Old Retirement Strategy: work hard until you reach age 65, save and invest a minimum of 10% of your earnings over that time, and retire to a life of leisure. This strategy worked for our parents and their parents. However, times have changed for those over 65 who will total in excess of one billion by 2030. Read any of the current information on retirement and challenges that retirees will face and it is a different story:
- 4 in 10 Americans save 0 for retirement.
- Medical costs are growing at incredible rates – the average couple over 65 will spend $250,000 to cover out of pocked expenses through the course of their retirement.
- The gap between where retirement savings should be today and where they actually are is $6.6 trillion.
- Housing values have declined at a time when home equity accounts for one third to one half of retiree total net worth, providing a diminishing resource to draw from.
- The blessing of a longer life is mixed with the challenge of funding 25-30 years of retired life.
- Social Security will be around for some time but will likely change in some way to meet the increasing demand, whether in reduced benefits, a later retirement age, or increased taxes on benefits.
Retiring is no longer a no-brainer. And unless you get started now planning and preparing, reviewing and analyzing, balancing and prioritizing, chances of living your satisfying, fulfilling retirement life will be slim.
Know your Net – based upon a comparison of all of your sources of income with all of your expenses, how much are you in the black/red each month? This is your retirement planning 101 – you need to know now what your financial situation will be when you retire and you need to make adjustments where necessary to be net ahead of the game. If you find gaps or areas of concern, you need to take corrective action because they will not go away.
- Sources of income – Social Security, pensions, retirement accounts (401k, IRA), income from property, investment dividends, inheritance, any income from working after retirement,
- Expenses – mortgage, health insurance, healthcare out-of-pocket expenses, food, electricity, gas, travel and entertainment, taxes,
Without this basic understanding, the retirement life you anxiously await may be just wishful thinking. You need to realistically analyze the situation to understand what you have in store. Mark Miller wrote a thorough and understandable book “the hard times guide to retirement security” which digs in detail to address all of the variables that impact your retirement security and practical strategies for you to pursue. Mark knows what he is talking about and shares his insights regularly on his blog Retirement Revised.
A healthy senior is a happy senior – we can thank our aging for the collection of physical and mental challenges commonly shared by retired folks. If we sit back (literally) and watch the world go by, we are forced to accept what comes our way. Instead, senior citizens can take action to improve strength, balance, and alertness. Not only will our quality of life improve but we are also striving to avoid debilitating injuries that frequently afflict the elderly such as falling. In addition to exercise, watching what you eat is important. All of the vitamins and minimum this and organic that can be confusing but here is a trick that may help. Good things – vitamins, minerals, nutrients – come with a “minimum recommended daily allowance”. Bad things – salt, fat, sugars, and cholesterol – instead come with “maximum” levels which you want to stay under. In your diet, remember to minimize the max – avoid fat, salt, sugars and cholesterol.
Live beneath your means – I borrowed this one from Bob Lowry and his always insightful blog Satisfying Retirement. A basic but powerful concept -spend less than you bring in. Set a goal to undershoot your budgeted monthly expenditures by 10-20-30%, whatever you can commit to and achieve without living too miserly. By following this strategy, you will have money left over at the end of the month, an emergency fund available for any unexpected surprises should they arise.
Define your retirement career – numerous articles support the widely held attitude that work will not end with retirement. Not solely due to financial concerns, baby boomers that have found an identity in their job and enjoy working plan to keep at it. The interaction with co-workers, recognition by superiors, and the satisfaction of a job well done are things that make them happy and they want to continue. Work can be a positive thing. Remember that retirement can be your time to look at your career and decide if you want to continue down the same path or venture out into something new. Many second careers are started by senior citizens who enjoy working and now have the opportunity to pursue more directly what they really want to do. The path you choose can be creative, curious, outlandish, experimental – don’t shy away from your chance to follow the path less taken.
Always look on the bright side of life – in retired life, the importance of maintaining a positive outlook cannot be over stressed. The world may bombard you with more than you think you can handle. It may feel easier to roll over and give in and become part of the problem rather than part of the solution (sorry, from my days as a sales manager…). But being positive is within your grasp. Only you control how you choose to deal with discouragement. You determine if you view life through half full or half empty glasses. You can blame events around you all you want but you control the smile on your face and your inner peace and your positive effort to start each day .
Getting to retirement is not a given by any means and once retired, maintaining our desired standard of living while paying the bills will turn white whatever hair may be left on our head! The odds may appear stacked against us but in our casino of retirement, we actually can influence how the dice will land or what the next card in the deck will be. By following a careful strategy of planning, saving, adjusting, and accepting the realities of retired life, we can win. The odds tip in our favor and the bells and whistles will resound loudly as that jackpot pays off with a happy, satisfying, and fulfilling retirement life. Good luck!