View Full Version : Retirement panic
After a life of working counter-culture jobs, and spending the bulk of my time in my Family-of-Origin based co-dependent search for meaningful relationships rather than meaningful work, I am turning 56 this year with a mountain of debt and puddle of retirement savings. Panic button.
My DH & I just consulted a financial planner, and we're on the right track with our planning, we have a good understanding of the challenges, and we track things well. Ok. So, what have you done to address retirement savings? I need suggestions. I've been joking for years that my retirement plan is having a younger husband (he'll be 42 this year), and it's getting to be a worn-out joke. Though it's actually true... and I spent the most productive earning years of my life supporting his kids instead of maxing out my potential, so I'm feeling a bit ok about this... but cannot count on it for sure.
What have you done about retirement?
I have money, not so much because I planned for retirement, but because I like being frugal and most importantly, the thought of having no money panics me. I am wired to fear and hate debt. Interest is THE ENEMY.
So it wasn't so much a practical sound investment program I've got as an emotional averison to debt. That created an environment for money to accrue.
Men who came with financial baggage were never remotely on my radar as marriage material or even as serious boyfriends. I have to say that men with children were in that category. Sorry! Looking back, I don't know how I avoided even dating a man with children, but I did. I didn't get married until I was 34 so kids would have been normal for men in this age range, but not for abnormal me! ha ha.
Technically I could probably retire now at the age of 56 but the wild card of health insurance scares me. Our household income has never been much beyond $100,000 and most years it was well below that. DH's income varies.
Aversion to any debt as well for me plus we bought real estate and sold at the right time. I got out of the stock market at a good time and we live very thriftily.
We started late but reading and following sites like this helped a lot....we retired at 62 and 64 years of age and are doing okay with what we have..and love being retired
I am in the middle of reading Gail Vaz-Oxlade's new book (got it from the library) "Never too Late" to take control of your retirement and your future.
She is a Canadian author with a no nonsense way about her I love.
Simplemind
1-22-11, 6:56pm
Iris Lily +1.
My problem is that I think I will always fear running out of money no matter how good my savings are. We have no debt and have been saving like fiends yet I worry about it not being enough. Right now I have great health care and losing that worries me. DH has insurance that is almost as good but his job is volatile compared to mine. I guess I feel it would be Murphys law that if I jumped at early retirement something would happen to his job and our health insurance.
Blackdog Lin
1-22-11, 8:31pm
I am the poster-child of "thinking-about-retirement-monies" will never affect ME. Same (quasi-governmental) job for 30 years, with a pension-to-come (so I'm covered, right?), and busy with life and child and elderly parent committments.....who had the money (or foresight) to think of retirement?
So I'm now burnt-out and needing-out and thinking "I didn't save enough!".
But I think it's gonna have to do. In part due to y'all and these forums, I am living debt-free and think we can live much lower on the food chain (if necessary). I can't predict health-care costs. I can't predict inflation. I can predict that I think I'm gonna "jump off the cliff" and do the retirement thing anyway (15 mos.). I have options to bring a little money in, I have a few skills.....well, it's incredibly scary but empowering too at the same time.....
I need to learn to let go of the fear. I know they say I need $1,000,000.00 in savings to retire.....I'm just gonna have to make do with $100,000.00. I'm a simple person, after all, and luckier than many to have this much.....Actually, I am grateful to be in this good a position.....
Hubby and I never made more than $50,000 TOTAL BOTH OF US COMBINED in a year. We had my two kids living with us and hubby has three kids (older and on their own).
We were/are frugal to the max. We put money into university savings for both my
kids, have no debts (not even a mortgage) and now live on about $30,000 per year. We don't eat out, buy brand name clothes or travel, but if there is something we really want, we are able to get it. I have never felt that we do without anything.
When we became semi-retired the stock market crashed big time while we were renovating. It was the worst case scenario for us. Hubby is very good with investing and I trusted him completely. He told me just to hang on - it was going to be a bumpy ride but we'd get through it. Well we did get through it and are still enjoying the semi-retired life. :)
Debt is your worst enemy. Credit cards are good in that you can collect points or air miles or whatever you are collecting but you MUST ALWAYS PAY THEM OFF EACH AND EVERY MONTH!! I don't believe in buying anything I can't afford. Some people don't understand how we can live like we do, but I look at them with all their buying and spending beyond their means and don't understand how they can live like they do. :)
It's still a good ways out for us but we've both had Roth IRAs and work 401/403 since our 20s. We're DINKs, though not with a huge income though it has improved in the last few years. I suppose the way I think of it is this: if you're older you're likely to be able to tap into Medicare and Social Security because it has less time to implode, also the Boomer cohort has big clout with the govt. Being younger (mid-30s) I have no such faith so pretty much expect that what I save is what I'll have. Therefore, saving a fair bit is a high priority for me. Fully funding a Roth IRA has been above or close to 10% of my income in any given year, and of course the pre-tax 401K type funds are above that. I'd say we've been saving on the order of 20% of our income for retirement for probably close to a decade. Even with that, I hope it's enough. Inflation could be a monster given the federal debt, health care costs are a wild crap shoot. Never mind that we're chasing a moving target: the $1 million one "needs" today will be like $5 million in 30 years but it'll take that long for what I have saved to be $1 million! That aside, I control what I can and one of those things is health. Staying or getting into the normal weight category isn't that complex but it does take constant attention. Many, many scientific studies show that it's worthwhile to do whether by decreasing chances of chronic health problems, lowering morbidity/mortality or lowering one's personal health care costs.
Right, I'm clear that debt is my enemy. Too bad I got clear on that after accumulating it. So, now I am facing paying off debt and saving. We'll see. If there is any money left in my parent's estate when my folks are gone, it's going right into retirement.
What do those of you who have debt do? How do you manage, and how do you prioritize?
chrisgermany
1-23-11, 7:11am
We have figured out several years ago what our retirement income (most of it will come from pension plans) will be. From then on we have tried to live on less than that, even though our actual income is much higher. Most of the excess goes into savings right at the beginning of each month.
We track expenses with great detail, so we know what we spend. This is much better than just estimating or guessing.
I'd rather downsize now and add to savings than spend more now but know that I'd have to reduce our lifestyle significantly after retirement.
flowerseverywhere
1-23-11, 7:32am
If you haven't done so read the following books from your library
Your Money or Your Life
Dave Ramsey books
Mary Hunt Books
write down every debt you have and every interest rate
Start to pay down one at a time, either the lowest amount or highest interest rate, whatever makes sense to you.
Do not use a credit card. If you end up eating pancakes the day before payday oh well. You will survive. No more clothes, no more shoes, no more eating out. Go on a super austerity budget and write down every penny you spend.
This is not deprivation, this is survival. The longer you do this the more you realize how meaningless all this stuff is in your life and how enjoyable debt free living is.
The safety nets/entitlements etc we have all known all around the world are disappearing. Governments cannot sustain their current levels of social security/pensions etc. You only have yourself to depend on so get to it!
if you are really brave post your monthly spending in every category and I bet you'll get lots of suggestions where to cut. Beware though, it won't be pretty.
edited to add also beware of a financial planner. They have to make money to and if you invest with them be careful they have your best interest, not theirs at heart.
[QUOTE What do those of you who have debt do? How do you manage, and how do you prioritize?[/QUOTE]
The best thing is to setup a plan and get out of debt. It has to be a "doing" type of thing!
Ed
chrisgermany, that is what we did. When we retired it was so easy because it turned out we had been living on only our retirement income for several years.
Tracking actual spending gives us knowledge of habits and how to change (or if they need to be changed).
We have spent the last five years or so paying catch up. Luckily no debt except for small mortgage balance. Our dilemma is that our house needs a lot of maintenance so we need to decide whether to use savings, sell and downsize or take on debt to do repairs. I keep reading all these dire, scary predictions for our retirement years so I always wonder what the reality will be. I am sure there are lots of seniors scraping by in one bedroom apartments or mobile homes all over this country.
There's always the debate about paying off high interest or low balance first. For me, it worked to go for low balances because now I've got two CC's paid off and one high balance one to go. Now I can put more on that one high balance one. For me it's psychological even if perhaps it wasn't the 'wisest'. I feel I have made progress and actually see results. It's till hard for me to really put lots more money towards it because I want to save and see that balance in the savings go up. I'm very emotionally based. I found that making extra small payments towards one card at a time helped bring the balance down quicker also. I'm still working on it.
Do not use a credit card. If you end up eating pancakes the day before payday oh well. You will survive. No more clothes, no more shoes, no more eating out. Go on a super austerity budget and write down every penny you spend.
This is not deprivation, this is survival. The longer you do this the more you realize how meaningless all this stuff is in your life and how enjoyable debt free living is.
:+1::+1: TWO thumbs up to this advice!! You won't find better than this! Well said flowerseverywhere!
flowerseverywhere
1-23-11, 3:16pm
:+1::+1: TWO thumbs up to this advice!! You won't find better than this! Well said flowerseverywhere!
Thank you Hattie. I thought at first I was being a little dramatic but it is what we did. Lucky for us, when DH was disabled we had no debts, we might have lost our house. It was scary and luckily he recovered.
You know, as I read all the news about what our lawmakers want to cut I think it is only a matter of time before they get to social security/medicare. As it is, SS had no cost of living increases for two years and I would not be surprised if this led to a decrease in all of our projected amounts. Another thing to keep in mind is if your spouse dies, you only get one amount, the higher of the two however your costs won't be cut in half.
Also, Medicare is not cheap or free. You have high co-pays and also pay a premium which I think a lot of people don't understand. I help MIL with her medical bills and she is healthy yet still pays a lot in medical.
This example is applicable to the US but every country is facing financial woes these days so we all better pull ourselves up by the bootstraps and seriously figure out how to be debt free. No government fairy is going to wave a wand and clean up our financial messes. Regardless of how anyone got there, it is crucial to take responsibility and move forward every day.
I started working for government before I was even out of highschool. Stuck with it for 30 years. I wasn't much of a saver to start with, but then YMOYL and the Tightwad Gazette came into my life. Turned me around completely, and now, at age 50, I'm "retired." Not that I would ever actually retire. I now have my monthly pension and many part-time jobs. I'm actually planning on going to graduate school in another year or so to start another career. I live on as little as possible, and save as much as possible. It has not been easy. There were many times when I was getting up and slogging through work every day for 30 years that I wondered if it was ever going to pay off. But now when that pension shows up each month, I realize that all those years when friends were taking vacations, buying new cars, expensive jewelry because they were "worth it", and taking "time outs" from their careers, that, yup, all those dedicated and frugal work years are now paying off.
frugal-one
1-23-11, 7:05pm
I am retiring in 34 days and a wake up. We make lists of things we need and get used (garage sales/auctions/thrift stores) and only buy new when we can't find. Recently, I went met with a few neighbors and the subject of wealthy came up and they all looked at me. HUH? I said "don't look at me"... but I am rich. I have everything I need.
One thing people talk about needing is health insurance. I recently talked to a fellow and he stated he gets health insurance through his local chamber of commerce. He pays $150/year (no need to be a business) and is able to join. For those thinking they may not be able to retire should consider this or think outside the box?????
If you haven't done so read the following books from your library
Your Money or Your Life
Dave Ramsey books
Mary Hunt Books
write down every debt you have and every interest rate
Start to pay down one at a time, either the lowest amount or highest interest rate, whatever makes sense to you.
Do not use a credit card. If you end up eating pancakes the day before payday oh well. You will survive. No more clothes, no more shoes, no more eating out. Go on a super austerity budget and write down every penny you spend.
This is not deprivation, this is survival. The longer you do this the more you realize how meaningless all this stuff is in your life and how enjoyable debt free living is.
The safety nets/entitlements etc we have all known all around the world are disappearing. Governments cannot sustain their current levels of social security/pensions etc. You only have yourself to depend on so get to it!
if you are really brave post your monthly spending in every category and I bet you'll get lots of suggestions where to cut. Beware though, it won't be pretty.
edited to add also beware of a financial planner. They have to make money to and if you invest with them be careful they have your best interest, not theirs at heart.
+ 1 :+1::+1::+1: Excellent advice. Get out of debt first then you can start investing.
What I would suggest is writing a list (I think someone else had this suggestion) of all of the debts, in order of the highest interest rates first, down to the lowest interest rates. Then start paying off the highest interest rates first.
There is no sense in saving money until you get out of debt. If the financial planner is telling you otherwise, stop listening to them, they do not get money unless you are buying something.
If you are badly in debt, and the credit people are calling, you might be able to get the debts consolidated into one, at a lower rate. It depends on what the debts are. Only you and your family can get you out of debt, so do that as aggressively as possible. See if you can take on additional work, make more money, sell more stuff, etc. Anything to get out of the debt.
Unfortunately not much. I'll be 50 soon and have never made more than $10.50 / hour in my life. I have a mountain of debt from trying to help out my kids that I'm hoping to get paid off by 2014. I'm about to go back to school to get my master's, if I can get into a particular program, this fall. It'll take me *3* years!!
I wish I would have done a few things differently, but it is what it is and I just have to do my best.
OK, I do not mean any disrespect, but you are in debt, why are you going back to school to get your master's? Wouldn't it be better to take a second job, and get rid of the debt quicker? Then you could go back to school.
Because going back to school means, first going into more debt, and having school loans to pay off. And you know that it will not only be the education costs, but also the extra gas going back and forth to school, the late nights, extra caffeine, bad diet, cost of school books, computer, internet, and everything else in-between. I do not understand going to school and getting yourself deeper in debt.:0!
The Storyteller
1-24-11, 7:49am
If you haven't done so read the following books from your library
Your Money or Your Life
Dave Ramsey books
Mary Hunt Books.
http://www.backyardchickens.com/forum/img/smilies/thumbsup.gif
Excellent list.
The Storyteller
1-24-11, 7:55am
Because going back to school means, first going into more debt, and having school loans to pay off.
I have a masters degree and didn't take out a single school loan for either undergraduate or graduate education. I tend to agree that getting out of debt first would be a good idea, but if she can work on her masters as well as pay off the debt over the next 3 years I don't see it is quite that big a deal.
What have you done about retirement?Got out of debt as fast as possible and have stayed that way. Built up savings for planned expenses and set aside funds for unplanned & Emergencies (I distinguish between the two). After all that was done, then we started saving for retirement. Retirement savings with debt strikes me as ridiculous for anyone under 50: pay down the debt first, then put all that money into retirement accounts.
Over 50, it's a numbers game. If you're starting from $0 in retirement and still have debt, you need to sit with your spreadsheet and figure out the course which maximizes your net worth across time - there is no easy answer and there is guesswork involved in expected returns over time.
Thinking about your other posts, you've still got 8-10 earning years in front of you. I think you need to find a way to visualize your debt (besides a string of numbers) and put it where you can see it *every day* as a motivator. Then let your creative juices take you to the place where you can live comfortably and move that debt indicator towards $0 as fast as possible.
Got out of debt as fast as possible and have stayed that way. Built up savings for planned expenses and set aside funds for unplanned & Emergencies (I distinguish between the two). After all that was done, then we started saving for retirement. Retirement savings with debt strikes me as ridiculous for anyone under 50: pay down the debt first, then put all that money into retirement accounts.
Over 50, it's a numbers game. If you're starting from $0 in retirement and still have debt, you need to sit with your spreadsheet and figure out the course which maximizes your net worth across time - there is no easy answer and there is guesswork involved in expected returns over time.
Thinking about your other posts, you've still got 8-10 earning years in front of you. I think you need to find a way to visualize your debt (besides a string of numbers) and put it where you can see it *every day* as a motivator. Then let your creative juices take you to the place where you can live comfortably and move that debt indicator towards $0 as fast as possible.
Ditto.:+1::+1:
Ed
Unfortunately not much. I'll be 50 soon and have never made more than $10.50 / hour in my life.
I hear ya...I will be fifty this year too and I have never made more than $11.00 per hour. Today I am home sick for the second day in a row...I have no paid sick days, no paid vacation days, no paid holidays and no health insurance. Oh yeah, the joy of working retail for a tiny independent business which is struggling due to the economy. It's like all of the sudden I woke up from a 3 year binge of pretending I was still in my twenties and going out all the time, spending tons of money at the bar, and feeling really smug about acting so "young." Foolishness, for the most part, and a lot of money that I could have socked away is gone. Luckily, I don't have any debt right now (however, I just spent $1000 on a car repair and having to get new glasses). I do have an IRA I started a long time ago that has about $35,000 in it right now. I have always been quite frugal (except for my partying ways as of late) and I am bound and determined to step up to the plate and have been working on getting back on track. I need to make more money, as simple as that. I need to find a new job because there is no future at my current position. I need a job with benefits. I desperately need to upgrade my skills.
Ughhhh....now I need to go back to bed...feeling pretty sick...
margerymermaid
1-27-11, 4:52pm
I got out of debt about 8 yrs ago and have stayed out. I use a credit card for my small business but always pay it off each month. I, too, live in fear of being in debt again. I learned the hard way, and it took a long time to get out of it. I did get a smallish inheritance about 8 yrs ago which helped tremendously. I downsized, moved, and bought a small very modest house outright, so I have no mortgage. I live on about $15,000 a year quite comfortably and because I love my work I hope to never stop. But I should be able to live on my SS when I have to stop plus I have some monies saved from ROTH IRA and a pension annuity which was a 401K from a job I worked in for years that I hated! I don't have dependents anymore, and I"m single, so I can float my own very happy boat. (no one elses financial problems) As for health insurance, I pay over $300 a month for a useless catastrophic plan and will continue to until I can get Medicare in five yrs.
I feel very fortunate that I 'got' the whole stay out of debt thing. Like SiouzQ I spent a lot of my younger years partying and wasting my money. Come to think of it, my life started to get better once I stopped partying! (ie got sober) Also reading "Debtors Anonymous" and "Your Money or Your Life" and coming on this website for many years really helped me. So thanks!
I am nearing 56, and getting out of debt before saving for retirement is not an option, so I'm doing them side-by-side. I too took on debt for grad school, more than I should have. Some would have been okay. I immediately doubled my earning power and much more importantly, got access to jobs I actually liked and could bring my whole self to, not just low-paying scut work. THAT has been worth it.
PS~ I'm not panicked anymore... just had to get it figured out!
Due to a wide variety of factors, it is working better for me to reduce expenses than to accumulate money. Fact is, if I live much past 65 I;m probably become eligible for various poor-people benefits that will probably allow me to have a resonably peaceful old age as long as I don't start wanting to do a bunch of middle class stuff like traveling or paying for entertainment.
I've mostly retired, DH retires in 3 years at 70 because he wants to get full ss. We have $4,000 only in savings, and two mortgages. One has 6.25% interest and we owe about $155,000 on it. The other has 3% interest and we owe abut $97,000 on it. Our house is underwater. We are paying off the bigger mortgage first and if nothing changes for the worst, will have it paid off three months after he retires. We are doing this by paying down the principal each month by $3,500 and living very frugally except for medical care for me, which hopefully will diminish in the next few months.
If we pay this one mortgage off, the other is cheaper at $304 a month and either of us would be able to handle that on our ss. We will never have a lot of money, but hopefuly enough to live frugally on.
We will have to get in extra principal payments to make up for the three months after his retirement that we'll still have that mortgage. We haven't figured that one out yet.
Fortunately our priorties for life after retirement pretty well match each other's.
There are certain advantages to paying into retirement prior to paying off debt, and the advantages sometimes depend on the type of debt one has. Housing debt can be rid of by selling the house (if not underwater). In extreme cases, bankruptcy can erase most debt, though not student loan debt. During crisis issues like bankruptcy or foreclosure, retirement money cannot be touched. Some retirement money, such as principal paid into a Roth IRA, can be used penalty-free for certain situations such as medical needs, education costs and sometimes housing costs. Whether this is advisable would greatly depend on the situation. In addition, paying for retirement "early and often" means one can pay less over the course of working life because the interest accumulates to a greater degree. So I would disagree that paying off debt before saving for retirement when younger than 50 is generally best. If you're over 50 with debt and no retirement, you'll have to buckle down and possibly make some difficult choices. Luckily there's plenty of support here.
rodeosweetheart
2-25-11, 11:06pm
Redfox, I am just about your age, turning 55 in March, and here's what we have done about retirement-- sold our farm and paid off debt with the proceeds, paid cash for a tiny foreclosure to live in(and boy, was it disgusting when we bought it, and we still don't have central heat) , made a commitment to no more debt, gotten serious about earning more money, tried to develop a healthier relationship with money, and are starting from ground zero with 401ks at jobs.
What we would like to do longterm is sell this tiny but now adorable and very well located house and buy another farm, where we can grow all our food and take in both my parents and my sons if need be. But that is next year's plan!
I got serious about retirement when I was 40. I put together a spreadsheet of my net worth and where I wanted to be at say 55. I started tracking my spending when my net worth started growing faster than I had thought, so I had a "number" to shoot for. I retired in 2007, I told the boss that I wanted to quit in May, just before my 50th birthday, but he asked me to stay on for a few more months part time so I didn't fully quit till Sept.
So I made a plan. I saved and invested my money. I can live on 2% if I needed, less if I gave up some expensive hobbies. I currently spend about 2.5%-3% and live very well. My net worth is higher now than it was at the end of 2007.
Life is good. I need to start spending more money.
The biggest things I did to become retired was to sell the house and downsize. That allowed me to have a paid off home that was inexpensive and live off a relatively small govmint pension and an even smaller military disability pension. Plus I had a large amount of cash left over to suppliment my pensions for fun stuff. I also never had any debt - all cash, all the time - lived below my means and saved as much as I could even on a small salary. I got a couple of roommates to help pay off the first house early (the one I downsized from), and made what other would have considered sacrifices to live on less money. I didn't consider them sacrifices at all - I love living like that anyways - and that was the key for me: To learn to love my very frugal lifestyle even more than I would a more upscale one. That meant I never felt deprived or had yearnings for "more".
San Onofre Guy
3-1-11, 7:03pm
Spartana,
Did you buy again in Big Bear?
I know that you are Lindi in disguise!
Spartana,
Did you buy again in Big Bear?
I know that you are Lindi in disguise!
Nope, near Temecula. Bigger town, more moderate climate, close to my sister (AKA The Dog Sitter), still close to the mountains (50 miles) and the beach (45 miles), a casino, lots of hiking and outdoor stuff nearby, and (most importantly) lots of wineries :-)!
San Onofre Guy
3-3-11, 10:58am
Don't forget that you back up against one of the major land conservation areas in Socal...Camp Pendeleton. I think the Santa Rosa Plateau has some of the nicest non-mountainous hiking in Socal
Don't forget that you back up against one of the major land conservation areas in Socal...Camp Pendeleton. I think the Santa Rosa Plateau has some of the nicest non-mountainous hiking in Socal
I LOVE the SR Plateau. Hike and run there when ever I can. Also nar Lake Elsinore, Lake Skinner, Lake Perris, and the Santa Margarita conservation area is just to the west of Temecula is great too. Not to mention all the huge horse ranches and avacado forchards. Even have the whole Cleveland Nat Forest to play in as well as the Mt Palomar area and Northern San Diego mountains. Too hot and dry in summer and fall for me but I'll survive! Isn't that what wineries are for ;-)!
Don't forget that you back up against one of the major land conservation areas in Socal...Camp Pendeleton. I think the Santa Rosa Plateau has some of the nicest non-mountainous hiking in Socal
I live in Murrieta (next to Temecula). I work with my family - we build and manage affordable housing in Old Town, Temecula. I also love the Santa Rosa Plateau. I moved here from Newport Beach in 2004 and it took me a long time to get used to the valley. Now I revel in its beauty.
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