This morning I talked on the phone with my friend about our financial plans for retirement. We discussed how much income we will have, where we will live, what housing and living expenses will cost, and other subjects.
It is so important not to let retirement sneak up on you! I can't tell you how many of my dancer friends have had to have unexpected surgeries at around the age of fifty. None of us had purchased disability insurance. (which is very expensive.) When you are self employed, if you can't work, you don't get paid. No one thinks that they are going to be the one on the operating table, but it is highly common.
I never imagined that I would be having my hips replaced at age fifty. Fortunately, I had six months of living expenses in my savings account. I also had a large stockpile of food, a productive garden and orchard, and a paid off home. Many others aren't so lucky.
It's wise to rehearse for your retirement. Practice living on the amount of money that you anticipate receiving. Factor in for inflation. That surprises many people. How long will your car last? Will you need to replace it? Can you walk or bicycle places so that you aren't wasting trips? Keeping your mileage low really saves money. Older cars are much cheaper to insure and register.
Will your home need a new roof? How about your appliances? How old is you water heater? Do you have mature trees that need trimming? All of these costs can sink a budget, if you haven't planned for them in advance.
I personally think an older person should have five years worth of living expenses in savings. If there's a downturn in the market, you can pull on that cash and not lose a huge percentage of your principal.
It's helpful to keep track of your net worth. You can check your home's value on Zillow or Realtor.com. If you add up the totals on what you have, you can get a visual picture of whether or not you are headed in the right direction. Planning is everything. Just getting started is the main thing.
How does your future look? Do you feel confident and optimistic about the old lady or man that you will become? Will that person be secure and comfortable?
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I love how organised and forward thinking you are. It's such sound financial advice too.
ReplyDeleteThank you, Cherie. Time seems to speed up as we get older. Finances can either be a source of stress or security and relief.
DeleteBeing a teacher, I was very fortunate to be part of a really good pension scheme and the payments from that, plus my state pension and other bits and bobs keeps me comfortable. Very wise words above, it's all to easy to ignore that part of ones future but costs don't shrink, they expand, and future proofing is fairy essential really. xx
ReplyDeleteYes, they do expand, Cherie. A paid off home in retirement makes all the difference. That's excellent that you have those pensions. It's rewarding to receive those payments into your account in the golden years. Teachers generally plan very well for their retirement. They are better at saving money than most people.
DeleteI cannot agree more about planning for your retirement years very carefully. When we paid off our mortgage we religiously put the amount of the monthly mortgage payment into savings and continued to do that until Steve fully retired, about 5 years later. We also practiced living on just his pension and putting the rest of our income into savings and that lasted about one year. I realize not everyone can operate like we did, but doing these things really set us up for our successful retirement lifestyle.
ReplyDeleteThat's fantastic, Anita. It sounds like you and Steve are really in sync when it comes to money. Congratulations on your successful retirement.
DeleteThis is a great post, Stephenie! I love how you've planned for your future and financial security!
ReplyDeleteWell, I am already retired, but, before I retired, I calculated what my living expenses were to see how well I could manage to live on my retirement income. I was already living below what my projected retirement income would have been, so, I was happy. :)
Thank you, Bless. That's wonderful that you were already living beneath your means before your retirement. It really gives you peace of mind.
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