66-Year-Old Who's Struggling With $1,601 Monthly, Share's Why She Refuses To Touch Her 401(k) Until She's 70

Maureen, a 66-year-old retired teacher, relies on a modest $1,601 monthly from Social Security to make ends meet. Though she has a 401(k), she is reluctant to draw from it, worried that she might exhaust her savings too soon.

Throughout her more than 40 years in elementary and middle schools, Maureen cherished a special tradition with her third-grade classes. Every year, they would read Patricia Polacco's The Keeping Quilt together and then spend the afternoon creating crafts inspired by the story. Her students would design their fabric squares, which Maureen would later stitch into a quilt — a lasting keepsake for each class.

Reflecting on her teaching career, Maureen told Business Insider, "It didn't pay much, but it was a wonderful job. I was very blessed to have it. "

Maureen, who chose to use her first name for privacy, was caught off guard when she was unexpectedly laid off in 2020 after the Catholic school where she taught closed due to funding shortages. She felt "blindsided," she said.

According to bank statements reviewed by BI, Maureen, living in northeast Pennsylvania, relies solely on $1,601 in monthly Social Security payments. Struggling to make ends meet, she's contemplating returning to work despite being close to the federal retirement age of 67.

This trend aligns with a recent Pew Research Center report indicating that nearly one in five Americans over 65 remain in the workforce, totalling approximately 11 million individuals. Maureen estimates that her 401(k) accumulated over her lengthy career is currently worth $180,000. However, after taxes, the withdrawal amount will be reduced to approximately $144,000.

Despite the potential financial relief, she hesitates to use these funds, fearing they won't sustain her throughout retirement. Maureen's anxiety about outliving her retirement savings is shared by many Americans, as evidenced by the 2024 BlackRock Read on Retirement report, which found that 60 percent of people across all generations harbor similar worries.

Americans like Maureen are confronted with difficult retirement decisions. While some have successfully built substantial retirement savings through prudent investments, surpassing the $1.5 million benchmark identified by Northwestern Mutual as necessary for a comfortable retirement, others find that fixed Social Security income falls short of their basic needs.

According to a 2024 report by the Retirement Income Institute, over half of baby boomers have retirement assets of $250,000 or less. This has led many older adults to question the optimal timing for utilising their savings or benefits and whether their accumulated wealth will be sufficient to sustain their retirement lifestyle.

"I'm trying to hold off," Maureen said about her 401(k) savings. "I'm figuring: if I start using it now, what if I live to be 90? Then I'm going to be in trouble." Despite her financial struggles, Maureen hesitates to tap into her retirement funds.

Maureen reflected on a lifetime of financial challenges. Her husband's unexpected passing 22 years ago made her the sole breadwinner for their two young daughters. Although her teacher's salary was typically around $42,000 annually, Maureen frequently needed two or three part-time tutoring jobs each summer to supplement her income.

Maureen regretted the limited time she could spend with her children as they grew up due to her work commitments. However, she prioritised providing for her family, stating she had to put food on the table. Although she has received additional benefits and income, they lack regularity.

Balancing Needs And Fears

Maureen explained that her husband's Social Security benefits were primarily used to support their daughters during childhood. However, she recently learned that her husband's former employer is closing their pension plan.

Maureen expects to receive a modest amount, which will only make a slight difference in her bills. She shared that she doesn't have a teacher's pension due to her private school's decision to replace it with a 401(k) in the 1990s.

Adding to the complexities, she only received unemployment benefits for approximately a year during the pandemic. Maureen is living on a tight budget with $1,601 in monthly Social Security payments as her sole reliable income. Her expenses include cell phone, WiFi, Medicare fees, car, gas, and any unforeseen house or medical bills.

Maureen and her husband purchased their home in the 1980s, and the mortgage has been fully paid off. However, she noted that the cost of utilities and insurance for the house is significant. Her electricity bill can reach $500 or more monthly, prompting her to keep the heat below 55 or 60 degrees, even during the frigid Pennsylvania winters.

Maureen shared that the $23 she receives monthly from SNAP doesn't go very far for food. To stretch her budget, she often prepares large batches of soup that she can enjoy over several days. Additionally, she buys items like pasta and tomato sauce in bulk when they're on sale.

Maureen chooses not to disclose her receipt of government assistance to most people. Her financial constraints can be isolating, as she often has to turn down invitations to concerts and restaurant dinners due to the expense.

Maureen understands the need for additional funds but hesitates to withdraw from her 401(k) account. She intends to wait a few more years before withdrawing from her savings, aiming to reach the age of 70.

However, she acknowledges the possibility of needing to tap into her retirement funds earlier, stating, "Unless I have to do it before that," she said, "And I might have to."