I'm sure you have seen the headlines: a bare bones satisfying retirement lifestyle requires at least $1 million. If you want to maintain your standard of living and keep up with inflation you need at least $2 million in retirement savings. And, on and on. It is enough to scare you into staying on the job (any job) until you drop dead of old age.
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.
Or, you could approach retirement more like your grandparents did: a time to savor life, use your talents and skills, and strengthen your relationships. Live life with the money you have, not with the money you can only dream about.
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.