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We had more than we needed when we first retired four years ago but with good health and freedom our lifestyle has changed (for the good). The combination of changes we made, inflation (higher health care, taxes, fuel, food, etc.) and lower income (market funded retirement) has us looking hard at our plan.
Although we are fine for right now if the trend continues for years we will see a squeeze that will be unpleasant in best case and potentially very serious. We are now discussing if we should return to work now for a year or so to insure against bad times later.
All of this to say that expenses will change and income (unless insured) can vary so be conservative in your estimates. Being active people we retired spending about the same as we were while working, and now question if we can continue.
I think everyone well be seeing a far more serious financial squeeze in the years to come than what we are dealing with now. You are willing to make changes before being forced to, and that will hold you in good stead.
I, too, live an active lifestyle, and learned to pick and choose what was important to me. I still maintain all my former activities and hobbies, but there are certainly things one has to cut back on. No bad feelings about it, whatsoever, as I am far better off than a lot of other people.
Even if you do decide to go back to work for awhile, you are able to be a lot more picky about what you do and for whom you work. That's a great feeling of freedom, isn't it?
I wish I'd asked for advice before I retired (two years ago)! I took over a 66% drop in cash flow when I retired, for which I was unprepared. Therefore, I spent a lot of money uselessly - not for unnecessary things, but because I hadn't calculated properly. Yes, I "coasted" for about a year and a half. Talk about a learning curve!
The most important thing I did was to get out of debt completely before I retired. I don't like owing money on anything, or to anyone, so spending a lot to be clear of debts was critical to me.
And over the past few years, I learned to curtail some spendthrift ways (no choice!), i.e., spending cash on things I really didn't need. I still count myself fortunate, to be able to (God willing ) always have a roof over my head, food on the table...the basics of keeping one's head above water.
Your drop from earnings to retirement is indeed a huge one, but you sound pretty clear-headed. I think you're right, different situations require a different kind of discipline. You'll still be able to afford to give your wife nice things, just have to pick and choose a little more carefully, that's all.
Take it from these good folks, start living now on your projected retirement income. I think you'll do just find in making the adjustments needed. And, yes, the financial trade-offs are well worth it, imo.
I love reading these threads about retirement, how other folks prepared for it, and are dealing with the adjustments one has to make. Some excellent advice here. Good luck to you.
Thanks. Here is a brief anecdote you'll probably find ironic. Like you, I don't like owing money on anything. Everything I have bought in the past few years has been cash only or I worked hard to pay it off in a few months. My wife on the other hand puts most of her expenses on credit cards, although she doesn't carry any balance over.
Since we both work some distance from our house (about 100miles), after renting an apartment about half-way for seven years, we decided to buy a small apartment last February. As always we applied for the mortgage together. Her FICO score was 805. Mine was ZERO. They said I didn't have
bad credit I just didn't exist per their records. The mortgage broker said he hadn't seen anything like this in 20 years. We had to put the mortgage entirely in her name, quit claim both our names on the title after it closed,
and the payment actually comes out of my business. That's my reward for not getting over-extended on credit.......according to the system, I don't exist, but my wife is an excellent risk. No wonder I drink!
I think everyone well be seeing a far more serious financial squeeze in the years to come than what we are dealing with now. You are willing to make changes before being forced to, and that will hold you in good stead.
I suspect this will be true. With the weak economy, enormous govt. debt, and the run up in oil prices, we are probably in for an extended inflationary cycle but this time without a commensurate increase in wages. For retirees, this will be especially difficult.
I suspect this will be true. With the weak economy, enormous govt. debt, and the run up in oil prices, we are probably in for an extended inflationary cycle but this time without a commensurate increase in wages. For retirees, this will be especially difficult.
And this is one of the main reasons I look to move to a more retirement-friendly state. In Oregon, we pay state & fed taxes on retirement income. That's nearly a whopping 10% in state taxes alone. While I have a "guaranteed" retirement income, I don't believe that anything is guaranteed when it comes to money. I also worked part-time last year, and was hit with a large payment owed to IRS - the first time in my life I've ever owed taxes. It factors out to the negative if I work, considering taxes, transportation costs, clothing and food costs. My tax accountant said work full-time, or move. What's up with that?? It just irks me to pay tax on my retirement (which is not huge to begin with), since it was already taxed!
Tesaje, I'm thinking that in the not too distant future, there'll be some kind of communal type of sharing heat, food, health bills for older retirees - out of necessity for survival. Which may not be such a bad idea, imo.
What has always stayed with me, and hurt my heart, was the outcome of the tremendous heat wave in Chicago about ten years ago. Many, many older people died, because they couldn't afford air conditioning or even fans. I remember seeing a photo of a police officer who broke down in tears, after checking on an older lady who'd died because of heat stroke. Her apartment was stifling hot, and she'd neatly prepared her table for dinner. All for lack of an air conditioner, or a way out of the city. I count my blessings. (Sorry to bring such a downer, but talk of retirement always makes me think of this, and how truly fortunate I am -).
GLS - You are quite the trail blazer, there! I've never heard of anyone with a 0 FICO score - What a goofy system (and a huge debt-hole we've dug for ourselves nationally), where we are penalized for paying off our debts!
I checked my score when I retired and had paid off all debts...like your wife's, my score was close to the highest. You make me wonder, now, two years later, what my score is, or if I even exist!!
Another factor to consider is the stock market. So many folks about to retire (and I'm one of them - in about 2 years) have their 401k's or IRAs in stocks. Many of my and my wife's co-workers are really upset with losses in the markets recently, esp in the international markets. We had been spoiled by a 20-year bull that has now morphed into a bear. Lots of people are just thinking (hoping?) that this is just a "correction" but my 6th sense tells me NO. Some of my friends who are heavily into financials are waiting for them to "come back". I fear they will just lose more money.
Too bad so many retirement plans offer no way to keep up with inflation. In my wife's case, she has switched over all her funds to government bonds. Not much of a return, but at least she isn't losing money! In my case, as a business owner with a private IRA, I have far more choices of investments and I think my funds are safe; at least they are not losing.
We all need to look at where the money for our "pensions" is going to come from. My greatest fear is that a lot of folks in the state and municipal sector - and many more in the private sector than are aware of it - are invested in these SIV's - MBS's and CDO's - which will be worth a big, fat donut hole pretty soon...these are invested in other people's real estate mortgages which are going south right now. Not to mention car loans and credit card debt, all going bad.
So if you are contemplating retirement and feel upset that your income will be lower than it is now, you should feel fortunate that you will have some income to work with. There are many, still unaware, that within 5 years' time, they will have NO pension. Look into where your pension is invested, and start asking questions. Lots of questions!
And this is one of the main reasons I look to move to a more retirement-friendly state. In Oregon, we pay state & fed taxes on retirement income. That's nearly a whopping 10% in state taxes alone. While I have a "guaranteed" retirement income, I don't believe that anything is guaranteed when it comes to money. I also worked part-time last year, and was hit with a large payment owed to IRS - the first time in my life I've ever owed taxes. It factors out to the negative if I work, considering taxes, transportation costs, clothing and food costs. My tax accountant said work full-time, or move. What's up with that?? It just irks me to pay tax on my retirement (which is not huge to begin with), since it was already taxed!
Tesaje, I'm thinking that in the not too distant future, there'll be some kind of communal type of sharing heat, food, health bills for older retirees - out of necessity for survival. Which may not be such a bad idea, imo.
What has always stayed with me, and hurt my heart, was the outcome of the tremendous heat wave in Chicago about ten years ago. Many, many older people died, because they couldn't afford air conditioning or even fans. I remember seeing a photo of a police officer who broke down in tears, after checking on an older lady who'd died because of heat stroke. Her apartment was stifling hot, and she'd neatly prepared her table for dinner. All for lack of an air conditioner, or a way out of the city. I count my blessings. (Sorry to bring such a downer, but talk of retirement always makes me think of this, and how truly fortunate I am -).
GLS - You are quite the trail blazer, there! I've never heard of anyone with a 0 FICO score - What a goofy system (and a huge debt-hole we've dug for ourselves nationally), where we are penalized for paying off our debts!
I checked my score when I retired and had paid off all debts...like your wife's, my score was close to the highest. You make me wonder, now, two years later, what my score is, or if I even exist!!
A safe Independence weekend to everyone!
I was told by the mortgage lender that it takes about three years to "fall off the "credit grid" completely. I think I have always been standing on the edge, and someone pushed me. You should see the look on my wife's face when I tease her, "I own 50% of the apartment, but you have 100% of the mortgage". Lucky I can cook.
[quote=GLS;
I use only one Debit card and no outstanding revolving accounts.
.[/QUOTE]
You need to dump the debit card and use a credit card that gives cash back. Buy everything on the credit card, just make sure you pay it off every month. I know you will think the amount they give you back is peanuts, but the amount of income you are cutting back is so large you are going to have to do things different. Almost all credit cards offer 1 % back. On $50000 thats $500 more to spend.
...Her FICO score was 805. Mine was ZERO. They said I didn't have bad credit I just didn't exist per their records. ...That's my reward for not getting over-extended on credit.......according to the system, I don't exist, but my wife is an excellent risk. No wonder I drink!
This reminds me of the time about 5 years ago when DH and I were applying for private health insurance. One insurance company accepted me, even tho I have a pre-existing condition that requires twice-daily Rx and regular dr visits, but refused him because he had, in their words, "no medical history"—he had only been to the doctor once since his army physical in 1965.
This reminds me of the time about 5 years ago when DH and I were applying for private health insurance. One insurance company accepted me, even tho I have a pre-existing condition that requires twice-daily Rx and regular dr visits, but refused him because he had, in their words, "no medical history"—he had only been to the doctor once since his army physical in 1965.
Stuff like this just makes me wonder. Is this just evidence of the dumbing down of America? How illogical is that? That and someone who doesn't incur debt being a terrible credit risk.
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) always have a roof over my head, food on the table...the basics of keeping one's head above water. 
No wonder I drink!
).
