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How to Retire With No Money


Many Americans are retiring with little to no money. According to Northwestern Mutual’s 2021 Planning & Progress Study, 10% of Americans have nothing at all saved, while 18% have less than $5,000 saved for retirement. The Schwartz Center for Economic Policy Analysis found that nearly 20% of Americans close to retirement had no retirement wealth. With lifespans lengthening, many experts say you should have eight times your annual salary saved by the time you hit 65. But if that’s not possible for you, check out the following strategies for retiring with no savings.

Consider working with a financial advisor as you plan for retirement.

The first thing to do is to get the clearest possible picture of where you stand financially. This retirement calculator will give you a good sense of your current financial condition. Once you know that then you’ll be able to make good decisions about how many of the following strategies to employ.

Review Social Security Benefits

Social Security is a program that you pay into during your working years and then receive a benefit from when you retire. Many retirees rely on support from their Social Security benefits to help cover their retirement expenses.

To qualify for Social Security benefits, you must have at least 40 credits or 10 years of work. Your benefit amount is based on your highest-earning 35 years of work, your earnings during your career and the age you apply for benefits. Essentially, the more you earn throughout your career and the longer you wait to take your benefits, the higher your benefit amount will be.

However, if you didn’t work 35 years or more, the Social Security administration will add zeros to those years, which could drastically lessen your benefit amount. Therefore, if you want to maximize your benefits you should wait to try to earn as much as possible during your working years and wait until age 67 (for those born after 1960), which is considered full retirement age.

It’s important to note that Social Security may only cover a portion of your expenses in retirement. In January 2022, the average monthly benefit payment was $1,657, according to Social Security Administration (SSA) data. If this doesn’t seem like it will cover your retirement expenses, you either need to reduce your living costs or find other sources of income.

Reduce Your Living Expenses

Retire With No Money

Reduce your living costs. By downsizing your lifestyle, you can help ease the financial burden of retirement. For starters, evaluate your largest living costs such as your mortgage, senior care or vehicle expenses. Once you identify your largest expenses, you can begin looking for less-expensive alternatives. For example, if you’re living in a three-bedroom house in Seattle, you may want to consider moving to a two-bedroom condo in Tuscaloosa, Alabama. Even if you don’t want to downsize, you can often achieve big savings by just moving to a less expensive area. If you live in Boston and move to the Phoenix suburb of Scottsdale, your cost of living will decline about 20%.

If you want to compare the cost of living where you are with the cost of living in other states, this calculator can provide much of the information you’ll need.

Pay Off Outstanding Debt

Another way to reduce your living expenses in retirement is to pay off your outstanding debt. Your outstanding debt could be preventing you from saving and living a full life in retirement.

You should pay off your debt with the highest interest rates first. This might be your revolving credit card debt. You can start by putting any extra cash towards your outstanding balances and do not take on any additional credit card debt.

Other common debts in retirement are mortgages, car payments and parent loans for children’s education. You can start overpaying on your mortgage to eliminate it more quickly or sell your car and drive something smaller to save money. You may want to speak with a financial advisor to see which debts are most important to pay down first, and if you should allocate some of your savings to get rid of interest-accruing debt.

Secure a Pension

A pension is a retirement plan that provides retired employees with a guaranteed monthly income. While pensions are now few and far between, some organizations and corporations still offer them. If you don’t currently work for a company that has a pension plan, you could consider applying to work for one.

Pension plans often apply to teachers, police, fire workers, federal or state employees and military personnel. However, some big corporations like General Mills and Eli Lilly & Co. offer pensions to their employees. If you’re able to pay off your outstanding debt, receive Social Security benefits and get a pension, you may be able to fulfill a comfortable lifestyle in your golden years.

It’s important to note that the key to making a pension plan work is to stay at the same employer for a long time. Most pensions give the largest benefits depending on the employees’ tenure and compensation. If you job hop, your pension may not be large enough to cover your retirement costs.

Working in Retirement

Retire With No Money

According to a report from United Income, 20% of adults over the age of 65 are either working or looking for work. This is up from 10% in 1985. If you’re in good health, you may want to consider working in your retirement years – or delay your retirement for a few years. If you’ve become accustomed to a certain way of life you may not be willing to give that up when you leave the workforce.

To maintain your lifestyle once you retire, you could consider working a part-time job that can help you afford certain living expenses. Working part-time also allows you to reap some of the benefits of retirement without being fully retired. For example, you may still be able to volunteer or play tennis with your friends. If you can, you should look for a job that offers benefits like paid vacation time.

While you may not make as much money as you did before you retired, working can help you supplement your income.

Bottom Line

Facing a retirement with no savings can be frightening. But the good news is you have a number of strategies you can use to put yourself in the best possible position. First, get as precise a picture as possible of where you stand financially. Then see what Social Security will get you. If you’ve got a pension coming, determine what your monthly income from that will be. Also, cut your expenses, pay off debt and consider working. Finally, if you haven’t yet retired, think about delaying retirement.

Retirement Planning Tips

  • Consult with a professional to plan for your specific goals. A financial advisor can help you determine the best path toward your best retirement. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.
  • Check on your Social Security payments. If Social Security figures to be a primary source of retirement income, you should figure out how much you’re in line to receive. Find out how much you’ll get from Uncle Sam with our free Social Security calculator.

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