Sep 9, 2024
At 61, Chugiak, Alaska resident Becky Davenport is nearing retirement age, but she fears it may never happen. She works full-time as a disability and education lead at a nonprofit but still struggles to pay her bills.
“There hasn’t been a time that I felt secure because I’m always one car repair away from being in debt,” Davenport, who raised two sons as a single mom, told Business Insider.
Advertisement
With the low pay she received for many years, she “scratched out a living” by juggling bills and continues to drive her paid-off 25-year-old car.
Despite her sons moving out, frequent medical expenses (she has chronic illnesses) and the high cost of living have hurt her ability to make ends meet and save for retirement. She said she may have to move in with her children, which would make her part of a recent trend of “silver squatters.” One in five (21%) 55-year-olds expect to need housing support in retirement, according to a recent survey.
While Davenport can claim Social Security benefits at age 62, she plans to wait until 67 to receive her full benefit. She estimates it will be about $2,000 a month but fears that won’t be enough. While she has a 401(k), she’s had to make early withdrawals to cover emergency expenses, which has left her with only about $40,000 in savings. This is far from what she'll need to retire comfortably.
Davenport’s far from alone. Many “peak boomers” like her face financial insecurity — now and in their golden years.
A wave of over 30 million boomers will hit the typical retirement age of 65 between 2024 and 2030. They are known as “peak boomers.” Of those, two-thirds aren’t financially prepared for retirement, according to a report from the Alliance for Lifetime Income’s Retirement Income Institute.
Time to move?
One of Davenport's challenges is that she lives in Alaska, which is considered one of the worst states for retirees. Indeed, in a Moneywise ranking, Alaska came in dead last, in part due to the high cost of living — along with its frigid temperatures, distance from critical amenities and rising number of violent crimes.
The cost of living in Alaska is 27% higher than the national average, according to the Economic Research Institute. While Hawaii has the highest grocery prices in the nation, Alaska takes third place, thanks to its remote location and harsh climate. California has the highest gas prices in the country, but Alaska isn’t much better, coming in at No. 6.
Advertisement
She spends $1,200 on rent and has never been able to afford a home. While she worries about her rent going up, housing prices have also soared in Alaska, with an average single-family home sales price at about $436,000 in 2023, per the state government, up from about $303,000 a decade ago.
One bonus, however, is that Davenport receives some extra cash from the Alaska Permanent Fund — dividends from the state’s oil and mining revenues paid to residents. In 2023, she received $1,312 from the government, which helped with some incidentals. But it’s still not much when it comes to retirement.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
- Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Survival techniques for peak boomers without savings
As mentioned, Davenport is eligible to claim Social Security at age 62, but she’d have to take a reduced amount, and she’s not sure the $2,000 she’d receive at her full retirement age of 67 will be enough to live on during her golden years. Medicare will also kick in at 65.
Waiting until her full retirement age means she has six more years to earn a salary, save for retirement, and receive a higher Social Security check, which could help her out in the long run. But if she continues to pay the same (or more) for rent and her car dies, she will struggle to save unless she can reduce her costs or bring in more income.
After Davenport retires from her full-time job, she could continue working part-time or on a contract basis to earn extra cash. This could help with ongoing rent payments, one of her biggest expenses.
However, she may be able to move in with one of her sons — she could even pay a nominal amount in rent to contribute to the household.
She could consider getting a roommate to reduce her housing costs if that's not an option. Or, she could take more extreme measures and move to a state with a lower cost of living — and maybe some better weather, too.
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- This 20-year-old lotto winner refused $1M in cash and chose $1,000/week for life. Now she’s getting slammed for it. Which option would you pick?
- Warren Buffett used these 8 repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Vawn Himmelsbach is a veteran journalist who has been covering tech, business, finance and travel for the past three decades. Her work has been featured in publications such as The Globe and Mail, Toronto Star, National Post, Metro News, Canadian Geographic, Zoomer, CAA Magazine, Travelweek, Explore Magazine, Flare and Consumer Reports, to name a few.
