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What Retirement Will Look Like Without Savings

Author: Daniel Harris

By many estimates you are going to need at least 70% of your income in retirement. But in this instant gratification society where keeping up with the Jones's is more important than saving money for the golden years, having a nest egg at all is considered a big achievement. According to a recent Wells Fargo (WFC) survey people aged 60 and older have a median savings of only $50,000. Furthermore, Bankrate found last summer that more than one-third of working-age adults don't have any money saved for retirement at all. In this debt driven society the thought of retiring penniless may not keep you up at night, but not having any money to support you when you stop working should. (For related reading, see: What's The Minimum I Need To Retire?)

Social Security Will Be Your Main Income

Retirement means the end of a steady income which is why having a nest egg is so important. Let's say you're annual income was $100,000 when you were working. That means you'll need around $70,000 a year when you are out of the workforce in order to maintain your lifestyle. Without savings you are going to either have to earn that money or rely on Social Security.

For many people who enter retirement without any saved cash their only of income ends up being Social Security. And with the average Social Security check standing at $1,335, it can be a big shock for seniors who were used to bringing in much more. Getting by is going to be a stretch when Social Security is your only of income. Throw any healthcare costs, a mortgage, debt and other expenses in the mix and Social Security isn't going to be enough. (For more, see also: Top Tips For Maximizing Social Security.)

You'll Have to Downsize Your Lifestyle

Even if you were doing well in your working years, if you didn't stow away any money you are going to have to downsize your lifestyle in order to get by in retirement. That will mean possibly moving into a smaller home or apartment, forgoing extras like cable, the iPhone and the gym membership, and even swapping the pricey car for a less costly one. It could even mean moving in with your adult children which is the case for many seniors. After all, even if you make a nice profit on the sale of your house, your retirement can easily last more than 20 years and there is a distinct possibility you will outlive the proceeds of the sale of your house and other assets you sell off. (For more, see: Avoid the Downsides of Downsizing in Retirement.)

Working Part-Time Won't Be a Choice

In order to maintain your lifestyle in retirement you may need an extra income stream. This often means you'll either have to go back to work or get a part-time job. That isn't bad in and of itself, but when you need money you can't be choosy about what job you accept which can get old very quick. The surge in the global workforce thanks to the Internet makes it easier for seniors to work remotely. Retailers are also more than willing to hire retirees because they tend to be reliable and loyal. But if your health fails and a part-time job isn't doable, without a savings you are going to face real financial hardship. (For more, see: The Best Jobs for Retirees.)

Taking on a Roommate Will Be a Must

With the likelihood of Social Security not being enough, seniors who don't save for retirement are going to have to generate income and often turn to their house as a result. For some that means taking on a roommate, which can be fraught with risks. Being a landlord is fine if you don't mind sharing space, but if you are the type of retiree who values peace and quiet and doesn't like to share, renting a room may be a bitter pill to swallow. For others it means a reverse mortgage. That too can be a costly and risky choice.

Retirement Won't Even Be on the Table

If you don't put any money away for retirement and you aren't willing to sacrifice and overhaul your lifestyle, then retirement won't be an option at all. Particularly if Social Security isn't enough to live off of. Many people forego retirement and work for as long as possible, largely because they don't have enough saved. But working longer will take a toll on your health and psyche and really isn't the ideal option.

The Bottom Line

Workers of all ages have long heard about the need to save for retirement and the importance of saving enough. Yet far too often people shrug off the advice and don't put even a penny into a retirement savings account. They do that at their own peril. Without money saved for a retirement that could easily last 20 or more years, retirees are going to be forced to downsize their home and lifestyle, take on a roommate, get a part-time job or even forgo retirement altogether.

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