in our free newsletter.

Thousands benefit from our email every week.

  • Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

From top 5% to broke

Based on analysis by SmartAsset, Hanson’s net income of $400,000 would easily put him in the top 5% in his home state of Texas. By his own admission, the success of his construction business and decades of hard work should have put him in a comfortable position.

However, the business hasn’t been the same in recent years. The slowdown in residential construction expenditure and inflation of construction costs are only part of the problem. Personal issues kept Hanson away from work. “Frankly, my wife passing away was a huge factor,” he told Hammer. His wife suffered from muscular dystrophy for many years before passing away. His stepson passed shortly after.

Despite the slowdown, Hanson could have avoided financial trouble by relying on savings. Unfortunately, his spending habits quickly eroded that safety net. “I was spending it, I’m telling you,” he says. Much of the money went into his son’s motocross career (which he admits isn’t profitable) and expenses associated with traveling and living out of luxury hotel rooms.

Now, the situation is precarious. Hanson hasn’t made an income for several months and hasn’t paid rent since September. His only financial asset is $200 in crypto. All his business and personal bank accounts are in overdraft, while his credit card debt is somewhere between $30,000 to $40,000. There’s another $20,000 due for unspecified legal expenses.

He’s facing eviction and borrowing electricity from his neighbor. Unfortunately, his escape plan could put him in a deeper hole. His latest business venture is a weight loss supplement he sourced from a company with a multi-level marketing scheme. He insists it’s not a pyramid scheme, though Hammer’s sketch of the organization’s structure looked suspiciously triangle-shaped.

Meet Your Retirement Goals Effortlessly

The road to retirement may seem long, but with WiserAdvisor, you can find a trusted partner to guide you every step of the way

WiserAdvisor matches you with vetted financial advisors that offer personalized advice to help you to make the right choices, invest wisely, and secure the retirement you've always dreamed of. Start planning early, and get your retirement mapped out today.

Get Started

Salvaging the retirement

Hammer estimates that Hanson has roughly a decade of productive work ahead of him. Which means it’s not too late to secure his retirement. However, this would involve cutting back on expenses, paying down debt, selling some of the motocross equipment and focusing on productive construction-related businesses rather than pyramid-shaped ventures.

“Why don’t you just do [construction] and get rid of the debts and then save up enough money for retirement?” Hammer asks. He pushes back against Hanson’s claim that his dreams are a top priority. “For me, reality takes priority, though. We need to get rid of debts. We need to have money to be able to retire.”

Unfortunately, Hanson’s situation isn’t unique. A recent survey by Credit Karma revealed that 27% of seniors 59 or older had no retirement savings. Some of these people might be relying on the Social Security program that is also on the brink of depletion.

Effectively, millions of older Americans need to salvage their retirement in a hurry. Selling assets — such as a primary residence or vehicles — could help these seniors pay down debt. Delaying retirement into their 70s — which is increasingly common — might also be needed to accumulate savings.

However, the best way to salvage a retirement is to move. States like Mississippi, Oklahoma, Kansas, Alabama and West Virginia are considerably cheaper to retire in. Moving to another country is also an option, with some seniors moving to Portugal, Ecuador and Costa Rica in recent years.

Moral of the story: It’s never too late to fix a bad financial situation.

Sponsored

Meet Your Retirement Goals Effortlessly

The road to retirement may seem long, but with WiserAdvisor, you can find a trusted partner to guide you every step of the way

WiserAdvisor matches you with vetted financial advisors that offer personalized advice to help you to make the right choices, invest wisely, and secure the retirement you've always dreamed of. Start planning early, and get your retirement mapped out today.

About the Author

Vishesh Raisinghani

Vishesh Raisinghani

Freelance Writer

Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having covered family offices, private equity, real estate, cryptocurrencies, and tech stocks over that period. His work has appeared in Seeking Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions, National Post, Financial Post, and Yahoo Canada.

What to Read Next

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.