Real-Life Examples of What Happens When you Fail to Save Enough for Retirement

The consequences of not saving enough for retirement can play out in numerous, yet subtle, ways. The results aren’t always disastrous, but they’re almost always sad.

Maybe you have an elderly neighbor who still works a part-time job. Or, perhaps you know someone who moved in with an adult child to afford their bills.

Sometimes, not saving enough for retirement doesn’t spell disaster, but kills dreams instead. Think of everyone you know who wanted to travel the world during retirement, but sits at home watching their pennies instead.

Unfortunately, not having enough money for retirement will be a reality for far too many Americans. As Forbes contributor Andrew Biggs noted late last year, “roughly 45 percent of working-age households have no retirement savings at all.” That doesn’t count social security of defined-benefit pensions, he says, but millions of families will still run short.

Further, those who are saving may not have enough. A 2016 survey from financial services company PWC showed that 50% of baby boomers had less than $100,000 saved for retirement last year. Unfortunately for baby boomers, their time to save and invest is running out.

9 Financial Advisors Share What Happens When You Don't Save Enough for Retirement

If you need any more convincing you should boost your retirement contributions today – or like, yesterday – look around you at the everyday people who no longer have time to change. Or, read these stories from financial advisors who know exactly what happens when you don't save enough:

#1: You need to keep working until you die.

“Rather than contributing to his accounts during his fifties, John was making withdrawals of $2,000 per month on his $400,000 balance. Having worked with John for over 15 years, we had the same kind of talk every few months. I told him, “John, your spending and lifestyle need an adjustment. This is not going to work.”

He would always say, “I know, Tom, but the business is getting better and that will take care of everything.”

The accounts were growing slightly, despite the withdrawals. Then came the crash. The balances are much lower today. John, well into his 60’s, has taken on a full-time job when he should be looking at his retirement options.” – Financial Advisor Tom Diem of Diem Wealth Management

#2: You drown in debt instead of planning for the future.

“I have a couple who are clients of mine that don’t have enough saved for retirement. They’ve have fallen short of their goals because of spending what they couldn’t afford and borrowing to make up the difference.

After not saving enough to pay for two of their kid’s weddings, they decided to put both of them (which were both pretty close together) on credit cards. By the time I met them, they were tens of thousands of dollars in credit card debt.

While their children are saving for their futures and doing their best to get started in their lives without a care in the world, the parents are struggling to get by, working longer than they planned to and are swimming in debt because they wanted to “help out” their kids by paying for two dream weddings that no one could really afford in the first place.” - Seattle Financial Advisor Josh Brein

#3: You leave your family with financial and emotional stress.

“Tony and his two brothers owned a small family business. The business supported Tony’s growing family of six, and he thought that when the time to retire came, he could sell the business to live on the proceeds. He thought wrong.

Tony had saved very little outside of the business. When a heart attack forced him to retire sooner than planned, Tony did not receive the amount of money he thought he’d get from the company to support he and his wife Mary.

Tony lived the rest of his life puttering around in his workshop and died in peace. After his death . . .sadly . . . though her children supported her financially and otherwise, Mary suffered the emotional stress of limited cash and financial pressures.” – Financial Advisor Don Roork of AssetDynamics Wealth Management

#4: You reach retirement age with $300 in the bank.

“I was referred to a couple, Glenn and Mary. Glenn and Mary spent money as soon as it hit their bank account. They had never learned to budget or live beneath their means. At 59 and 47, they had only saved 5k in a 401(k), had no pensions, owed 10k on their vehicles and 250k on their mortgage, and had $300 in the bank!

I helped them to create a budget and Mary changed to a higher paying job, but their indiscriminate spending and lack of savings put them a long way from retirement.” – Financial Advisor Alex Whitehouse of Whitehouse Wealth Management

#5: You throw your financial future away.

“Here’s what happened to our aunt who had not done any planning, not just for retirement, but not for much of anything.

The first issue surfaced several years ago when her husband died. They had owned and operated a fairly successful bicycle shop and he had also worked for a national railroad company. When he died, his wife was entitled to his railroad pension, but she found out that the bicycle shop was paying her too much, so she would have to take a reduced pension amount.

Rather than seeking out competent financial advice about how to structure the ownership of the bike shop to be able to control what her income was, she sold it to her son, who ran it into the ground because she had unnecessarily given up control to him without really understanding what she was doing.

She made ends meet for a while, continuing not to seek planning guidance, but recently began to develop dementia, so was forced to spend down all her assets, including selling her house, to be able to be eligible for Medicaid and to live in an assisted living home in her home town.

Simply a sad story of not planning. Not planning for anything. And not planning forces you into a situation of having to live with the consequences, whether you like them or not.” - Arizona financial planner and co-creator of FinancialChoicesMatter.com, Charles C. Scott

#6: Your kids support you in old age.

“I currently have a client whose parents didn’t exactly save much for retirement. When the husband passed away, the widow had no money to her name and very little money coming in from social security.

Because of this, my client had to completely upend his entire lifestyle to have his mother live with them and support her. It’s completely changed their own financial lives and we’ve since had to make adjustments to their retirement plan as well.

Not saving for retirement can bring an extreme burden on your children’s lives and even cause resentment. While my client could afford to take care of his mother and her lifestyle, not everyone else is so lucky.” - Kansas City Financial Planner Clint Haynes

#7: You need to die by age 72 to make it work.

“Long time clients of mine recently decided to retire early out of the blue at age 65. During all of our meetings and discussions, the plan was to work until age 68. I was a little surprised when I received a phone call saying they retired.

Congratulations, I guess?? They were never big savers and all the projections I was running showed them running out of money by age 72. The did own a home, however, with a decent amount of equity. The only way for them to survive financially was to sell their home and relocate to another part of the country with considerable lower housing prices.

That was one of the hardest meetings I ever had. It was not easy telling clients who have become friends that their money runs out if they want to stay in their beloved home.” – Financial Advisor Joseph Carbone of Focus Planning Group

#8: You wind up believing money grows on trees.

“While reviewing the finances of a prospective client with a house that was valued at $1.4 million (they only owed $200,000 on the mortgage) living in a really nice upper neighborhood, I learned they wanted to purchase a condo worth $1.2 million.

After running some numbers, I realized the couple would run short at least $247,000. This couple did not want to take out a mortgage, either. They wanted to purchase this new condo with cash and own it free and clear!

My suggestion was that they move to a less expensive neighborhood and either purchase a small home, or a condo for $500,000. By doing so, they would have been able to add $652,800 to their IRA for a combined $952,800 to kick-off their “golden years.”

Needless to say, this couple did not hire my firm to serve on their behalf because I was not in agreement with their dream of purchasing a condo in a neighborhood that was more expensive than the one they were already living in. Truth is better than fiction.” – Financial Advisor Martin A. Smith of Wealthcare Financial Group, Inc.

#9: You trade your cozy house for a tiny apartment, then suck it up.

“Picture the house you have lived in for the last 20+ years. Now, imagine selling it – along with many of your personal belongings – and living in small apartment away from your friends and family. That’s what happened to our client. They worked hard, made good money, but lived above their means. They neglected their financial health and when it came to retirement they were forced to sell their home to avoid outliving their money. - San Diego financial planner and founder of StayWealthySanDiego.com, Taylor Schulte

Final Thoughts

Unless you have a secret plan to get free money or you're lucky enough to hit the lottery, not saving enough for retirement will leave you scrambling to get by in old age. At the very least, you'll need to work longer or make serious adjustments to your lifestyle to get by. And when you're deep into your "golden years," who wants to do that?

Fortunately, it doesn’t have to be this way. Instead of burying your head in the sand, you can get serious about retirement instead. Start by beefing up contributions to your work-sponsored 401(k) plan. After that, look into opening a traditional or Roth IRA to save even more. If you're worried about making the wrong move, meet with a fee-only financial advisor to find out which steps you should take first.

By making your retirement a priority, you can ensure you’ll never outlive your money – or worse – wind up living in your daughter’s basement.

Jeff Rose, CFP® is determined to make sure you don't have buyer's remorse when buying an annuity.