Americans have a problem: they are undersaved but it is solvable.

TalkMarkets published an article by Lance Roberts that has what seems like 99 different statistics to say how ill-prepared we are for retirement by virtue of no one saving any money and everyone counting on Social Security. Obviously I am being somewhat hyperbolic but the data is grim.

Randomly pasted from the article:

• 45% of boomers have zero savings for retirement
• 23% (nearly one in four) Americans are saving not even one penny from their paychecks
• 46% admitted to taking no steps to prepare for the likelihood they could outlive their retirement
• Even among workers who have accumulated savings in retirement accounts, the typical worker had a modest account balance of $40,000

Read the post, there's more. There were no solutions or strategies provided which is why I think it is just an excerpt.

There's no shortage of data points like these and there are plenty of eyeballs and clicks to be had writing about gloom, doom and negativity (Zerohedge has built a business on this); fear sells. When my wife and I first moved to Walker there was a lot of socio economic diversity (there's a little less so now) and I saw first hand, retired people without much money getting by just fine. The reason for this was simple, they were making it work because they had to make it work. I am not talking in absolutes of course but if any of the types of grim stats cited above apply to you or people in your circle of influence then what is probably on the line is trying to figure out how how difficult it will be to piece together a reasonably comfortable, even if modest, retirement.

Put differently, this is a matter of problem solving. If you've worked, then you'll have some amount of Social Security coming to you. You're eligible at 62 and the payout goes up 8%/yr until you're 70. Waiting until 70 for the highest payout might be difficult but holding out a few years could make the rest of retirement easier.

If you own a house then you have optionality one way or another. Optionality to trade down and cash out, rent part of it out (depending on the layout) or some other idea that could suit your circumstance. If you have not been able to save anything up to this point, why is that and is there any chance that whatever is in the way of you're saving could be removed or otherwise worked around? I've blogged before about how even starting from scratch at 50 or 55 can still accumulate/grow into a decent retirement fund even if it isn't $1 million. Part of what I observed in first moving here was people having part time work on their own terms; backhoe operator, handyman, piano tuner and so on. What do you like to do that you have a reasonable proficiency with that you could figure out how to monetize?

The Roberts article says the average Social Security check is $14,000 so for a couple that could be $28,000 if both partners worked or $21,000 if one of the partners takes a spousal benefit. If this couple started saving $5000/yr at age 55 and worked until 67 and assuming a modest 12% per year in growth (JOKE, a couple of financial media personalities cited 12% as a growth rate, I went with 5% which I think is reasonable but some would argue it is too much) would come out to $83,564. This is enough money to be a sustainable emergency fund, generate $3300/yr assuming the 4% rule or maybe go toward 2-3 years of living expenses (the account getting exhausted at the end of that period) while Social Security is allowed to grow or some other purpose that could suit your circumstance.

Cobbling a few things together; $21,000 in Social Security, another $3000 from the portfolio, $8000 from some sort of part time work and while this is not a lot of money it can pay the bills in a situation where there is no mortgage. It's not great, but it's not homeless. If this scenario allowed for trading down to a smaller house and pulling out $100,000 then the portfolio income would more than doable. Also, if you are working, $8000 is probably very low.

Realistically, if you're reading this post you are not in this circumstance but there is a good chance you know someone who is. And if you are the type of person to read investing blogs then you are quite possibly the person your friends/relatives go to for advice along these lines. This post or other ones like it could be a way to break up this dilemma into smaller and maybe more solvable pieces instead of thinking you need come up with $1 million in the next three years.