Saturday, December 22, 2018

6 Things Retirees Can't Afford

     Right now I'm feeling a little cautious, maybe because I'm realizing that I've grown complacent after ten years of good economic times. My retirement funds are flush because of a rising stock market; we've been able to sell our old house and move because of the good housing market; and we haven't had to worry about our kids because they've been working and prospering in their careers. But as we know, all that can change pretty quickly.

     We should keep in mind that we are lucky to be able to retire. It’s an option not available to many others in the world. And except for the rich and famous, it was never available here in America until well into the 20th century. And who knows if it will be available for our children and grandchildren?

     There are no guarantees that come with retirement -- any more than guarantees come with a job, a marriage or how our kids are going to turn out. All of life is a gamble. So I'd like to reflect on some things we simply cannot afford to do if we want a secure and happy retirement. Let me know if you disagree, or think I'm worrying too much. Or maybe you have other suggestions about what we should be careful about, especially at this time in our lives, as we face another new year.

     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, 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 should make sure that our investments are diversified, and if possible that our income derives from several sources -- Social Security, pension, savings, working, whatever -- so if one source runs into trouble the others will pick up the slack.

     2. Or 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 it may never fully heal at all. So we should get our checkups, eat right, sleep well, avoid stressful situations, get our exercise. But let's not be foolhardy. Walk or hike, play tennis or golf; don’t go skiing or skateboarding or skydiving unless you really know what you’re doing.

     3. We can't afford not to downsize. We may like our suburban house with its backyard, and there are probably sentimental memories attached to it as well. But we are getting older and less able to clean and maintain and improve 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 like Miss Havisham from Great Expectations – rattling around in a big old white elephant that’s falling down around our feet.

     4. Or not to plan ahead. Retirement is not a destination; it’s a starting point. We may have planned out our retirement lifestyle and think that all those decisions have been made. But life goes on. Maybe you now need to account for your creaky knees or painful hip, and live in a place with a bedroom on the first floor. Maybe your divorced daughter will come back to live with you – or perhaps there’s a grandchild in your family now. Our job is to look ahead, as best we can, and set ourselves up for the most likely possibilities, and then still be able to adapt to new situations.

     5. We can’t afford to lose our friends. Many older people are lonely. They’ve lost some friends; others have moved away; the kids are 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. B and I moved away from our old hometown, in part because our old friends were drifting apart for one reason or another. Now we've moved to a new town, and we're trying to take the advice of B's older brother who relocated about ten years ago. He told us: Say yes to everything -- to every invitation, every activity -- and eventually you'll find a new and hopefully supportive group of friends. We're still working on it. But we are invited to a Christmas party hosted by one of my new golfing buddies, so we're making progress.

     6. Or take our family for granted. Our kids, or our siblings, may have been around so long that we just assume they will always be there for us. But no law says they can’t move away for a job or a new lifestyle. We need to make an effort to stay connected to our families -- which, in our case, means driving a thousand miles up and down the East Coast, and taking an occasional trip on American Airlines to see the West Coast branch of the family. So before any of us retires to Hawaii or Key West, or possibly another country, we need to think about how we're going to stay in touch with our family. And as B and I are beginning to find out now -- you can never underestimate the pull of grandchildren. For, as I discussed in my last post, we all have the cutest grandchildren in the world!

18 comments:

DJan said...

Very thoughtful and informative post, Tom. I have now been retired for a decade and have found that my new friends are wonderful and not to be taken for granted. I am grateful for Facebook that allows me to see siblings and nieces and nephews that otherwise I would have lost touch with. And I haven't been skydiving for three years now. I got too frail and worried that I might hurt myself, and I knew what I was doing but knew that any injury would take way too long to recover from. :-)

Anonymous said...

Your blog is always so wonderful...I don't see or speak to any of my family, my family has been for 44 years my hubs and then our angel of a daughter..strangers became friends to me many years ago..I got a phone call from a relative in sept. and I could have gone the rest of my life after the phone call, still the same selfish and self-centered person, I think one can choose their family not the people they supposedly came from..thanks to the higher power in our universe my hubs is a cheerful happy person and he was the oldest of 8 living siblings so he had to take control he never ever would be like the people I supposedly came from..our only lives over 4,000 miles away but we talk each morning and sometimes eveings~ I have friends I have known since my childhood who are closer than blood relatives..Happy holidays and keep blogging and peace, joy and love in 2019!!!!!!!!!!!!!!!!!!!!!

Rian said...

Tom, you hit on some very good spots with this blog. DH and I have been retired for 9 and 7 years. And although we are able to live pretty much the same as we always have without a paycheck, it's beginning to be become an issue lately. This is because of exactly what you mentioned... bills keep going up and maintenance. I worry that although we're comfortable here and like 'retiring in place' because of friends, family, doctors, etc., we may not be wise to keep this 4 bedroom house for too much longer.

We do have family spread out all over the US (including Hawaii) and do try to keep in touch. However, we are lax about traveling too far (issues: cost and age). Luckily our health hasn't been too much of a problem and we're aware of doing our best to keep it that way. But you are right about the possibility of living another 10 to 20 years and whether our health and our finances will hold out is a concern.

gigi-hawaii said...

I am grateful I have an extended family with whom to visit during the holidays. I plan to remain in my 3 bedroom 2 bath house, because it costs so little to live here. No mortgage, no maintenance fee and no rent.

DUTA said...

The most important thing is to learn not to depend on others , especially not on the various "professionals" (gardeners, cleaners, hairdressers, plumbers, electricians, technicians). In the age of Youtube tutorials, we can learn to do almost anything, at any age, both men and females.
Do-it-yourself saves a lot of money and nerves,exercises our mind and body, keeps us busy with real things.

Downsizing and decluttering - good point.

Keeping healthy and avoiding doctors, is quite possible by controlling stress and bad nutrition, the two main killers. Watching one's weight is crucial and this is done only by a low-calorie food intake and adequate sleep.

Jono said...

I have seen several retired couples move from their retirement home to be closer to their grandchildren. I also agree with financial diversity being very important and health is an ongoing concern. I added a half mile to my walk today, for example.

Barbara said...

Good list. All things that have crossed my mind from time to time. Health, wealth and happiness. Need them all.

Mr J said...

Great blog, always enjoy reading. I agree with your suggestions except giving up skiing. If healthy enough, it's such a great experience, and as we age, we can become cruisers rather than racers.⛷️ Another suggestion is for your readers who love music from their past. Keep going to concerts, there are some great groups that are still out there (Rolling Stones, Paul McCartney, Tom Rush, etc). They will bring you back to some wonderful times in our past. More $ now for tickets, but really worth it.

Keep on Rockin.🎵🎵

Thanks Tom.

Diane Dahli said...

Thanks for writing about what we retirees need to know! You covered it all—finances, health and social well-being. I especially pay attention to downsizing these days. I moved from a large two-story house into a ground floor condo thirteen years ago. I'm still downsizing, though, because I find, as I get older, that clutter causes stress and inconvenience. My head is so much clearer when everything is in its place, and easy to find! That's easier to manage if you have cleaned out all of the surplus 'stuff'!

Janette said...

I wish I had a way to tell the future and figure out how much money we will need to be fine.What will our pensions be like in ten years? How about Social Security? Will the stock market continue to be CRAZY (funny how no one is writing about that)? Will national health care come---and will we have to buy special insurance to get procedures because we are old? Will our grands be able to go to college and start their own families at a reasonable age? How long will I live if my mother is almost 90 but my dad died at 74 (gosh that isn't far from my age now)? I am not really worried, I just wish I knew.
We have downsized stuff- but not house size. It is paid for, in a safe area, super low taxes, good access to local foods/beach and lots of room for visiting grands. They do visit. I don't want to get caught in condo fees until I have to.
Thank you for giving me even more to think about. Hopefully I will have some solutions by the time I am 80!

Tabor said...

This is all good advice. We moved, not too far away, but always know that children and grandchildren can also move far away. We sold the big house but did not downsize and got a medium house with big yard. Hubby is stubborn about downsizing more, but I think he will have no choice as the years move on.

Anonymous said...

Tom

I love reading your blog. My husband and I are both retired I am 78 and he is 94. We saved money and sometimes did without things we wanted. The unthinkable happened my husband is in a nursing home and has dementia. We don't qualify for medicaid and I am paying $541 a day for his room and board. We live in CT so you know how expensive it is here.
I can't plan for the future because I don't know what it will look like.
I'm sharing this because so many retirement articles never seem to mention this scenario.

Gertrude said...

To those living "rent free" in a paid off house... it is not "free". Repairs come along to bite you! In addition to property taxes and routine expenses... there are the unpleasant surprises. Last summer the water line from the main to my house sprang a leak. Repair is not a home owner task... even for the very fit. Eight thousand dollars later I have a new water line, a messed up yard and a depleted checking account. Plan, as best you can, for the gotchas that come with owning a house... even a small, paid-for house.

Linda Myers said...

This is a GREAT post, Tom. I hadn't broken out the areas to watch, like you have, but it's comforting to see that, as usual, we are by no means alone or different. I love that we are all in this retirement thing together. I try not to take anything for granted, but sometimes I do anyway.

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David @ iretiredyoung said...

A thought provoking post as usual, Tom. We've downsized significantly recently and are enjoying being closer to our kids in our new location (not that close, but much closer than we were before).
My favourite item is number 4, remember to plan ahead. It could almost be a catch all for the others, but it also reminds me that our retirement (early or traditional age) is much better if we put some effort and thought into it. I think that doing this has been the most influential thing in my first two years of early retirement, and they've been two good years.
Best wishes for the New Year.

Wisewebwoman said...

Thanks for this post Tom. I am trying to be frugal and learning to say no which can be difficult. I want to chew down on life as fully as I can but financial circumstances (in regard to my real estate which didn't have the value I predicted once the neighbour clear cut the woods next door and threw up ugly eyesores). I don't mull or stew over that, the past is the past but I need to monitor and conserve more and try and improve my health.

Very timely reminders.

XO
WWW

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