What happens when you retire with little savings?

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(MoneyWatch) Most older Americans don't have nearly enough retirement savings to be able to retire any time soon. That's one finding from the 2012 Retirement Confidence Survey, recently released by The Employee Benefit Research Institute (EBRI).

Just 22 percent of workers currently age 55 and over report having accumulated retirement savings of $250,000 or more, an amount that's most likely not enough for a traditional retirement. Even worse, 31 percent of this same age group say they have retirement savings of $10,000 or less. These findings have been confirmed by many other, recent similar surveys.

Retirement savings of $250,000 will generate a retirement income of roughly $10,000 per year, using the "4 percent rule" withdrawal rate that's often recommended by financial planners. Add in expected Social Security benefits, and it's still likely you'll fall well short of the income you need to retire full time. And if you're like three-fourths of the workers who responded to the EBRI survey, your reported retirement savings are well below $250,000.

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So what can you do besides live in a tent and eat noodles during your retirement years? There are some steps you can take, but most likely none of them is what you had in mind for your "golden years." Nevertheless, you'll need to do more than just worry, so here are some thoughts about what action steps you can take:

Cash in other assets

Some of you may be able to tap into your home equity, either by selling your house and cashing in your gains, or by taking out a reverse mortgage. Others may have life insurance with cash values that can be converted to retirement income, or cars, furniture or jewelry that you can sell.

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One more hidden form of savings might be unused vacation time. Many employers cash out this accrued vacation time when you leave. If you're still a few years away from retirement, one way to "save" for retirement is to forgo your vacations and let that time accumulate on the books. After all, when you retire, you'll be on permanent vacation and will have plenty of opportunities to travel.

These are just a few suggestions. You should take a good look at all your possessions and resources to see how they can be used to generate retirement income.

Work longer

Many workers responding to the EBRI survey report they plan to work beyond age 65. If you can stay with your current employer either full or part time or find another job that lets you keep working in your later years, that's great -- do it as long as you can.

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But keep in mind that the day will come when you'll no longer be able to work due to your health. Another problem with this idea is that you may not be able to find work, as reported by many current retirees in the EBRI study.

Form a commune

No, you don't need to be a hippy and grow your hair long in order to enjoy the benefits of communal living. Just band together with a few like-minded friends and share a house and living expenses. You can make the math work even if you and your friends have little more than Social Security benefits.

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This strategy can help address another problem in your retirement years -- loneliness.

Move in with your kids

This is another variation on the sharing living expenses idea mentioned above. Actually, it's how many of our grandparents coped during retirement. When I was growing up, a handful of my friends -- including my wife -- had their grandparents living with them. Around the world, many people live in multi-generational families, and this was common in the U.S. a few generations ago.

Obviously, you'll need to get along with your kids and grandkids in order to make this work. But if you can find a way to make your presence a benefit rather than a burden, say, by babysitting and sharing household duties, this could be a win-win for both you and your kids.

Drastically reduce your living expenses

Downsize your home, sell one or both of your cars and use public transportation, grow your own food, barter, shop at second-hand stores...well, you get the idea. This is actually how many kids who just graduated from college without good job prospects are living today. They're doing what they need to do to make it work and finding this "less is more" lifestyle works just fine for them.

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While it may not be your idea of a "dream retirement," it's a great way to help make ends meet.

Retire overseas

If you're adventuresome, you can live more cheaply overseas where the cost of living is far less than here in the U.S. The downside is that you may be far away from family and friends. One other option: Consider moving to an area of the U.S. that has a lower cost of living than where you are now -- I hear that homes in Detroit are pretty cheap right now.

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These are just some of your options. Based on my past experience, I expect to receive a few comments asking what planet I'm on, that these ideas are very unrealistic, or that nobody can actually live like this. I readily admit that these aren't ideal solutions. But if you're approaching your retirement years with little savings, you're in a tight spot and will have to do something creative and resourceful in order to stretch your dollars. If you've got a better idea, please share it in the comment section below.

  • Steve Vernon On Twitter»

    View all articles by Steve Vernon on CBS MoneyWatch»
    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 Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.

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