How to Retire Without Saving a Penny

Retire, without saving? Yes, it can be done.

Retired couple playing cards
Yes, you can have a happy retirement, even if you didn't save. Cultura RM Exclusive/Natalie Faye

Saving for retirement is smart, but, did you know, you can retire without saving a penny? People do it all the time. And some of them retire with quite a nice lifestyle. How do they do it? In a few different ways. Here are three ways you can retire without saving at all.

1. The Career Plan

If you pick a career where benefits are good and a pension plan is provided, you can retire with a comfortable guaranteed income and never save a penny along the way.

The longer you work in your chosen career, the higher your retirement pension will be.

I see this approach in action most frequently with teachers, fire and police workers, military personnel, and people who work for the federal or state government. They stick with their career, structure things so their house is paid off about the time they retire, and with a stable pension, retiree health benefits, and in some cases Social Security too, they are able to live quite comfortably.

What makes this plan work well is sticking with the same employer for a long time. Most pensions give you a benefit based on how many years you were there and on your final few years of compensation. The more years, and the higher the compensation, the higher the benefit. If you move around too much it is unlikely you will have the opportunity to receive as large a pension as if you stay with the same employer for twenty or thirty years.

One thing to keep in mind, you may not get your full Social Security and a pension. There is a Social Security rule called the Windfall Elimination Provision that can impact you if you receive a pension from years of work where your earnings were not covered under the Social Security system. This often impacts teachers in 13 states which have pension plans in place of Social Security, and it can affect you if you receive a pension from work overseas.

2. The Late Start Plan

Professionals, such as doctors, lawyers, architects and accountants, often get into the habit of spending more as they make more. In this situation, it’s easy to find yourself in middle-age with no substantial retirement savings.

One option to consider: leave private practice or small business and go find a corporate or government job that offers a pension. Spend the last 10 to 15 years of your career in a place where retirement health benefits and a pension are part of the package. This late-start plan can be a life saver for high earners that didn’t save along the way. It may not be what you envisioned the later part of your career to be like, but the pension income and benefits will make your retirement years far more comfortable.

This approach can allow you to live large and spend what you make in your younger years. But remember, there is no guarantee you’ll be able to get that government job later on. If you don’t save and can’t transition into a career with a pension, then you’ll have to go with the last option on this list.

3. The Live on Less Plan

Did you know that Social Security is pretty much the sole source income for about 20% of retired couples and 43% of retired singles?

Living on Social Security may not sound like the ideal retirement plan, but if you had a lot of fun along the way, the trade-off might be worth it. This plan can work great for the free-spirited type, or for anyone that for whatever reason didn’t save along the way.

And, if you work until 70, and wait until 70 to claim Social Security, you’ll be getting a decent income. You get a lot more by claiming later. Combine that income with a low-cost lifestyle, and living on Social Security, believe it or not, can be comfortable — if you know how to stretch your dollars.

There are all kinds of ways to make your money stretch.

You can buy the things you need for less by shopping at Goodwill or finding other ways to buy things second-hand. You can save on housing by renting a room from family or friends. Or maybe you can trade skills, such as cooking or pet-sitting, in exchange for rent or utilities. Get creative in your later years, and you can pull off quite an accomplishment — retiring without saving a penny!