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Old Yesterday, 11:59 AM
 
1,891 posts, read 676,649 times
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I have semi-retired early (but have still been earning, just less), and here are my elements of frugality:


1. I live in places that have public transportation, so do not have to own a car. I have not owned a car in many years.



2. I own my place(s) to live, so there is no mortgage. If you cannot buy even in a very low-cost area, and are really poor, there is low income senior housing (like public transportation, it is more readily available in large cities). If you are 55 you may be eligible for a low-income senior housing nearby, and if you are 62, you are definitely eligible. Waiting lists tend to be long, 2-3 years is not unheard of. Splitting cost of a market-rate rental with roommates is possible too. The cheapest market-rate rentals are probably mobile homes in senior mobile home parks. Explore a possibility of taking care of seniors or kids at someone's home in exchange for room and board.



3. I still earn too much to qualify for subsidized health insurance, but it is available if you are low-income and not eligible for Medicare (yet or not at all). If you are really dirt-poor (less than $2,000 in total assets - but many assets are not counted, like the primary home), you qualify for Medicaid. After you deplete your funds, Medicaid will also pay for your nursing home should you need it.



4. Eating out costs a lot, and when I do it, I go for breakfast or lunch, not a dinner. But theoretically a person never needs to eat out. For free food, there are food stamps, church- or charity-operated soup kitchens, or bartering eldercare/childcare for food (see #2).



5. Public library, walking around, hiking and bicycling are free entertainments. Public swimming pools are free or require a minimal annual fee.



6. If you have some money but not very much, and want to travel, look for the cheapest airfares on flexible dates on Google Flights. Stay at an AirBnB or hostel.


That's all I can think of regarding poverty management (I myself use # 1, 4, 5 and 6 extensively, although am not particularly poor).
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Old Yesterday, 12:13 PM
 
Location: Loudon, TN
6,032 posts, read 4,992,524 times
Reputation: 20537
Here's one more elnrigby, our local church has a Wednesday night spaghetti supper for church members, and those who just might want to think about joining. It's all you can eat spaghetti, salad, bread, dessert and ice tea, lemonade, for $5. It's a cheap dinner out and you get to meet new people and might make some new friends.

Also in agricultural areas look up Senior Gleaners. These volunteer folks glean leftover fruit and veg from farmers' fields after the harvest, or even from neighborhood fruit trees if the owners call, and then they make up boxes of produce for distribution to Seniors or those in need of food.
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Old Yesterday, 12:17 PM
 
Location: Monroe NJ
14 posts, read 6,635 times
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Quote:
Originally Posted by EllieKay56 View Post
One plan we have, I will still be working at 66. DH will be collecting his Social Security. I will take 1/2 of his and we will bank it. We do this for 2 years we will have some money to fall back on.


Thank you for this insight. this is what I was trying to seek. would care to elaborate a little more on this plan. How did you decide who will cash SS and who will be working? Do you get 1/2 of his straightaway in addition to his own SS? Is there an upper cap on the amount SS one can collect? If he works part-time how does that impact the amount of SS he will get and therefore the spousal benefit that you will get? How about your investing approach in terms of your portfolio asset allocation.

Thank you, everyone, for your responses. I also like the idea of claiming SS and investing it. I guess it is only fair to comment that we (self and DW) are not poor but the middle class which is getting severely impacted with little or no assistance available. We are looking to retire around 65 and are considering to take SS at our FRA which is 66 and some months. The wife actually wants to retire in a couple of years. She is firmly in "the life is too short "camp.
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Old Yesterday, 12:24 PM
 
Location: Monroe NJ
14 posts, read 6,635 times
Reputation: 12
Quote:
Originally Posted by TheShadow View Post
According to the rule of 72, if you can invest your money at 10% it will double in 7 years. Obviously not everyone can find a relatively safe investment that returns 10% annually, but you can see how fast the money can accumulate if you get started immediately. Working PT after retiring to supplement is another good way. And lastly, you can just work longer if you are able.
Thanks for the insight. What do you estimate is a decent return in today's world given that these are investments need to preserve capital as these are retirement funds?

Are there any ideas to generate 10% with reasonable risk in these days and times?
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Old Yesterday, 12:41 PM
 
303 posts, read 235,740 times
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Quote:
Originally Posted by eternalsands View Post
Are there any ideas to generate 10% with reasonable risk in these days and times?
No. I worked for many years in 3 major investment firms and in that time saw many people become millionaires and many other people lose millions (generally through leverage or just bad life decisions). Please use common sense with your investing. People get into great trouble taking too much risk with money they cannot tolerate losing. Slow and steady wins the race. And set your life up to live below your means.

Last edited by seasallyttle; Yesterday at 01:06 PM..
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Old Yesterday, 01:02 PM
 
Location: Scottsdale, AZ
8,280 posts, read 5,072,281 times
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Quote:
Originally Posted by eternalsands View Post
Thank you, everyone, for your responses. I also like the idea of claiming SS and investing it. I guess it is only fair to comment that we (self and DW) are not poor but the middle class which is getting severely impacted with little or no assistance available. We are looking to retire around 65 and are considering to take SS at our FRA which is 66 and some months. The wife actually wants to retire in a couple of years. She is firmly in "the life is too short "camp.

If you have a spouse, you are already rich beyond measure.
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Old Yesterday, 01:08 PM
 
303 posts, read 235,740 times
Reputation: 613
Quote:
Originally Posted by fluffythewondercat View Post
If you have a spouse, you are already rich beyond measure.
Agree!
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Old Yesterday, 01:28 PM
 
Location: Tennessee
24,258 posts, read 18,075,952 times
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To be frank, a lot of people simply don't think farther than the end of their noses on this. Combine that with "life happens" events, a lot of people are going to be up the creek and won't see the wall coming at them until it's too late. This board's participants are largely middle class and above, and fairly comfortable. The population here doesn't reflect the general population well at all.

I'm going through this right now with my parents. Low six figure net worth excluding home equity - probably $40k-$50k in equity. Dad just turned 62 in August. Mom will be turning 62 next month, will be retiring, and taking SS immediately. Her monthly SS is only going to be ~$1,100/month. She has never made more than $40,000 until this past year - mostly in the $30k-$35k range. They have a mortgage in the $700/month range and a payment on a new CR-V. He's going to try to work until 67, but works a physical job in a manufacturing facility. Who knows how long he can keep that up.

He was laid off from his manufacturing job during the Great Recession. The factory he was in offshored the jobs to France. He did find other employment, at about 60% of his previous pay (ended up in the mid $30k range, but 100 mile daily roundtrip commute), and they dipped into their savings to try and make ends meet. He spent about ten years "out of field" at low wages before getting back to a better wage. She was able to maintain employment.

They never really dialed down the spending to the lower income. She has over forty purses (yes, I counted them) and has hoarded a bedroom to the point the window and closet isn't even accessible. Many of those purses are name brands like Michael Kors and Louis Vuitton, many have tags on them with MSRP at $300-$400 per purse. She has to have well over a hundred pairs of shoes - the closet is completely full, a "shoe rack" on the back of the door nearly as tall as the door is also full, there is a clothes rack on wheels nearly the length of the bedroom wall that's also full, and clothes and shoes are piled up all over the floor. The bedroom is a hoarded mess of consumer purchases. Who needs dozens of purses, a hundred pairs of shoes, and a dozen comforters? She's easily spent thousands of dollars on clothing and household crap, but necessary work to the home doesn't get done as it "costs too much money."

I rolled the trash to the road for mom this week, and there was a new pair of shoes in a shipment from DSW when I pulled onto the carport.

They're spending like much younger people at a much higher income level. They went to Florida for a week last year and near Myrtle for a week this year (granted, they hadn't been on a vacation in probably five years before that). The financed new car (both of their cars were paid for last year, then she wanted the CR-V), excessive and needless consumer spending on things like purses and comforters that are still in the package, etc., really shows they haven't planned for any of this. The shoes are still coming in when she's retiring next month. They meet for lunch at least three days a week, so a lot of money is going to eating out.

Meanwhile, her health has been going downhill for a number of years. Even though they don't have a lot saved up, you'd think that with her health declining, she'd have seen that she might have to retire soon, and at least try to dial the spending back, pay off the cars before retiring, etc., to soften the blow. None of this happened - in fact, the spending appears to have ramped up!

This board is fairly affluent. I'd wager the average late 50/early 60 something on the street is closer to my parents (less the wasteful consumer spending) than the average person on here.

Many seniors are locked in due to family ties. 3/4 of my grandparents are still alive and in their mid 80s. A 50/60 something may be caring for their aging parents, as well as supporting their 20/30 something kids or even the grandkids. Many don't want to leave familiar surroundings, friends, or even doctors they know well.

Many of the seniors on this board live in affluent coastal areas, or were from there originally. I'm from small town Tennessee. With some exceptions, houses here basically appreciate around the rate of core inflation. You're not going to get a huge equity bonanza like someone who bought in coastal California or Massachusetts decades ago, who could sell their paid for home there, buy a much better home in Tennessee, and still have hundreds of thousands in proceeds leftover. For some of us, there's nowhere cheaper to bail out to.

If you're up against it and don't have a lot of savings, I think the best thing you can do is get your fixed expenses as low as possible and try to muddle through the best you can on whatever the rest of your cashflow is.
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Old Yesterday, 01:59 PM
 
743 posts, read 227,454 times
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We cut our expenses and work part time. This has made it so we could afford to travel. Serious, I am so sorry your parents are such train wrecks. I really don’t understand it as I don’t want many things anymore but enjoy experiences. I have 5 pairs of shoes and 2 purses. Nothing designer. It must be hard for you to watch. Don’t let it become your financial problem.
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Old Yesterday, 02:08 PM
 
7,644 posts, read 8,841,566 times
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Quote:
Originally Posted by eternalsands View Post
Folks who are thinking about retiring in 5 to 7 years and feel that they would not have enough to sustain them through the rest of life how would you plan ahead.
I think the first question is: do you have a good sense of how much of a total nest egg you'll need for your retirement?

It's a math equation generally calculated thusly: (avg annual expenses expected) x 25.

Assumptions are: retirement horizon of 25 to 30 years, starting withdrawal rate of 4% per year then adjusted for inflation, maintaining an equity exposure or comparable of no less than 40%.


Quote:
What is your approach to tackling this momentous life-altering issue?
My approach:

1. Understand yearly expenses by tracking them. I've used the free aggregator website Mint.com by Intuit for the last 9 years, but there are other tools as well. That's made it easy peasy to see what I'm spending, where I'm spending it, and how my expenses are tracking compared to my monthly budget.

2. Calculate my expected total nest egg needed for my retirement (see formula above).

3. Get my social security benefits report (updated each year), to understand how much I can expect each month in retirement. Total amount of SS benefits will get subtracted from the total nest egg needed.

4. IF there's a pension, get an updated report to see how much is in the account. In my case there is no pension. Any expected pension amount total will be subtracted from the total nest egg needed.

5. Maximize contributions to retirement buckets as much as possible while earning income, and utilize as many retirement buckets available, to the extent reasonably possible. That means combos that include 401K pre and after-tax, IRAs (Roth and Pre-tax), Backdoor IRAs.

6. Learn what types of investments (mutual funds, ETF funds, index, active managed) are best in pre-tax and what ones are best in after-tax. This is best to learn as early as possible long before retirement.

7. Learn about taxes, what gets taxed, when, how much, divs vs cap gains, qualified vs unqualified divs, what all makes up MAGI and what account(s) to withdraw from first, next, last. All this info is available online -or- a tax professional can assist if needed.

8. Based on understanding yearly expenses needed in retirement and using the above formula, minus expected income from pension/social security/other determine total nest egg needed. Compare nest egg needed to current total portfolio amount. Don't include current domicile in nest egg calculation unless you're planning to sell it. However, do include any income from rentals, net value of other property owned after any mortgage.

9. Once your current nest egg total ≥ net nest egg needed, you are at the point where you can retire IF you want to. If you don't want to retire and don't have to, then keep working.
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