What would happen if one ran out of $ later in life?

[Mark2024]

You did you part and the fire calculator gives you 100% chance of success. But something unexpected happened. In some cultures, the kids are obligated to take care of their elderly. That is not the case in US.

Assume you are in very good health but old and could not work. But only have the SS as the source of income which is not enough to cover the basics.

What happens then?

Also, we read so many articles on line about the "crisis" of Americans do not have enough to retire. Where are all those people who do not have $1000 to their name?

 

[Fermion]

SS usually is enough to cover the basics, it is just that people have redefined what the basics are.

Assuming you really do let your money go down to Firecalc zero (I don't know exactly how this would happen but perhaps someone just blindly follows the 4% rule all the way down), SS can provide enough for food and shelter in several areas of the USA. Medical probably some form of Medicaid/Medicare.

I would say if you run out of money later in life, you will need to move to one of the lower cost of living areas of the USA, instead of staying in NYC or LA or Seattle. Possibly share a house with someone.

Average SS in the USA taking at age 66 is $1673 per month. This is not at eating cat food levels for some parts of the country where you can get a 1bd apartment for as little as $600 a month. You cut out expenses like cars. You sign up for free internet/cell phone for low income. You take advantage of medical for low income. You probably don't take trips to Europe.

 

[jebmke]

Some people move in with friends to share the cost. Actually, many do live with their children and share the cost as well.

Other options are to get a job, even part time to supplement the SS income. Depending on the state, state assistance programs like Medicaid and housing assistance are options.

 

[RunningBum]

If you retired with 100% chance of success in FIRECALC I don't see how one could get down to less than $1000 unless they let their spending far exceed their plan combined with poor investing. You would not be one of the people written about not having enough to retire. If you were, you blew by obvious warning signs without doing anything.

Ignoring your first paragraph and assuming someone was too old to work anymore but didn't have any money, I would advise them to redefine what their basics are. Pick up your meager belongings and move to a different area. Get roommates, share an apartment or rent a room in someone else's home, with kitchen privileges.

Can't even do that? Well, have you read the many articles on line about homeless people? I see estimates that over half a million people in the US are homeless, and around half of those are over age 50. I wouldn't expect that your "very good health" would last that long being homeless.

 

[pacergal]

Unfortunately, this is the case for many elderly here.
When I was working in public health, I saw quite a few who lived on SS alone. They often had room mates, some technically homeless living in small campers, some in Section 8 housing, some living with family. Most had some food stamps, Medicare.
Our social workers helped guide many to state assistance/elder care help. Depending on where you live, there is quite a few options out there, most have long wait lists, especially housing.

 

[Fermion]

It must be the refusal to move to a different area that causes a lot of these problems. I read about how people must live in campers in Seattle because of the high cost of housing.

MOVE.

Seattle and King County are throwing billions at trying to fix this, to the point where they are spending 50k to 100k a year for each homeless person helped. In a lower cost of living area, that kind of money could help dozens.

 

[RunningBum]

I'm starting to see a trend of threads started by the OP:

Are you taking care your elderly parent(s)?

when is the best time to tell your boss that you are retiring?

Want to retire now but with concerns

In the latter thread you say you said

Last analysis says we have a near perfect chance to spend about $10K a month after tax if I walked out today.

Spending $10K/month is way way more than anyone's definition of "the basics". Don't just retire and stop looking at your finances. Instead of blinding spending what some tool told you was safe, take a look every year to see how you are doing and make adjustments.

I think a few people here take 5% of their investment assets at the start of the year for that year's spending. If investments do poorly, that 5% is lower and you will have to make downward adjustments. Do it.

VPW is another plan that looks at your balance every year and allocates a slowly growing % to spend each year.

 

[Midpack]

Various sources FWIW

• More than half a million people in the U.S. experience homelessness on any given night.
• The 2019 HUD report found that nearly half of those experiencing homelessness lived in one of three states: California, New York, and Florida. They were concentrated in urban areas.
• Among the states, homeless population sizes range from approximately 600 people to more than 170,000.
• The report found that nearly two-thirds of the homeless in the United States were sheltered, the rest being unsheltered.
• More than two-thirds of the homeless in 2019 were individuals living alone. The rest were families with children.
• Seven out of ten homeless individuals were men.
• Among unhoused single adults without children, the percentage older than 50 had increased from 11 percent in 1990 to around 37 percent in 2003. In subsequent studies, Kushel’s research group found that number has risen to about 50 percent today. It’s now arguably the fastest rising group,” said Dennis Culhane, professor of social policy at the University of Pennsylvania.
• Older adult renters are a large and growing group.
• 40 percent of homeless people were African Americans, though they made up only 13 percent of the country’s population overall.
• Veterans have also suffered high rates of homelessness, constituting 8 percent of all homeless adults in 2019.
• 5 percent are unaccompanied youth under 25 (considered vulnerable due to their age)
• 22 percent are chronically homeless individuals (or people with disabilities who have experienced long-term or repeated incidents of homelessness)
• From 2007 to 2016, it had been going down pretty steadily every year. Starting in 2016, it has been creeping up every year, including this year, as far as we know. It’s largely due to the lack of affordable housing and housing getting more expensive, and also what people earn purchasing less housing.
• White people are numerically the largest racial group - half (50 percent) of all people experiencing homelessness. Most groups of color have higher rates of homelessness than their White counterparts—and, in some cases, far higher. Within the White group, 11 out of every 10,000 people experience homelessness. For Black people, that number is more than four times as large—48 out of every 10,000 people. Native Hawaiian or Pacific Islanders particularly stand out as having the highest rates, with 121 out of every 10,000 people experiencing homelessness.

 

[ivinsfan]

The government has massive safety nets for elders that run out of money..ie Medicaid, low income apartments, food stamps, heating assistance, basic cell phones and free or subsidized internet. If you see somethings like this coming the key is to get it as soon as you qualify not wait until you spend your last cent.


If you own your home our state has a tax deferral program for elders for property taxes.

 

[aja8888]

If I ran out of money (age 79+ now), I could live on my SS and I would become a "live in" with a family member or I would look for a girlfriend that had a house and needed someone to talk to every day.

 

[Fermion]

The government has massive safety nets for elders that run out of money..ie Medicaid, low income apartments, food stamps, heating assistance, basic cell phones and free or subsidized internet. If you see somethings like this coming the key is to get it as soon as you qualify not wait until you spend your last cent.


If you own you home our state has a tax deferral program for elders for property taxes.

I think most people just don't realize all of the safety net stuff that is out there. I bet there are seniors living on SS right now who don't realize they can get free internet.

Probably those of us on this forum are much more informed than the general public.

 

[ivinsfan]

I think most people just don't realize all of the safety net stuff that is out there. I bet there are seniors living on SS right now who don't realize they can get free internet.

Probably those of us on this forum are much more informed than the general public.

Maybe but all you have to do is call a senior assistance office for help and info. A bigger problem is that people are in denial that they have an issue.



I know a lot about our states program because of my broke 70 YO friend..he hasn't made one phone call to anyone.

 

[CardsFan]

With our current WDR of 1.5%, I just don't see it as possible to run out of money. But for the sake of argument let's say we did.

Our SS for 2 exceeds $5,400/month. With our paid off condo, in a fairly low COL area, we could live fairly comfortably, even keeping 2 cars. Aside from eliminating travel, I don't think much of our lifestyle would change.

When one of us passes, the SS will drop to about $3,700/month. More difficult, but still not cat food territory. And as commented above, there are a lot of safety net programs to help, if needed.

Now, if the survivor needed LTC, then as a last resort, a medicaid facility would be the last place one of us would exist.

In reality, DS and DDIL, would surely step in to help. But the above sequence of events is so remote I don't spend anytime even thinking about it.

 

[cyber888]

DW and I have a combine SS of around $4,000/month which we will get in 2.5 years.
We now collect a Lifetime annuity of $1015/month. So, Fixed Income will be more than $5,000/month for Life.

BACK UP 1:
While I'm 100% on Firecalc, assuming I ran out of money, we then need to downsize our house.
We currently have a full brick house with 5 bedrooms that is 3,435+ sq.ft. as our retirement house.
We could downsize to a 1,700-1,800+ sq.ft with 2 Bedroom 2 bath home and probably gain $300,000 in cash for downsizing to a much small house.

BACK UP 2:
Worst comes to worst, and we wipe out that $300K cash from downsizing ...
wife still has family in the Philippines. We can move there and our $5,000/month lifetime income will let us live like royalty in Asia. Many Americans live luxuriously in the Philippines with US $1,500/month. With US $5000/month income, you can eat out everyday in Philippines restaurants and hire 2 maids to take care of all chores.

 

[easysurfer]

When you see the signs of running out of money, that's the cue to stock up on ramen noodles.

 

[Aerides]

You did you part and the fire calculator gives you 100% chance of success. But something unexpected happened. In some cultures, the kids are obligated to take care of their elderly. That is not the case in US.

Good. Depending on kids to bail you out is not a plan.

You plan for contingencies. Insurance. Social Security, literally. Firecalc of 100% is pretty darn reliable. Most of us are fine with 95% and will die rich.

If you're still worried, map out those "unexpected" things.
A storm destroys your home: Insurance, savings, adjust
The market goes to near zero? You wait it out, keep a cash bucket so you don't have to sell low, you can ride out global issues for a few years.
Medical disaster: Insurance, and if you need treatments that aren't covered, there are programs that can help, and perhaps you don't have to worry about your money lasting till your 98 at that point
Zombie apocalypses? I hope I go in the first round.
Know your budget for discretionary vs. non. You get wiped out? No more travel, etc. SS keeps food on the table and keeps you in your house.

 

[NW-Bound]

As other posters pointed out above, it is not hard to manage a "soft landing".

I know many elderly friends and acquaintances of my parents. None of them have the stash that I and most posters here do. Not one of them had a well-paid professional job. I have not heard a single one of them living on the street or in destitute.

Surely, they don't drink Cognac as I do (not hard because I don't drink much anymore ), or eat Kobe beef (did that only twice to know what it's like), nor take month-long European trips, but they live fine from what I can tell or hear from my mother. These people are in their late 80s, early 90s.

 

[GenXguy]

SS usually is enough to cover the basics, it is just that people have redefined what the basics are.

Often, it's not. You shouldn't assume "your basics" or that everyone has at least average SS income or waited until FRA. That's definitely not the case.

Average SS in the USA taking at age 66 is $1673 per month. This is not at eating cat food levels.

You're making a big assumption that the people who have no other income/savings are making the average SS income and waited to age 66. These lower income people are more likely to have started taking SS benefits earlier, like 62 where the average income SS payment is closer to $1200, but for so many people, it's much less than that, maybe $500 to $800/mo, many even less due to lower incomes and years worked, and Medicare and supplemental/medication/out of pocket medical will suck up a lot of that. They can't afford $600/mo for an apartment. Although, I live in one of the lowest COLA as far as rent, and I haven't seen any apartments that low since pre-pandemic. Maybe there's some shack in a dangerous neighborhood for that. Plus you would still have moving costs, utilities, renters insurance, groceries, etc. And you really need a car in those areas to get around - it's not like the urban city with plenty of public transportation.

SS simply isn't enough for a lot of people to live on, and seniors get excluded from some benefits like Medicaid expansion, which would have been very helpful to some seniors that I know. And if they can get free internet, big deal, that's not going to make up the difference what they need.

Then there are people who didn't work enough years to even earn social security benefits, and didn't work enough to get free Medicare part A, struggling to get by, but don't qualify for Medicaid either due to the very low income and asset limits. So they have no income at all yet have total Medicare (plus out of pocket) costs over $1000/mo. I know some affected by that.

I'm not sure why a trip to Europe was even mentioned vs. taking a trip to any other country or any expensive trips across the US if you are just scraping by. How about suggesting no paid rides on any space shuttles, as well? Ridiculous.

There are so many people out there that simply do not have the resources that most of the people on this forum have and won't get nearly as much of a monthly SS benefit (if any) as various forum members here who made high incomes over a long career and waited until FRA or age 70 to take benefits while also having a huge stash.

 

[pb4uski]

...Assume you are in very good health but old and could not work. But only have the SS as the source of income which is not enough to cover the basics.

What happens then? ...

If needed, I would have a modest apartment or share an apartment with a friend and LBYM as we always have.

 

[jim584672]

There are some programs that will pay for all Medicare out of pockets (QMB) and give Social Security Extra Help Part D supplement. At least in NY they made the qualifications the same as for MAGI Medicaid (138%), and no asset test for either so a person can seamlessly age out and not loose coverage.

 

[NW-Bound]

... I'm not sure why a trip to Europe was even mentioned vs. taking a trip to any other country or any expensive trips across the US if you are just scraping by. How about suggesting no paid rides on any space shuttles, as well? Ridiculous.

I was assuring the OP, who wrote the following in his introductory thread, that he should be able to manage a "soft landing" if something bad should happen, if he will not insist on the aforementioned pleasures.

About the elderly people in destitute, yes, they exist and have to rely on the various public assistance programs. I can't comment much on that, simply because of my limited knowledge.

The key to me is as one approaches old age, he has to plan ahead. A lot of people fail to do that. I am sure that some did plan, but still failed to achieve the goal that they set out for various reasons. Most posters here have some reasonable success, as we have seen.

Written by Mark:

Hi, We have been thinking and planning about retirement for a while. We are in our early 60s.

Financially, we are in decent shape. We both have small pensions and qualify for SS. Last analysis says we have a near perfect chance to spend about $10K a month after tax if I walked out today.

 

[MarieIG]

Well if we only had SS then we would live on SS, i.e. in a small rent-controlled apartment or in a LCOL area, would not pay medical out of pocket (Medicaid/ Medicare as appropriate), would take public transportation and seek low/ no cost entertainment, i.e. walks, parks, the public library, free public performances, etc.

 

[GenXguy]

There are some programs that will pay for all Medicare out of pockets (QMB) and give Social Security Extra Help Part D supplement. At least in NY they made the qualifications the same as for MAGI Medicaid (138%), and no asset test for either so a person can seamlessly age out and not loose coverage.

The asset limit is under $8000 in my state. And about $9000 income limit. So, not even close to the Medicaid expansion that allowed unlimited assets and more income. I read that California increased the asset limit for an individual to $130,000, but that's an exception vs. most states. It sounds like N.Y. would be a good state if you had low income and needed health care coverage without having to give up pretty much everything you had.

 

[rothlev]

Often, it's not. You shouldn't assume "your basics" or that everyone has at least average SS income or waited until FRA. That's definitely not the case.

You're making a big assumption that the people who have no other income/savings are making the average SS income and waited to age 66. These lower income people are more likely to have started taking SS benefits earlier, like 62 where the average income SS payment is closer to $1200, but for so many people, it's much less than that, maybe $500 to $800/mo, many even less due to lower incomes and years worked, and Medicare and supplemental/medication/out of pocket medical will suck up a lot of that. They can't afford $600/mo for an apartment. Although, I live in one of the lowest COLA as far as rent, and I haven't seen any apartments that low since pre-pandemic. Maybe there's some shack in a dangerous neighborhood for that. Plus you would still have moving costs, utilities, renters insurance, groceries, etc. And you really need a car in those areas to get around - it's not like the urban city with plenty of public transportation.

SS simply isn't enough for a lot of people to live on, and seniors get excluded from some benefits like Medicaid expansion, which would have been very helpful to some seniors that I know. And if they can get free internet, big deal, that's not going to make up the difference what they need.

Then there are people who didn't work enough years to even earn social security benefits, and didn't work enough to get free Medicare part A, struggling to get by, but don't qualify for Medicaid either due to the very low income and asset limits. So they have no income at all yet have total Medicare (plus out of pocket) costs over $1000/mo. I know some affected by that.

I'm not sure why a trip to Europe was even mentioned vs. taking a trip to any other country or any expensive trips across the US if you are just scraping by. How about suggesting no paid rides on any space shuttles, as well? Ridiculous.

There are so many people out there that simply do not have the resources that most of the people on this forum have and won't get nearly as much of a monthly SS benefit (if any) as various forum members here who made high incomes over a long career and waited until FRA or age 70 to take benefits while also having a huge stash.

Government assistance -- no health insurance premiums -- section 8 housing ( 30% of income is the total cost ). food stamps, food subsidies, ( boxes delivered to section 8 housing units ) it isn't hard to manage at all. My MIL did so, and many of the foster grandparents that volunteered at a school I taught at did so also, they lived a perfectly normal life style if not extravagant.

 

[athena53]

I think most people just don't realize all of the safety net stuff that is out there. I bet there are seniors living on SS right now who don't realize they can get free internet.

Probably those of us on this forum are much more informed than the general public.

I think it really takes an advocate as you get older- these programs can require a lot of paperwork and much is on-line. I know my Dad and my late husband, both of whom were VERY computer-literate, started losing their ability to handle technology when their bodies and brains started to fail. It can also be tricky. One woman on another Board had to set up a Miller Trust for her MIL; MIL made about $3/month too much (pensions and SS, so not "manageable") to qualify for Medicaid. They were able to get her qualified by putting that tiny amount in a Miller Trust every month.

My finances are pretty darn healthy but I do keep track and will adjust if a zombie apocalypse happens- much of what I spend is either travel or charitable donations, so I can cut back and still have food and shelter.