Retirement Secrets

[LakeCleElum]

Times are Tuff: Used to make a profit of $1,100 from a rental house with no mortgage...just sold it, so going fom 8 paychecks a month to 7.

It's all about a lifestyle and mindset that started with a paper route and mowing lawns when I was 12...

[Don Ro]

"It's all about a lifestyle and mindset that started with a paper route and mowing lawns when I was 12..."
.
Fairly common when I was a kid.
No paper route here...but I shoveled sidewalks for $.25 in the winter, mowed lawns in summer, and various odd neighborhood jobs.
I'd scour around to collect soda bottles and sell them to the grocery store for $.03 apiece...I was in heaven when I could buy a 5 cent pack of sunflower seeds.
Folks divorced when I was 4 yrs. old...mother went to work to support 4 kids...I learned early to value & save nickles & dimes.
Worked in the school cafeteria during lunch, swept school room floors after school (remember those desks bolted to wooden rails?).
That's how the nuns let me trade for my tuition to a Catholic Academy my last 4 years.
Never, ever got an allowance...we were not poor, but low income.
If I wanted firecrackers in July, or go to a movie (10 cents), I had to earn my own money to do so.
I learned early on.
~~~~~~~~~
" Most didn't have a month of savings in the bank. But they had the RVs, ski boats, jet skis, etc."
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As I began to make decent money in my 30's & 40's, I had a friend who lived in an "affluent" neighborhood...I'd visit him and see his neighbor's cars parked in their driveways, garage doors open and their garages chuck full of what I used to call "consumer trash".
I often felt envy, however.......
~~~~~~~~~
These days of retirement, I have no desire to travel so I can live a comfortable life on very little income...and do.
~~~~~~~~
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Bless your Spirit, Jim (jcommin).

[sc_rufctr]

Poor is a state of mind not a condition.

[onewhippedpuppy]

Originally Posted by Porsche-O-Phile

Fkin A brother...

I do have a copy of that book and while it makes some good points, the jist of it is "live miserably so you can continue to live miserably after you retire - since you're used to it, you won't notice the difference".

No thanks.

I'll live as much as I can now before I'm too old, take a few risks, etc. but also sock some money away when and where I can, try to invest if and when I can and do the best I can to cultivate multiple revenue streams - SS, a pension, some stock funds, a 401k, whatever I get from continuing to do occasional projects (I doubt I'll ever completely stop working - I'd get too bored, I just want to work a lot less and on my own terms because I want to - not because I have to).

I don't consider living like a pauper an option. I'm only getting to do life once - I'd like it to not suck.

You must have read a different book. What I read was to be conservative with your spending, strive to become debt free, and SAVE YOUR MONEY. If more people were willing to follow that advice, the previously posted chart would look much different. That is the key to real wealth. Sure, you can simply "enjoy the ride", but eventually you have to come back to reality.

[motion]

Originally Posted by onewhippedpuppy

Sure, you can simply "enjoy the ride", but eventually you have to come back to reality.

Agreed, but let's define this a bit more. What is reality? Well, its different for different people, and probably depends on what your needs will be when you retire and need to start drawing from your stash.

Speaking for myself, I've chosen to spend my money (within reason), rather than horde it. So, what's that done for me? At the age of 52 (I think that's how old I am), I have very, very few things left to do in life. I've pretty much done everything there is to do, and seen everything there is to see, within reason. I have a few things left: skydive jet jump, go to space, have a good relationship with my future grandchildren. That's really about it.

So, what's my retirement going to cost? I truly hope that I will be happy to putter around my collection of bikes in my 2,000 sq ft man cave for half the year, and spend the other half at our beach shack. To summarize: not much. I think we could live just fine on $2,500 a month. I have plenty of investments, cash, assets, so hopefully that won't happen, but if it does, life will be fine.

I still can't figure out how most people in America are going to retire. A buddy of mine have this conversation all the time. We've figured out that most people end up doing nothing with their lives, aside from hopefully having a satisfying family life.

[onewhippedpuppy]

So I think what you're finding is that there's no secret. Figure out what lifestyle you want to lead in retirement, what that will cost, and what you need to the bank to make that happen. If you've got the money already then life is good! If you have some work to do, start aggressively saving towards the appropriate target. The secret, if there is one, is to save enough money to support your desired lifestyle. That's all there is to it. Unfortunately for most Americans that approach takes hard work and sacrifice, something many of us aren't very keen on. I could have twice the house or a some awesome toys with the cash that my wife and I are saving towards retirement, but that's not a very good long term plan.

[dmcummins]

Originally Posted by jcommin

Cudos for lifting out of context: answer the remaining part of my response.: My cousin just put her husband in a home costing $10K/ month. It is not covered by anything - it is all hers. You ready for that. She can afford it. Can you? Can most? I can't........
__________________

I posted before you added the last part. I don't know her situation, and i have looked at assisted living and nursing homes for my dad. So I know some of these places are expensive. If I couldn't afford it, I would have to look at other alternatives. Some people also purchase long term care insurance. I don't.

My grandmother was put into a nursing home years ago, she didn't have much money and they simply took whatever she had left and her SS, so there are places for less than 10K a month.

[dmcummins]

One of the main things that got me started with thinking about early retirement was that my mother passed away when she was 55. And I've also seen many of my relatives health deteriate in their 60's and 70's.

So in my late 30's I planned to at least be able to retire at 55. And we really didn't want for anything, just made a effort to look at things as assets or liabililities. We always had nice cars and homes, and took nice vacations.

But we also invested in land from time to time, and the stock market. This also took some time and work, and risk. I was also fortunate that my family was healthy and I've been married to the same gal for years. She was 19 and I was 23 at the time. My boys got out of college when we were still relatively young so I got those expenses out of the way early. We paid for their college as they really didn't qualify for anything as my income was to high and I didn't want them saddled with debt.

We currently get by on about a 100k per year. But could live on much less if we chose to, but like Motion, I want to do as much as I can while I'm still in decent health. My Dad quit working when he was 57, right after my mom passed. He did pretty much what he enjoyed doing, but around 75 his health nosedived. Now he is pretty much stuck at home sitting around, he can't drive, and has to use a cane. And his mind is going.

[dmcummins]

Originally Posted by onewhippedpuppy

So I think what you're finding is that there's no secret. Figure out what lifestyle you want to lead in retirement, what that will cost, and what you need to the bank to make that happen. If you've got the money already then life is good! If you have some work to do, start aggressively saving towards the appropriate target. The secret, if there is one, is to save enough money to support your desired lifestyle. That's all there is to it. Unfortunately for most Americans that approach takes hard work and sacrifice, something many of us aren't very keen on. I could have twice the house or a some awesome toys with the cash that my wife and I are saving towards retirement, but that's not a very good long term plan.

Exactly!

[Porsche-O-Phile]

Here's the point I was trying to make before:

My dad recently retired (summer of last year). He really wanted to retire about five years ago and most people including me told him to go for it. He didn't. He slogged out five more years miserable (he'd grown to be bitter and hated his job due to recent post-recession management changes) so he could max out his pension. He retired on the exact day he hit the max. Five months later he had a stroke and spent four months in the hospital / rehab and is now home but clearly not the same person. He's made a dramatic and great recovery but not a full one (strokes do leave a person brain damaged after all).

He should have retired five years earlier. He'd have gotten a lot more quality time to do the things he wanted probably, would have had more meaningful time with family, grandkids, etc. It's not a total loss but it certainly gives me pause to consider what's important. As a side note all of the extra money he receives out of his pension fund each month as a result of his having stayed working for the five final years gets more than eaten up (as has more than half his savings) by medical expenses, medication and therapy. Insurance helps but they deny an awful lot ("oh, that's not covered", "oh there's this or that copay", "oh there's an annual limit for that" and similar bullcrap). It wasn't worth it in my book. Personally I think he should've gotten out when he was "done" about six years ago.

Money is one of those things there's never going to be enough of no matter if you get $2k a month or $20k a month anyway. So I see the priorities as being (1) living a meaningful, purposeful and fulfilling life where you're reasonably happy, (2) spend time with family and friends, (3) cultivate ways to keep yourself engaged, stimulated, amused and entertained and lastly (4) worry about money and figure out how to make things work with the available resources.

I'm not saying money isn't important - it is. But other things are much more important. Money is a tool to help attain enjoyment in life and provide some measure of security. If you've got enough to do that from whatever sources you've set up through sensible planning, that's what matters.

I have absolutely zero desire to end up in some home someplace - particularly here in the northeast. Too many people end up sitting around pissing and moaning all day as if in a competition to out-complain each other and generally being miserable human beings. I saw it all the time with the people in my dad's rehab hospital - they complain about the weather (in fairness it does suck half the year but still...), politics, their medication regimen or generally how unfair life has treated them. No frikkin way I'm going to allow myself to end up like that and if I stay here much longer I'm afraid I might start heading down that path by default. No way. I'm getting out soon, starting my own practice and building my own future, not being a slave to someone else's preconceived notion of what ought to happen to me in my so-called "golden years". If it fails I'll get up and try again until I get it right. I wish more people would look at things the way. I certainly wish my own dad had.

The other thing to take away from this story is that retirement planning is all well and good but unforeseen circumstances (like a medical condition or a boiler failure or a leaky roof on the house - all of which happened to my parents in the last few months) can cost tens of thousands of dollars and really screw up any projections. They all go out the window once expenses like that come up - and they will.

[onewhippedpuppy]

Jeff, so the counterpoint is this: what if you live for the moment, then live to be 90 with only social security to support you? As usual, the answer is somewhere in the middle.

My grandfather was a very successful self-made businessman, who worked every day until he died in his sleep at 84. He lived a great life, but had the means and desire to do a lot more......he just didn't. I don't want to be that person either.

[ckelly78z]

Anything I say about how I live will be construed as being cheap from those of you who live in half million dollar houses, have new cars, and have services rendered for you on your home, or cars. When I need a plumber, I go get the parts from Lowes and do it myself, when I need a mechanic, I generally tackle everything but the most complicated surgury. At 50 years old and with two kids still needing our help, I have my $150,000 house and barns paid off, and have more than that in my 401K (currently saving 20%) with no debt. I will have a 27 year pension when I retire early at 60, and have no plans of moving to the beach or the mountains....we're staying put and enjoying our 10 acres in the country. Living in small town USA, you learn to be practical and conservative, we don't have big plans of world travel or a new yacht, we will travel all over the united states and Canada in our 30 ft camper /truck, and I might get a nice fishing boat for the local resevoirs and inland lakes.

Between my pension, my SS, my wife's SS, and a nice 401K annuity with no debt, we should be able to do anything we want to do within reason.......go out to dinner, go on a cruise now and then.

With my health issues, i'm going to retire as early as I possibly can and try to enjoy time for my kids/grandkids and puttering around the farm.

[BE911SC]

Step One: Obtain substantial, unassailable, extremely secure wealth.

Step Two: There is no Step Two.

[Porsche-O-Phile]

Hey Matt, I think we're more or less saying the same thing in different ways. The truth is definitely in the middle. As I said before choosing the path of miserly self-depravation or the path of hedonistic excess will lead to a wasted life. There needs to be a sensible balance of living and preparing. Unfortunately we live in a society that glorifies consumption as evidenced by pathetic savings rates. This doesn't help when it comes to retirement. Far said, I think it's critically important to enjoy life while you can (within reason) because tomorrow could be (likely WILL BE) too late.

I'm a lot like ckelly78z - I can't stand paying people for stuff I can do myself. It's a waste of money. I didn't just my ass in school to get "A" grades just so I could hand over my money to the kids who screwed off and got "C" or "D" grades because I can't be bothered to pick up a wrench or screwdriver or paintbrush. This is to a point of course - my time is worth something to me and if it's a gigantic PITA I'll sometimes opt to hire someone and let them suffer through it.

I suspect some of the mindset we see here comes from ingrained Judaeo-Christian thinking - that somehow suffering leads to salvation. I reject that belief - suffering simply leads to more suffering (and misery, and discontent, and jealousy...) By contrast, learning to be accepting of situations and looking for ways to improve them is helpful. Thinking that seeking out more suffering and self-deprivation will make one's life better is really kind of foolish. That said there is a place for frugality and sensible planning - just not to the extremes suggested here (or even some of the ones suggested in "The Millionaire Next Door").

I guess what I'm saying is don't be afraid to live life a little when it matters. You only go around the block once. Don't waste it worrying about tomorrow too much. Plan, prepare and don't be stupid or reckless, but don't throw away your most useful and valuable commodities - time and youth.

[onewhippedpuppy]

I've never thought of saving and being frugal as "suffering", even when I was dirt poor. I read and enjoyed "The Millionaire Next Door" and honestly didn't have that thought about the examples in the book either. But the things in my live that I derive happiness from are totally free. Living in an an affordable paid for house, driving used cars, taking reasonable vacations, and having lots of money in the bank....I'm cool with that.

[ted]

Just some guidance we got from our financial planner...protect your assets.
Consider a Long term health care insurance policy and a life insurance policy greater than 2 years of your annual income.

Unless you are very rich and can afford to pay out of pocket or you are in the opposite position where you have no assets and you must depend on government assistance.

Believe me nursing facility conditions vary, the nice ones feel like a cruise ship.
The cheap nursing facilities can be very sad and disgusting.

Long term health insurance policies provide piece of mind and protect your assets.
Several years ago you could get longer policies but now they don't like to write coverage for more than a couple of years.
My wife and I each have 10 year long term coverage.

Thank god both my mother and mother in law listened when I suggested a long term health insurance.
Not long after I retired at age 50 my mother in law was diagnosed with Alzheimer's.
We are 8 years into Alzheimer's with my mil and knowing she is covered indefinitely at a top facility close to our home is a relief.
(thank you John Hancock for $90k a year)

Without insurance we would have wiped out her assets (my wife's inheritance) and worse she would of ended up in lesser quality state paid nursing facility.
It helps that the annual long term insurance fees ($5k a year or more) are normally waived once the person starts to use the coverage.

Without her long term insurance I would of been back to work to help cover costs...

That along with a small life insurance policy in case the bread winner of the family sudden passes away to cover your income for a few years will also help your family and protect your assets.

Retirement is something I started saving for in my 20s.

[speeder]

The best retirement strategy is to have kids who wind up really rich. Oh, and make sure to treat them right as they're growing up. I know a few people who've accomplished this.

The second way would be to make sure to become rich yourself, either through work, investments or inheritance. Or pick a public service profession with generous retirement benefits, (this would have been in the past but it's worked out great for a lot of people).

The whole retirement question is such a moving target. Most living expenses, like food/shelter/energy/healthcare are rising steadily and not predictable expenses. As others have astutely pointed out, one catastrophic illness or economic calamity can wipe most people out.

My parents wound up ok through a combination of good incomes and buying houses in affluent areas that appreciated quite a bit, (plus investing heavily in vacation property that went bananas), they also don't believe in debt or pulling money out and have no mortgages. They are now in their 80s but this has been the case for 20 years or more.

For anyone actually paying attention, I refer to my mother and stepfather as my parents, my dad died in the last year and he had a really good county pension and benefits from being a retired judge. He also was diagnosed with cancer one month after retiring @ 70, he lived another 12 years and would have been wiped-out quickly without the health insurance from his job. So that was luck.

My older sister retired 6 months ago at 56 and moved to a small village in the mountains of northern Italy where she will pursue her passion which is being a bicycle racing blogger and riding a lot herself. I'm sure that she will travel a bit as well. She is not rich but saved her money, lived alright but not extravagantly and had a decent job. Never married and no kids. A certain rich sibling kicked in some on this deal.

I myself will just work till I drop and hope for the best. I'm trying to make an investment plan but starting late. I will be working at something forever and I'm ok with that. I don't golf or like motor homes and the idea of traditional retirement does not appeal to me on any level. Conventional life in general does not appeal to me, so this is not different. I'd rather be a hobo hopping trains and smoking hand-rolled cigarettes than to wander around some god-forsaken slab of concrete in the sunbelt as the earth gets hotter every year like Tabs.

[930addict]

Originally Posted by speeder

...The best retirement strategy is to have kids who wind up really rich. Oh, and make sure to treat them right as they're growing up. I know a few people who've accomplished this.

This is my plan B. LOL. My 9 year old daughter says wife and I can live with her and that she is going to build me a race track and buy me a Porsche and Ferrari to race on my track.

[Evans, Marv]

I did a lot of things backwards - sort of. Like some of you, I worked as a kid doing a lot of jobs you all did. I worked lots of hours during the week and weekends at a gas station starting at 15 1/2. I changed jobs at the beginning of my junior year over to loading semi truck transports with milk and milk products for shipment to other towns. (I really don't know if kids now days can work like kids did then because of laws, regulations, and liabilities.) It was very hard work but I didn't have to work on weekends. After I got out of the Army, I worked and started school (about nine months later) and continued working at night. I took time off to do things I enjoyed like hiking, mountaineering, skiing, and traveling when I could afford it. After marrying at 32 and parting ways 10 years later, I had to start over in effect. I never made a lot of money and lived frugally, but still did enjoyable things that weren't costly and didn't feel a need for expensive house or cars. What I did was keep my living expenses level. I saved and invested any money I got via raises, extra work or other source. Managed to invest in rental property, which I managed and maintained myself. I didn't remarry until 55 and put my now wife through her last three years of university and grad school. We continued living frugally and saved through the first several years she worked. With what I saved & invested, I as able to meet my target of building my house and being debt free after retirement. Since my wife is younger than I and working, I chose a reduced retirement. She will continue to receive my retirement after I'm gone for the rest of her life. We have enough excess income to do things we want and contribute to a Roth account for her. My situation is better than I thought it would be, and I'm glad I made the decisions I did from around 40 on. I do feel a bit sorry for the younger people trying to make it now. I think times will be hard for them at retirement time.

[gatotom]

Retirement secrets??? there are none.

After 33 yrs doing what I do with people that have retired 20-30 yrs ago, it's the inflation that eats you up. What you last made as a yrly income before you retire might make ends meet if you are frugal.

Myself, at 67, SS is a nice bonus, the medicare cost is wonderful. My wife at 62 is still paying 900 plus a month for health care, in four yrs she will hang it up. We will be fine.

Our biggest expense is the boat for sure but is to our liking so it will stay, my youngest son will get it when we are done with it. Have a ton of places to go to in the NW, all by water. The nice thing about sailing is that it does not add to the congestion already on land.

Being self employed most of my life, I live by the sword so I will die from the sword, enough said. Live in the present, the past is over the future is unknown.