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The Grey Nomads: How Seniors Survive On Low Income

Steve Pomeranz, Low Income Senior, Grey Nomad

Grey Nomads Struggle To Find Financial Security With Low Income

The housing and financial crash of 2008 still haunts many Americans today, and its effects set in motion new ways for those who were at or near retirement to survive in the new world created by that crisis. Thousands of these Americans have become a new type of retiree: a mobile, dispersed class of “grey nomads” crisscrossing the country in search of part-time jobs and a safe place to park their RVs and experience a bit of adventure.  All this while living on the economic margins of society.

Every one of these itinerant seniors has a unique story about how their circumstances propelled them into a life of quasi-poverty, homelessness, and constant migration, but common threads of financial stress, over-reaching debt, foreclosures, busted pensions, and blown savings, speak to the nationwide nature of the phenomenon.

The LA Times published an article titled “Too Poor To Retire And Too Young To Die” that documented the lives of several seniors living on the road in RVs, trying to stay one step ahead of ever-looming money, health, and mechanical problems.

Living on the edge has a way of galvanizing people’s resourcefulness as they scrape together income from a variety of sources. After selling off worldly possessions of no use on the road, they cobble together Social Security, pension funds from the government or military and, in some cases, Social Security Disability Income.

They supplement all of this by picking up low-paying, low-skill temporary and seasonal jobs while all the while paring down their costs to the bone by fervently clipping coupons and resorting to ultra-cheap or free meals—basically, doing whatever it takes to survive.

The Harsh Reality Of Seasonal Work For Seniors

Seasonal work is scattered throughout the country, and many grey nomads drive hundreds or thousands of miles to follow a string of temporary gigs. The LA Times piece describes grinding minimum wage work like cleaning bathrooms at campgrounds, harvesting vegetables, selling Christmas trees, door to door sales, and mall kiosk jobs.  Ironically, many of these seniors had interesting, far more highly-esteemed careers earlier in life but unexpected events or a combination of ageism, transience, erratic work history, and health issues all conspired to limit their opportunities in old age.

Along with debt, one of the biggest challenges facing non-retired seniors is the threat of emergency costs, whether it’s health care or vehicle repairs or some other type of misfortune.  Something as simple as a routine bill from the DMV can provoke a financial crisis that forces them to decide between a prescription co-pay and subsisting on rice and beans for a few weeks.

Depending On Social Security

Let’s take a closer look at the income side of the equation for people with little to no savings or equity.  Social Security pays out an average of $1,200/month, or $14,400/year, just a few thousand dollars above the official poverty line. About one-half of all single people and one-quarter of married couples depend on Social Security for 90% of their income. The reason it’s better for couples is that they have an advantage due to the economies of scale gained by sharing expenses.

This puts single women of retirement age at the most risk for poverty.

The AARP issued a report stating that 3 out of 5 households headed by someone over the age of 50 had no retirement savings at all.  That adds up to millions of people living month-to-month and hand-to-mouth on that one check.  Even with a paid-off home, the expenses of upkeep, insurance, taxes, and utilities are a major burden on less than $15,000/year, and this doesn’t even begin to get into other mandatory expenses like health care and food.  Even if these individuals can qualify for Federal assistance, medicine and food insecurity are still daunting problems for many.

Retirement Income, Financial Safety And Quality Of Life

Retired seniors who are lucky enough to receive pensions or payouts from their 401(k) or IRAs are substantially better off than those living exclusively on a Social Security check.  That said, even if we push the theoretical income up closer to $25K/year, this doesn’t exactly put you on easy street. So how do you figure out how much money you will need in order to enjoy a comfortable retirement or at least one that’s similar to the lifestyle you’ve been accustomed to while working?

Some retirement planning experts say that you’ll want to “replace” 85% of the income you made while working.  There are many paths to reaching this target, but simple scenarios depend on saving 15% of your income per year for four decades, which is difficult for many, especially when it forces you to live a more austere life for those many decades. Of course, figuring out how much you’ll need at retirement is more complicated, but a competent Financial Planner can work with you on this.

Plan Early And Save Aggressively

In any case, you not only need to save this money, but you need to invest in long-term assets like home equity, a diverse portfolio of stocks, and when rates get back to normal levels, high-yielding savings accounts. See my post on our website: stevepomeranz.com for my segment entitled “To Have and Have Not: How to Build Wealth with Stocks”.

Whatever romance there might seem to be with the grey nomad life, roaming around the country in your golden years, experiencing new towns and people of all walks of life, there’s a right way and a wrong way to make that happen.  The wrong way is by necessity, driven by the fear of running out of options and being always one surprise away from disaster. The right way is with the luxury of choice.

The point is that while it’s possible to live on $14 or $25K a year— as proven by the millions who do live on this budget—the stress of being one health or another emergency away from poverty is something none of us would want for ourselves or our loved ones.

So, take heed and think about your future.

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