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General Discussion => Welcome and General Discussion => Topic started by: Seņora Savings on November 25, 2014, 01:30:26 PM

Title: What happens to people that don't save for retirement?
Post by: Seņora Savings on November 25, 2014, 01:30:26 PM
It seems like I'm always meeting people who don't save for retirement and reading about them here.  Where do they end up?  Seriously downsizing?  Homeless?  Working until they go to the hospital to die?
Title: Re: What happens to people that don't save for retirement?
Post by: Chuck on November 25, 2014, 01:37:46 PM
Steady downsizing starting in late middle age, indefinite part time work and a complete reliance upon SS.

 
Title: Re: What happens to people that don't save for retirement?
Post by: Gone Fishing on November 25, 2014, 01:39:04 PM
Like most of history, many end up living with family.  The 100% self supporting old age model is relatively new.  Many are also eligible for public services such as subsidized housing. 
Title: Re: What happens to people that don't save for retirement?
Post by: Cassie on November 25, 2014, 01:44:44 PM
Low cost senior apartments, food stamps, energy assistance,  basic home phone that government subsidizes bill so you only pay 10/month, food banks, etc.  Can you tell I was a social worker at one point in my life?
Title: Re: What happens to people that don't save for retirement?
Post by: Artemis67 on November 25, 2014, 03:27:34 PM
My mom's best friend of 30+ years never saved any money, plus refused to take/keep stable employment that was well-paying--an "ain't gonna work for the Man" approach that sure as hell hasn't worked out so hot for this particular woman.   

She has been teetering on the edge of homelessness for several years now. Currently, she's 68, collecting about $750/mo in SS, unemployed,and sharing a rented travel trailer in an RV park, with no car and limited access to public transit She's got a difficult personality, so while she was eligible for some decent shared, subsidized women's senior housing in a good location (near shopping, services, potential jobs and bus routes), she didn't get in after pissing the wrong people off. Her utter inability to "go along to get along" is part of her undoing.

I'm pretty sure she will end up truly homeless within the next year or so. Her personality plays a huge role in that, but she's also in declining health, and is pretty much unemployable. But even if she did magically grow some humility and the ability to just do as she's asked without a fight, and exercise some impulse control, she'd still be stuck working at low-wage jobs until she's either dead or in a state facility.

Then there's the 60-something Metro driver I see on occasion who lives in a rooming house in my neighborhood because it's so cheap. But he says he'll have to leave the Seattle area and retire elsewhere--maybe even Belize--because he can't afford to stay in Seattle. And I'm thinking, "Dude--you drive for Metro. You've been driving for Metro for at least 20 years, maybe 30. You guys get paid fairly well, have access to things like 401ks and pension plans that self-employed me doesn't--where the fuck did all your money go, bro? Booze? Indian casinos? Hookers? Seriously."

Title: Re: What happens to people that don't save for retirement?
Post by: Miss Prim on November 25, 2014, 03:36:06 PM
Well, my mom and dad didn't save a lot, but they both have pensions and SS.  They have managed to do okay from 55 to 83 years old, but now dad's dementia is getting worse and he will eventually have to go into a home.  My mom actually has been furiously spending down her money fixing up her house because she knows it will all go for his care and he will be on Medicaid.  I really don't know what will happen, but we have enough space in our house and money to take her in if it comes to that.  If one doesn't have family that is able to help, I can see it would be a huge problem!
Title: Re: What happens to people that don't save for retirement?
Post by: Bateaux on November 26, 2014, 12:20:13 AM
There was a very angry lady in her 70s making my Subway sandwich the other day.  I'm thinking she'll be making sandwiches in her 80s.
Title: Re: What happens to people that don't save for retirement?
Post by: vern on November 26, 2014, 12:42:46 AM
(http://businessbewareshow.com/wp-content/uploads/2011/01/walmart.jpg)
Title: Re: What happens to people that don't save for retirement?
Post by: alsoknownasDean on November 26, 2014, 01:35:38 AM
If they've paid their house off, they may be able to get by on the aged pension (even if they have no super). If part of the pension has to go to rent, then it'd be much harder, especially with rents in the capital cities.
Title: Re: What happens to people that don't save for retirement?
Post by: DrowsyBee on November 26, 2014, 02:08:44 AM
There was a very angry lady in her 70s making my Subway sandwich the other day.  I'm thinking she'll be making sandwiches in her 80s.

This is heartbreaking and is the exact reason why I want to be financially independent.
Title: Re: What happens to people that don't save for retirement?
Post by: deborah on November 26, 2014, 03:27:54 AM
At least we have the aged pension here - the US SS scheme appears to give people a lot less because you add to it when you are earning, so the typical divorced woman who was always a SAHM who ends up on the aged pension in Australia actually has no SS from what I can understand about how the US system works. I hope I'm wrong.

However, the people who have no retirement savings tend to be the ones who have always spent everything they have earned, and don't know how to budget. So they end up in a horrible situation, no matter how much they get in aged pension/SS/whatever is relevant in your country, because no country is going to give them as much as their pay packet in retirement. Unfortunately, a lot of these people might think they are entitled to more.
Title: Re: What happens to people that don't save for retirement?
Post by: shotgunwilly on November 26, 2014, 07:40:57 AM
They live off of handouts taken from us and die with alot of debt.
Title: Re: What happens to people that don't save for retirement?
Post by: Bob W on November 26, 2014, 07:49:04 AM
Some of them I work with have it pretty decent and life at or above a mustachian level.

Here is an example --- A gentleman I know has $1,200 in SSI monthly.  He receives $80 in food stamps.  He has a free Obama phone.   

His rent in subsidized Senior Housing is $190.  His cable is $90.  He has a car he rarely uses so I'm guestimating $100 per month in insurance, gas and mait.   So his total fixed costs are $380.  He has about $800 per month in discretionary income.    He pays $40 a month for a burial policy.   I'm pretty sure that he will eventually spend most of his money on medical care as Medicare doesn't really cover much. 
Title: Re: What happens to people that don't save for retirement?
Post by: GardenFun on November 26, 2014, 07:52:30 AM
At least we have the aged pension here - the US SS scheme appears to give people a lot less because you add to it when you are earning, so the typical divorced woman who was always a SAHM who ends up on the aged pension in Australia actually has no SS from what I can understand about how the US system works. I hope I'm wrong.

However, the people who have no retirement savings tend to be the ones who have always spent everything they have earned, and don't know how to budget. So they end up in a horrible situation, no matter how much they get in aged pension/SS/whatever is relevant in your country, because no country is going to give them as much as their pay packet in retirement. Unfortunately, a lot of these people might think they are entitled to more.

As long as the marriage lasted min 10 years, and the "SAH" spouse hasn't remarried, the SAH spouse can collect SS that equates to 50% of what the earning spouse will collect - minus any penalty for early starting age.   
Title: Re: What happens to people that don't save for retirement?
Post by: Villanelle on November 26, 2014, 08:00:18 AM
Working til they die, becoming a burden to family, becoming a burden to tax payers (SNAP, subsidized housing, etc.) and/or living extremely unhappily, where they literally must watch every penny. 

I could not be more grateful that my parents were responsible.  I stand to get a large inheritance (hopefully not for many more years) but even if I didn't get a penny, it is such a gift the I don't have to give a single second's thought to how they are going to get buy. 

That's worth every cheap dinner my mom ever made, every toy I never got, and the non-name brand jeans I had to endure in junior high.  A hundred fold. 
Title: Re: What happens to people that don't save for retirement?
Post by: golden1 on November 26, 2014, 08:11:41 AM
My mother never saved anything for retirement.  She does okay because she is on SS disability, and lives in subsidized housing, gets heating assistance, uses food stamps etc....plus gets a little help from me from time to time.  She is able to live fairly comfortably, no vacations or luxuries really, but she has learned (finally) to put away a little for emergencies.  So she is doing okay, not fantastic, but okay. 
Title: Re: What happens to people that don't save for retirement?
Post by: rujancified on November 26, 2014, 08:13:31 AM

That's worth every cheap dinner my mom ever made, every toy I never got, and the non-name brand jeans I had to endure in junior high.  A hundred fold.

+1,000,000
Title: Re: What happens to people that don't save for retirement?
Post by: lielec11 on November 26, 2014, 08:22:57 AM
There was a very angry lady in her 70s making my Subway sandwich the other day.  I'm thinking she'll be making sandwiches in her 80s.

God I hope that doesn't turn into my mother. She is one of those work-your-entire-life-but-don't-save-a-dime persons. When my parents divorced years ago she was completely reliant on my fathers income. Now she's living with my sister and her children for as long as they can keep that up. Ugh.

To be quite honest, my family's lack of savings (except my father), is a HUGE reason why I have and continue to work towards being financially independent.
Title: Re: What happens to people that don't save for retirement?
Post by: merula on November 26, 2014, 10:38:35 AM
Sounds like my grandparents-in-law. They sold their house and used the proceeds to build an addition to their daughter's house to live in. Anything they had went to Grandma's medical costs before she died a few years ago. Grandpa works as a greeter at Walmart (seriously!) and turns over his pay and SS to his daughter, but it doesn't cover his bills so his kids supplement.

I could not be more grateful that my parents were responsible.  I stand to get a large inheritance (hopefully not for many more years) but even if I didn't get a penny, it is such a gift the I don't have to give a single second's thought to how they are going to get buy. 

That's worth every cheap dinner my mom ever made, every toy I never got, and the non-name brand jeans I had to endure in junior high.  A hundred fold. 

This. My parents will be fine and I'm more grateful about that than anything else. I'd rather not get an inheritance at all, but they are dead set on leaving one.
Title: Re: What happens to people that don't save for retirement?
Post by: Rife on November 27, 2014, 09:36:47 AM
My dad and my father in law were both engineers in aerospace for over 40 years. My dad saved for retirement the entire time while my father in law thought he would work til he died and saved nothing ( mostly spent on airplanes as he is a pilot also). Both are in their 70s. My dad had enough spare money to buy a 150000 dollar Mercedes (hey he is near the end at least) while my father in law gets by on ss, a paid off house and he also remarried a younger woman who still works (after his wife died).  The new marriage did alienate his family. Even though he is getting by it is still a dramatic contrast considering their earnings were comparable. He had not counted on failing health forcing him to stop working. Also as he passed 70 finding a job as an engineer became impossible.
Title: Re: What happens to people that don't save for retirement?
Post by: catccc on November 27, 2014, 11:54:49 AM

I could not be more grateful that my parents were responsible.  I stand to get a large inheritance (hopefully not for many more years) but even if I didn't get a penny, it is such a gift the I don't have to give a single second's thought to how they are going to get buy. 

That's worth every cheap dinner my mom ever made, every toy I never got, and the non-name brand jeans I had to endure in junior high.  A hundred fold.

I love this so much!  I want my kids to be able to say the same.
Title: Re: What happens to people that don't save for retirement?
Post by: pachnik on November 27, 2014, 12:18:03 PM
Working til they die, becoming a burden to family, becoming a burden to tax payers (SNAP, subsidized housing, etc.) and/or living extremely unhappily, where they literally must watch every penny. 

I could not be more grateful that my parents were responsible.  I stand to get a large inheritance (hopefully not for many more years) but even if I didn't get a penny, it is such a gift the I don't have to give a single second's thought to how they are going to get buy. 

That's worth every cheap dinner my mom ever made, every toy I never got, and the non-name brand jeans I had to endure in junior high.  A hundred fold.

+1 to parents.  I am really grateful that I won't have to worry about stuff like this with my folks either. 

On the other hand, my husband is someone with next to nothing in the way of retirement savings.  We are in our 50's and got together later in life.  His plan is to work full-time for as long as he can and then collect CPP and OAS.  I figure if he does this until 65, between what we'll have in our CPP and OAS benefits and what I have invested, we'll be fine - modest but okay. 
Title: Re: What happens to people that don't save for retirement?
Post by: Kyle Schuant on November 27, 2014, 04:51:25 PM
Well, Australia has raised the retirement age for people born after 1965 to... 70. That's the age I'll be able to access the age pension.

Superannuation we can't touch until we're 60.

Super it used to be, well it's your money, take it out whenever you like. They changed that quickly, and gradually increased the age. Then they brought in all these taxes on it - taxes on extra contributions, taxes if you withdraw it in a lump sum rather than deposit it and live off the interest, etc. And then of course the super funds all have their charges, etc, so the balance rarely goes up much.

My thinking is, we'll never get to touch our superannuation. By the time I'm 60 they'll say, "well... it's your contribution to your pension!" and by that time it'll be 75 rather than 70. And they're trying to turn part of the unemployment payment into a sort of grocery card - food stamps, I suppose - and there's no reason to expect this won't eventually be extended to all government pensions.

We have to provide for ourselves. Either work like a madman for 10 of your 50 possible working years and then retire, or work part-time for all 50 years and then die.
Title: Re: What happens to people that don't save for retirement?
Post by: fartface on November 27, 2014, 08:24:55 PM
Some of them I work with have it pretty decent and life at or above a mustachian level.

Here is an example --- A gentleman I know has $1,200 in SSI monthly.  He receives $80 in food stamps.  He has a free Obama phone.   

His rent in subsidized Senior Housing is $190.  His cable is $90.  He has a car he rarely uses so I'm guestimating $100 per month in insurance, gas and mait.   So his total fixed costs are $380.  He has about $800 per month in discretionary income.    He pays $40 a month for a burial policy.   I'm pretty sure that he will eventually spend most of his money on medical care as Medicare doesn't really cover much.

Uh huh. My grandma's friend. Same situation. She pays around $200/month in low income senior housing -- nice place too btw.  She doesn't have a pot to piss in, or a window to throw it out of; however, her daughter insisted on taking her "couch" shopping. That's right, grandma bought a brand new couch costing $1600 but hey, 0% financing over six years, so why not? She lives solely off SS and subsidized senior housing. Her mindset? She said this, and I quote, "I came into this world dirt poor with nothing, and that's how I'll leave it."
Title: Re: What happens to people that don't save for retirement?
Post by: BPA on November 27, 2014, 08:47:48 PM
My mother retired at 65 with only $4k in savings.  She gets OAS, and a bit of CPP.

She lives frugally and well.  She is very happy.
Title: Re: What happens to people that don't save for retirement?
Post by: fa on November 27, 2014, 11:02:46 PM
(http://businessbewareshow.com/wp-content/uploads/2011/01/walmart.jpg)

No offense to hard working wal-mart employees, but that picture was priceless.  Thanks for posting.
Title: Re: What happens to people that don't save for retirement?
Post by: EricL on November 28, 2014, 12:22:01 AM
People with no savings become Mustachians with none of the mental and emotional preparedness or willingness required to live frugal and absolutely no hope for the pot of gold at the end of it.   Essentially the worst of both worlds.  Complainypants with entitlement issues and no money to fullfill their wants or existential issues.  Terrible! 
Title: Re: What happens to people that don't save for retirement?
Post by: Workinghard on November 28, 2014, 04:00:44 AM
Well, my parent managed to live on SS, and eat out 3-4 times a week, with my brother paying large property tax/ insurance bills and subsidizing $600-$700 a month. They did help us out several times with the excess.
Title: Re: What happens to people that don't save for retirement?
Post by: Terrestrial on November 28, 2014, 06:19:08 AM
Slightly off topic but fascinating observation I have noticed reading this thread. Many people are bringing up their own parents/family/upbringing...that make sense as most people's best knowledge of how old people live is watching their parents/aunts/uncles/grandparents first hand.  It seems largely split between people wanting to live a frugal lifestyle because:

-They were brought up by financially responsible families and were taught that's how it's done, see that it works, and want that for themselves in the future.

and

-People who came from financially irresponsible families who want to avoid similar fates.

That would be an interesting poll question to see what the % split is between the two.  Maybe it's already been done.
Title: Re: What happens to people that don't save for retirement?
Post by: Gerard on November 28, 2014, 02:31:00 PM
For the Canadians talking about getting by on CPP and OAS, are you also including the GIS in your calculations? Or do all the people involved have big enough pensions that they don't qualify?

I spend some time with my mom and the money-hopeless folks at her seniors drop-in centre, and they're all doing surprisingly well. Government guaranteed income (CPP, OAS, GIS) of at least $16K a year, virtually no taxes, health care, subsidized taxis and transit, some subsidized housing, drug plans... the perks of being the generation that votes. Plus a lot of them bought houses back when they were virtually free and are yet to deplete their home equity lines of credit.

(I expect to pull in about $40K a year in retirement, but it's nice to know that I could live pretty well on that $16K if I had to!)
Title: Re: What happens to people that don't save for retirement?
Post by: RetiredAt63 on November 28, 2014, 04:39:04 PM
@Gerard

I have a good (not great) pension (CEGEP teachers are not well paid compared to the rest of Canada's teachers at Community Colleges, so the pension suffers), and it is not well indexed.  I have my RRIF.  I will soon have CPP and OAS.  I obviously have way too much money coming in to ever qualify for GIS.  I pay a chunk of taxes, and am glad, because it means I have some income.

I basically live off my pension.  My other income is paying down debt (divorces are expensive), and once that is done it will be TFSA and "fun"money down the road.

I was always frugal, so if I had not had the work pension, I would have maximized my RRSP (and final income would have been about the same, maybe a bit more). However, since I had the pension credits, my RRSP contribution room was always small.  My RRIF is only a reasonably large sum because I have been doing my RRSP since it was first introduced, and as we all know here, time is the great money-maker.   
Title: Re: What happens to people that don't save for retirement?
Post by: Gerard on November 28, 2014, 08:32:46 PM
  I obviously have way too much money coming in to ever qualify for GIS. 

I'm betting most of the mustacho-Canadians will... I meant to specify the Canadians who didn't save, who a couple of folks here were talking about. People seem to forget about the GIS, which pretty well keeps senior Canadians out of dire poverty unless they *really* screw up.

I'm bummed to hear that CEGEP teacher pensions/pay aren't great. Some of the most creative and intelligent teachers I've had were at the CEGEP level.
Title: Re: What happens to people that don't save for retirement?
Post by: Poopsio on November 28, 2014, 08:33:41 PM
Those stories you hear about baby boomers living with roommates lol.
Title: Re: What happens to people that don't save for retirement?
Post by: Albert on November 28, 2014, 11:26:15 PM
Here in Switzerland you live off your pension which is substantial if you worked all your life as you are expected to. I'm currently promised ca 60k in todays dollars, how much I will actually get is unknown and unpredictable of course.

My parents don't live in a rich country and while relatively prudent with money didn't get to save too much due to revolutions and everything. Still they have their properties and pensions (ca 2x average household income together) so at the moment they are doing fine and can afford luxurious lifestyle (two cars, trips abroad etc). Nevertheless they'll probably need my assistance when/if they are not able to live alone due to health issues.
Title: Re: What happens to people that don't save for retirement?
Post by: Goldielocks on November 29, 2014, 12:21:39 AM
For the Canadians talking about getting by on CPP and OAS, are you also including the GIS in your calculations? Or do all the people involved have big enough pensions that they don't qualify?

I spend some time with my mom and the money-hopeless folks at her seniors drop-in centre, and they're all doing surprisingly well. Government guaranteed income (CPP, OAS, GIS) of at least $16K a year, virtually no taxes, health care, subsidized taxis and transit, some subsidized housing, drug plans... the perks of being the generation that votes. Plus a lot of them bought houses back when they were virtually free and are yet to deplete their home equity lines of credit.

(I expect to pull in about $40K a year in retirement, but it's nice to know that I could live pretty well on that $16K if I had to!)

I looked at it once, and married pensioners get something like $24k combined per year. No savings draw down or invested money, With the perks above, and a paid off house, they have far more disposable income, after mortgage and basic utilities, than a $100k per year family of four in high COL area (VCR , TO, or even Calgary mortgage).

Singles have trouble if they refuse to live with someone, people who pay rent without subsidized housing, or those that were expats for many years and do I not qualify for full  coverage. 
Title: Re: What happens to people that don't save for retirement?
Post by: BPA on December 01, 2014, 04:27:04 AM
For the Canadians talking about getting by on CPP and OAS, are you also including the GIS in your calculations? Or do all the people involved have big enough pensions that they don't qualify?

I spend some time with my mom and the money-hopeless folks at her seniors drop-in centre, and they're all doing surprisingly well. Government guaranteed income (CPP, OAS, GIS) of at least $16K a year, virtually no taxes, health care, subsidized taxis and transit, some subsidized housing, drug plans... the perks of being the generation that votes. Plus a lot of them bought houses back when they were virtually free and are yet to deplete their home equity lines of credit.

(I expect to pull in about $40K a year in retirement, but it's nice to know that I could live pretty well on that $16K if I had to!)

My mom gets a small amount of GIS.  She is really healthy and active.  At 68 she takes no medication.  She and her cat live in a cute one bedroom apartment in a nice building.  She is finishing her history degree tuition-free. 

My mom had a rough go in life.  Married young to escape her parents. My dad was really abusive.  After she divorced him, she worked a ton of increasingly lower wage jobs.  When she retired, at 65, she had been working for three years at this soul-destroying call centre.  It used to make me nuts that she didn't try to make things better for herself, but I now realize she lacked the confidence to try anything new and different.

She is loving now though.  Her time is her own.  She was always frugal by necessity, and so lives really well now.  My grandfather was the same.  And I think I will be too. 
Title: Re: What happens to people that don't save for retirement?
Post by: pachnik on December 01, 2014, 08:24:51 AM

My mom gets a small amount of GIS.  She is really healthy and active.  At 68 she takes no medication.  She and her cat live in a cute one bedroom apartment in a nice building.  She is finishing her history degree tuition-free. 

She is loving now though.  Her time is her own.  She was always frugal by necessity, and so lives really well now.  My grandfather was the same.  And I think I will be too.
[/quote]

+1 for your mother, BPA.  She did not have an easy life but she's sounds like she's really enjoying herself now.  Really well-deserved.
Title: Re: What happens to people that don't save for retirement?
Post by: riverffashion on December 01, 2014, 09:50:30 AM
My mom and stepdad are both terrible with money, big spenders, have mortgages on there house, live in a remote area and drive a lot, and live with a very large amount of debt. they are in their early 60's and working less and less. they plan to sell their property (that they don't really own) close to $1 million and move to a (much) smaller place in a small city. they are expecting several inheritances down the road form moms mother and aunt. also from stepdads father, but I worry they will blow these as they are so bad with money.
Dad however is now F.I at 60. He's the one who introduced me to MMM in april and is guiding me down the lovely path of F.I. :) I am so grateful for him.
Title: Re: What happens to people that don't save for retirement?
Post by: Poopsio on December 01, 2014, 11:19:26 AM
There was a very angry lady in her 70s making my Subway sandwich the other day.  I'm thinking she'll be making sandwiches in her 80s.

This is heartbreaking and is the exact reason why I want to be financially independent.
It's absolutely not heartbreaking that she's working. It's heartbreaking that she's angry.
Title: Re: What happens to people that don't save for retirement?
Post by: austin on December 01, 2014, 12:01:18 PM
It's why we have social security. It's an enforced retirement contribution so people like this don't die in the streets when they can no longer work.
Title: Re: What happens to people that don't save for retirement?
Post by: MrsPete on December 02, 2014, 05:52:53 AM
Looking over all these comments, I see few commonalities; this leads me to think that many paths exist for people who just don't save.  Perhaps this is because "don't save" could mean different thing:  It could vary from actively-spent-every-penny-he-ever-had-plus-more . . . to, has-a-house-that's-paid-for-but-no-real-cash-savings. 

One thing no one has mentioned is Reversed Mortgages.  I know a couple people who've made that very expensive choice, and I suspect more people than we know are doing it:  It's an "invisible way" to garner income.  By that, I mean you can up your income without visibly reducing your lifestyle. 
Title: Re: What happens to people that don't save for retirement?
Post by: CopperTex on December 02, 2014, 08:55:16 PM
My father is going on 73 and works at walmart. I see him there when I am shopping and it is a constant reminder of how important saving is. His entire social security check goes to credit card debt which I am trying to encourage him to bankrupt.
Title: Re: What happens to people that don't save for retirement?
Post by: Lia-Aimee on December 03, 2014, 07:58:36 AM
Did anyone ever have any luck convincing spendthrift parents at or near retirement age to reduce spending? If so, any tips? :)
Title: Re: What happens to people that don't save for retirement?
Post by: BPA on December 03, 2014, 08:21:52 AM

My mom gets a small amount of GIS.  She is really healthy and active.  At 68 she takes no medication.  She and her cat live in a cute one bedroom apartment in a nice building.  She is finishing her history degree tuition-free. 

She is loving now though.  Her time is her own.  She was always frugal by necessity, and so lives really well now.  My grandfather was the same.  And I think I will be too.

+1 for your mother, BPA.  She did not have an easy life but she's sounds like she's really enjoying herself now.  Really well-deserved.
[/quote]

Thanks.  I'm so happy for her.  She was worried in the years leading up to retirement because she hadn't yet run the numbers.  One Christmas I bought her the book Why Swim With the Sharks (http://www.amazon.ca/Sharks-Unconventional-Guide-Early-Retirement/dp/0973706007/ref=sr_1_1?s=books&ie=UTF8&qid=1417619952&sr=1-1&keywords=why+swim+with+the+sharks (http://www.amazon.ca/Sharks-Unconventional-Guide-Early-Retirement/dp/0973706007/ref=sr_1_1?s=books&ie=UTF8&qid=1417619952&sr=1-1&keywords=why+swim+with+the+sharks)).  After she read it, she felt much better.  She already lived frugally and when she did run the numbers, she knew she'd be okay. 
Title: Re: What happens to people that don't save for retirement?
Post by: SporeSpawn on December 03, 2014, 08:35:06 AM
Most of the population of my area make at or under 40k a year, do not save, and, if they are enrolled in a retirement program, it is generally a pension.

The ways they make it are: 1.) reduce spending of non-necessities and rely on Medicare and SS (and maybe food/housing assistance) for necessities, 2.) work part-time forever, usually in menial labor such as food, service, or similar areas, 3.) live with family and rely on them, usually with some mix of the first two, 4.) die.

I've noticed an uptick in interest in retirement advice recently, possibly from the baby boomers who have retired being unsatisfied and the 60s kids facing retirement not wanting to follow in their parents' footsteps.
Title: Re: What happens to people that don't save for retirement?
Post by: greaper007 on December 03, 2014, 08:55:02 AM
Wow, there are some heartless, angry people on this board.    Instead of focusing on how you're "John Galt" providing for the millions of losers, focus on yourself.     You can't comment on people's experiences without really knowing their life story.    Things like addictions and lack of planing often come from a long history of abuse and engrained poverty.     I'd argue that many people on this board have become addicted to austerity out of some misplaced fear probably brought on by childhood trauma.    Lets just cut everyone some slack.

Yes, people without retirement savings live off of SS (not hard to do if you follow mustachian principles) or get help from family members.    Many people also continue to work into old age, and for some of them it keeps them alive.   Work gives many people a social structure and a purpose.    People that continue to work often live longer than those that don't.    My dad has mandatory retirement this year and he's independently wealthy.    He's also reclusive and often depressed.   I fear that he won't make it long in his retired years.
Title: Re: What happens to people that don't save for retirement?
Post by: RichMoose on December 03, 2014, 10:41:00 AM
In Canada old people who don't save are generally very well taken care of. The two big rules to live well in old age here are 1) Work till you are 65, even if it's only part time and 2) Be debt averse. Following these two rules will mean you are eligible for (near) maximum government social benefits and have a high discretionary income. I once did the math and found it virtually impossible to earn less than $22,000 per year from forms of benefits for a single person.

This has traditionally worked very well, for example my gran who lives in a nice paid-off house that's worth ~$700k still gets at minimum $2000 a month from a small survivors pension, Allowance for Survivors, OAS, and GIS. She's naturally quite frugal and not a vacationer so it's more than enough to live from. In fact, I'm willing to bet that she has money left over at the end of each month.

How the next generation (baby-boomers) will fare is a whole other question. A lot of them are expected to retire with debt and currently have very lofty lifestyles.
Title: Re: What happens to people that don't save for retirement?
Post by: Kaspian on December 03, 2014, 11:08:17 AM
It seems like I'm always meeting people who don't save for retirement and reading about them here.  Where do they end up?  Seriously downsizing?  Homeless?  Working until they go to the hospital to die?

They end up bitching that they don't get enough from social security while bitching that they pay too much in taxes.
(While still being wilfully financially illiterate enough to not see a relationship between those two things.)
Title: Re: What happens to people that don't save for retirement?
Post by: Cassie on December 03, 2014, 11:49:24 AM
I agree with the Greaper that many people find themselves in bad circumstances due to no fault of theer own.  I was a social worker at one point in time.  Yes we all know some people that blew all their $ but many have had devastating medical bills, illness, un or under employment, etc.  I spent the last 24 years of my working career helping people with disabilities return to work.  By the time we saw these people they usually had lost everything due to not being able to work, not having necessary resources to help them find work.   WE provided the necessary services that got them back to work. Sure some were losers but MOST were not!  I always used to say "there but for the grace of God go I."   It doesn't matter how much education you have-one accident or illness can take away your livelihood.
Title: Re: What happens to people that don't save for retirement?
Post by: RootofGood on December 03, 2014, 06:53:31 PM
They end up living in paid off modest houses with modest social security and four or five digit savings accounts or investment accounts.  That's the case for my grandma in her late 80's and my in-laws in their mid-60's.  They never made a whole lot, never saved a whole lot and don't spend a whole lot now because they don't have a whole lot.  I think they treat their small cash savings as "emergency money" and just try to live off the SS month to month. 

Title: Re: What happens to people that don't save for retirement?
Post by: BPA on December 03, 2014, 07:21:25 PM
I agree with the Greaper that many people find themselves in bad circumstances due to no fault of theer own.  I was a social worker at one point in time.  Yes we all know some people that blew all their $ but many have had devastating medical bills, illness, un or under employment, etc.  I spent the last 24 years of my working career helping people with disabilities return to work.  By the time we saw these people they usually had lost everything due to not being able to work, not having necessary resources to help them find work.   WE provided the necessary services that got them back to work. Sure some were losers but MOST were not!  I always used to say "there but for the grace of God go I."   It doesn't matter how much education you have-one accident or illness can take away your livelihood.

Thank you so much for this post. 
Title: Re: What happens to people that don't save for retirement?
Post by: fartface on December 15, 2014, 05:48:07 PM
Did anyone ever have any luck convincing spendthrift parents at or near retirement age to reduce spending? If so, any tips? :)

SH!T-- I cannot imagine this. And yet, several MMM posters, share this about their very own parents.

My parents both retired before age 50 (a dozen or more years ago) due largely in part to my Dad being able to claim his pension after 25 years of service + medical. That, coupled with a home that had been paid off 20 years prior, set the stage for their ER.

Last spring, my Dad was FINALLY eligible for SS at age 62 after being 12+ years retired already.

 
Title: Re: What happens to people that don't save for retirement?
Post by: mindaugas on December 15, 2014, 05:57:22 PM
My mom lives with me in my basement and works part time online.
Title: Re: What happens to people that don't save for retirement?
Post by: OutBy40 on December 15, 2014, 07:51:43 PM
They end up doing what my grandfather did - live entirely off of social security and pull out way, way more than he ever put in.  Basically, getting supported by the taxpayer.
Title: Re: What happens to people that don't save for retirement?
Post by: FarmerPete on December 18, 2014, 08:22:33 AM
My in-laws are approaching this issue right now.  My FIL was self employed for most of his working career.  He had a failing business pretty much that entire time.  He stuck it out and ended up hardly being able to put food on the table and shuffling around payments to the different providers to stay 1 step away from getting the utilities turned off.  Obviously, retirement wasn't an option for him.  He decided to retire in his early 60's and closed the business.  He was probably losing money anyways.  My MIL was a SAHM and helped out at the business when she could.  The last 10-15 years, she's been working as a LPN at a nursing home pulling a modest wage.  They are currently living off his SS and her paycheck.  The problem is, they live in a nice town in NJ right outside NYC.  Their property taxes alone are 10k a year.  I hardly pay 10k for my mortgage+insurance+taxes living in the midwest!  Basically, they are going to have to move when my MIL retires.  It would have been a tough situation, but unfortunately, my FIL had a brain tumor and while it's been removed, he's not fully there.  They spend money recklessly, and their house is falling apart.  Their only hope is that they can sell their house for decent money.  The house is a pit, but the land has value to a developer.  They could tear down their hobble and build a 1m home on it easily.  If they can sell it for ~300-400k, they could turn that into an annuity* and get 2k a month for life.  Mix that in with SS, and they should be in decent shape.

-----------------

*I don't typically recommend annuities, but in this case I think it's a good plan.  My FIL is the kind of guy that if he had access to $300-400k would blow it all in a year.  I like that buying an annuity locks in the income and removes most of the risk, especially if you split the investment between multiple companies.  Even if we could keep my FIL away, my MIL would probably spend more than the SWR would allow.  I just don't see themselves limiting themselves to 2k a month if they have that much in the bank.
Title: Re: What happens to people that don't save for retirement?
Post by: MrFancypants on December 18, 2014, 08:44:42 AM
They end up bitching that they don't get enough from social security while bitching that they pay too much in taxes.
(While still being wilfully financially illiterate enough to not see a relationship between those two things.)

This isn't unique to people who don't/didn't save.  Everyone complains about paying too much in taxes and getting too little out of SS.
Title: Re: What happens to people that don't save for retirement?
Post by: TreeTired on December 18, 2014, 08:52:12 AM
Quote
His cable is $90

Blows my mind that someone on a subsistence budget allocates $90 for cable, presumably TV and internet.  I know people of relative means that get by with a TV antenna and park outside of Barnes and Noble to check their email on the free wireless internet.
Title: Re: What happens to people that don't save for retirement?
Post by: FarmerPete on December 18, 2014, 10:21:59 AM
Quote
His cable is $90

Blows my mind that someone on a subsistence budget allocates $90 for cable, presumably TV and internet.  I know people of relative means that get by with a TV antenna and park outside of Barnes and Noble to check their email on the free wireless internet.

On a cost per hour basis, that $90 a month may be the best value for your money.  Even driving to Barnes and Noble for "Free" internet costs $$$.  Presumably, you're talking about driving several miles each way to get there and during the winter/summer you may need to run the car for heat/AC (remember, old people are more susceptible to cold and heat).  Or you can pay $25 a month and not have to get off your butt.