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Seems that no matter the subject of retirement leads to...it always seems to get hung on the question "will there be enough to retire on?" The lifestyle one follows or pursues upon retiring is not important or matter much...ultimately, the one retiring decides how he/she will spend the rest of his/her life. I know some simple approaches before retiring. And these ideas are not mine at all...I learned them from others...and I am sure some of you know more ways than I do. You won't get rich but it might help ease the ever increasing cost of everything down the road. Sure, save money. Easier said than done. But try anyway, I'm sure it will help you later when you retire....provided the ever increasing cost of living hasn't gobbled up the money you've been saving all along.
At least five years before retiring...start:
1. Downsizing what you own or have in your household. This is probably the most difficult part of the preparation..and likely take the longest to accomplish. We all get emotionally attached to things we own and had for a long time; mementos, old books, magazines, tools, heavy furnitures, things we needed and used at one time...but had put aside and not used or even seen for a number years. Specially heavy items like old furnitures and equipment. As we get older...although we usually do not accept our gradually diminishing strengths, it will happen. Believe me, will. There will come a time when you won't be able to move heavy objects anymore like you used to. I know, I am still lugging around (everytime we move) several boxes of old National Geographic magazines that go back to the early 1900s...up to this month's issue. Each box weighs about 45 pounds. Each time that I move those boxes around...they seem to get heavier. I'm sure, in no time, I won't be able to lift them anymore. Then what? I'd probably have to hire someone to move them for me. Money wasted. Yes, I'll get rid of them...I promise. This week. Later, in our late 70s or 80s...we won't be able to move that heavy couch or table anymore. We usually end up paying a handy person to move them for us. More money wasted. Get rid of them while you are still strong enough to move them out...load them on a truck and get rid of them. Or sell them...to someone who will haul it away for you. Sell it cheap. Because, later, if you don't, and find yourself having to move to a smaller place (because a big house is so much work...and costly), it will be much harder to get rid of them. Or you'll end up putting them in one of those mini-storage units. Add that to the cost. For how long? I once stored furnitures and a couple of appliances and some boxes in a storage unit for almost a year! When I finally sold what was stored in them...the total amount I got didn't even come to half of what it cost me for the year to rent the unit. Still storing some of your kids' stuff? Call them and tell them..."I've been storing your baby stroller or a kitchen table, ten boxes of your kids' toys (which they have outgrown)..or whatever, for the past (**#) years, and I need to downsize. Pick them up before the end of the month or else out they go!" And be firm about it.
2. Stop charging on your credit card! Takes a lot of discipline to do this, I know...but it is do-able. Carry enough cash for what you need to spend. Complaining about the high cost of gasoline nowadays?
Go ahead charge it on your card next time you fill up. Then look at your statement when it comes in. And see how much you had paid for that gas. So don't complain about the high cost of gas. You contribute to that cost when you charge it! I got rid of my 3 credit cards a year before I retired...and kept one. I still have not charged anything on it for over two years now. If the bank cancels it...for inactivity, so be it! Mine is a combination credit/debit card. I use my debit card often so my account stays active. I usually make payments 3 to 4 times the minimum amount due. I haven't followed my own advice as judiciously as I should have...so I am paying the consequence in interests and other hidden charges. But at least, I have not added to the amount owed for a long time now. The point is....keep the balance low enough so it doesn't become a strain on your budget. Pay as much as you can manage to bring the balance down. Take the time to go over your statement...and get shocked at what you learn about credit card charges. Ultimately, you want to have a small balance left on your credit card account by the time you retire. And keep it low..or at zero!
3. When you retire...your income would be somewhere about half of what you made when you were actively employed. That means you'd have to learn to live on half as much as you spend now. Yes, you'll still be paying taxes after you retire, BTW. Don't let anyone tell you otherwise. And just because your retirement income is cut in half...doesn't mean the cost of everything you need to pay for will also be cut in half! On the contrary, by the time you retire, the cost of living would have gone up a few more notches..while your pension, down a lot more notches. So now that you're still getting twice as much as you would after you retire..start practicing like you're retired! Try to live like you're only earning retirement money. It will get to that point sooner than you realize...so, get rid of costly bad habits now.
You know what they are. If you don't know and you want me to spell it out...send me a note on this forum and I'll be happy to point out many ways we can cut down on waste while improving your health.
Just on these three approaches alone...will help you manage to live on that meager pension. Not everyone can make enough to stash away large sums of money for the rainy days...so it would be prudent to start planning...and acting long before you retire. I retired once...then went back to work...retired again....and one more time...went back to work...and finally retired again, I think for good, in July of 2011. That proves how tough it is to try to live off half the amount of what you were accustomed to while you were actively employed. And don't rely on whatever senior special deals you think you'll get! What? $1 off on a $10 lunch? $1 off on a movie matinee? Must be a joke. Best to you in your retirement planning. Keep an eye on those special senior exemptions at tax time, though. They're great. See, there is something good about being a senior and retired, after all.
BTW, yes, I am well aware there are exceptions! I know there are folks who retire on 6-figure pension...or have stashed way half a million for retirement. Notice they're not exactly taking it easy. They're out there constantly worrying how to double, triple...and quadruple their pension. If I retired like those guys...I'd be out there cruising the world already. I'm talking about just the regular person who has worked hard all his/her life to save, and save...and save...and hopefully, would have saved enough to carry them through the rest of their lives.
Last edited by FCStraight; 06-30-2014 at 09:49 PM..
Reason: Minor correction.
There are sooooo many styles of retirement. The media and financial advisors paint one picture, applying it to everyone. Just not the way it is in real life. We adjust to what we have as our resources, and adopt an appropriate attitude toward it. If not, well, there's options there I won't go into. The basics you outline above make sense. Within that framework there are a number of ways to live and enjoy life. It's a matter of perspective, a workable philosophy, and management.
There are sooooo many styles of retirement. The media and financial advisors paint one picture, applying it to everyone. Just not the way it is in real life. We adjust to what we have as our resources, and adopt an appropriate attitude toward it. If not, well, there's options there I won't go into. The basics you outline above make sense. Within that framework there are a number of ways to live and enjoy life. It's a matter of perspective, a workable philosophy, and management.
NEG, you make good points. Might I add that people read articles and presentations not intended for them. Financial advisor advice is a perfect example. They are for specific issues and financial wealth levels. Many of us don't read golfing articles on retirement golfing for the reasons you give.
I practiced the 'lower' income budgeting five years prior to retiring. Had a general idea of what my s/s check would be and lived accordingly. Not only did that prevent the 'lower income shock' when I did retire, it afforded the opportunity to save more each month. Plus, by the time I retired I was completely debt free.
One other thing that worked for me: around the time that the stock market was being very 'bearish' and I started noticing drops in my 401k balance, I transferred a large amount into a high yield CD and a high interest return savings account.
Not being materialistic, not a clothes-addict, and very content if I don't take extravagant vacations every year, it was easy for me to cut back on spending and even to this day I have never felt I was sacrificing anything by being very frugal.
It's all relative since we're all unique....what works, is what works for each of us.
Retirement does not necessarily have to be a 'hardship.' One thing that contributes to retirement hardship is getting so focused on retiring (getting away from work), that one overlooks the long-term impact of lifestyle compromises.
Retirement is NOT a long vacation from which one can always "go back" if one gets bored or finds small rooms confining and the activities too redundant. Thus, the notion of 'retiring on a shoestring' is not a good long-term plan ... unless one has no other options.
I did not downsize but instead bought a place to enjoy in retirement.
I would never give up my credit cards... have paid the balance in full every month for almost fifty years and will continue to use the convenience of the cards.
My financial plan allows me to spend about what I always have... I planned, saved, and invested to have an ongoing income. Worked to avoid a big drop in lifestyle in my later years.
Location: Living near our Nation's Capitol since 2010
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To the OP, this is an excellent post. It is full of good advice.
Although I wont retire for quite some time, I have already done many of the suggested steps. When I moved to my current house, I took a tough stand. Very tough. I got rid of college books that I still loved, all saved magazines (20 years of Gourmet, that hurt to give them up), a lot of furniture went to my kids or friends, clothes and shoes I had not worn (many items would never begin to fit me anymore, but hope spring eternal!) went to Goodwill ...14 large bags worth. I even got rid of some of the kitchen appliances I hated to give up, but did....pasta maker, juicer, electric carving knife, fondue pot, etc. Kinda wish I had kept the juicer though.
I also got rid of all credit card debt, car payment, and all outstanding debt except for a tiny mortgage which I will pay off in the next few years. Everything is now on a cash or debit card basis.
I am having all medical problems fixed before I retire...well, at least the existing ones. (Bunion surgery, all major dental work, etc) Since I have excellent insurance at work now, I want to take advantage of that.
In the end, I guess we can prepare and prepare and prepare. It will still be a major adjustment, I am sure. Still, it is inevitable and it is coming. At least doing some preparations may make it easier.
Thanks for an interesting thread.
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