Stashing away $1 million for retirement has long been the goal that savers were encouraged to shoot for, but many Americans have stashed away far less. How much less is unclear.

According to a March 2016 report from the Economic Policy Institute (EPI), the average retirement savings of working-age families, defined as those between the ages of 32 and 61 (or 1 year short of 62, the age Social Security marks as early retirement) is $95,776. However, the median number, or those smack in the middle, is just $5,000. For those who are near retirement age, or between 55 and 61, the median was $17,000. A June 2015 analysis by the Government Accountability Office found that average Americans between the ages of 55 and 64 have accrued roughly $104,000 in savings for retirement, but that reflects both the super savers and the people who have saved nothing.

While the higher number isn't exactly encouraging, it doesn't include Social Security income and, for some lucky folks, cash from a pension. And it does inspire a lot of creativity about finding ways to make a comfortable retirement still be within reach. One option many Americans are investigating is retiring abroad (see Retirement Funds Too Little? Retire Abroad and Strategies to Retire Abroad and 7 Countries to Consider).

Then there's another tempting alternative: opting to spend your later years at sea. It's worth exploring if you’re both adventurous and concerned about running short of cash (and don't get seasick, of course). With careful planning, you could enjoy retirement on a cruise ship full-time with a lot less than $1 million in the bank. (For more advice, check out Insider Tips for Saving on Cruises.)

Retiring on a Cruise Ship for Less Than $1 Million

For occasional travelers, cruising may be all about living it up in luxury. If you’re planning to spend all of your time at sea once you retire, however, you have to weigh the options carefully. (Read 5 Best Cruise Lines for Recent Retirees.)

Spending a chunk of your savings on permanent quarters aboard a residential cruise ship may seem like a good option, but it won’t come cheap. The World, for example, is a private residential ship that launched in 2002. The ship offers studio, one-, two- and three-bedroom residences, starting at $600,000. That doesn’t include annual ship fees, which can run into the thousands. 

If you’ve got less than $1 million set aside for retirement, booking individual cruises is, needless to say, the cheaper (and more realistic) way to go. That could mean jumping ship once a month or even more often if you can't find a way to book lots of long cruises. But if you’re only traveling with the necessities, you may get good at these transfers. It does, however, take extraordinarily careful planning. And you'll likely need some kind of land-based permanent address.

In terms of what you’ll spend, it all comes down to how you book and which lines you’re cruising with. Princess Cruise Lines, for example, offers last-minute deals from $79 a day per person. For a 15-day cruise, that works out to a base rate of $1,185. Book back-to-back cruises at that rate and you’d pay $2,370 for the month. If you can keep your fares that low on a consistent basis, you’re looking at spending less than $30,000 a year – and, of course, that means food as well as housing and no need for your own furniture or car. (See 3 Money-Saving Cruise Ship Tips.) 

Is Cruising More Affordable Than Assisted Living?

Of course, these are not real alternatives: to live on a cruise ship, you'll need to be reasonably healthy and not in need of the kind of assistance you get in assisted living. But it does offer a useful financial comparison. When you have limited financial resources, assisted living could drain your savings much faster than you’d like – and much faster than living on cruise ships. The national monthly median cost of assisted living is $3,628 or $43,536 annually, according to Genworth Financial. That’s approximately $119 and change on a daily basis. 

Living on a cruise ship could let you hang on to more of your savings. To keep the cost of cruising lower than the cost of assisted living, you’d just need your average daily spending to be below that $119 cutoff. 

How much money would you need to make that work? Let’s say you’ve reached full retirement age and you’re receiving Social Security benefits. As of August 2017, the average monthly benefit was $1,360, according to the Social Security Administration. That’s $16,320 for the year, so you still need another $27,216 to make up the difference. 

That means you need a big enough portfolio to be able to withdraw at least $2,300 a month. If you anticipate spending 20 years in retirement and adhere to a conservative investment strategy, you could make cruise-ship living work with savings of $600,000. You’d be able to withdraw $2,400 a month the first year in retirement, with subsequent withdrawals adjusted for inflation. That income, together with your Social Security benefits, could be enough to keep you afloat. In fact, you're unlikely to spend that whole 20 years at sea. In advanced old age, you will likely need to make other plans.

The Bottom Line

The previous example illustrates how it would be possible to cruise full-time in retirement even if you have less than $1 million saved. (For more, see Retiring: Is $1 Million Enough?) The other comparison you need to make, of course, is how cruising compares with a land-based retirement in your current home or somewhere else, including abroad. If you stay healthy, you could spend 15 years traveling the world, if you're able to plan the ship-to-ship transfers and perhaps some breaks on land. The planning part may be the most exhausting aspect of this kind of ocean adventure.

And there are other caveats.

For one thing, our financial example assumes you’re traveling solo. If you’re married, you have your spouse’s Social Security benefits and other retirement income to take into account, as well as what another person adds to your travel costs. Usually, traveling as a duo is cheaper, but not always.

Besides that, you have to factor in how you’ll manage your healthcare costs while you’re traveling. Medicare won’t cover you overseas, and most traditional health insurance policies only offer limited coverage. If you have to purchase travel insurance or pay for medical care out-of-pocket when you reach a port of call, that could add significantly to the total cost. (See Is My Health Insurance Good Abroad?)

And that's just the beginning of a long list of real-world issues, such as where you'll get your mail (and your Social Security check), how you'll handle taxes, what your residency is and more. You'll need the advice of an attorney or accountant and a financial planner. 

The key takeaway? Before packing your bags – or renting out the house – run the numbers carefully to make sure you’ve got all your bases covered.

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