Wednesday, March 2, 2011

Retirement: Saving for those days.

This Australian fig tree on the site of Rancho Los Cerritos, in the area of present Long Beach, is over two-hundred years old,  still thriving and on foreign soil. This young family here could be living way beyond the current life expectancy, way into their nineties, and they could be living on foreign soil too. Many of us have ended up where we didn't anticipate to be.

Most financial planners and actuaries calculate that you need a good twenty-thirty years of saved up income and a house already paid up. It was a good assumption for our parents' generation. Nowadays, with medical breakthroughs, we  can all look forward to a longer life span than our parents. And, unlike them, we'll not have much savings, nor a house paid up.

So, the first thing we need to do is live below our means while we are employed and able to put away money for rainy days, for children's college. So many things to finance!  If you are a modern two-spouse income household, try to live on just one of those incomes, and sock away the rest.

Did we?
We couldn't save enough for our children's college because we were still paying back our own student loans.
We even tapped our retirements a few times for tuition, to buy our first house, to reconstruct after a major earthquake.

How much money should we have had before retiring?  Interestingly, less than we thought.
We didn't need the things we needed when our family was young.
Our house?  We slashed our house payments in half by moving to a more affordable place.

This is what you need:
Health Care/Medications
Mental and physical stimulation.

Could you live without a car?
Could you live without a land line?
Could you work part time?
Could you make your own gifts?
Could you exchange your services for those you need? For instance, there are time-banks all over the country, an exchange of hours, my cooking for you, you repairing my plumbing.
Could you grow some of your food? Or do your own picking?

These questions are meant to stimulate yous saving buttons. If you could live without a car, you have dropped a good amount of money into your savings. If you already have a computer, you have a lot of networking and entertainment capabilities, including inexpensive ways to read papers and find out about the world.  Track your expenses and make a game of slashing them. 

You don't have to retire at any particular age,  so, plan on working as long as you can and as long as it doesn't kill you.


NormalToEatPB said...

You can go to someone's farm and pick your own food?

dianefaith said...

The surprising and disturbing cost for us has been health care insurance. I never anticipated that Medicare supplement and pharmacy insurance would total over $700 per month for the two of us, and it continues to rise. You think: At 65 I get Medicare and my insurance cost will be much, much less. But, it isn't.
I am considering taking out the land line for my phone -- don't really need it. And, I AM discontinuing cable service for the TV. I'll keep broadband for the computer and confine my program watching to the computer screen.
I'd like to get of one car (we each have one), but can't do that as long as I babysit as much as I do.

rosaria said...

Normal----Yes, You can walk by people who raise food and ask if you could pick some. Most people don't know what to do with their back-yard harvest. Also, there are 'pick-your-own farms.' Many times, in your local paper you'll find under Market Basket or Misc. farms advertising for self pickers.

These cost less, and are fresher than anything in the market.
It you live in the city, you'd have to drive to these places. Well worth it. Kids love to run around and harvest stuff.

Dianefaith--Oh, so true. It was a big disappointment to find out that Medicare Part B needs to paid now, as well as Medigap Insurance which add an additional 200-400 dollars a month of expenses. As working folks we hardly paid anything for medical. Add meds, and your budget shrinks even more.

Suz said...

I think these times have been good in one way...
the young that overpaid for a big house, luxury cars, maxed out their equity for things....have learned a very hard lesson
Like my mother who lived through the depression..your attitude is colored by that...therefore she raised kids (me being one of them)
she raised us in a very simple,healthy,respectful and frugal way....
She has been my life's guide
and we live a good life, but way below our means....
And we try to stay healthy..try..I said...Those nasty medicines can cause damage to ones budget
You offer very sound advice
all you have is all you need, really
Families have done it..survived together, for generations...
neighbor helping neighbor
Boy, am I running my mouth!

Eva Gallant said...

Excellent advice. I can't convince my husband to give up our land line.

Brian Miller said...

lots to think a ways to go but defintiely things to think on now and not wait...

Anonymous said...

Like Diane Faith, I've downsized. Cut out DirecTV etc. Trying to save. $20,000 isn't much in today's economy. But it's something. I do what I can. You never know what might happen.

Your list is right on--the basics. This is where I'm at too.

Terra said...

These are bright ideas and a good list of questions; it is good to plan ahead, that is for sure.

Sightings said...

A few modest ideas for saving money:

1) I canceled my life ins. Don't need it anymore with the kids grown up and on their own.

2) Buy clothes on sale at Macy's. Rarely pay more than $25 for pants, $15 for a shirt., and the last time I bought a suit was 1999.

3) Go out to breakfast or lunch, not dinner. Much cheaper.

4) Cancel health club membership; take a walk around the neighborhood instead. You meet your neighbors that way, too.

Michele said...

ciao Rosaria passavo di qui
Michele pianetatempolibero

rosaria said...

I'd love to hear how you all have cut back and squirrel your money away.

Sometimes, we don't think of something until someone says, I do this, and then we go, oh yes!

I used to cook for six people, and I still do. Now, I freeze the leftovers in single servings, so we have lunches and snacks always handy. Cooking in bulk helps cut down utility costs as well as food costs.

Jane said...

Im astonished and horrified at the vast amounts people in the USA have to pay for health insurance - and that you still have to find large amounts when you've retired from paid employment. Do you also pay dental insurance on top, and for eye care too? What about prescriptions, are they included in the $700 that dianefaith quotes for 2 people?

Did you all hope that Obama's health care programme would happen?

Linda Myers said...

We added one more cellphone to our family plan for $10 a month, ported our landline number over, and cancelled the landline. I let the new phone go to messages. If it's not a salesperson, they'll leave a message. That way, we don't give out our personal cell numbers except to people we want to talk to.

We have the most basic cable but we only watch Netflix - movies and television a season late.

Moannie said...

The car is going very soon, Rosaria, hopefully before it pegs out, seeing as it it ten years old. The only thing we won't stint on is food...JP is the policeman of the light/power switches/and heating.
We have books/music/telly and a dog so we are set for entertainment.

You do give terrific advice.

dianefaith said...

Jane: The $700 does not include dental or routine eye care, but it does include prescription drugs -- to a point. We still have to pay some on the prescriptions.

yaya said...

For me I'm hoping to work as long as possible which means taking better care of my health to keep the fast pace of my job possible. I fear the insurance cost most of all and working in health care I see the writing on the wall for my generation. Many health care measures that we do now for the very elderly will not be allowed or afforded in my future.

The Red Angel said...

This is an excellent post! I'm actually currently studying Economics and we are learning about how everyday we have unlimited wants, and we have to choose what we want to give up in order to gain something else due to scarcity of resources.


Cloudia said...

Excellent advice!

Aloha from Waikiki

Comfort Spiral



Donna said...

We've always been big savers but then the stock market, which we invested in heavily, has cut in half what we have spent our life working for. That's hard to swallow so your advice is right on!

Miss Sadie said...

My goodness, I feels like you've been reading my mind, rosaria. At least when it comes to the needs. Fortunately, medical care in Canada is a good deal better than in the US.

As for transportation, we've gone from two cars to one. And we share that one, sometimes, with our son and family — they don't have one.

Land line for phone, and home security, and internet (= mental stimulation through reading and writing to others).

The rest of the suggestions are open for discussion. Except I'm in no condition to do much of anything by way of work.

#1Nana said...

My brain is working on processing all the information. Since I retired the spouse and I live on only his income and we save my pension. I haven't made the shift from saving to spending yet.

I cut back on book buying and rediscovered the library and also If anyone signs up, tell them MissNana referred you!

I don't buy anything unless it's on sale and I search for coupons before buying anything.

I'm trying to cut back on buying by asking myself if I really need the purchase...most of the time I don't. But, I did get a cute dress at Macy's for an additional 50% off last Sunday!

Forrest Seale said...

Very nice lead it and good advice!

Forrest Seale said...

Opps - must learn to read THEN hit publish. Nice lead IN

the walking man said...

Problem is every time I cut back more the utilities or someone else seems to smell it like chum in the water and they raise basic rates.

becky said...

Living without a car...what a good idea!!
Loved all of the other ideas you had for living without...have a few of my own that go along with my desire to simplify.

Arkansas Patti said...

I really didn't plan well but am so far doing OK. My saving grace is that my house and car are paid for.
A lot of your "could you" thoughts, I could do and may have to.
I do wish I could do with out satellite TV but so far not yet. That is a huge expense but also a great form of entertainment for me especially now that baseball season is near.
Wonderful advice.

Saretta said...

How to save for retirement when the two salaries don't get you to the end of the month? :-(

Pat transplanted to MN said...

Hope those still in the workforce think about this. We fortunately have a paid off home, from selling off in No. CA before everything went upside down there and we moved to MN where we got 5 times the house for less. We had nearly paid off our CA home as well but had a 2nd on it to purchase this one in MN which we bought ahead of retiring, selling off and moving, so it was a tight couple years. Medical costs are often a surprise to folks as someone else commented; people need to know that Medicare has a cost and also does not cover it all.Gap insurance is essential. I am blessed to have our Medi Gap through my retirement system and do not have to go out on the market and pay those prices. We saved a lot too because I put half of my check (I made a great salary while working) monthly into my deferred savings, which unfortunately lost a lot in the stock market, but not a penny of my original investment only the gain. Still that is a substantial pot of $$ that will be on hand and which I don't plan to touch until I reach 70 or whatever that age is when forced to take minimum withdrawals. We spend much less, no need to buy my professional suits, dry cleaning, cost of commuting in CA and when I retired Social Security no longer took the $1000+ per month, whatever that huge amount from my check. So far we are doing fine, but we don't take cruises or big vacations, mostly just in our motor home which we also paid for from the CA proceeds. Gas costs now will take more for that travel, but so far we are fairly blessed and our planning and thrift paid off. Yes we could have done more, but we didn't so it goes. We knew we would relocate out of CA and thought that was an expense, it has paid off.

wvhiker said...

Times are hard, that's for sure. When my family and I moved to NC a little over 5 years ago we were not in the best of shape. Slowly started crawling out of a hole then economy tanks. We are living as frugally as we can nowadays, actually have been for quite some time. We grow our own crops as much as we can, and can the ones we use over winter, do not have a land line, both have cars but definitely need them as we work no where near each other, oldest has car but no job but that'll end in a few months, basic cable and internet, make our own laundry detergent, my wife and I shop at the thrift stores not the department stores unless we absolutely have to have something not available elsewhere, we Ebay or Craigslist what we don't need, etc. We take our lunches to work and always eat in. Wife coupons like crazy and that saves a bundle. There's one saying that I keep in the back of my mind whenever I'm out and tempted to buy something, "Do I really need this?" 99.9% of the time I don't and I put it down. I also work odd jobs and mow neighborhood lawns in the summer for extra $. There's a lot you can do.

Joani said...

Great post. Loved reading all the notes. I have not had a land line for a couple of years. Just when I think I've got things under control, here comes the electric with a $19 a month raise in my power bill. Now, they R wanting to raise the water by 7%. Those at the helm just can't seem to realize that if they don't have it, we probably don't either. I've been thinking of quitting work at the end of the year and after reading some of these....I'm not so sure that is the best thing. So far, my investments have been doing very well but as everyone knows what goes up, must come down. Thanks for all the great info.

Phoenix said...

Ugh. I'm nowhere close. I don't even think I have six months of my monthly take saved so that if I get laid off I would be able to have adequate time to have a job. It's hard, but I'm still paying off hundreds of dollars a month just in student loans.


Granny Annie said...

Bartering for goods and services is an excellent savings method.

NitWit1 said...

Great Post. We owe nothing. We have NO credit Cards. We have two paid for cars and I have always wanted to get down to one vehicle, but the debate begins, pickup or SUV. I have to have stool to get in the pickup and could not drive it. This is a stand off.

My SUV is nearly 4 years old and not at 30,000 yet.

I can stream on my computer--not sure about my all the computers. I keep a line phone. We only have one cell that is pay/minute but rollover costs a monthly fee.

We don't eat out much, not entertain. We have a boat (paid for) and the rental stall is atrocious but storing and driving to the lake, launching, etc. wears me out before we ever get to fishing.

We have savings in CDs which surely are not worth much right now.

We don't gift each other or others, but we are very generous to causes we support all year long.

There are pick farms, mostly berries around here, but I am allergic to just about everything that grows. However, I buy in season for the most part.

However, because of my husband's 22 years military servicee, we are covered, with medical insurance one way or another for life. My husband can sue Medicare/TRiCare for Life, or VA or a military base. I have Medicare/TriCare for Life or a military base. We have prescriptions services with TriCare for Life or military base.

We would need to move to conveniently use a military base medical care.

We could do better, and still eat and live healthy.

RNSANE said...

Excellent advice, Rosaria. I am dealing with my forced retirement now. How I wish tht I were getting a full pension, rather than half. But that is water under the bridge. Though the four nurses in my specialty covered
24/7, we were on half time req ( we
were paid per diem for any hours over half tim ), just so the city could avoid full time benefits. My pension, after taxes would have been double the $2300 I get now. In some places that, plus my $1300 social security, would go far. The solution will be to relocate, outside the Bay area, I suppose, but I am trying to stay in CA since all three of my sons are here. I have definitely cut back on many things so I know that makes a difference. I do have good health care, thankfully, with my retirement and, thus far, have not had to pay any Medicare supplements. My cruising days are definitely over, though, which is really sad for me!!

Vagabonde said...

I wish some of the young people I know in Europe who want to come to the US to live would read your post and all the comments. They would be amazed and realize that this is not an easy country when you are old.

My mother in France who did not have much of a retirement plan and who had Parkinson’s Disease had full free medical, meals on wheels for less than 2 Euros a day, a nurse in the morning to help bathe her and a cleaning lady 2 hours a day paid by the city. In addition she had an alarm on her in case she had an urgent problem and health staff would come, free of charge. She lived to 92 – here she would never have lived as long. Of course here people are against all this as they think it is too socialistic – but in “social” is also “society “, group of people living together. The government here is made by the people and they chose to give tax breaks to the wealthy – there are more children on welfare than in any other Western country and they are closing schools. That is the choice of the people and it has consequences. Everyone has their own priorities but it is hard here to live well when you are a senior unless you have the means. I do not entertain and save on many things, but traveling is more important to me than food or TV. This is a good post.

The Boat House said...

Hi Rosaria, A little late to answer, made daughter's birthday dinner, she is much too old (46) somehow my age doesn't bother me, but hers does, go figure!

House, not paid for (but we're working on it)
Yes, we make gifts, I make jewelry, Ron makes beautiful glass plates, I make herbed salt, Ron roasts our own coffee beans, we've even made our own Mozzarella cheese and we give those as gifts, and we are blessed with friends who love to come over to visit, and like you, a place with a lovely view to look out at. As to savings, gone (we both had multiple emergency surgeries a few years ago (prior to Medicare) and even with insurance there went the extra. We are lucky enough to have a good retirement income, yes, we need a car (live 25 driving minutes from the nearest market), no, we don't need a landline, nor lots of what we consider luxury, but feel we live a better life than when we were both working full time and bringing in a much bigger income. This area is abundant in fruit, vegetable, and dairy farms, and seafood, so we feel totally blessed.

Ah, the wisdom of age, and an appreciation of life.

Greetings, from Nancy at the Boat House in Birch Bay