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My grandmother used to beg my grandfather to save money so they could one day stop working. She would say to him, “please, Fred, I don’t want to eat cat food when we retire.” He never did save his money, but luckily she never had to eat cat food.
The two divorced in their 50s because she grew sick of his selfish behavior with money. It was a smart choice for her, but it was just the beginning of a difficult journey rebuilding her credit and financial life late in the game. My grandfather’s choices left her bitter and angry. Rightfully so. She was forced to continue working part-time even after 65.
“Your grandfather would tell me don’t worry about it, I got it covered,” she says. “He didn’t have anything covered. He never had anything covered. He did whatever he wanted to do and never concerned himself with the future.”
After the split, he just moved on to another woman, married her, and used her income on his own wants. He spent more time at the horse racing track than home, all on his second wife’s dime. Sadly, the man died penniless a few years ago.
My grandparents’ story isn’t unique. There are more than 4.5 million seniors living in poverty in the United States, according to nonprofit organization the Henry J. Kaiser Foundation. 
And more and more working Americans aren’t putting away enough to sufficiently fund retirement. Here are the big mistakes my grandparents made, and as you’ll soon see, most people do too…
- My grandma left her finances up to her husband only
- The two didn’t believe they would need long-term care throughout their lifetimes
- She cashed out her 401(k) savings early
This is why she now is in a low-income, senior living facility funded by the United States Department of Housing and Urban Development.  She survives off government funding for everything from housing to medical care and food.
Women struggle with retirement savings more than men
Women earn 80 cents for every dollar a man earns, says the Institute for Women’s Policy Research,  a think tank for women’s rights. That pay gap makes retirement saving harder for women.
Debt.com has reported that 56 percent of women leave financial decision-making to their husbands. Meanwhile, 80 percent of those women end up in a situation where they eventually need to make financial decisions.  Why? Typically, because of divorce or their husbands die before them.
My grandmother was hit hard after their divorce. She had to piece together her broken financial situation. And not knowing about their finances left her blind to my grandfather’s spending.
By the time she caught on, it was too late to save enough for her own retirement.
My grandmother isn’t alone in her plight. What happened to her can happen to your grandma or your mom, or even you.
Is there a retirement crisis?
In a weird way, my grandmother is lucky. She is able to survive off government resources, such as Social Security. But politicians and U.S. workers fret those programs are running dry. And by the time I get to be her age – it’s possible there will be nothing left.
Half of Americans believe Social Security won’t be around when they retire, says a study from the Transamerica Center for Retirement Studies.  (TCRS). In fact, the Social Security Administration has even put a date on it – 2034. 
The term “retirement crisis” is how some financial experts describe how little Americans put away in a nest egg compared to what it costs to stop working.
Modern medicine makes it possible for people to live longer. Which is great if you always have the means to afford the healthcare. Yet, many middle-income Americans won’t be able to. Why? Because healthcare costs are rising quicker than wages. And by their late 60s, those middle-income workers will have earned too much throughout their careers for eligibility of Medicaid and most Medicare benefits.
Despite the need to save more for healthcare in retirement than previous generations, a 2016 survey from GOBankingRates revealed that 1 in 3 Americans had $0 saved for retirement. 
“The American dream of a modest retirement after a lifetime of work now is a middle-class nightmare.”
—Diane Oakley, executive director of the National Institute on Retirement Security
Further research from the nonprofit organization the National Institute on Retirement Security found that the median retirement account balance among working-age Americans is nothing.  And out of 100 million workers, none had assets in a retirement account.
“Retirement is in peril for most working-class Americans,” says Diane Oakley, report author, and NIRS executive director. “The typical working American has zero, zilch, nothing saved for retirement. What this report means is that the American dream of a modest retirement after a lifetime of work now is a middle-class nightmare.”
How has the workforce changed retirement over the decades?
To understand how retirement has changed, you first have to look at how the workforce has. Decades ago, it was common to have one job your entire career. Workers were offered pension plans and steadily collected a pot of money that would disperse out to them monthly during retirement.
My grandfather acquired a pension early in life. He never spent any of it, though. He died while serving time in prison (but that’s for another story).
His second wife collects that pension now and she splits his Social Security with my grandmother. It’s funny how life can work out like that. After 20 years of putting up with him and his spending she now gets the bottom half of just his Social Security. Meanwhile, his second wife gets access to both retirement accounts.
But a traditional pension isn’t offered in many private companies anymore. Much different than my grandfather’s heyday as a young pressman working in a printing shop, a job that’s near-obsolete now.
With pension plans vanishing from existence, 401(k)s are now the most offered work-sponsored retirement saving vehicle.
“Pensions work great with what I’ll call the ‘old school’ work model,” executive director of TCRS Catherine Collinson told Debt.com. “When pensions served retirees well, it was an environment which was normal for people to work at the same employer for 20-30 years. They were able to accumulate and invest in a meaningful benefit. That’s no longer the case.”
“The handwriting is pretty clear on the wall that there will be changes, and we can choose to wait or be proactive.”
—Catherine Collinson, executive director of Transamerica Center for Retirement Studies
The funny thing about the work-sponsored 401(k), is it was never intended to replace pension plans. But, over time it did, according to nonprofit, nonpartisan think-tank the Economic Policy Institute.  That’s not the only difference now compared to when my grandparents’ generation ruled the workforce.
More and more workers are now self-employed – on contract or freelance – and those don’t offer the same benefits as workers on salary, or payroll through traditional W2 jobs.
Is the system to blame or is it the people?
My grandmother did have a 401(k) from a job she worked at for a couple of years, but she didn’t hold on to it until retirement. She was faced with the three financial challenges that lead most Americans to file for bankruptcy: divorce, job loss, and medical expenses.
She was diagnosed with lung cancer shortly after their split. Around that time, she was working as a secretary for a cruise line between South Florida and the Bahamas. The company disbanded after Hurricane Floyd destroyed the resort.
Her former employer offered its workers the ability to withdraw their 401(k) benefits early without penalty. So she did, to make ends meet.
That’s a major problem with 401(k)s – people cash them out before they’re intended to. In 2015, Time Money reported 30 million Americans had tapped into their 401(k) accounts to pay for an emergency in that year alone. 
Never stop working
My grandmother, who’s 76 now, worked a part-time job as a secretary in a hotel two days a week until she turned 68. She was paid without a record, so as not to interfere with her Social Security – which wasn’t enough for her to live comfortably.
My grandmother isn’t unique. More than half of workers approaching retirement plan to rejoin the workforce later. At least so says a recently released study from Home Instead Senior Care. Fifty-three percent of U.S. workers five years away from retirement feel they will need to return to work.
It’s tougher to return to work after retirement than working longer, says Mike Ross, president of the Financial Planning Association of South Florida.
“For a lot of people, once they pull the ripcord on retirement, it’s hard to go back,” Ross says. “They do it and a couple of years later they realize they don’t make enough money to live a certain lifestyle. They got off the fast track and it’s hard to go back to the workforce.”
Well, my grandmother was supposed to get off that fast track at 65 but didn’t. And still wasn’t living in her own home. She had to move into a HUD-certified apartment, where rent is based off a percentage of her Social Security.
For years she pulled her aching bones out of bed and made a 30-minute, 22 1/2 mile commute from Deerfield Beach to Dania Beach, Florida. She would answer phones and check-in the late-night junkies and drunks with their evening dates.
Life hasn’t been glamorous for the latter part of my grandmother’s life. And the lesson here is to budget, plan, and save all you can to avoid working like she’s had to.
Long-term care will keep you alive while killing your savings
Debt.com has reported how Americans grossly underestimate long-term care costs.
Only one-third of Americans feel they’re going to need long-term care in old age, says a study from Lincoln Financial Group. That’s despite 1 in 2 people turning 65 needing long-term care in their lifetime, the Department of Health and Human Services says. 
This is a bridge my family has yet to cross. My grandmother recently told me in her 528 sq. ft apartment: “One day, they’ll smell my dead body in here and come looking for me.”
The statement pierced me. I never wanted to imagine such a scene. The woman I once called Nanny – the same one who fed me cookies and chocolate milk as a child – would one day meet her maker in such a horrific, lonely way.
But this is something many of us never think or talk about. And why would we? I know the thought left me feeling sick to my stomach. No sane person wants to imagine a loved one’s death in such a way.
Only 37 percent of Americans 65 and older have talked about long-term care planning, says a recent poll from life insurance company OneAmerica. The reason people don’t plan for long-term care is due to how uncomfortable the conversation can be.
Then, of course, is the costs. Healthcare expenses continue to skyrocket with no sign of slowing down in the immediate future.
“For a lot of people, once they pull the ripcord on retirement, it’s hard to go back”
—Mike Ross, president of the Financial Planning Association of South Florida
“Long-term care is a moving target,” Ross says. “The costs are real.”
Only 38 percent of workers from all age groups have had these conversations. But, 70 percent of Americans living in a household with an annual income of $100,000 or more have talked about long-term care planning.
“Wealthy people can afford to self-insure their long-term care,” Ross says, “for the middle and lower-middle class that’s a real issue.”
And it’s a real issue in my family. Our plan is no plan. Pray and hope for the best. And when the day comes, we’ll do our best to ignore the fact that we never planned who would care for my grandma when she couldn’t.
How to survive this so-called “retirement crisis”
The biggest take away is to start planning. If the current retirement savings trends continue, U.S. workers need to make themselves prepared to keep up with the changing times.
Here a few tips on how to get ahead on retirement savings…
- Planning: Know your lifestyle and make savings goals. You can use a retirement budgeting calculator. Or if you have the means, hire a financial planner.
- Your work-sponsored retirement savings account: Once you’ve planned out your expenses and know your budget, max out your retirement savings. Does your company offer a 401(k)? Put the highest amount your employer is willing to match. It’s free money – get as much as you can.
- Look into resources: Contact your local credit union or bank. Set up an Independent Retirement Account (IRA) and automate funds to transfer on a monthly basis to the account from your checking or savings.
- Educate yourself: One of the simplest pieces of advice Ross gives is to make a commitment and do your homework. There are plenty of free sources available online that workers can brush up on to start saving for the future.
- Save as much as you can: Ross and Collinson agree that you can never save enough for retirement. They don’t advise a magic number on how much one should save for retirement. Both agree it’s very personal to each retiree. The best thing to do is to start saving as early as possible.
Keeping up with the times
The truth is with all that my grandmother has gone through, I’ll probably end up working longer than she has. People have the ability to live longer and healthier lives now. And you should factor that into how much money you need to save.
One solution to ensure having enough to retire is, expect to work later in life. Keep up with trends in your career to hold value to hiring managers, says Collinson.
“Keep your job skills up to date and marketable so you can extend your working life,” she says. “One critical success factor is adequate employment opportunities for older workers so they still have the ability to be economically productive. At least as a freelancer or contractor.”
Helping struggling seniors
Collinson recommends keeping our eyes open in our communities for people at risk and lend them a helping hand. There may also be resources available for them they may not be familiar with.
Resources like the Supplemental Nutrition Assistance Program or access to affordable housing programs.
“Many [retirees] didn’t know the world was changing quickly,” Collinson says. “We’re seeing problems today that we would have never anticipated 30 years ago. And likewise, 30 years from now there will probably be scenarios we would have never expected today.”
Collinson concludes: “The handwriting is pretty clear on the wall that there will be changes, and we can choose to wait or be proactive.”
To avoid becoming a victim of the retirement crisis, read Debt.com’s extensive guide on How to Save for Retirement.