How to Retire with No Money (2024)

One of the biggest questions associated with retirement planning is, “How much do I need to save?” A retirement study of American workers conducted by Schroders found that the average worker age 45 or older believes it will take $1.1 million to retire comfortably. However, only 21% of those workers expect to save $1 million or more for retirement.

Can you retire on no money? Having no savings means that you will be forced to rely on your Social Security benefit for income in retirement. According to the Social Security Administration (SSA), among elderly Social Security beneficiaries, 12% of men and 15% of women rely on Social Security for 90% or more of their income. So people do it. Still, it requires sacrifices, hustling, and planning.

Understand Your Social Security Benefits

Social Security benefits provide a stream of income for retirement, so if you’re trying to retire with no money saved, it’s important to understand how much you might be able to collect. As of November 2023, the average monthly retirement benefit from Social Security was $1,844.76.

Whether you receive that amount, or more, or less, can depend on a number of factors, including your employment and earnings history and the age at which you retire. The earliest you can begin taking Social Security retirement benefits is age 62, but claiming benefits early reduces the amount you’re entitled to receive. Delaying benefits until age 70, on the other hand, can allow you to claim an increased benefit amount.

If you’re retiring with no savings, it may be to your advantage to wait as long as possible to take Social Security benefits. Calculating your estimated retirement benefit at different ages can help you determine when the timing may be right to apply for Social Security.

According to the SSA, Social Security benefits typically account for a replacement rate of roughly 40% of a retiree’s previous working income, but it is commonly accepted that a replacement rate of roughly 70% is adequate for retirement income from all sources. So how do you make up that 30%?

Stick to a Budget

Making a retirement budget is essential if you have little to no money saved. Having a budget can help you track where your money is going and avoid overspending.

When making a budget for retirement, it’s good to consider where you can slash spending if you anticipate having limited income. You can start with the largest expenses first, which are usually housing and healthcare, then work your way down the list to look for areas where you may be able to cut back.

For instance, if housing costs take up a sizable part of your income, you might be able to reduce those expenses by:

• Downsizing to a smaller home or moving to an area with a lower cost of living
• Renting out part of your home, either on a temporary or permanent basis
• Selling your home and moving in with one of your children, a sibling, or another relative
• Moving to an all-inclusive retirement community that bundles utilities, maintenance, and other homeownership costs into the purchase price

The more cuts you can make, the better off you’ll be when retiring with nothing in the bank.

Apply for Government Benefits

Government programs can help to offset some of your cost of living in retirement if you have little or no money saved. There are several government programs for which you may be able to qualify if you have limited financial resources, including:

• Supplemental Nutrition Assistance Program (SNAP)
• Medicaid
• Medicare
• Supplemental Security Income (SSI)

Eligibility requirements for each program vary but can be based on age, disability status, income, and assets. For example, SSI is available to individuals who are 65, blind, or disabled and have limited income and financial resources. Medicare eligibility, on the other hand, is based on age; you can apply when you turn 65.

If you’re unsure of the kind of government benefits for which you might qualify, you can contact your local Department of Social Services. Someone there should be able to tell you the programs for which you may be eligible and how to apply.

Get a Part-Time Job or Side Hustle

If you’re contemplating retirement with no savings, then you may need to find ways to make more money. Getting a part-time job or starting a side hustle are two ways to earn money in your spare time without being locked into a full-time position.

Examples of possible side hustles that you might start in retirement include:

• Walking dogs or pet sitting
• Babysitting
• Cutting grass or doing yardwork
• Selling homemade baked goods
• Getting paid to run errands or do odd jobs for neighbors

Remember that if you’re earning money from side hustles, the Internal Revenue Service (IRS) still expects you to report that income on your taxes. If you have more than $400 in earnings from side hustles or self-employment for the year, you’ll have to report it as taxable income. Failure to report income properly could result in financial penalties and other serious consequences, such as a tax lien, if the IRS believes that you’re attempting to commit tax fraud.

Ways to Avoid Retiring with No Money

If you fear that you will have to retire without any savings but haven’t yet actually gotten there, there are things you can try to prevent that scenario. They may include:

Pay Off Debt

Debt, of course, is the opposite of savings, so the first thing to do is get rid of yours if you want to save for retirement. Retiring with debt, alas, is not uncommon.

According to a Clever Real Estate survey, in 2023, retirees have an average of $19,888 in debt, excluding mortgage debt but including credit cards, medical bills, car payments, and personal loans. According to the Federal Student Aid Portfolio Summary, borrowers age 50 or older accounted for 25.16% of total student loan debt of $1.63 trillion in 2023.

How you go about paying down debt can depend on what you owe and how much money you have to commit to debt repayment. Some of the options include:

• Credit card balance transfers
• Debt consolidation
• Using a home equity loan or a home equity line of credit (HELOC) to pay off debt
• Federal student loan consolidation
• Private student loan refinancing

If you’re having trouble getting a grip on debt, you might want to talk to a certified credit counselor or debt counselor. They can review your budget and debt to offer solutions for dealing with it, which may include enrolling in a debt management plan, negotiating debt to pay less than what’s owed, or, in extreme cases, filing for bankruptcy.

Increase Your Income

If you need more money but feel stuck at your current pay level, there are steps you can take to increase your income. These include:

• Ask for a raise. Be smart and check comparable salaries to yours. If you are on the low end, make sure that your employer knows it.
• Look for a new job. Sometimes there is little room for advancement where you work, while moving to a different employer could open up the corporate ladder.
• Go back to school. If you improve your credentials, you can increase your earning power.
• Get a second job. There are plenty of part-time opportunities out there, from waiting tables to driving a cab or livery vehicle in the evenings and on weekends.
• Turn your expertise into cash. If you have a deep knowledge about a subject people want to learn about, you could use it to teach part-time, blog online, or hit the lecture circuit.
• Turn a hobby into a business. You may have a passion that you can turn into a marketable sideline online or at various selling places, such as the local fair, a farmer’s market, or a consignment booth in an antiques and tchotchkes store.

Utilize Your Workplace Plan

If your employer offers a retirement plan, it’s to your advantage to make the most of it during your working years. Among private industry workers, 69% have access to a retirement plan at work. Those include both defined-contribution plans, such as a 401(k), and defined-benefit plans, such as a pension.

Saving in a 401(k) can help you head into retirement with some money in hand, especially if you’re contributing enough to get the full employer match if one is offered. With pension plans, your benefit amount is typically determined by how many years you worked for your employer and your income in your highest-earning years.

If your employer offers a 401(k) and you’re not yet enrolled, sign up and start making contributions once you have retired any high-interest debt. If your current employer doesn’t offer one, ask if the company would consider changing that. If not, you might want to consider moving to a new company that does, as 401(k) plans are quite common. If your employer doesn’t offer a pension, though, it’s highly unlikely that you can do anything about that or find a new employer that does. Pensions have largely gone the way of the dodo.

Invest Your Money

Once you are able to start saving, think about investing that money instead of just saving it. When you invest money, you’re putting it into the market, where it can earn a higher rate of return than in a savings account. Both saving and investing can allow you to capitalize on the power of compounding interest, though at different rates.

How can you invest money for retirement? Your options include:

• Contributing to a 401(k) at work
• Opening a traditional or Roth individual retirement account (IRA)
• Investing through a taxable brokerage account
• Purchasing real estate as an investment property
• Buying an annuity to get an unchanging regular income stream

The most important thing to remember about investing is that it almost always involves some degree of risk. Certain investments tend to be riskier than others. For example, trading cryptocurrency is generally riskier than investing in municipal bonds, as the latter is backed by the issuing municipality while the former is not.

Considering your personal risk tolerance, goals, and timeline until you plan to retire can help you decide what approach to take when investing. You may also benefit from talking to a financial advisor or an investment advisor if you need more specific guidance on where to invest.

You Can Also Delay Retirement

Whether you feel that you still haven’t saved enough money for a comfortable retirement or have no savings at all, there’s one more thing you can do: wait to retire.

Delaying your retirement date may not be ideal, and for some people, it might not be realistic. For example, if you have a serious health issue that’s making it difficult to keep up with the demands of your job, then an earlier-than-expected retirement could be inevitable.

However, if you’re able to put off retirement, it can give you more time to save and invest. And as mentioned, waiting longer to retire and claim Social Security could result in a larger benefit amount.

The Bottom Line

Retiring with no money may not be an ideal situation, especially if you’re dreaming of a particular type of lifestyle. If you have little to no money saved and your retirement is nearing, it’s important to start planning sooner rather than later.

Finding a financial planner or advisor to work with can make coming up with a realistic plan for retiring with scant savings easier.