Land of the Free, Home of the Broke. Here's how YOU can dodge the retirement disaster

So many people believe the lie that if they just work for 40 years, they should be able to retire—without ever actually pulling out a calculator or looking at the data. Then, once those people hit retirement and their Social Security checks are barely enough to survive on, they’re left stressed, angry and hopeless.

Needless to say, many Americans are facing a retirement crisis, and a lack of planning (or your family’s lack of planning) could put you next in line for this bleak ride. Seniors in the U.S. still have mortgages, car loans and Parent PLUS Loans, and many believe the government (or their adult kids) will swoop in and save the day. 

If you want something to blame for this grim reality, you could point fingers at inflation, skyrocketing housing costs, wildly expensive health care, rising interest rates, government mismanagement and corporate greed—just to name a few. That was cathartic, wasn’t it? Now that we’ve got that out of our system, let’s look at the one factor you can control in this whole mess: you. 

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Here’s the harsh pill to swallow: It’s your responsibility to retire well. No one will care about your financial future as much as you. So let’s talk about how to set yourself up for success in retirement—no matter your age.

The Social Security Blanket Isn’t Cozy

It should come as no surprise that 54% of workers haven’t even calculated how much they’d need in retirement. And according to the U.S. Census Bureau, by the year 2034, there will be more adults 65 and older than kids 18 and under for the first time in U.S. history. That means more people will be withdrawing Social Security and fewer people will be contributing to it. If Congress doesn’t make some changes soon, Social Security funds will start getting drained. And by 2035, individuals will only receive 83% of their benefits.3 So, by the time my 1-year-old is getting ready to retire, who knows what Social Security will look like.

Here’s another fact: Social Security was only intended to replace 40% of someone’s income, but around a quarter of people are relying on it for more like 90%. According to the Social Security Administration, the average payment as of August 2024 was $1,784 a month. In comparison, the average American monthly income after taxes is $4,547.50. If this frail Social Security check is your end-all be-all, you’ll be eating rice and beans for the rest of your life. While this meal is great when you’re getting out of debt, I can assure you, it’s going to get old real fast. 

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And to the younger generations: Your parents’ problem of relying on Social Security alone could very soon become your financial problem if they haven’t set themselves up for retirement. If you’re in a place where you can help them out, and you want to, that’s great. But if you’re not financially capable of supporting them, that’s okay. It’s more important that you set yourself up for retirement success first. Heck, maybe you’ll be the first one in your family to break free from a generational cycle of broke.

Calculating how much you need for retirement is a very personal decision because it depends on a whole bunch of factors, including health, location, cost of living, inflation and lifestyle.

How To Retire Well

Let’s set the record straight: No matter your age, you’re capable of retiring with dignity (and a healthy nest egg)! Even if you’re a 40-year-old without a dime in your 401(k), you can still retire a millionaire at 67 if you start consistently throwing money into your account (around $650 per month, assuming a 10% average annual return, to be exact). If this isn’t something you can currently do with your income, you need to find ways to spend less and make more in order to create margin for investing. 

Calculating how much you need for retirement is a very personal decision because it depends on a whole bunch of factors, including health, location, cost of living, inflation and lifestyle. The trick is this: You need your assets and investments to generate enough income to cover all your expenses. 

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If retirement is creeping closer but you still have consumer debt, your first job is to get out of debt. Those debt payments are robbing your ability to invest and build wealth. I used the Ramsey Baby Steps to go from broke to millionaire in less than 10 years, and you can too. Here’s the first few steps: Start by saving up $1,000 in a starter emergency fund—really quick. Then hustle to get out of consumer debt using the debt snowball method. Once you’ve knocked that out, save up a fully funded emergency fund (3–6 months of expenses). At this point, you’re ready to invest 15% of your gross household income into retirement accounts. 

The sooner you get to the point where you can invest 15% consistently, the sooner compound growth will start working for you and making you more money. Here’s an example using the median household income of $80,610. Let’s say you’re 40 years old with $0 in retirement, and you begin investing 15% of that income into mutual funds within a 401(k). That amounts to around $12,000 per year, or $1,000 per month. Assuming a 10% average annual return (which, historically, is the average annual return of the S&P 500), by age 63, you’d have over $1 million in that account! If you kept it going to age 67, you’d have over $1.6 million. And that’s if you started at 40 with zero in retirement, never got a raise, and never had an employer match!  Are you convinced you don’t have to retire broke now? 

Just remember, retirement is not an age—it’s a financial number.

If someone you love wants to retire soon but the numbers don’t look too promising, it’s time to have the uncomfortable (but important) conversation with them about the future. It’s likely not viable, sustainable or healthy for you to fund the gap for someone else’s lack of planning. The key here is to approach these conversations from a place of love and to start having them as soon as possible. 

And just remember, retirement is not an age—it’s a financial number. You get to retire when your assets and investments generate enough income to cover your expenses. It’s wise to work with a financial advisor who can help you figure out what those numbers should look like to reach your goals. 

Don’t leave your retirement up to chance (or worse, the government). Don’t underestimate the power of time, consistent habits and compound growth. And most importantly, don’t underestimate yourself.

George Kamel is the #1 national bestselling author of "Breaking Free from Broke" and a personal finance expert. Following Ramsey’s proven money plan, George went from negative net worth to a millionaire in under 10 years. On his YouTube channel, George educates and entertains, exposing the financial system designed to keep you broke. Since 2013, he’s served on the Ramsey team, speaking across the country and co-hosting top-ranked Ramsey Network shows, like "Smart Money Happy Hour" and "The Ramsey Show." George has been featured on Fox News, Fox Business and "The Iced Coffee Hour," among others. His goal is to help people spend less, save more, and avoid money traps so they can live a life with more margin, options and freedom. Follow George on Instagram, Facebook, TikTok, X and YouTube or online at georgekamel.com.