The 2 big reasons half of older Americans are dying nearly broke

The thinking goes that we work hard now so that we can one day enjoy the fruit of our labors in retirement. But too many Americans are living their final years without a financial safety net.

A 2012 National Bureau of Economic Research study found that about 46% of U.S. senior citizens have $10,000 or less in financial assets when they die.  That percentage rises to 57% if the seniors live alone.

As Washington Post critic William McPherson wrote about his own descent into poverty in his retirement, “If you’re poor, what might have been a minor annoyance, or even a major inconvenience, becomes something of a disaster. Your hard drive crashes? Who’s going to pay for the recovery of its data, not to mention the new computer?”

For McPherson, he became poor through health problems and by acting “like one of those people who win the lottery and squander it on houses, cars, family, and Caribbean cruises. But I hadn’t won the lottery; I’d fallen under the spell of magical thinking.” Like for many Americans, his magical thinking caught up with him in his retirement; in his essay, McPherson described the everyday humiliations of being broke and elderly: “I am glad that none of my friends has ever found himself sitting on a bench in a park with a quarter in his pocket, as I once did, and nothing in the bank.” McPherson died this past March at age 84.

Two major reasons senior citizens are dying broke

There are two dovetailing factors keeping older Americans from financial security: they aren’t saving money, and they have high debt.

These two are related: but when you’re no longer part of the full-time workforce, money becomes scarce. Social Security and part-time jobs rarely fill the hole for living expenses, so the margin for financial error gets razor-thin. Even with Medicare, just one unexpected medical bill can throw a senior citizen’s whole world into crisis.

Adults are already bad at saving—69% of adults reported in 2016 that they had less than $1,000 in savings.

Seniors are not only broke, they’re in debt. Accumulating credit card debt is one of the all-too-easy ways seniors fall into a financial hole they can’t get out of.

Seniors aged 65 to 69 have $6,876 in credit card debt on average. Even the American demographic group with the least debt, seniors aged 75 and above, still have $5,638 in credit card debt.

For vulnerable Americans like senior citizens who may not have the physical capacity to take on side jobs or other work, these debts can seem unsurmountable. In these cases, the so-called golden days of U.S. citizens’ lives are filled with financial stress and dread.

3 ways to avoid dying broke

While the situation is unlikely to improve for current senior citizens, those still in the workforce have time to plan ahead.

It may seem like a while away, but it’s important to build an emergency fund now for rainy days in the future. The sooner, the better. That means taking a hard look at your finances, so you can see where the money is pouring in and slipping out of.

Look at your finances realistically: The Penny Hoarder recommends making an income and expense report; after you subtract your fixed expenses like rent, see what remains.

Examine what you really want to spend your money on: It’s easy for money to just flow out of our pockets (and bank accounts) without vigilance. We can get caught up in luxury spending even if we’re not making luxury money. To avoid this, bring intention to your financial plan. Figure out your personal goals for your budget: Do you want to retire early? Do you want to travel? Do you want to pay off your student loans before you hit 50? It’s well-known that experiences (and freedom) are what give us lasting memories and feel like the best use of our money. Put as much money as you can towards those, and cut the amount you’re spending on things that give you only fleeting happiness. Every dollar you spend is a vote for the life you want: if you spend $5 on your coffee or $10 on your lunch every day, that’s fine as long as you see it as 5 votes towards caffeine, or 10 votes toward food that you will forget about in a few hours. Imagine if those votes went to your vacation fund instead. As The Penny Hoarder notes, “if you align your spending and saving to your own goals, then you will live your ideal life (at least financially).”

Make lifestyle changes to match your spending to your goals: As part of your financial plan, USA Today recommends making small lifestyle adjustments like scaling back on eating out —and if those don’t work, you’ll need to consider bigger adjustments like moving to a less expensive city or selling your car. And don’t be tempted with not paying off credit cards—their interest charges can be just as terrible as the interest on your loans.

This is hard, unsexy work, but it’s better to do this now when you’re a working adult who can handle extra shifts and physical and personal sacrifices. Once you’re in retirement, the chances of you building up a financial cushion are slim to none.