Sep 19, 2011

How to Retire...Live on LESS Than You Have

Bocci Ball with friends...cost $-0-
Did you know:
  • The good news about retirement cost: ....spending typically peaks when you're in your forties and fifties (the big exception: health care). After age 75, the dropoff is especially steep. (CNN Money)
  • The bad new:  If you don't live beneath your means when you are young YOU MAY NEVER RETIRE!  (Retire in Style Blog)
  • The cold truth:  You need to focus on what will actually help you keep cost down and not get caught up in a penurious way of living.  (Retire in Style Blog)
  • Live debt-free. – Financial debt causes stress and heart ache.  Live a comfortable life, not a wasteful one.  Do not spend to impress others.  Do not live life trying to fool yourself into thinking wealth is measured in material objects.  Manage your money wisely so your money does not manage you.  Always live well below your means.  Read The Millionaire Next Door (27 Healthy Habits of Happiness)
Goodness sakes...I discovered that I am not the only one that thinks that retirement not only possible but can actually be fun.  Good news for a change.  In an article published by CNN Money: Live well on less, 6 ways to save in retirement, one of my favorite bloggers, Bob Lowry, shared his story about retiring 10 years earlier than planned.  He shared the keys to the good retirement...simply live well on less money.  In fact, I think it is main component in finding out "How to Retire".

I cannot tell you how many people have told me that they needed at least $xxx,xxx or much more a year to retire on comfortably.  A man I played golf with in Florida several years ago was delaying retirement for three years so he could pay for a wedding for his daughter that cost more than the value of his house.  He just didn't see how he could get along without a condo in Florida and beautiful house in Georgetown.  It was so over the top that I could not relate to what he was talking about.  He was the perfect example of the bad news...if you live beyond your means now, you will NEVER retire.  Face up to it because it is the truth!

My mother said that you cannot save much while your children are at home...the minute they leave the nest you need to sock it away to the max.  Save as much as you can when you are young and save more when the nest is empty.  It will pay off for you I think.  I know it did for us.

The good news is, if you have lived just a little under your means and saved as you went along, retirement is not going to be dull or poor or dreadful.  Retirement is going to be a lot of fun and you will wonder how you ever found time to work. 

In my world the joy is not in what I have.  Like the Lowry's we live beneath our means.  Oh, we spend money but we accumulate extra every month so we can enjoy a vacation occasionally.  We are fortunate.  We enjoy each others company and time with family and friends.  Most of what entertains us is not expensive.  We make trade offs if we like something more costly.  For example, we like cable TV so we do not go to movies or to live entertainment very often.  We cannot justify doing both.

This is how we live beneath our means:
  1. We eat out but use coupons or eat at happy hour.  We love the crowd and being around young people so we go at the busiest times.  I think we would do it even if it didn't cost less.
  2. We travel but we own a timeshare we bought many years ago and use the time or bonus time to make the trips at a very reasonable rate. For example, we use timeshare bonus time in Palm Springs for around $60 a night.  (Worldmark by Wyndham).
  3. We always travel on the shoulder of the season.  That is the time very late or early in high season.  Travel is cheaper and crowds are less.  You should check into this!
  4. We have found ways to "co-op" with our family, sharing cars, garden tools, garden bounty, bulk purchases and even our condos or homes so we can own things we would not have been able to afford.  For example, my husband I kept our old Subaru for the whole family to use and they reciprocate generously.
  5. We are still using the same furniture we bought when our children were small.  In this case we spent more to begin with.  We always buy really good quality and depend on the classic style to last...hopefully forever.  As we grow older we need less so even when the good furniture goes away we are not necessarily replacing it.
  6. We do not scrimp on health care or insurance because we know that major illness would break us in the end.  We spend money to save money in the end.  This can require sacrifice but it makes good sense.
  7. We golf but also do it within reason.  Again, coupons/discounts from golf.now, etc, help a lot. 
  8. I cook from scratch...99% of the time.  Prepared food is very, very expensive and a good curry or tortilla soup is much tastier if it is prepared with your own hands.
  9. We entertain at home...I love it and we can have friends for dinner more frequently.
  10. We do buy new clothes and a few every season.  But, by buying off season, we get things for less and still dress nicely.  (Dressing shabbily makes you look and feel very old!)  I never go shopping in a better clothing store without a coupon or member discount.  Most stores have a mailing list for customers.  They send store coupons to their faithful customers.  Sign up for these...it can help quite a bit.
Living beneath your means can be a very tricky balance.  You really do need to focus on what will actually help keep costs down and not get caught up in a penurious way of living.  Pinching your pennies at the cost of making friends and family miserable is not a good way to live.  The trick is, save without anyone even realizing what you are up to.  I think that if you knew us you would not guess we were being careful...at least not to the point that it grated on your nerves.  Not everything has to be cheap or on sale or second hand.  We keep our life enjoyable even on a budget!

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