Serious question: if you didnt save enough or run out of retirement money...

[ThistleMae]

This is a broad statement with no factual basis. We have 2 kids and I have been a stay at home mom since my oldest was born almost 13 years ago. My husband is a military officer. We have always lived in high COL areas (Southern CA and Northern VA). We are able to save for college, retirement, take vacations, etc.

I have a sister who lives in San Francisco. The actual city. She has 2 kids under 6. She stopped working 3 years ago. She has a part time job that she does mostly for fun, as she uses the drop in daycare there while she works, which almost negates her pay. Her husband is a creative director (graphic designer). They probably spend every penny they make, but they are not struggling.

I know several other people who have kids and only one parent works. It's not uncommon at all.

That said, we will have a military pension for life in about 2 years (husband will be 41). If my husband passes away before me, I will still get 50% of that pension, which will be around $8k per month by the time we are 70. So, me not working won't impact my future retirement much at all. We also have a separate retirement savings fund (TSP) and Roth IRAs.

My parents raised three kids on one income and are now retired in Florida at a retirement community. Their social security checks cover their living expenses and then some. They bought a brand new house when they retired and have about a $120k mortgage. Their payment is like $800/month. Their social security checks total around $4000/month combined. My dad has a small pension. They have a 401k with about $500k, ALL of which was saved in my dad's last 10 working years (he lost almost all of it during the recession in 2008). Right now, they are taking the minimum required distribution, but it is only coming out of the interest at this point. The principal hasn't been touched. So, it IS possible to save really late in the game and end up okay. But, my dad was a high wage earner at the end. He was able to sock away a ton of money at the end.

In my circle of family and friends, I do not know anyone who can afford to stay at home with only one parent working, unless they are on welfare, or the working parent has a very decent wage, or special circumstance, where they don't pay rent/mortgage because the family has money. Sorry, I just don't think your situation is the norm anymore.

 

[shoney]

In my circle of family and friends, I do not know anyone who can afford to stay at home with only one parent working, unless they are on welfare, or the working parent has a very decent wage, or special circumstance, where they don't pay rent/mortgage because the family has money. Sorry, I just don't think your situation is the norm anymore.

A stay at home parent is very common where I live. Many chose to go back to work when the kids are in middle school. I waited until high school.

Families live in nice homes, drive new cars and take vacations. They are not on welfare or being subsidized by family.

I do not think there is a norm. Every family is different.

 

[ThistleMae]

Perhaps you live in Pleasantville? The post is here because this is a serious issue of concern for many. Maybe saving or investing for retirement isn't your issue but for many American's it is. Do you watch the news?

 

[MickeyMinnieMom]

Perhaps you live in Pleasantville? The post is here because this is a serious issue of concern for many. Maybe saving or investing for retirement isn't your issue but for many American's it is. Do you watch the news?

No doubt it's more challenging for some -- but it's an issue for everyone. But none of us should assume that what we see in our immediate surroundings matches EVERYONE'S experience. My neighborhood is much like PP described -- consider ourselves quite fortunate -- and no, we do not live in Plesantville.

 

[Hikergirl]

Perhaps you live in Pleasantville? The post is here because this is a serious issue of concern for many. Maybe saving or investing for retirement isn't your issue but for many American's it is. Do you watch the news?

Wow, that was rude. FYI saving and investing for retirement is everyone's issue.

 

[QueenIsabella]

Perhaps you live in Pleasantville? The post is here because this is a serious issue of concern for many. Maybe saving or investing for retirement isn't your issue but for many American's it is. Do you watch the news?

Nope. I've been a SAHM for 22 years--my youngest enters middle school this fall, I might see about getting a job. It's tricky for me because my DH can have work emergencies and suddenly need to put in an 80-hour week. Which doesn't result in any additional compensation for him, BTW.

We have 4 kids, and try to live frugally. It can be done, it just takes commitment. The kids each have money set aside for college. We are closing in on $1M in our retirement funds, in addition to SS and a small pension for DH.

You're making assumptions when you clearly have no clue how other people live. Maybe you look at the people around you, but you aren't seeing people who deliberately choose smaller/older houses, drive older cars, choose lower COL areas. I will be the first to tell you, sometimes I get tired of cooking every meal, buying second-hand clothes, shopping sales and thrift stores and pawn shops. But then I have a week where I have a sick kid who needs me, and remember why quitting my job was such an important choice for us. No welfare checks or big $$ family support here.

I'm not knocking working moms at all--your life, your choice, do what works for your family.

 

[Gumbo4x4]

I think the short version in the U.S. is: relatives, social security, medicare, medicaid.

Don't forget - go back to work.

 

[tzolkin]

Some of those are common "poverty traps", though. Your car needs more work than it is worth, but you don't have enough cash on hand for either the repairs or a decent used car... But you need to get to work tomorrow and the next day and the next, and you might be able to get by without a car for a day or two but not for long. So you go into one of those "we finance anyone" dealerships and pay too much for a more expensive car than you wanted/needed because that's the only way to replace your car before you lose your job for lack of transportation. Only now you're paying more for insurance too, because you need full coverage (and those shady lenders often require a very low deductible that you or I would never consider) and because in many states pricing is based on zip code so just by living where poor people live your rate is higher than that of your middle class counterparts. Or you buy more house than you can really afford because it is still cheaper than rent and doesn't go up every year, and then struggle to make the payments. It has been a decade or so since renting was cheaper than buying in my area, and low income borrowers often make poor loan choices for lack of information, lack of down payment, or because they're buying "fixer upper" properties that don't qualify for prime loans. But when rent is going up 10-20%/year, every year, while your income remains unchanged, locking in a fixed housing payment looks like a good choice.

.

You are correct that these are real issues affecting the poor. I absolutely agree.

But some of the overspending problems I was talking about are issues for middle class families as well. There are many families with decent incomes who think that they can't afford to save for retirement because they have nothing left over at the end of the month and are accruing more debt. It's not that they don't make enough, it's that they spend too much. If saving for retirement (or whatever else) is a priority, most higher income families have the ability to change their spending habits to make that happen.

In my circle of family and friends, I do not know anyone who can afford to stay at home with only one parent working, unless they are on welfare, or the working parent has a very decent wage, or special circumstance, where they don't pay rent/mortgage because the family has money. Sorry, I just don't think your situation is the norm anymore.

The majority, actually almost all, of the families I have known (different locations across the US and different economic statuses) have had one parent stay at home at least for a period of time.

It's often actually the opposite of what you're saying. They stay home because it's more affordable than paying for daycare for multiple children.

 

[tvguy]

My parents have not saved much for retirement. They do own their house outright and have medicare and get social security checks. Luckily they did just get a lump sum of money from a house that Dad fixed up and sold afterward. That will help them financially for awhile.

They are in their 70's.
My Dad is fighting 3 different cancers. At some point, my sisters and I figure he will lose that battle that has been going on for the past 4 years. So far Medicare has covered most of it.

Mother is insisting she will live on her own if that happens but we aren't sure how well that would work out. In our case, if they run out of money one of us will most likely take her in and all of us would pitch in and help with medical bills and such.

Your mom and dad have the option of a reverse mortgage. It would impact what they left their heirs, but they can put that home equity to work for them.

 

[tvguy]

Don't forget - go back to work.

The ushers at our minor league ball park (River Cats) are all retired people. I don't know how many are working there because they need to, or because they want to. And I sure saw a lot of older workers at WDW, a couple in scooters, at the admission gates. And there is always being a Walmart Greeter.

 

[aprilgail]

The thing that bothers me, and I am sure someone will quote me some article on finance, but I see a lot of people taking early SS who can not afford the pay cut they will take. If you have nothing working till 70 will give you a lot bigger check.

I honestly could not even imagine having to work until 70 years old. There is no possible way i could have stayed at my job 50 years-nor would i have wanted to. Having to climb ladders, jump down 5 feet off them lift 30-40 pounds over my head no way in hell could i do that much past the thirty years i did it.

 

[Gumbo4x4]

I honestly could not even imagine having to work until 70 years old. There is no possible way i could have stayed at my job 50 years-nor would i have wanted to. Having to climb ladders, jump down 5 feet off them lift 30-40 pounds over my head no way in hell could i do that much past the thirty years i did it.

You're very fortunate. I sweated my tail off at work Friday and retirement is nowhere in sight. I'll be 50 tomorrow.

 

[tvguy]

I honestly could not even imagine having to work until 70 years old. There is no possible way i could have stayed at my job 50 years-nor would i have wanted to. Having to climb ladders, jump down 5 feet off them lift 30-40 pounds over my head no way in hell could i do that much past the thirty years i did it.

Physically demanding jobs certainly could be the exception. But our Shipping room guy is 73, and he doesn't seem impaired by his age. But even if he was 50 years younger, he would need help unloading a 100 pound parcel.

 

[MickeyMinnieMom]

You're very fortunate. I sweated my tail off at work Friday and retirement is nowhere in sight. I'll be 50 tomorrow.

one day early!

 

[Hikergirl]

My FIL is 72 and still working because he still has too. He made some pretty bad decisions in his life and now he is working to pay the price for them.

 

[MickeyMinnieMom]

Don't forget - go back to work.

True!! My Dad was a police officer, retired after 28yrs -- it was time. After a couple of years, he went back to work doing various security gigs.

 

[Pacolovestacos]

It's very hard to do when you are, say, 75 and lived your whole life in one country...maybe never even traveled outside the country. My MIL has traveled only to Mexico, and then only border towns to buy meds. There is simply no way she's picking up and moving to another country! DH and I have considered it (for reasons other than financial as we have the economic means to continue living here) but then we think about what it REALLY means. My husband's sister and her husband have moved to New Zealand, and they get home once ever 2-3 years to see friends and relatives. I don't want to see my kids "only once or twice" a year or less! So, realistically, it's not happening. For people who have no family, I can see why it would be more possible, but even then, they probably have friends they would like to see.

I'm sure it would be hard but the thread title is "what happens if you didn't save enough or run out of retirement money." Presumably if one retires, they will have a decent handle on how long their savings (if any) will last them. If you retire at 65 and project savings to run out at 75, just burying your head in the sand and praying isn't going to solve anything. So sure, moving to Mexico might be tough but if it gives you an extra 10 years on your money, probably worth considering no?

Also, yes, visiting family and friends would be nice in the retirement years. But again, the thread title is "what happens if you run out of retirement money." So if you've run out of money, how do you plan to finance family and friend outings?

 

[ronandannette]

Your mom and dad have the option of a reverse mortgage. It would impact what they left their heirs, but they can put that home equity to work for them.

As it happens, that simply cannot be a factor in the decisions we make about our finances. Not that we set out to deprive them, but it will take all our wherewithal to provide for ourselves indefinitely without worrying about how to leave an "estate".

 

[Pacolovestacos]

As it happens, that simply cannot be a factor in the decisions we make about our finances. Not that we set out to deprive them, but it will take all our wherewithal to provide for ourselves indefinitely without worrying about how to leave an "estate".

100% agreed.

 

[DLgal]

In my circle of family and friends, I do not know anyone who can afford to stay at home with only one parent working, unless they are on welfare, or the working parent has a very decent wage, or special circumstance, where they don't pay rent/mortgage because the family has money. Sorry, I just don't think your situation is the norm anymore.

Well, just as your circle of friends has a "norm", so does mine. I have never known anyone on welfare. We live in a city with a pretty high median wage though ($90k). Most people I know, us included, would take a HUGE tax hit with a second income, which is why so many have only one earner in the household. If I earn more than $15k per year, all of a sudden we will owe like $30k more in taxes. Me not working saves us all that money that would otherwise go straight to the tax man. I do part time scoring of standardized tests every spring. I earn like $6k, which pays for our yearly vacation, most years. I don't have the earning power to make a six figure income on my own, which is the only way me going back to work would pay off, so for now, I stay home. Plus, my kids are both special needs, and they need me home when they are.