What happens to people without any retirement savings?
"I'm afraid you have missed a few of the outcomes commonly faced by millions of Americans, so I would like to take a moment to discuss a wider range of outcomes that are common in the United States today. Most importantly, some of these happen before retirement is ever reached, and have grave consequences - yet are often very closely linked to financial health and savings. Not planning ahead long-term - 10-20+ years - is generally associated with not planning ahead even for the next few months, so I'll start there. The most common thing that happens is the loss of a job, or illness/injury that put someone out of work. 6 in 10 adults in the US have less than $500 in savings, so desperation can set in very quickly, as the very next paycheck will be short or missing. Many of these Americans have no other source of saved money, either, so it's not like they can draw on retirement savings, as they don't have that either. Even if they are able to get another job or recover enough to get back to work in a few weeks, this can set off a desperate cycle. Those who have lost their jobs to technical obsolescence, major economic downturns, or large economic changes are often more severely affected. People once making excellent, middle-class (or above) wages with full benefits find they cannot find work that pays even vaguely similarly. In the past this was especially common in heavy labor jobs like manufacturing, meat-packing, and so on, but more recently this has happened in financial sectors and real estate/construction during the 2008 economic events. The more resilient people had padding, switched careers, and found other options - the less resilient, didn't. Especially during the 1970s and 1980s, many people affected by large losses of earning potential became sufficiently desperate that they fell heavily (or lost their functioning status) into substance abuse, including alcohol and drugs (cocaine and heroine being especially popular in this segment of the population). Life disruption - made even more major by a lack of savings - is a key trigger to many people who are already at risk of issues like substance addiction, mental health, or any ongoing legal issues. Another common issue is something more simple, like loss of transportation that threatens their ability to hold their job, and a lack of alternatives available through support networks, savings, family, and public transit. If their credit is bad, or their income is new, they may find even disreputable companies turn them away, or even worse - the most disreputable companies welcome them in with high interest and hair-trigger repossession policies. The most common cycle of desperation I have seen usually starts with banking over-drafts, and its associated fees. People who are afraid and desperate start to make increasingly desperate, short-sighted choices, as tunnel-vision sets in and they are unable to consider longer-term strategy as they focus on holding on to what they have and survival. Many industries have found this set of people quite profitable, including high-interest ""check cashing"", payday loans, and title loans (aka legal loan sharks), and it is not rare that desperate people are encouraged to get on increasing cycles of loan amounts and fees that worsen their financial situation in exchange for short-term relief. As fees, penalties, and interest add up, they lose more and more of their already strained income to stay afloat. Banks that are otherwise reputable and fair may soon blacklist them and turn them away, and suddenly only the least reputable and most predatory places offer to help at all - usually with a big smile at first, and almost always with awful strings attached. Drugs and alcohol are often readily available nearby and their use can easily turn from recreational to addictive given the allure of the escapism it offers, especially for those made vulnerable by increasing stress, desperation, loss of hope, isolation, and fear. Those who have not been within the system of poverty and desperation often do not see just how many people actively work to encourage bad decision making, with big budgets, charm, charisma, and talent. The voices of reason, trying to act as beacons to call people to take care of themselves and their future, are all too easily drowned out in the roar of a smooth and enticing operation.  I personally think this is one of the greatest contributions of the movement to build personal financial health and awareness, as so many great people find ever more effective ways of pointing out the myriad ways people try to bleed your money out of you with no real concern for your welfare. Looking out for your own well-being and not being taking in by the wide array of cons and bad deals is all too often fighting against a strong societal current - as I'm sure most of our regular contributors are all too aware! With increasing desperation often comes illegal maneuvers, often quite petty in nature. Those with substance abuse issues often start reselling drugs to others to try to cover lost income or ""get ahead"", with often debilitating results on long-term earning potential if they get caught (which can include cost barriers to higher education, even if they do turn their life around).  I think most people are surprised by how little and petty things can quickly cycle out of control. This can include things like not paying minor parking or traffic tickets, which can snowball from the $10-70 range into thousands of dollars (due to non-payment often escalating and adding additional penalties, triggering traffic stops for no other reason, etc.), arrest, and more. The elderly are not exempt from this system, and many of America's elderly spend their latter years in prison. While not all are tied to financial desperation as I've outlined above, a deeper look at poverty, crime, and the elderly will be deeply disturbing. Some of these people enter the system while young, but some only later in life. Rather than homelessness being something that only happens after people hit retirement, it often comes considerably earlier than that. If this occurs, the outcome is generally quite a bit more extreme than living off social security - some just die. The average life expectancy of adults who are living on the street is only about 64 years of age - only 2 years into early retirement age, and before full retirement age (which could of course be increased in the next 10-20 years, even if life expectancy and health of those without savings don't improve). Most have extremely restricted access to healthcare (often being emergency only), and have no comforts of home to rest and recuperate when they become ill or injured. There are many people dedicated to helping, yet the help is far less than the problem generally, and being able to take advantage of most of the help (scheduling where to go for food, who to talk to about other services, etc) heavily depends on the person not already suffering from conditions that limit their ability to care for themselves (mental conditions, mobility impairments, etc). There is also a shockingly higher risk of physical assault, injury, and death, depending on where the person goes - but it is far higher in almost every case, regardless. One of the chief problems in considering only retirement savings, is it assumes that you'll only have need for the savings and good financial health once you reach approximately the age of 62 (if it is not raised before you get there, which it has been multiple times to-date). As noted above, if homelessness occurs and becomes longstanding before that, the result is generally shortened lifespan and premature death. The other major issue of health is that preventative care - from simple dentistry to basic self-care, adequate sleep and rest, a safe place to rejuvenate - is often sacrificed in the scrambling to survive and limited budget. Those who develop chronic conditions which need regular care are more severely affected. Diabetic and injury-related limb loss, as one example, are far more likely for those without regular support resources - homeless, destitute, or otherwise. Other posters have done a great job in pointing out a number of the lesser-known governmental programs, so I won't list them again. I only note the important proviso that this may be quite a bit less in total than you think. Social Security on average pays retired workers $1300 a month. It was designed to avoid an all-too-common occurrence of simple starvation, rampant homelessness, and abject poverty among a large number of elderly. No guarantee is made that you won't have to leave your home, move away from your friends and family if you live in an expensive part of the country, etc. Some people get a bit more, some people get quite a bit less. And the loss of family and friend networks - especially to such at-risk groups - can be incredibly damaging. Note also that those financially desperate will be generally pushed to take retirement at the minimum age, even though benefits would be larger and more livable if they delayed their retirement. This is an additional cost of not having other sources of savings, which is not considered by many. Well, yes, many cannot retire whether they want to or not.  I cannot find statistics on this specifically, but many are indeed just unable to financially retire without considerable loss. Social Security and other government plans help avoid the most desperate scenarios, but so many aspects of aging is not covered by insurance or affordable on the limited income that aging can be a cruel and lonely process for those with no other financial means. Those with no savings are not likely to be able to afford to regularly visit children and grandchildren, give gifts on holidays, go on cruises, enjoy the best assistive care, or afford new technological devices to assist their aging (especially those too new and experimental to be covered by the insurance plans they have).  What's worse - but most people do not plan for either - is that diminished mental and physical capacity can render many people unable to navigate the system successfully. As we've seen here, many questions are from adult children trying to help their elderly parents in retirement, and include aging parents who do not understand their own access to social security, medicaid/medicare, assistive resources, or community help organizations.  What happens to those aging without children or younger friend networks to step in and help? Well, we don't really have a replacement for that. I am not aware of any research that quantifies just how many in the US don't take advantage of the resources they are fully qualified to make use of and enjoy, due to a lack of education, social issues (feeling embarrassed and afraid), or inability to organize and communicate effectively. A resource being available is not very much help for those who don't have enough supportive resources to make use of it - which is very hard to effectively plan for, yet is exceedingly common. Without one's own independent resources, the natural aging and end of life process can be especially harsh. Elderly who are economically and food insecure experience far heightened incidence of depression, asthma, heart attack, and heart failure, and a host of other maladies. They are at greater risk for elder-abuse, accidental death, life-quality threatening conditions developing or worsening, and more. Scare-tactics aren't always persuasive, and they do little to improve the lives of many because the people who need to know it most generally just don't believe it. But my hope here is that the rather highly educated and sophisticated audience here will see a little more of the harsher world that their own good decisions, good fortune, culture, and position in society shields them from experiencing. There is a downside to good outcomes, which is that it can cause us to be blind to just how extremely different is the experience of others. Not all experience such terrible outcomes - but many hundreds of thousands in the US alone - do, and sometimes worse. It is not helpful to be unrealistic about this: life is not inherently kind. However, none of this suggests that being co-dependent or giving up your own financial well-being is necessary or advised to help others. Share your budgeting strategies, your plans for the future, your gentle concerns, and give of your time and resources as generously as you can - within your own set budgets and ensuring your own financial well-being. And most of all - do not so easily give up on your family and friends, and count them as life-long hopeless ne'er-do-wells. Let's all strive to be good, kind, honest, and offer non-judgmental support and advice to the best of our ability to the people we care about. It is ultimately their choice - restricted by their own experiences and abilities - but need not be fate. People regularly disappoint, but sometimes they surprise and delight. Take care of yourself, and give others the best chance you can, too." Well, if you worked in the United States you have social security, and medicare and medicaid in most cases as well.  So you have a small amount of income to spend every month to cover your most basic living expenses, as well as your basic medical expenses.  At least, that's the idea. In reality, it probably isn't anywhere near enough money for most to live comfortably.  Also, there is a real fear that the US will have to inflate itself out of its debt to some extent in the future.  This theory implies that the money retired individuals have saved or are receiving down the road could buy significantly less in the future than they expect. If you have the ability to put money away into an IRA or 401K early in your life, it will be greatly beneficial to do so.  However, that is another issue I won't begin to discuss fully here. Edit since your question was restated after I typed my initial response, the final answer is:  You will receive some assistance from Social Security, Medicare, and Medicaid.  You will most likely need to either continue working, draw on savings such as an IRA or 401k, or will need assistance from others.  If none of those are options, you would most likely end up living in poverty or worse. According to both Huffington Post and Investopedia:  Trying to retire without any savings in the bank can be difficult, and   that difficulty is compounded by other factors senior citizens need to   keep in mind as they age, like health issues and mobility. If saving   money is not possible for you, retirement doesn’t have to pass you by.   There are plenty of government-assisted and nonprofit programs that   can help you, such as the Commodity Supplemental Food Program,   Medicare, senior housing help from Housing and Urban Development and   other resources. Therefore, to answer your questions:  Is this pretty much the destiny of everyone who cannot save for retirement?  Yes, if you do not have help from family (or friends) then you have a chance of ending up homeless and/or on government assistance.  Do most people really never retire? There are people who really will never retire. There are stories in the news about Walmart greeters or McDonald's cashiers who are in their 80s and 90s working because they need to support themselves. However, that's not the case for everyone. There's a greeter at my local Costco who is in her 80s and she works because she loves it (her career was in consulting and she doesn't have a lack of retirement money. She just really likes talking to people.).  What really happens? I can't answer what really happens because I have never experienced it and don't know people that do. Therefore I have to go off of what the two articles have said. This is a good question and you seemed troubled by this and this person's choices in life.  And that is the rub, they are choices.  They know how to make them, they know the consequences, and they know how to work around them.  Its a skill you probably don't have (and don't want to have).   In the end they will survive.  If you go to a fast food store in a popular retirement location you will see plenty of elderly people working.  They might live in low income housing, receive some financial assistance, and utilize other charities such a food banks.  They might depend on family and friends.  There is also the ugly, it is not a fairy tale that some supplement their diets with pet food.   There is of course social security.  The amount is very low for most workers, but the amount is almost inconsequential.  They would spend it all anyway and still be short despite the predictability of the income and a time frame with  predictable expenses.  Budgeting is a skill. So I have a friend that deals with this himself, and is helping an elder relation.  He and his wife provide some help, but when it started there was a endless stream of requests.  His policy now is:  No more help unless he works out a budget with the person requesting help. I've used his ideas myself, and by using this it becomes clear on who is in actual need and who is just looking for the next handout.  You can feel good about yourself for helping an actual needy person or guiltless say no. There are a host of programs in the US to help low/no-income seniors: Many states discount property taxes for the elderly as well. Not a dream retirement, but plenty of people are provided for without having prepared for retirement whether due to poor decisions or unfortunate circumstances. Social security was created with just such people in mind. It's a meager living, but it is an income stream that can be supplemented by Walmart greeter income. It probably isn't so dire that it leads to homelessness, but it might mean not having some of the other comforts that we take for granted.
BrenBarn did a great job explaining your options so I won't rehash any of that. I know you said that you don't want to save for retirement yet, but I'm going to risk answering that you should anyway. Specifically, I think you should consider a Roth IRA. When it comes to tax advantaged retirement accounts, once the contribution period for a tax year ends, there's no way to make up for it. For example in 2015 you may contribute up to $5,500 to your IRA. You can make those contributions up until tax day of the following year (April 15th, 2016). After that, you cannot contribute money towards 2015 again.  So each year that goes by, you're losing out on some potential to contribute. As for why I think a Roth IRA specifically could work well for you: I'm advocating this because I think it's a good balance. You put away some money in a retirement account now, when it will have the most impact on your future retirement assets, taking advantage of a time you will never have again. At a low cost custodian like Vanguard, you can open an IRA with as little as $1,000 to start and choose from excellent fund options that meet your risk requirements. If you end up deciding that you really want that money for a car or a house or beer money, you can withdraw any of the contributions without fear of penalty or additional tax. But if you decide you don't really need to take that money back out, you've contributed to your retirement for a tax year you likely wouldn't have  otherwise, and wouldn't be able to make up for later when you have more than enough to max out an IRA each year. I also want to stress that you should have a liquid emergency fund (in a savings or checking account) to deal with unexpected emergencies before funding something like this. But after that, if you have no specific goal for your savings and you don't know for sure you'll actually need to spend it in the near future, funding a Roth IRA is worth considering in my opinion. What's the best strategy? Buy low and sell high. Now. A lot of people try to do this. A few are successful, but for the most part, people who try to time the market end up worse. A far more successful strategy is to save over your entire lifetime, put the money into a very low-cost market fund, and just let the average performance take you to retirement. Put another way, if you think that there is an obvious, no-fail, double-your-money-due-to-a-correction strategy, you're wrong. Otherwise everyone would do it. And someone who tells you that there is such a strategy almost surely will be trying to separate you from a good amount of your money.  In the end, $80K isn't a life-altering, never-have-to-work-again amount of money. What I think you ought to do with it is: pay off any credit card debts you may have, pay a significant chunk of student loan or other personal loan debts you may have, make sure you have a decent emergency fund set aside, and then put the rest into diversified low-cost mutual funds. Think of it as a nice leg-up towards your retirement. "Whether your financial status is considered ""OK"" depends on your aspirations.  You aren't spending more than you earn and have no debt.  That puts you in the category of OK in my book, but the information in your post indicates that you would benefit from some financial advice--100 grand sounds like a lot of money to have in a bank unless you are on the verge of spending it. Financial advisors come in various shapes and sizes.  Many will charge you a lot for what turns out to be helpful advice in the first meeting, but very little value-added thereafter.  Some don't have the best incentives (they may be incentivized to encourage you to put your money into certain funds, for example). There are many financial advisors (of sorts) that you have access to that won't cost you anything.  For example, if you have a 401(k) at work, I bet there is a representative from the plan administrator that will meet with you for free.  If you open a brokerage account or IRA at any place (Fidelity, Vanguard, etc.) you can easily talk with one of their reps and get all sorts of advice.  My personal take is to meet with anyone who will meet with me for free, but not to pay anyone for this service.  It's too easy to get good advice and paying for it doesn't guarantee that you get better advice. Your financial situation will depend primarily on a few things you have not mentioned here.  For example, How much are you setting aside for retirement and what are your retirement goals?  This is something lots of people can give you advice on, but we don't know what market returns will be going forward so we don't really know.  One bit of advice that may benefit you is how to set aside money for retirement in the most tax advantaged way. How much do you feel that you need saved up for large expenses?  Thinking of starting a family?  How many months worth of income are you comfortable having set aside? What is your tolerance of risk?  If you put your money in risky assets, you may make more, but you may also actually lose money.  Those are the questions a financial advisor will ask about.  Once you have his/her advice--and preferrably after talking to a few advisors--you can make your own decision. Basically, your options are: Rules of thumb: Save only what makes sense to save in banks given your expected needs for cash. Put a lot in tax advantaged accounts (don't give Uncle Sam any gifts). Then look at financial and real investments. There are a number of free resources on the internet.  For example FutureAdvisor.  Or you can hit up the forums at BogleHeads.  Those guys give and receive financial advice as a hobby.  They aren't professionals, but you can get a lot of varying ideas and make up your own mind, which to me is better than (just) asking a professional. BTW, regarding the ESPP: these plans often give you a discount on stock and can therefore be a good idea.  Just be sure you don't hold the stock longer than you need to.  It's generally a bad idea to concentrate your wealth in any single investment, especially one highly correlated with your background risk (i.e., if the company does poorly you will already be worse off because you may lose your job or see fewer advancement opportunities. No need to add losses in your savings to that).  1 Please note: I am neither advocating nor discouraging buying guns, gold, or other controversial real assets.  I'm just giving examples of items some people buy as part of their wealth-preservation strategy." "The first issue you'll find is that if you aren't going to immediately live in the house as a primary residence, this property counts as a ""second home"" or ""investment property"". You'll generally pay a higher interest rate, have a larger down payment, and qualify for less government-backed programs/incentives/subsidies than you would otherwise. The lending criteria on such properties is always more strict - and generally more costly - than an equivalent primary residence. Lenders won't really care that in 10 years you or your parents plan to move in - you can't be held to that, so they'll generally ignore that plan entirely. On a related note, you should be aware that insurance for the property will also generally cost more, but you'd need to get quotes to determine if that is at all significant in your situation. You'll need to talk with a few potential lenders, but from a first read it sounds like it would be best ""storied"" like so: you and your parents want to buy a 2nd home or vacation home, which you'll share the use of (vacations, etc, and being converted to a primary residence later). It'll need to be clear what plan to use the property for - if you intend to rent out the home in the interim years then instead make that clear and state it will be an investment home; if it is what you are planning it might make it easier, as expected rent for the property will be considered. Saying you want a mortgage for a home no one will live in for a decade probably isn't a good idea, as a general plan anyway. Either way, this can be called a ""joint mortgage"". When I was a loan officer we didn't use that term, but it's basically just a mortgage application with multiple people on it, all of whom are combined together to qualify for the loan. Everyone's income, debts, assets, and credit get included, which can work or one person's situation can cause the whole thing to collapse. From your description I think this could work for you, and one option is to set it up where only one of the parents is on the application if the other parent has problematic credit situation. Note that his possibility is often restricted by local law, so it may not be an option for you in your jurisdiction, but worth being aware of. An alternative is you just buy the property and the parents gift you the down payment, and you list them as beneficiaries in will/trust in case something happens to you before they retire, but I don't know if that would make any sense in your situation. This is a single applicant mortgage, and it means only you are considered as buying it, which sometimes is the only option depending on your parents current financial situation. It's usually something you try if the other option doesn't work, but it's a fallback plan. Some lenders will allow guarantors (co-signers in US parlance), but this will vary by lender and locale - often what they actually want is a joint mortgage, not really a guarantor/cosigner. Finally, you'll need to plan for what happens if things don't go as planned, regardless of what happens. What if your income changes, if either of your parents become deceased in advance of retirement, if they get a divorced from each other, or if either/both become ill or disabled and need assisted care? Planning for such unpleasant possibilities (even if they seem crazy and not going to happen in your mind right now) can save you all a tremendous amount of heart ache later on when the unexpected (including things I didn't mention) pops up." This article is very one sided. What about us ‘from nothing’ folks?  You’d be surprised how many  of us made severe sacrifices like living in a mobile home or having high numbers of roommates for decades so we could save to start up and then ramp up our businesses. It will affect Greeks as any bankruptcy affects the bankrupt. They already started reducing their welfare policies and government hand-outs. Default would mean that the government isn't able to meet its obligations. It's not only the external obligations, it's also the internal obligations - pensions, social security benefits, healthcare, public services, military (and the Greeks are in constant confrontation with the neighboring Turkey, with several armed conflicts throughout the years) - all that will get hit. Yes, they will get affected much more, definitely. So to translate that to US English: taking an early retirement in lieu of impending layoffs.  If you have a layoff you're saying you have no need for the work and if you replace the workers then they come back to sue you (which seems to be what you're saying, and we have the same concept) but an early retirement is a voluntary exit with a compensation package such that any right to sue is forfeit because it was a consensual exit rather than mandatory.  Got it.  Thanks. :) "Banks do NOT lend money they don't have. I don't know where you get that idea. In your view what stops a bank from lending a quadrillion dollars? Banks do need to have savings in the bank - learn about reserve requirements, which I mentioned above. Banks (just like you and me) can have assets and debts, but they account for them and they net to (almost) zero, just like you and me.  Fed does not pay government as I stated above. The Fed buys goods from the open market (Treasury Bonds, for example, which are IOUs the government has sold to investors who purchased them freely), and the Fed pays for this with ""new"" money while holding the bonds, which then pay out just like they were being held by you or me.  Finally, M2 is about 10 times M1, for the reasons I gave. Your claim of M2 increasing regardless of M1 is not true. [See here](http://en.wikipedia.org/wiki/File:Components_of_US_Money_supply.svg) for example and note that M2 is about 10x of M1, with the variations being for the reasons I gave above."