Sunday, December 4, 2016

6 Things Retirees Can't Afford

     The big day arrives, and we're off on that new adventure called retirement. Hopefully we've got our finances in order, and maybe some dreams of traveling the world or resettling in the Sunbelt.

     We are lucky to be able to retire. It's an opportunity not available to many others in the world and, except for the rich and famous, was never available here in America either, until well into the 20th century. The problem is, there are no guarantees that come with retirement. So as we go forward we should remember that there are a few things retirees simply cannot afford to do . . . and maybe you know a few others that I haven't identified here. 

     1)  We can't afford to ignore our finances. It doesn't matter how big our nest egg is or how generous our pension, we have to remember that we could easily live another 20 or 30 years -- all without a paycheck. We will inevitably go through a financial crisis or two, and perhaps another bout of inflation. The purchasing power of a pension that looks good today could dwindle if inflation returns. Ask your parents who lived through the 1970s and 80s. So we need to make sure our investments are diversified and our incomes derive from several sources, so if one asset runs into trouble the others will pick up the slack. 

     2)  We can't afford to ignore our health. This is right in front of our eyes, but sometimes we don't see it. As we get older, our bodies become less tolerant of injury and more susceptible to disease. An injury we could recover from in two weeks when we were in our 30s now takes two months -- or we may never fully heal at all. So we need to get our checkups, eat right, sleep well, avoid stressful situations and get some exercise. But don't be foolhardy. Say yes to walking, hiking, playing tennis or golf. But don't go skiing, skateboarding or skydiving unless you really know what you're doing. 

     3)  We can't afford to hold on to a large home. We like our suburban house with its backyard and tree-lined street. Perhaps we want to keep the old place so the kids will come home and show the place to the grandchildren. There may also be sentimental memories attached to the house. But again, remember that we now are getting older, and we are less able to clean and maintain a big three- or four-bedroom house, especially if it's showing its age and may need a new roof and new windows. We don't want to end up rattling around in a big old house that's falling down around our feet. 

     4)  We can't afford to skip planning ahead. Retirement is not a destination; it's a starting point and may involve some time for transition. Life goes on, and so we can't think that all our decisions have been made. Someone may need to plan ahead for their creaky knees or painful hip and live in a place with a bedroom on the first floor. Maybe a divorced child will want to come back to live at home, or perhaps there's a grandchild in the future (as there now is in ours). Our job is to look ahead, as best we can, and set ourselves up for the most likely possibilities. We're retired, but we still may have to adapt our lifestyle to new situations.

     5)  We can't afford to lose our friends. Many older people are lonely. They've lost some friends and others have moved away. The kids may be halfway across the country. So we can't just plan where we're going to live and what we're going to do. We have to figure out who we're going to do it with. So we can't be shy about signing up at the local senior center or trying out a new activity where we can meet new people, whether it's joining a card group or taking a dance class. If we're going to relocate, we need to consider where our friends are going and whether we want to join them. Also, we need to make sure to find a community that will welcome us as newcomers, whether it's a retirement mecca, an over-55 community, or (what we're looking for) just a neighborhood with lots of friendly people. 

     6)  We can't afford to take our family for granted. Our kids, or our siblings, may have been around so long that we assume they will always be there for us. But they can move away for a job or a new lifestyle. We need to make the effort to stay connected to family. Before anyone retires to Hawaii, Key West or another country, they should think about the family. And (as I keep reminding B), we shouldn't underestimate the pull of children and grandchildren. For most of us, they're worth sticking around for.

23 comments:

Savvy WorkingGal said...

My husband retired two years ago while I'm still working. He had knee replacement surgery a few weeks ago, so we hired out for leave cleanup and snow removal. As I walked into our home this morning I said to myself we will have to move when I stop working - I don't want to spend my retirement money on services we can no longer do ourselves. We also spent a lot of money this past year keeping our house up.

Friends are also a concern. When we do move we want to be closer to my family since we don't have kids. I'm afraid it will be hard to start over making friends that late in life, but I am a nervous Nellie.

I will say the biggest surprise we've had since he retired are all of the unexpected expenses - tree fell down in a storm, car repair, health expenses, etc.

Linda Myers said...

Excellent post! Every item is right on the money. So far we are doing fairly well except with the house part. We do have a small, very convenient winter home in Arizona, but our Washington house is way too big - both house and yard - for us now that our kids are grown. I am ready to take on that project, but my husband isn't yet. The idea of finding a new place to live is exhausting just to think about, especially when it requires going through our many possessions.

One advantage of a park model (trailer) in an active senior winter resort is that we started out with just what was there and added slowly. All we brought with us was our clothes and our cat. Another advantage is making friends easily, since 80 percent of us are here only seasonally, and we're all looking for like-minded folks.

I have been surprised at the health expenses that were covered when we worked. Medicare doesn't pay for hearing aids, for example, and the copay on my cataract surgery last year was $950. The dental experience is another issue. We go to Nogales, Mexico for most of our care, because it's good care and very inexpensive. But the dental insurance available for retirees is limited.

Juhli said...

Excellent points! I can't begin to describe how glad I will be to shed this too large house and yard in the Spring. Getting it ready to sell is truly exhausting and the expenses of operating the house and eventually hiring help are way too much.

I like your point about friends and family. We are planning to move to a 55+ community and nearer to family and have our fingers crossed that it will be a happy time and place for us for the next part of our journey.

Carole said...

Love this Tom! I can't think of anything to add. The part about friends is something I've come to appreciate ever since I retired. The work related social network is gone, so it's important to nourish those friendships and be open to new ones.

Terra Hangen said...

I think all your points are excellent. Unexpected expenses do occur, you may want to sell your now too large older house, etc.

retirementreflections said...

All so true, Tom. Thanks for this insightful post.

retirementallychallenged.com said...

All of your points are right-on. Although we have no plans to make any changes soon, we'll probably seriously consider downsizing our home in the future. It's not too big, but it does have two stories. Currently, I consider the stairs I have to go up and down a few times a day as good exercise, but that won't be the case forever. But, moving would mean leaving a wonderful neighborhood with lots of friends.

Stephen Hayes said...

Wonderful post. I think I'm on top of all of these.

Janette said...


Excellent list.
One of the most comprehensive ones yet. Hits most all of the pitfalls we have already seen.
To add to the house point- don't forget larger houses are now beginning to depreciate in many parts of the country. Don't think of it as your million dollar piggy bank. Millennials are not really interested in lots of space like their Gen X cousins. If the house is getting "too big" fast, then time to move! Be careful of those condos though. They can raise HOA fees faster then the jump in the market!
If we had to do it again we would take into consideration where the hospitals are in our area (and how good they are). Wonderful to be on a lake in the country. Not so grand when you have a stroke (that you can easily survive if you get fast help).

Dick Klade said...

Excellent advice say I who has been retired for 24 years. Sometimes, however, a tradeoff works. We moved from a HOA town house to a three-bedroom home near our son. The HOA fees kept going up and the loss of freedom became irritating in the extreme. What we paid in HOA fees was more than what it costs to hire contractors to do our yard work and snow removal. The house is virtually maintenance free. Moving up instead of down in housing has worked out well for us.

DJan said...

When we retired nine years ago and left Colorado for the Pacific Northwest, it's all worked out quite well. We take care of each and every one of those issues on an almost daily basis. Thanks for putting it all together here. :-)

Laura Lee Carter said...

Yes Tom, these are all the things we thought about and why we left suburbia and built a solar home in a rural area. We have cut costs, especially heating and electric, and can now live on a little bit more than our social security income. And best of all no lawn, no leaves to rake, just surrounded by natural beauty! Silence truly is GOLDEN!
https://adventuresofthenewoldfarts.com/

Wisewebwoman said...

Thanks Tom. All pints noted. I am looking ahead to cashing out my house and formed friendships in the city I'm moving to. Commuting should also be on your list as many of us are single and if we lose the ability to drive need good public transit close by. That was one of my considerations along with cultural Accessibility. Soul food. 😊
XO
WWW

Tom Sightings said...

Wisewebwoman: excellent point. And Dick, a house that is maintenance free? Don't know where you find that, but ... sign me up!

Kathy @ SMART Living 365.com said...

Hi Tom! Nice take on important issues that actually affects everyone--not just retirees. Even trying to hang on and maintain a large home should be reconsidered if you are single or a couple and just don't need all that space. And while it is popular to call it "downsizing" when we go from big to smaller, as you know I prefer to call it "rightsizing" simply because in my opinion, it is a more optimal move and not a sacrifice. Not only were we able to purchase a "rightsized" single-level home for just the two of us in a nice neighborhood (without any HOAs) we paid all cash so it is free and clear. So instead of using our income to merely maintain a large property we were able to remodel it to include everything that really matters to us. The best move we ever made. Of course, all the other elements you list are very important like planning ahead, taking care of our health, paying attention to finances and continually cultivating friends all must be "rightsized" as well. Thanks for these reminders and may we all find the balance and contentment we seek! ~Kathy

schmidleysscribblins.com said...

Great list. As for the house, its hard to let go. Besides, weare aging in place.

Olga Hebert said...

I will echo the "excellent."

Jono said...

All good things to keep in mind. I think I have to work to 70, but I really don't want to. Downsizing would be a good thing.

Anonymous said...

I like to think my hubs and I are very lucky a paid for tiny home..we are alive, both sets of parents dead many years..My hubs was the oldest of 9 kids and his mom just never expected what happened a child who never talked for 9 years and is developmentally delayed, two sons who were in my opinion criminals, one stil alive the other passed from Aids, daughters she did not care for, we footed a lot of bills even though she had plenty from her first husbands social security the maximum amount..She passed at nearly 87 his dad died young of cancer of the liver at 74 early in our marriage, family baloney..We have one child she does well and travels for her job and is financially great..she has no plans for marriage of kids..she saw what her poor grandmother went thru and my family was a bunch of criminals in training so I had nothing to do with them whatsoever, we worked like hell paid the house off early..We don't go on any lavish trips or anything, we live simply and mindfully..just blessed to have each other, food and hydration and place to live..

Barbara said...

Right on point. We have to be proactive about our retirement. I've seen so many make the mistakes you listed. I fell into a few of those potholes myself.

Dick Klade said...

Tom: Our "virtually maintenance free" house has vinyl siding (no painting), combination windows and sliders (no need to change storms or screens), treated wood deck (no need to stain or paint), and gutter covers (no need to clean often). Might be some things to think about in your housing search. Low maintenance houses can be found in many places.

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gigihawaii said...

We live in a 3 bedroom 2 bath house in Hawaii that costs next to nothing to live in due to our reverse mortgage.