Yeager talks about how long term decisions can ease the financial burdens of retirement including buying a small forever home and living in it through all the stages of life. Those of us with careers that move us around can't do that, but we can downsize for retirement. He also talks about remedies for not having a lot of money to retire on and cites examples of people who are making retirement work on little money. His approach is to find ways to live happy and meaning filled lives regardless of your financial situation. He does bring up the health care cost conundrum near the end of the book, but really has no solutions for those with few assets and acknowledges that is a difficult and perhaps unsolvable issue.
Fiscal trouble ahead for most future retirees talks about how the fiscal downturn destroyed 40% of Americans personal wealth coupled with pressures to reduce Social Security and Medicare benefits and evidence that 53% of Americans 30 and older are on a path that leaves them financially unprepared for retirement creates a perfect storm.
A lot of people struggle with how to know how much they will have as income as they age and you can't know if you are on a reasonable financial and lifestyle path if you don't have that information. The Social Security Administration makes getting an estimate of your monthly benefit easy with their My Social Security page where you create an account that lets you get benefit estimates and later sign up for benefits, etc. If you have a 401k, 403b or similar account your account holder may have a web based tool that lets you estimate your monthly benefit at different ages or have a representative who can assist you in doing that. There are other tools available but pick them carefully as some are designed to encourage you to invest in their products.
The key is to get an idea of what your after retirement income will be and how your income streams will be designed. That can include rental property income or renting out a room or storage space in your home. It may include a job but it can be risky to count on that as your health or the economy may make that difficult.
We are just under 5 years from my husband's retirement and I have already basically retired (I'm older, have had health problems and seen my career derailed by the economy). This past week we have been looking at income estimates from our various retirement income sources and discussing some of the decisions we will have to make before knowing the final number (e.g. single life or survivor annuities, monthly cash withdrawals, etc.). It is not simple and we will take advantage of our access to Federal employee retirement seminars, TIAA-CREF's individualize counseling and online tools. I do update annually a simple spreadsheet with estimates for each income stream - it helps us sleep at night.
On a personal level, the fact that concerns me the most is that health care costs continue to outpace inflation and long term care costs could wipe us out. Can't control that, but when you couple it with our plan to relocate close to our sons in S. Cal and go on at least one major trip a year and we will have a more expensive retirement than we would if we would live in a location with a low cost of living. So this is a topic of great interest to me.
Some other aspects of Preparing for Retirement that also interest me and that I will be writing about are:
- How you will spend your time in retirement & starting now to live it on a smaller scale
- Keeping physically fit as you age
- Living large while living frugally
- Seeing the world and learning new things in retirement
- When spouse's have different visions for their retirement
Suggestions for other topics? I would love to get a discussion going about this!
I loved Best Exotic Marigold Hotel. It goes to show you the truth of the old saying: men plan, god laughs. Yet, plan we must.
ReplyDeleteYou are so right. The key is to keep in mind that a plan is just that. What happens may be very different.
DeleteI love Jeff Yeager's books and will need to read that one. I think his main idea about having a forever home and forever lifestyle (without "lifestyle inflation") is sound. I feel very fortunate that in Canada, I will only have to plan for supplementary health insurance and not major health services.
ReplyDeleteI like the concept of forever lifestyle without (too much) inflation. Our definition is to make sure we are saving as well as spending on what is important to us. You are lucky to have your health system in Canada.
DeleteI just put a request in to my library for this newest book of Jeff Yeager's and look forward to reading it. He's always funny in addition to being very frank.
ReplyDeleteDo you have a target date on when you think you'll be relocating and retiring? What an exciting transition!
Yes, my husband will retire from his current job at the end of 2017 and we hope to relocate soon after that so it is 5 years away. I realized recently that I have already retired! I'm 3 years older than he is and have been working as a consultant for year's since the last company that employed me full time was bought out and the employees weren't wanted. I recently chose to schedule cataract surgery at the earliest possible date which meant I had to turn down my remaining regular project. I feel relieved!
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