Are you worried that you haven't saved enough for retirement now that you're in your 50s or early 60s? Maybe you haven't managed to save at all between paying for college, spells of unemployment, an ill parent and poorly timed investments. You're far from alone. It's sinking in that many people won't have saved enough during their prime working years to fund a comfortable retirement. And since time is short, they will have to take other steps besides saving more to improve their finances. The investment management behemoth TIAA-CREF in its latest newsletter has a good overview of 5 sensible steps most people can take, even as the traditional retirement years loom.
- Take a Good, Hard Look at Your Expenses, Cut Where You Can
- Downsize Your Home Now or Share Living Expenses
- Consider a Second Job or Working During Retirement to Offset Expenses
- Make Sure You Take Steps to Protect What You Have
- Consider Retiring Later
I want to focus on the first step, expenses. We often forget how creative people are at coming up with solutions to problems. Retirement is no different. Many retirees find that they can make significant cuts in expenses without slashing their standard of living. A letter writer to the New York Times put it nicely: “You can get by on a lot less when you’re retired, without really depriving yourself of anything important. ... If I had known earlier how much ‘wealth’ derives from such simple pleasures, I would have retired much sooner.” He's right. Much of our wealth comes from "simple pleasures." The good life is about finding deeper meaning in what we do -- whether we're 25 or 65.
One of my favorite examples of approaching retirement creatively came several years ago when I hosted the public television show, Right on the Money. Frank had been a pharmacist in Denver. Sandie worked as an assistant in doctors' offices. Frank and Sandie owned their home and they were empty-nesters. They were looking at another 15 years of work before they could retire. Sandie didn’t have a pension from work; Frank would get a lump-sum payout. They calculated it would be nowhere near enough to live on for the rest of their lives. "So then we decided, well, do we care if we still work? No," Sandie said. "We just don’t want to work all the time." They sold their house, bought an RV and started living in it full-time. "We decided that if we didn't own a house, we only needed half the income," Frank said.
They hit on a plan after some trial and error. Frank crafted a deal with his former employer to work the winter months in a pharmacy in Yuma, Ariz. Sandie found a job working 20 to 30 hours a week as a cashier at a craft store in Yuma. They put half of Frank's income and all of Sandie's into a savings account during those 6 months. They had no debt.
The work-and-savings liberated them for the next 6 months. They lived for 3 months on a lake in the Colorado mountains. They got their site in the park and utilities free in exchange for maintenance work at the campsite. The other three months of the year they join the RV Care-A-Vanners and built Habitat for Humanity homes.
Examples like this are not only heartening, they're important. Sure, the financial services industry makes it seem like you have to save enough to fund European hiking trips and cruises with the grandkids. Anything less and you're a failure. Not so.
Yes, some people will live that lifestyle. Yet many others will create wonderful memories exploring mountain nearby ranges or taking the grandkids to a nearby lake. It's the experience and the time together that matters. Most people have a lot of leverage on the quality of their retirement by paying close attention to their spending habits.