I have a different viewpoint. Remember I am not a financial adviser, just an average guy who has been a retiree for a decade. The financial professionals would probably tell me I'm full of it. I am 62 years old. When I am 72 or 82 it is possible I'll look back on this post and decide I was full of it. But, until then, let me make a few points that might bring you some comfort: your retirement savings doesn't need to be anywhere near those lofty levels. The idea that you must have at least a few million socked away before considering retirement to me is nothing more than a scarce tactic. How can I say that? Experience. My experience.
There was an article in Canada's Financial Post a week or so ago, written by Gary Marr entitled, "Try the Retro Retirement." He made the same point that I have made several times on this blog. There is a way to live a very happy, satisfying retirement lifestyle that doesn't require huge sums of money. It doesn't deprive you of pleasure and excitement and happiness. You don't shop only at thrift stores and eat beans and rice every night for dinner. You can vacation where you choose. You eat meals out and go to movies. You own a car. You dress well and are healthy.
How? By living under one simple rule: instead of worrying about how much money you need, base your lifestyle on what you have. That is worth repeating: instead of worrying about how much money you need, base your lifestyle on what you have. Determine what your life will look like on that reality and live accordingly. Instead of following the siren call of ever greater expectations and wants, be content in how people used to live in retirement: comfortable with what was available.
Do you play golf? Fine, but do you have to play at Troon North where a round in season tops $250 dollars? Not as fancy, but golf at a municipal course may cost $45.
Do you want to travel in an RV? Great. Do you need to own one that sits on the side yard for most of the year, or can you rent one when you have a trip planned?
Do you plan on gardening more after retirement? That is rather inexpensive if you don't recreate the Hanging Gardens of Babylon. How about exercising? Walking at the mall or around your neighborhood is free. Weights and exercise bands cost less than a month at the gym. Maybe you like the gym with all the equipment, pool, and sauna. Fine. It is cheaper and better for you than doctor visits due to poor health.
Play with the grandkids? Free. Go out to dinner with friends? No problem, but does it have to be at the steak house that charges $50 for 6 ounces? Have you ever considered a potluck at your house? If it is good enough for schools and church, why can't it work at home?
I guess it all comes down to your expectations. And my experience is they change the longer you are retired. The dreams of cruising the world, jetting off to spend the summer in Italy, or having a vacation home in Aspen begin to lose their luster as you age. Why? Because priorities change. Time with family and friends, giving something of yourself back to the community through volunteer work, a new passion for writing or biking or gardening suddenly become more important to you than spending spring in Tuscany. This approach is simply a conscious choice to live a mostly frills-free retirement.
Certainly you can decide that working longer or harder, or gambling on riskier investments so that you can have the baubles, the vacation home in the Cayman Islands and a new car every year would make you happy. Then, you will need the $2 million retirement fund. Just don't be surprised if the tricked-out retirement lifestyle wears thin after a while and you find you aren't as happy as you though you might be.
I wager you will be happier. Want to bet?
What is your reaction? Am I kidding myself? Will escalating costs in future years prove me wrong? Or, is it possible to live with strict limits and still have a satisfying retirement?
Exciting news: Betty and I will be featured in a national magazine in October. The story will be about folks who despite all the bad economic times are still enjoying a satisfying retirement. More details shortly.
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This is the way we are doing it. Got to spend a year of magical living in San Francisco but now back in our paid-for house in Fresno. Volunteering with a number of organizations, traveling to see our granddaughter every month, seeing friends as often as possible. Life is good.
ReplyDeleteI wouldn't be opposed to a nice part time job to add to the income, though.
Good Morning, dkzody,
ReplyDeleteLife is good. I had a business client in Fresno for almost 10 years. Got to know and appreciate its small town feel while still being big enough to have all the amenities.
A part time job is always nice for walking around money!
Bob,
ReplyDeleteI'm totally with you. There are so many things that we do because we care about how we think it looks. There are so many things to do that don't cost much (or any) money. You don't have to impress anybody. You don't have to keep up appearances. You do need to get in touch with what is important to you. Sometimes after a lifetime of looking good (or at least striving to look) good it is hard to sort our what is important from what you think others want you to do. It is about getting your head straight and once and for all putting yourself first.
Hi Ralph,
ReplyDeleteYou have said it very well. The "keeping up with the Joneses" phase usually ends by retirement (if not sooner). Maturity finally kicks in and we understand if people judge us by what we have then we aren't likely to want those people in our lives.
I hope you are right because I don't have any where near the amount of money all the scare mongerers say I need!
ReplyDeleteRoberta,
ReplyDeleteI hope I am, too. So far, things have worked out well for ten years, even with 500 point swings in the stock market from day-to-day.
I just like living a simple life-walking to the park,gardening,yoga,reading,being with friends and family-and none of these things cost money. Having time to enjoy life was always more important to me than money. I always lived below what I earned. Right now I'm managing fine on my pension.
ReplyDeleteIt is difficult to predict what future costs will be and impossible to predict what the stock market will do-hopefully my diversifed portfolio will be enough.
Hi Donna,
ReplyDeleteI enjoy things like that, too. Time is the only thing I can't somehow get more of.
A retro retirement isn't necessarily a frugal one. It is just an acceptance of limits. Our society has a problem understanding there is a cost for everything...now or in the future.
I can skimp on many things except seeing the world. My dad is 86 and still travels to so many countries I'd love to visit on our planet. That's what worries me is the cost of airfares. I could easily swap houses, or do some caretaking of homes, but I'd love to visit Asia, Australia, NZ, South Pacific Islands, and more. Travel is inside me and like my dad, I cannot just stay in one place.
ReplyDeleteSonia,
ReplyDeleteDoesn't your dad live in Paris? He must be quite a fellow to live that lifestyle. I bet he has fascinating stories of what it is like to be gutsy in France!
Airfare can be a major hurdle to travel desires. The answer as I see it is to budget for those dream trips just like anything else. The couple in the story linked from the post above spends time in Phoenix and are taking their family to Maui. What they don't do is go in debt.
My wife and I take one expensive trip every 2-3 years. On the off years we'll do a collection of long weekends somewhere in the state or maybe 5 days in San Diego.
I've always wondered why people can live on cheap stuffs when they are getting lower wages. But, as soon as they get a better job, the salry they will get won't be enough for them.
ReplyDeleteThank you so much for this great article
Hi Bob, I always did think that for most normal people, the idea of having a million or two in retirement savings is pretty laughable-yet most people still manage to retire and enjoy life.
ReplyDeleteWhen it comes to living on what we have, my husband and I feel like we've "had" so many things, that we won't miss the extra magazines we didn't have time to read, the extra tv channels we don't watch and so many things we used to spend money on.
I think you're right, it's a matter of priorities. When you're retired, your priority can be travel or doing what you enjoy. I think many working people fritter away money on things they don't need as a reward for putting in 40+ hours a week at a job they probably don't care much for. It's like, "I work hard, I deserve this." When you're retired, you don't need useless things to make you feel fulfilled if you're choosing to spend time and money on what you really want to do.
You are SO right.
ReplyDeleteThe happiest retired couples I knew were my great aunts and uncles. One lived in a Parkside home near the beach in California. They walked everywhere except the store- and took a cab to get there once a week.
The other set lived on North Shore HA before the roads were good there. They had a friend drive them to the commissary once a month- but generally ate at the local coffee shop two meals a day:>) It was a family of elderly people----and the owners loved them all. Neither set had much money or lived in fancy digs. They just loved life and friends.
Janett,
ReplyDeleteThat is the trick, right? Your situation improves and your consumption gene kicks in. The key is to stay steady and stick with the plan. Anything extra is saved or used for a needed house repair/upgrade, not for a "toy."
Joan,
ReplyDeleteThe idea of "rewarding oneself" buy spending money on something that doesn't last is an excellent example of why some folks struggle during retirement. Think of all the money that is thrown away when shopping to get out of a bad mood, or as a reward for working hard. Occasionally treating yourself is fine. But, when someone loses track of the bigger, log term picture trouble follows.
You are so right about use of time and money that was spent. We have cut back from 15 magazines to 4, two newspapers to none, and no cable TV. Do we miss any of it? Not really. Do we like saving the $200 a month? Yes.
Hi JBO,
ReplyDeleteI'll live in a very modest cottage on the North Shore of Oahu any day. I could watch the surfers 6 hours a day and never get bored.
As extended family living arrangements become more common I think we'll see more of the lifestyle you describe.
Ah, I see you are a wise sage in the tradition of the Tao Te Ching, which teaches, "He who knows enough is enough will always have enough." I have this framed on my desk! Your post encourages us to live in the joy of abundance (what we have) rather than in the fear of lack (what we don't have). Wise indeed!
ReplyDeleteGalen,
ReplyDeleteI like that saying from Tao Te Ching. Too bad more of us don't embrace it in our lives.
Approach life with humility and understand that so much is out of our control. Make what we have as good as it can be and don't fret the rest.
Bob,
ReplyDeleteYes, My dad lives in Paris. His wife is 75, and they are very active socially.
Mentally, he keeps up to date with news around the world, and is always excited to plan another trip.
I think it helps that he worked until he was 70, so he has two pensions.
My husband and I won't be that lucky, unless my book sells like crazy---HAHAHA!!!I have to keep looking forward.
Sonia,
ReplyDeleteHave you ever thought of doing a book based on some of your dad's stories and travels? I picture him wearing a beret with a baguette under his arm walking along the Seine with a younger woman (his wife!).
Also great advice for those that are still working:-)
ReplyDeleteI arranged for Plan A and lived it for six months before Wall Street and Big Banking changed it all. Now, it's Plan B, whether I like it or not. At first, I kept hoping it was all a big mistake and '08 would somehow magically unwind itself, restore Plan A. Now, there's this other reality and my choice is to figure out how to avoid dissatisfaction. Thank goodness I have my grandparents' example of living contentedly with less.
ReplyDeleteNow, I find that I'm just hoping to sustain THIS level of financial adjustment, rather than having to lower my expectations further, still, due to a double dip. This recession was a lot like a game of Freeze Frame: it froze my family in far flung locations, unable to move closer to us or us, to them. I think there are lots of folks in our situation, folks for whom the comfort and closeness of family is a matter of considerable effort and expense. That's the real cruelty of the thing; not so much that I can't get to Italy, but that I can't get to my kids and grandkids often enough.
Nance,
ReplyDeleteYour comment about being frozen in place is very important. I realize I am lucky to have all family here in town. Not being able to relocate to be closer to loved ones would be highly frustrating.
I don't think we are likely to see "Plan A" again for quite some time. There has been no change in big investment houses and banks' mindsets over risky investments. After ruining us they have shifted to speculating on Europe's collapse. America's middle class is under frontal assault with all the weapons on the other side.
A Retro Retirement might become the norm and not a choice.
We retired early because at 59 my husband was laid off his software engineering job. We sold our home in FL & moved into my inlaw's ancient garage apartment while we tried to sort things out. I interviewed for an RN position at a hospital in Wy & in Montana. We ended up buying a miner's cabin in a depressed mining town in SW MT. I worked for three years at the local hospital & my husband worked as a ski instructor. We are totally retired now and living as we never dared to dream. It was possible because we didn't have any debt and we kept our expectations at a reasonable level. We don't eat out but we do have membership in a gym and we ski almost every day the local ski resort is open.
ReplyDeleteAnonymous,
ReplyDeleteWhat a great story. It sounds like you and your husband were flexible and adaptable. Being debt free is a feeling that not enough folks will ever experience but a goal everyone can aim for.
Do you have a photo of the miner's cabin? I'd love to see it.
My husband and I both worked for decades as public school teachers. We lived within our means, in a comfortable but modest raised-ranch home that felt a little snug when we were raising our three kids, but it's quite roomy now, and it's paid for. We also managed to pay for all three children's undergraduate college education. We gave them each a car (used) upon graduation from college, and now they are each gainfully employed and we feel that it's our turn to enjoy what we've worked so hard to accomplish.
ReplyDeleteMy husband retired two years ago, and I just retired this year. We both just turned 60. We do not have millions of dollars saved, but we've crunched the numbers and we have enough to live on. Our state teachers' retirement system, which we've paid into for many, many years, pays us each a modest pension, and allows us to have an affordable health care plan and dental insurance plan. We are lucky in that we are both in good health.
We are taking this first year to figure out how to balance family, friends, interests, and travel on a budget. We've put one together that allows us dinner out once in awhile, a couple of days away every few months, and paying for a family vacation rental property every summer in order to get all of our kids and grandkids together for a week.
One day a week, we provide childcare for our daughter's one-year-old son. This is a joy that we love to share together. Another one of our children has two boys, and a third baby is expected in November. We'll be able to help out by caring for the older boys while their mommy gets plenty of rest after the birth. I am also looking forward to spending more time with my mother, who at 86 is still active and enjoying life. I'll be able to go visit her much more frequently now that I'm retired.
I've continued to teach by doing some one-on-one tutoring of adults, and I love it. Plus, I now have more time to teach my Jazzercise classes. I've been an instructor since I was 53 years old, and I love the exhilaration of a workout. Memorizing routines exercises my brain as well.
My husband and I both enjoy golfing, theater, learning to cook different cuisines, and traveling (except for the hassles of flying), and we are planning our budget so that we can go someplace warm for a week or two each winter through a combination of renting and visiting friends.
I feel that we're off to a good start. Staying active in the winter will be our biggest challenge, because we live in a cold climate and we've never been into skiing. Maybe snowshoeing would be something we could try together.
It's a very exciting and liberating time of life.
Jazz Angel (I like the name!),
ReplyDeleteThat is a great summary of a satisfying retirement launch. Your approach is textbook-perfect: learning to put important things first, doing what you love while maintaining a financial focus and looking forward to the future.
Don't be surprised if I use your comment as the basis of a post sometime. Your story needs to be shared.