My First Few Years of Retirement: The Finances

A comment on Is Retirement a Bed of Roses? was an important reminder to me that few of my readers have been part of the Satisfying Retirement family since the beginning three years ago. What I primarily write about is where my journey is now. But, that may give the mistaken impression that I had it all figured out from day one, that retirement has simply fallen perfectly into place and there have been very few problems along the way.

That is not true. Like everyone else, I had to learn as I went. In 2001 there were very few books or Internet resources that seemed relevant to me. The slow decline of my radio consulting business pretty much forced me to decide retirement was the best option for my family. I stumbled along for several years until I found a path that worked for me.

This post will be the first in a series of four that deal with the key areas that confront anyone who retires. Over the next few weeks, I will look back at the initial effect of my retirement on relationships, time use and management, and finding a passion. I will begin with the topic that most concerns those thinking of retirement or those who have recently left the work world: Finances.

I started saving for retirement when I was 27, the year I got married. I wasn't making much money as a DJ in Morgantown, WV, but I knew it was essential to start early. Over the years, as my career and income grew, I was able to set aside anywhere from 20-30% of my income each year, split between a retirement and a savings account.

When we stopped working in June 2001, I was 52, and Betty was 47. Though I had played with the financial projections over and over, I remained seriously concerned that we were making a terrible mistake. Even with a decent IRA and a savings account that was designed to carry us until I was ready to start withdrawing from the retirement account, I just couldn't accept that we'd be OK. Every month I'd re-run all the projections and take another look at our budget. I was nervous and worried. I hadn't projected the continuing escalation of health care costs, which were eating up over 25% of our monthly budget.

Panic means back to work

Within one year of closing my business, I got so nervous about money that Betty went to work at a local department store. She disliked the job intensely but bravely put up with bad bosses and mindless work. I sat at home, feeling guilty about the arrangement. After nearly a year of that silliness, we decided that the stress on us both wasn't worth the money, and she retired for good.

Two years after that experience, I took a part-time job as a tour guide that lasted almost five years. My job was to accompany business people who were in Phoenix and Scottsdale for conventions or seminars to dinners, golf outings, or trail rides. Actually, the task was quite simple: tell people where the bathrooms were and make sure all the folks got back on the bus to the hotel. It was not very satisfying but earned us an extra $3,500 a year. It also allowed me to interact with other people, something I was missing.

In the fourth year of retirement, I finally accepted the fact that our planning, budgeting, and sacrifices were enough to allow us to enjoy our retirement without constantly worrying about money. Sure, a disaster of some type could mess things up, but we shouldn't live constantly waiting for the other shoe to drop.

The 'Great Recession' knocks at our door

Of course, that "shoe" did drop in 2008. Our IRA lost 30% of its value in about 8 months. Our house value sank 50% in one year. My investments looked perilous, and interest rates plunged toward zero. The so-called "Great Recession" hit us hard.

Frankly, I had every reason to panic. I was too old to get any type of job, and Betty had enough physical limitations that she wasn't very employable either. My net worth had taken a hit of several hundreds of thousands of dollars. I could see no reasonable path to replace that money.

But, this is where the story gets interesting: I discovered I was less worried at that point than I had been when I first retired. Over those first six or seven years, Betty and I had traveled twice to Europe and extensively throughout the U.S. We were living what we thought was a typical retired lifestyle.

With the financial meltdown, we trimmed our expenses to match what appeared to be our new income level. Surprise! We discovered we were quite content with a much simpler, pared-down lifestyle. We were happiest being homebodies, spending time with family, and enjoying activities closer to home. We didn't need to eat so many meals at restaurants, buy new clothes as often, get a new car every three or four years, or spend $200 a month on cable TV...for hundreds of channels we never watched! Grilled cheese sandwiches for dinner every once in awhile tasted just fine to us. Compared to my last few years of work, we were quite happy living on about 50% less.

I began reading every book on simplicity and simple living I could get my hands on from the library (no more big packages from Amazon every month). I delighted to find free or inexpensive things to do in the area. I started using discount coupons as a way to do special things.

So where are we now?

Over the last four years, the retirement account has recovered fully, the house value is now down only 25% from its peak in 2007, and we felt confident enough in the future to buy an RV last fall. Our income has stabilized, and I have begun to receive Social Security checks as an excellent addition to our monthly planning.

Even so, the lifestyle we adopted five years ago remains. We are content and happy to live more simply. Finding milk on sale for $1.79 a gallon instead of $2.79 is reason for a fist bump. Waiting for a book I want at the library is well worth the money saved that I used to spend to buy a copy.

So, what you read on Satisfying Retirement today is where I am after several missteps, financial panics, and a reevaluation of what makes us happy. Retirement for me has been a journey that hasn't always been smooth, but certainly instructive. It has been about adjusting, recalculating, and believing in how we had prepared.

What's your story?