How to Retire With No Retirement Savings: the "Golden Girls" Solution

Many boomers are approaching their retirement years with little or no savings, and they're wondering how they'll make it in retirement. More widowed and divorced women than men are finding themselves in this tight spot, often with modest financial resources and loneliness as a constant fear.

But four women managed to put lipstick on this challenge and came out smelling like a Rose (pun intended). The popular TV show Golden Girls, which ran from 1985 to 1992, offered a creative example of how to solve the "not enough money/don't want to live alone" dilemma.

But that was over 20 years ago. Would they still be able to do it today? Let's see how the main characters might fare in 2011.

Widow Blanche Devereaux, played by Rue McClanahan, owned a home in Miami. Blanche placed a room-for-rent ad at a local grocery store, and she soon had two new tenants: another widow, Rose Nyland, played by Betty White and a divorcee, Dorothy Zbornak, played by Bea Arthur. Later they were joined by Dorothy's mother, Sophia Petrillo, played by Estelle Getty, when her retirement home, Shady Pines, burned down. Blanche, Rose, and Dorothy were in their sixties, and Sophia was in her eighties.

Let's take a look to see what their combined incomes might be today. According to the Social Security website, the average, monthly Social Security income received by widows as of April, 2011, was $1,111. Let's assume that the three widows -- Blanche, Rose and Sophia -- receive this average monthly benefit because they didn't work enough years to generate a higher Social Security income with their own earnings. Their combined monthly income would be $3,333, or $39,996 per year.

Dorothy worked as a substitute teacher, so let's assume she worked for most of her life and earned a Social Security income based on her own earnings record. Social Security's website shows the average income for retired female workers aged 65 to 69 was $1,175 in 2009. Let's just use that number as Dorothy's Social Security income in 2011 -- it probably wouldn't have increased much in two years. Her annual income would be $14,100, making the total annual income for the four women to be $54,096.

Now let's estimate their annual living expenses. According to the 2009 Consumer Expenditure Survey, average annual expenditures for a household unit break down as follows:

$16,895 for housing
$6,372 for food
$1,725 for services
$7,658 for transportation
$3,126 for health care
$5,471 for insurance and pensions
$2,693 for entertainment
$5,127 for everything else

Total: $49,067

We'll need to make some adjustments for their circumstances, since the above totals represent a household with an average of 2.5 people, not four, and the average household members are a lot younger than our Golden Girls. But let's assume these four women watch their budget carefully and are thrifty shoppers, making their expenditures the same today as that of the 2.5-person average household in 2009, for all items except health care, insurance, and pensions.

In my prior post, 8 Essential Steps to Enrolling in Medicare, I estimated that the monthly health care costs for a person aged 65 or older could easily amount to $500, when you consider premiums for Medicare Parts B and D, a Medigap policy, and out-of-pocket expenses. So for four women, that's $2,000 per month, or $24,000 per year. In the above numbers for average expenditures, I'll remove $3,126 for health care and $5,471 for insurance and pensions (they aren't saving any more for retirement), but I'll add in the $24,000. The adjusted total expenditures are now $64,470, more than $10,000 above their combined Social Security income of $54,096.

With the math done, it looks like at least some of them will need to work. In the TV show, Dorothy continued to work part time as a substitute teacher and Rose worked part time as an assistant on a local TV show. Let's assume that each of them earns $14,160, the annual threshold for the Social Security Earnings Test, so they don't have any reduction to their Social Security benefits. (Actually, once they reach age 66, the Full Retirement Age in 2011, they won't need to worry about Social Security's Earnings Test at all.)

Now their combined household income is $82,416, well above the estimate of their annual expenditures, and well above the average annual household paycheck reported by the Consumer Expenditure Survey of $62,857.

How well did they live together? In the show, they laughed, cried, betrayed each other, lied to one another, supported each other emotionally, did things together, helped family members, shared their resources, and discussed the important issues of the day. In short, they lived their lives and lived them well.

Now let's be clear: I'm not idealizing the Golden Girls' circumstances, and of course Hollywood smooths over real-world concerns, such as how to pool expenses. Reaching retirement age with little or no retirement savings is a very undesirable situation. But it is one option to consider, should you find yourself in these circumstances.

The show's ending provides one important challenge with the Golden Girls solution: It's not permanent, and you'll need to be prepared to make significant changes when life throws curveballs. In the final episode, Dorothy married Blanche's Uncle Lucas, played by Leslie Nielsen, and then moved out. The three remaining girls vowed to continue living together, but it's inevitable they'd need to find another Golden Girl. And I'd be worried about how they would cope if Sophie needed long-term care. In spite of these challenges, the Golden Girls still had seven good years together -- not bad considering their circumstances.

Today, in real life, millions of Americans are approaching their retirement years with modest financial resources. I'm sure that's not what they intended, but nevertheless, that's their situation. To make the most of our retirement years, we'll need creativity, compassion, determination, a willingness to provide mutual support, and some luck. Who knew that a 25-year-old TV show might show us one example of how to make it in the 21^st Century?

P.S. I'm always impressed with the creativity of our readers. If you have a real-life story that can help our readers who might be in this situation, please write in the comment section below or send me an email.

Want to learn more about retirement planning? Check out my latest creation -- Money for Life, an innovative online retirement planning guide. I've organized a rich collection of more than 150 blog posts, articles, research reports, and video clips on the most important retirement planning decisions regarding money, health, and lifestyle.

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Steve Vernon

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Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Retirement Game-Changers: Strategies for a Healthy, Financially Secure and Fulfilling Long Life and Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck.

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