my account. My payment schedule is strategized against each bill as they becomes due. I don’t see any liquid cash until the end of the month. Granted, yes I have a savings account but ALL that money is earmarked. My financial retirement strategy is based on the combination of Social Security, interest/dividends, a pension and a saving account. If any of these would cease, I’d handle it, but I’d be frantic.
It’s a scary thought. One that up until now, I really never thought about before. Retirees have different needs and goals than a salaried individual, since we know we won’t be working for a living anymore.
It’s not merely those earning low wages who are struggling. CareerBuilder reports that nearly 10 percent of Americans with salaries of $100,000 or more live paycheck to paycheck as well. That means that many workers aren’t able to put anything significant into savings. More than 50 percent of respondents say that they save less than $100 per month. Debt is also a growing issue for workers, CareerBuilder reports. Just more than 70 percent of all respondents say that they’re in debt, and a quarter of workers say they weren’t able to make ends meet at the end of every month of the past year.
Is it any wonder then, why so many retirees have not saved enough money for their own retirements? Social Security, pensions and 401Ks are more vital to a successful retirement then ever before.
While the recommended retirement plan savings amount is up to four times your annual salary, this is not a reality for many Americans. The average income for those in their 40s is around $50,000, but the median retirement savings amount for this age group is $63,000.
I’ll be honest with you. I was only able to retire a bit younger than most because I made a lot of equity selling houses that I lived in. I didn’t technically ‘save’ money from my salary for retirement. Throughout my working years, I never made more than $28,000 annually (and I have two college degrees!) I was vested with my last employer BUT I was let go after 8 years. My employer would not give me access to my retirement account till I turned 65. I didn’t want my ex-employer handling my retirement fund, so I sued him. My attorney got my retirement account turned over to me and his big legal fee to go along with it. I had to liquidate my retirement account in order to pay him off.
My husband didn’t fare much better than me. He was lucky enough to have a 401K but two of the companies he worked for went out of business. DH was oftentimes without work for years (2.5 years was the longest). We dipped into that 401K to survive. Lots of people do. Thankfully, he has both a pension and social security.
The only reason why DH and I can live a bit comfortably now in dual retirement is because we have a low-cost standard of living, no debt and we stick to a budget. Without a mortgage, car loans, equity loans, lines of credit or consumer debt, we can manage financially on our combination of social security, pension, investment/interest/dividends and savings. Should any of these income sources be knocked out (and sometimes retirees have suffered guaranteed income losses….think GM) we have material assets we can sell. Or pawn. Should the economy be in a downfall however, cash may not be as readily available as you’d like.
The winning combination then, for a successful retirement is no debt, cash in the bank (at least one whole year’s expenses to fill in should social security sputter) and a low-cost lifestyle IMHO.
You can’t depend on anything other than yourself.