“It was the labor movement that helped secure so much of what we take for granted today. The 40-hour work week, the minimum wage, family leave, health insurance, Social Security, Medicare, retirement plans. The cornerstones of the middle-class security all bear the union label.” ~ Barack Obama
An alarming 37% of middle class Americans believe they’ll work until they’re too sick or until they die. Another 34% believes retirement will come at the ripe age of 80. Just two years ago only 25% of respondents felt the same way. ~ Forbes
Photo credit to Tax Credits on Flickr.com.
I have read so many financial guide books and one of the most fitting descriptions I have heard about our ability to save money talks about money being like water running through our hands—we just can’t seem to hold on to any of it. So here are some suggestions from a couple who are retiring this month and we’re only in our late 50s. Note that there are many ways to find retirement success, this is just one couple’s crib notes.
I know a lot of people consider this seriously, so I thought I’d mention it. And people laugh when I suggest that you marry a smart, beautiful, and *rich* partner. One of the favorite quotes online is, “Don’t marry rich, be rich.” If you want to make it to retirement age without running into divorce, you need to consider a lot more than money, but still. Fortunately my lovely wife didn’t consider this an imperative; I was dirt poor with very little to offer when we got married. It was clear to me, and probably others, that I was marrying up.
Pay yourself first
You’ve arrived in the world of a full-time job. If you are successful here, you will get periodic pay raises. Assuming you are making enough to feed yourself and family, if that applies, I have a suggestion for you. Pay yourself first. Split your pay raise and put it into savings. You will still get more money in your paycheck, and you won’t miss the money that you didn’t have the month before. If you do this through out your career, you will do very well indeed. The money will grow so fast, you will be tempted to spend it. But try to consider that your money for retirement only.
There are many retirement calculators like this one from Forbes. If you think you are on a good trajectory to retirement, you can pay a financial advisor to check it out. Or you can use one of the many free calculators that are available online. Click on the screenshots below to find more information.
There is a lot of fear about whether Social Security will be there when you reach retirement age. Born in the ‘50’s, I can expect full social security benefit at 66.5 years of age. I joke that by time my son gets there, he’ll get full benefit at 92. But unfortunately for a lot of people, this is a big part of their retirement plans. If a large percentage of the rich and powerful have their way, this benefit will go away. I won’t go into the politics of this, but it will take a very educated and active population of citizens to protect this benefit from those who would remove it to save their business a little more money.
Stock market fear is out their too. What happens if the market crashes, again, just as you need to pull from it to live. There are ways to mitigate the risk in your portfolio. But that assumes you know what they are and make decisions at the right time.
I have hedged my portfolio by purchasing property. I bought a small parcel on the lake through auction.com for less than a quarter of the cost it had been listed for. I purchased my home during a housing market crash for almost half what it had been priced 4 years earlier. And I purchased another rental house well below market value from a seller who had trashed the house over 35 year period of time. If you consider this as an option, you will want to have some serious home maintenance skills. YMMV.