Unable to Work in Retirement? Here's What You Can Do Instead

Many financial writers, including myself, have advocated working in retirement as a way to make ends meet, given the insufficient financial resources that most boomers have for a traditional retirement. But then along comes my colleague Carla Fried's recent post Beware Risk of Best Boomer Retirement Advice, where she points out that many boomers may not be able to work in their retirement years, either for health reasons or simply because they can't find work. If you can't retire but you can't work either, what else can you do?

My answer? Act poor. Seriously. This is also the advice given to new college graduates by another colleague Kathy Kristof in her recent post 2010 Graduates: How to Become a Millionaire. Kathy's post includes such ideas as living with Mom and Dad, getting by with fewer dinners on the town, and driving an old car. That's good advice for aging baby boomers as well.

So live like you did in your college years. Take in a roommate or two. Maybe beg your kids to move back in with you in order to share expenses. Grow your own food. Entertain yourself and your friends by renting DVDs and sharing a five dollar bottle of wine from your local discount retailer. Many of my contemporaries have fond memories of their college years, partly due to the shared bond of figuring out how to enjoy life on a shoestring. Is it time to go back to the future?

Here's just one example of how to make this work. Suppose you have four households -- two married couples and two singles -- with nothing but income from Social Security. If they all start Social Security benefits at their Full Retirement Age (age 66 for most baby boomers), it's highly possible that their combined annual income could exceed $100,000. Now suppose this newly combined household finds a large, four-bedroom house to rent in the suburbs -- the kind that's going begging in many geographies. Could they live well in these circumstances? You betcha! And if they all currently own homes, they might be able to rent them out for even more income.

The "Golden Girls" solution won't work for everybody, but some variation of it can work for lots of aging boomers. The broader point: We'll need to be resilient and inventive -- we'll need to make every dollar count.

This cheapskate solution to affording retirement is a time-honored strategy that has been around for awhile, starting with a mention in Ben Franklin's Poor Richard's Almanack, and more recently in the 2008 edition of Your Money or Your Life, by Vicki Robin, Joe Dominguez and Monique Tilford. You'll see more inspiring cheapskate stories in "The Leap to Cheap", an excellent article in the June, 2010 issue of AARP The Magazine.
Most boomers will need to combine saving more, spending less, and working longer to make it in retirement. While you shouldn't count on the cheapskate solution as an excuse not to save for retirement, it can be a great way to make ends meet and even help you enjoy your retirement years more. All of this points to your most valuable retirement asset: the inventiveness and creativity in your brain.

More on CBS MoneyWatch
Can't Retire? Don't Despair
Is Work the Future of Retirement?
Retiring Baby Boomers: Dropping Out to Make Every Dollar Count?