HOW TO RETIRE ON LESS
Someone you know may be wanting to retire, but can’t. As youngsters they were never told that if they invested $10,000 in a fund that matched the S&P 500 when they turned 21, and never put in another dime, they would have a fund with more than $600,000 by the time they retired.
In addition (and sadly), according to one study, the societal concepts of “privilege” “BLM” and “trans-rights” have begun to hinder the already faltering financial thought processes of some younger adults. Being optimistic of the future is considered “privileged.” Society is putting pressure on “privileged” individuals to deny that privilege. I worked with a man who came out of the inner city. He was affable and a hard worker, but he also did not believe he would live past age 50. Thus, he had no reason to develop long-term goals. These concepts war against taking personal responsibility for the future and complicate what should be a straightforward investment approach.
Dori Zinn in the April 28, 2023 edition of Moneywise says that most retirees spend 75% of their monthly income on just 4 categories: Housing, Transportation, Healthcare, and Food. My suggestions below cover all but healthcare. About retirement healthcare, I can only say, sign up immediately at age 65 for Medicare A, as well as Parts B and D. (Do not sign up for Part C unless you have done extensive research to determine if it is a fit for YOUR situation…they push it hard in advertisements which should give you an idea how profitable it is for the insurance companies). You may not need Part B or Part D at that point, but if you don’t sign up they will cost much more later due to penalties.
There is a wise saying: “You don’t manage what you don’t measure.” If you do not want to be in the position where these lifestyle cuts (below) are necessary…it may be time to “up your game.” It is time to “measure”…make a plan, invest, and manage those investments. One BIG problem I found is that Americans have too many ways to pay. It is hard to “measure” what you are spending if you are using multiple spending platforms (Venmo, Credit Cards, auto-pay accounts, online banking, etc). This is crazy, but you MAY have too many ways to spend. So, one way to regain control of your budget is to SIMPLIFY. If you have more than 3 ways of paying for stuff, you probably need to trim back.
Of utmost importance as you get closer to retirement is to reduce costs. Cut out unnecessary spending. Secondarily, increase resources, so you can invest more. Third, realize that Americans think EVERYTHING is “essential.” In truth, not much is. Below, in no particular order, is a list of options for those who have not saved enough for retirement.
1. Give up travel and paid events. Go to free “music in the park” and community-type events.
2. Sell your car.
3. Zero alcohol, drugs, or marijuana.
4. Work past age 63. The worst three years for taking the benefits are 62, 63, and 70. “Based on United Income’s extrapolated analysis, ages 62 and 63 were the two worst claiming ages, with a mere 6.5% of claimants making an optimal choice by claiming early.” (They are saying that only 6.5% “won” by claiming early…meaning they died soon after 62). On the other hand, waiting until age 70 is not optimal either. The first problem with waiting until 70 is not that you will receive larger paychecks, but that you have a reduced probability of reaching the crossover point before your death. Second, is many cannot stay in the full time workforce that long. Many of my friends gave up working full time by age 65 due to arthritis, cancer, or other serious physical reasons.
5. Stop buying shoes for “looks.” Buy a few pairs of high quality (not necessarily high price) shoes for fun, walking, and for around the yard and make them last. Then your shoes will all fit on a small closet floor.
6. Live within walking distance of shopping and buy your own shopping trolley to cart groceries home. Make sure all your doctors are on the bus-line.
7. Grow a “cash crop.“ People will pay for tomatoes, peppers or chicken eggs.
8. Move to a one-bedroom home OR rent out rooms in your larger home. Pay off the mortgage before you retire. Think about this: Your kids don’t want the stuff in your attic, basement, storage unit, or closets. When you die almost all of it will be thrown into a dumpster. Why not sell it, donate it, or trash it NOW and enjoy the extra space and money.
9. Buy in bulk to save big. Toilet tissue does not go bad. Rice, pasta, dried beans … all have long shelf lives.
10. Share trash and internet services (sometimes the same thing) with a neighbor.
11. Go to bed an hour after dark and arise when it is daylight. Turn off lights when you leave a room.
12. Reduce electrical devices like clocks, radios, TV, coffee makers, and especially “smart” devices which continually suck on that electric meter.
13. Move to a location where weather is less harsh. Kentucky and Missouri are great because you often will not have a long harsh winter, nor a long harsh summer. It is possible to enjoy a walk most of the year. Florida and Georgia are too hot for too long. Minnesota and Maine are too cold for too long.
14. Where you live should have sensible taxes and home prices. That rules out California and New York.
15. Make all of your own meals at home. Do not go to restaurants or coffee shops. Definitely end all paid meal delivery services. Sign up for Meals-on-Wheels if available.
16. Forget steak and fish (unless you can go fishing nearby)…you need protein and lower-cost solutions exist.
17. Grow a garden.
18. Do NOT buy a freezer. (Why not a freezer? They are expensive to buy and own. The “savings” from buying meat in bulk will quickly disappear on your electric bill. Then, if the power goes out you lose EVERYTHING.)
19. Make several oven meals while baking bread. (Make your own bread from scratch using sourdough starter.)
20. Avoid using facial tissues, paper plates, paper napkins, and paper towels. Use handkerchiefs, cloth napkins, and cloth hand towels. These can all be tossed in with other laundry.
21. Go back to a landline phone. They don’t cost as much. The screen doesn’t break. You don’t have to buy a new one every 3-4 years. The contracts for service are usually cheaper. And you don’t have people bothering you when you are out for a walk.
22. Mow your own lawn.
23. Switch to instant coffee and save about 30 cents per cup vs ground coffee (even more if you have fallen for the K-cup trap).
24. Cancel cable, and other subscription services.
25. Eliminate “specialty” items (like special soaps for face and body with lavender, dill, etc….Zest is fine.) For every “specialty product on the market for $18.99 there are 3 others which will work equally well for $8.99.
26. Have a yard sale.
27. Pay off ALL your loans and never carry a credit card balance. Interest will eat up your savings.
28. Do your own taxes.
29. Get low flow faucets, washing machine, and toilets. When able, dry your laundry on a clothesline.
30. Store brand peanut butter and canned beans will not taste the same as premium brands, but you need to get used to them. This will save you money every shopping trip.
31. Sell your plasma.
32. Beg at Main and Oak. Cardboard signs are cheap.
Or, you could just invest for the retirement you want.
Copyright 2023 Donald Whelpley
[PLEASE NOTE that Don is always open to discussing the thoughts and opinions he shares here and welcomes comments as shared in the comment section. He doesn’t use other social media platforms, as I do, and won’t see whatever you’d like to share with him elsewhere. ~ Sherry]
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~ Medical Science Too Far? ~ Gravity and Light ~ Travel Fun ~ Fascinating People: Gloria Hartman Doughty ~
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~ Insect Oddities ~ DATA ~ Cities Got Name? ~ The Bible Does Not Say That! ~ Too Old?? ~ Be My Guest ~
~ IN-CRE-MEN-TAL-ISM ~ Bad Friends & Broken Tools ~ Pools Are For The Birds?? ~ Animals Hindering Your Financial Freedom ~
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