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A No Retirement Example

This article, A Homeowner with No Savings, but Some Options, is about yet another person, Susanna Wilson, who had a shot at a great retirement but instead failed to save anything.  Now she is looking at options she didn’t want to have to face.

Instead of Saving for Retirement

Ms. Wilson developed a successful clothing line in the late 1970’s, but kept reinvesting all of her profits without ever saving anything for her later years of retirement.  She later became a publicist and earned up to $65,000 a year but again reinvested her income into side businesses and ignored retirement.  Now she is 70 years old, has $9000 of credit card debt, no savings, and really only has a house to her name that she inherited fully paid off from her parents.  She lives off of social security checks and $1200 a month she brings in making dresses for little girls.  It’s not always enough and she’s sure she will never have a retirement now.

What pops into my mind is “Boy is she lucky to have social security!”  Ms. Wilson never seems to blame anybody, which I think is awesome, but I can’t help think of all the wasted opportunity for retirement savings.  The point of the article was to point out that she has other options besides bankruptcy such as a reverse mortgage or even selling a tract of timberland that she and her brothers own.

So here’s my complete take…

Retirement – Should Have, Could Have, Would Have

She should have saved for retirement.  Everyone who isn’t saving for retirement needs to save.  Unless you want to tie all of your future plans up to the hopes of social security, put some money away in a retirement account!  Anybody who doesn’t die young will need some way to fund their longer life.  When I hear, “you shouldn’t bother to save for retirement since so-and-so will get it anyway (insert the government, children, lawyers, etc) or you might die tomorrow”, I just want to scream that they have no other choice!  Yes, bad things might happen, but if you don’t save anything for retirement and you end up not dying, your golden years are going to stink!

Dealing with the Now – Retirement ASAP

Having said that, Ms. Wilson has to deal with her current predicament.  I’d personally cut back on every expense I possibly could and throw my dress-making money at my debt and then retirement.

That means that I could get a roommate, share the renters insurance rates, live on as small of a grocery budget as possible, sell that tract of land, and maybe even bump up my dress sales as much as possible for a year or two.  As soon as that land sale, that extra roommate money, or that dress money pays off my $9000 of consumer debt, I’d start throwing it into a savings account for an actual retirement fund.

It’s time to stop messing around and worrying about the future.  Ms. Wilson has to step up and sacrifice since she seemed to have forgotten to do it before.  Plus, a roommate could be fun…think of the Golden Girls!  If she’s an introvert, she can simply concentrate on the extra money instead of the social aspect.  A roommate has to be a better option for retirement than bankruptcy or a reverse mortgage, right?

What do you think?  What would you do in Ms. Wilson’s shoes?

26 thoughts on “A No Retirement Example”

  1. Moneycone

    I would hate to say this, but this might be one of those times where a reverse mortgage might be an option. Or depending on how easy it is to rent and down size, that may be another option as you point out.

  2. Everyday Tips

    I would find a rich man… 🙂

    She has a few options. I read the article and she could sell her portion of that timber land to knock out some of that debt.

    I would also probably sell the house and move into senior apartments. The article stated she had to take out a mortgage to pay repairs on the house- who wants to be 70, not financially independent, and have to deal with a house, yard, taxes and repairs??

    She said she doesn’t want to declare bankruptcy but she might. Well, she has resources, so she could avoid bankruptcy if she truly wanted to.

  3. Moneycone

    @Kris: LOL! Always thinking outside the box! 🙂

  4. Melissa

    I read this article too and was shocked at her lack of savings, but I am sure there are many people in her situation. I think the article mentioned she worked one day a week for $12.50 an hour. Maybe she could work another day or two in addition to some of the steps you mentioned. Now is the time to do it because who wants to be working that hard when you are 80?

  5. Ravi Gupta

    I agree with your assessment. I can’t believe that people make good salaries / income and choose not to save. It’s amazing, even saving 10% of your income will add up over time. I sometimes wonder how people get into this mindset that they will be taken care of.

    -Ravi Gupta

  6. Kevin @ Thousandaire.com

    We’d all be singing a very different tune if that money she had invested in her company had turned into a billion dollar corporation. I’d never blame anyone for investing in themselves. Unfortunately, it just didn’t work out for her.

    Wasting money on crap is one thing; putting money in your small business is another.

  7. First Gen American

    She’s very lucky to have an inheritance too. You’re right on. Housing has to change. Either have people move in so that you can share the costs of maintenance, utilities and taxes, or sell the place and downsize.

    I’d probably also try to work more just until I paid off my debt and got a bit more savings cushion. The older she gets the less she’ll be able to work, so now’s the time to get moving.

  8. Crystal @ BFS

    @Moneycone, oh I agree, a reverse mortgage is better than a bunch of other options, I just don’t think it would be necessary if she looked into changing her housing situation (roommate or sell and move somewhere cheaper, etc).

    @Everyday Tips, sounds like we are both thinking along the same lines (selling the house…not the rich man part, lol)…

    @Melissa, another day or two a week would be a great option.

    @Ravi, it’s simply a mindset with no thought for the future…it would be scary as heck for me…

    @Kevin, no, no I wouldn’t ever agree with investing 100% in yourself and saving nothing for a backup plan. I agree that investing in yourself is way better than just buying stuff or whatever, but you still have the responsibility to ensure you can take care of yourself if you do end up hitting a brick wall in whatever you were trying to do.

    I personally have spent thousands of dollars at this point on my blogs and blog-related tech support and whatnot. But I’ve also saved for my own future. If I don’t and my blogging full time dreams don’t work out, I would still definitely be to blame for having nothing saved.

    @First Gen, yep, she’s living in her nest egg…

  9. krantcents

    She needs to reduce her expenses, getting a roommate or selling the house would be a step in that direction. It takes time to sell the house so a temporary solution is a roommate or two. Selling the house will net some cash that she could use as savings. Her monthly social security is not enough to support her, she may need a permanent roommate.

  10. Squirrelers

    Good ideas by earlier commenters on what she can do going forward.

    As for her past, I do feel bad for her. She serves as an example of how putting your head in the sand and not worrying about tomorrow can really come back to get those that do so.

    When we work, we’re not just paying today’s bills, but we’re working for tomorrow’s bills as well. We’re working for our 70-year old selves now, because we might not be in position to do so then. Save, save, save.

  11. Crystal @ BFS

    @krantcents, if Mr. BFS passes away before me (hopefully WAAAAYYYY down the road), I am totally going Golden Girls and living with 2-3 other roommates in a nice 1 story…

    @Squirrelers, exactly.

  12. DoNotWait

    Just don’t know what to add from the other comments! Like Kevin though, I think investing in yourself can be the best choice you make. BUT sometimes we have to be more realistic and save for darker days. Also, many of us think that retirement is far far away and that we’ll have time to save for that later. That is totally wrong. It is never too soon!

  13. Jenna

    Wonder if that is going to be a trend in the far future – retiree roommates? I like it!

  14. LifeAndMyFinances

    I understand Ms. Wilson’s actions. If her business would have taken off, she would be living quite well, and therefore, wouldn’t have had a need to a retirement next egg.

    I struggle with this sometimes. I enjoy building businesses that generate extra income, and they could take off at any moment. But, in the event that they don’t, I do contribute some money to my 401(k)… You always need a backup plan.

  15. retireby40

    Sell her house and land, then take an annuity? She can probably move to a cheaper location and rent. It would be cheaper then, but who wants to move when you’re 70.
    It’s a tough situation.

  16. Henway

    Hmm if I was in her shoes? I’d just buy a lotto ticket everyday and cross my fingers ^_^

  17. Kathryn C

    I’m getting heart burn reading about Ms Wilson story….seriously. The thing that’s also frightening is people who retire around 2030 or so might not even have the social security that Ms W has.

    The 3 legged retirement stool…..

    social security
    401 (k) or IRA etc
    Savings

    ….is broken, and young people don’t even realize it.

  18. Little House

    At least she has a house she can use to make a little money. In her case I’d definitely think about getting a roommate and bumping up her dress business to pay off her debt. I’m also not a big advocate of a reverse mortgage, but it might work in her case – at least then she’d have a little more income coming in. That is a really scary predicament!

  19. Crystal @ BFS

    @DoNotWait, as you probably noticed, I am BIG on backup plans. 🙂

    @Jenna, I thought it was a trend already – I know a few people who do it. I personally love the idea!

    @LifeAndMyFinances, I guess my problem is that I don’t understand it. Even if I think I’m going to be hugely successful, I’d want to put some money away for retirement so I don’t have to work forever…

    @retireby40, yep, I agree. It’s a tough spot to be in.

    @Henway, I giggled at that one…

    @Kathryn C, I don’t know about other young people, but I realize it! I have no idea how much if any social security I will see and my husband won’t be getting any since he doesn’t contribute (pension plan for teachers, no ss tax). So we plan for nothing and realistically expect 50% of what I’d be entitled to…

    @Little House, I agree that her house may be her savior in this…

  20. MoneyIsTheRoot

    A reverse mortgage has to be better than the type of debt she is carrying right now.

    I worry about my grandparents, and my parents as well. I wish my grandparents had more money in their retirement, they get by, but at times they have to go without.

    I want my mom to be able to retire sooner than later, she was good to her family and deserves to have some rest! Im happy she will get some social security, but it wont be enough.

    I save in a 401k but I worry about myself the least, I have many more years and have taken the right steps…I just want to help them.

  21. Amanda L Grossman

    Wow–starting to save for retirement at age 70? Yikes!

    My grandparents live off of social security alone, and it is definitely not the way to go.

  22. Jeff

    Yikes. She should sell the assets she does have….and start playing the lottery. No I’m just kidding about the lottery part( the last thing she needs is more expenses), but she should look to help from family members who would be willing to give a loan.

  23. Sheila

    Sad at the age of 70. Maybe more than one room could be rented out. Reverse mortgage, is something she should at least explore!

  24. Shawanda

    I heard this story while listening to Marketplace Money. I remember thinking how sad it was that a 70 year old woman had to continue working. Especially, since she has real concerns about her ability to continue working. At 70 years old, it’s a blessing that she’s able to care for herself.

    At the same time, I didn’t feel too sorry for her. There are millions of 30 and 40 year old versions of Susanna Wilson who refuse to deal with the reality that there’s a strong likelihood they’ll have to care for their future selves. Although it’s wonderful to live in the moment, you simply must think about putting something away. Particularly those of us who will likely get little or no Social Security.

  25. Jackie

    I think you do give some sound advice. I agree that getting rid of her consumer debt should be the first priority. I love the idea of finding a house mate to help in sharing the expenses, having a friend there to share things sounds like lots of fun.

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