Thrifty or Miserly? Liberated Or Irresponsible? The Big Questions
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I bet I'm not alone as a retired person alternating between feeling scared and adventurous. Some days, I worry I didn't plan well enough. On others I feel like I worked hard my whole life, was dealt an unfair hand, too soon have to navigate life alone, so I deserve to lead the good life now. This week is one of those back and forth mind weeks. On one hand, few of us know how long we'll need our money to last. The thought of being a financial burden, or even a care burden to my kids puts thoughts in the thrifty lane and potentially miser lane. I don't want to have to choose between eating healthy and medications. Spending now on anything but food, shelter, and health care sometimes feels irresponsible.
Reading about retirees that end their months and years thousands and thousands in the black, the goal always building up their bank accounts, while seeming very unhappy with the quality of their life steers me in the opposite direction. That puts me in the lane where I want to look for vacations, hired out home improvements, and indulge or invest now in my kids rather than after I'm dead. I'm sharing a thought I read on this that some people are so frugal they are waiting to spend money on a moment that will never come. I don't want that to be me either. It's a liberating feeling to not say no to oneself all the time.
I know there's a healthy balance somewhere. A few fellow bloggers and AARP spotlights seem to have found a sweet spot. I think my MIL has balanced both their shared retirement and her widowhood on an even keel. Sure, circumstances are not identical, but some strategies used might be generalized. I'm trying to get understanding and adapt the summarized strategies used below by others for myself. (I take no credit or ownership of these concepts.)
- Be comfortable with your rate of withdrawal on retirement plans. Just because experts might tout a "rule" doesn't mean it works for you. Be more conservative if it helps with comfort levels or if you know you have an upswing in finances in the future, you can be more liberal with withdrawals. Keep inflation in mind as withdrawal amounts today will likely not be enough in 10+ years ( or much longer longer). Remember that minimum withdrawals will happen too when you hit a certain age and you don't want a huge tax hit because you were too conservative.
- Remember in retirement you're intentionally spending money for this time in life, but also that you're not likely in a saving mode either, and resources ( time as well as money) should be considered finite. Here is the rub with wanting to both enjoy and care for family and friends and ensure it's not come at the expense of your comfort level now or in the future.
- Do "good" with some of your time and money. In healthy societies, people invest a bit of their surplus in helping others and there are studies that show philanthropy is good to our own well being. Feeling valued and connected as we age is incredibly important.
- Put money in your priorities, not someone else's. Travel, gardening, art, season tickets and other sources might be a goal but none are a retirement requisite.
- Choose to replace items on your own schedule not because the season dictates; invest in things that work, fit, flatter, or make life smoother, but not to just replace for change sakes. A benefit I'm finding to aging is that I really don't care if something is out of style, antiquated, or just old. If it serves my purpose it's good.
- Love the place you call home. When feeling a financial pinch, that fear of missing out is mitigated by being surrounded by and near things and places that make you happy. Decluttering so that you can enjoy the good things already owned is so important. Know what's going on in your community to both support and enjoy without having to spend much money.
- Still have "goal" spending, like a big trip with family, a different car, a new piece of furniture while not denying smaller, more affordable pleasures today. Break these goals into sinking fund set aside to use some day, and use other money for day to day living.
- Have alternative means to get to outcomes. Side hustles might yield more fun money for travel or entertainment without being taxing. Use rewards and cash back to help with the extras in your life. Hobbies and interests might become self sustaining, such as volunteering in exchange for memberships or to an event.
- Look at downsizing or relocating if home costs (maintenance, cleaning, taxes, insurance) are eating up more of your retirement income and time than you're comfortable with. Even if not ready to do so, research options like a smaller or less maintenance home, locations, home types, and resale value so if this is a route, you'll move forward with full understanding.
We are near retirement, but not there yet. One thing that drives me crazy is that so many of my neighbors want to downsize, but it's not economically feasible. Unless they want to buy a fixer upper, it always seems to cost more for them to sell a house that the mortgage is paid off and buy a condo (of nearly the same price AND then have to pay exorbitant HOA fees for the rest of their lives). It's nuts!
ReplyDeleteOh my gosh have you hit the mark with this comment. There is nothing in the same price range as my house would sell for that would simplify life right now. Ideally it would be one level living, including laundry with at least two bathrooms on that same floor. Nope! Anything close is 50% more or would require investing 10's and 10's of thousands. I'll stay out as long as possible , starting with once I'm not able, hiring out jobs like lawn care, shoveling, even deep cleaning. My son is just starting his property search and has options I don't so I'm hopeful by summer the right place comes up.
DeleteThis post 100% resonates with me, and the last few years on my own. I didn't retire with much money, but enough to travel, and to go out to lunches with friends. I go back and forth about spending and saving.
ReplyDeleteIf you're comfortable with how you get to spend your time, you did well. I worry about that big hit that could come, but may never. It's push and pull in my brain.
DeleteWe planned ahead and saved and paid off when we could. I didn't realize I would be alone so young. I have made good decisions on my own. I have a little home, it is paid for, taxes are not bad, so I will stay put as long as I can take of things. We just have to do what seems right for ourselves.
ReplyDeleteIt's sad for me to think why I could retire a good two+ years before I ever dreamt of it is because I'm a widow. Our savings was meant for two people. That's part of why I want to be of help to my kids now and not when I'm gone. I want to experience some of their joy in having nice homes, education or business pursuits, and travel. Absolutely right that we have to only do what's right for ourselves.
DeleteOh Sam, I so here you! e downsized moved cross country, paid cash for a little Home, that needs a lot! Do I spend or do I save, Great question, no kids, but we did not save enough is my gut feeling. I have traveled enough for a lifetime, so that is good. Time what I have left will tell! Not Bossy here!
ReplyDeleteYou did make a huge move, but now you e got your sister's. I know they appreciate you close. You sure have worked on your house. Mine needs lots of TLC from 35 years of family life. Now it's pretty much just me. It's not a small nor big house, but is more than I need.
DeleteI think I have done a good job saving, but I am still very nervous about losing that paycheck, and I think working is probably good for me right now. It provides more than just income. I need to sit and really look at things to see where I stand. To me this feels like jumping into the deep end, not knowing how to swim. I will bookmark this post - you have given me a lot to think about.
ReplyDeleteOh, May last year when there was no deposit on that 2nd Friday was scary! If I was enjoying my job, I'd have kept working. Well, I did enjoy it until too many things started eating away my peace. I should sub more as I find I'm doing too much hibernating ( see previous blog) but I'm also reading, writing, researching, tackling things needing to be tackled. I too feel like I'm having to relearn how to swim.
DeleteI know we will downsize because our house is way too big for just 2 people, but by my estimation we are still 4 or 5 years away from that. We have socked money away and should be ok, but we have lived very tight and, if we have to do it again we both know how. I've always been a pretty cheap date!
ReplyDeleteThe more I see other housing options, my downsizing might be transferring this to one of my children, renting it out, and me travelling with no actual home. Just kidding, but it's a very strange housing market right now. I'm fairly content here and if need be can start hiring out a job here or there if needed. I too can get by on little if I have to, but I don't want stupid spending today to be the cause of that tomorrow.
DeleteI agree that we have to do what is right for us. We don’t know what the future holds, but I think you’ve done a great job planning for it given the trauma you’ve been through. I think it’s terrific that you want to help your children now.
ReplyDeleteNow is when my kids are getting/ just got their homes or figuring out life ahead. They don't need a windfall in some distant time in the future, but little boosts now would make big differences in their choices. I of course can't support four households so boosts rather than dependence would be my help.
DeleteMy house is too big for me and the toilets/bathroom are upstairs so logically I'm thinking I should move. However I love where I live, my little community makes me feel safe and just looking at the view from my back garden makes me feel I'll stay here until I can no longer handle the stairs. This is where my heart is!
ReplyDeleteMy bathrooms are up or down, plus bedrooms. They are not steep stairs though- just 1/2 flights because of the multilevel design of my house. I managed fine after knee surgery so suspect I can stay indefinitely unless I truly can't live alone. Your home place is in such a beautiful area so can see why you'd not want to leave. For me, my yard gives me endless possibilities ( while I'm still ignorant how to pull it off) and I can make this place a good retreat.
DeleteSam, I read this post and grinned "YES!" all the way through. I sometimes have had "Oh, you never want to have any FUN" (or its cousin "April, you just need to get out and have some FUN!") thrown at me, usually from casual friends whose idea of fun is going out and drinking. No, we just define "fun" way differently. Our household is frugal (but not miserly), we don't believe in running up credit card debt for "fun," and we plan bigger things, like vacations, ahead of time so we can pay cash (your sinking fund point). There are lots of things I do, from baking to volunteering to gardening to reading (library books—they"re free) to gardening to walking, that are meaningful for me and don't cost money.
ReplyDeleteI think all the strategies are both about balance and values. I'd never buy something other than a car or house and make payments. Even the car thing would strike a nerve with me now so zill save. But yes, lots of great hobbies are free to nothing. And I still got.oitbfir lunch on occasion and value travel...but not on credit card payments.
DeleteOh yes! I'm trying to balance thrift and spending. I keep thinking it might be a good idea to move back to where my sister and her family live, but it'll be expensive to do. My house here is paid for and I just can't sell it for enough to buy an equivalent place there, and downsizing isn't an option (this house is already very small). Property taxes are less there, though. That and so much else to consider.
ReplyDeleteI look near my daughter and there might be options to downsize there that make sense, but not in my town. Smaller one level homes need a lot of work to truly be one level living and those that are already are atrocious in price.
DeleteI chose to work until I turned 70. It helped with extra income for future. I became a widow in my late 50s, so everything to do with retirement funds started then. You have a great approach to retirement. Jean
ReplyDeleteThat would be a lot of time to make up. We all do what works for us. I wouldn't have wanted to work my past career type jobs, but have not ruled out small income earners on my schedule.
DeleteI definitely feel the push-pull. I'm afflicted with "bag lady syndrome." I turned 70 this week and will start drawing Social Security next month, which will be a welcome boost. I also need to start drawing money out of my retirement account. I've been able to avoid that so far due to my husband's monthly retirement income and our savings, but my financial advisor has hit me over the head with the prospect of a big tax bill if I don't start drawing down until RMD's kick in. We would love to stay in our home for as long as possible. I've loved this house from the moment we walked into it with a realtor 30 years ago. DH and I didn't even need to discuss it-when we got in the car after viewing it, her turned around and said, "what do you want to offer to buy the house." We've done some decent upgrades over the last 7 or 8 years, so the house should retain its value. Because our master B/R and bathroom are upstairs, we (or I-more likely since I am 7 years younger) will have to face the possibility of moving to a single level at some point I've identified a couple of local communities with single level living if and when the need arises. There are also some continuing care retirement communities in our area, but they are pricey. Your analysis of the push-pull is spot-on!
ReplyDeleteAdmittedly the RMD levels are confusing to me, and not sure how they will impact my taxes. Yet another meeting with both tax and financial advisor.
DeleteI hear you. Did I do the right thing retiring at 58yo (I turn 65 in May)? It took 2 years to know I would be OK. I can be super frugal. I don't waste. I could care less what House Beautiful says or what others have. No debt-home is rightsize purchase 35y ago. I withdrew from my IRA 2y ago and replaced all the flooring, had it painted and all new trim/doors. Done! (last painted 30y ago so I really think I'm done). I intend to spend half my savings by age 75 while I am very physically able traveling this country and buying great supportive comfortable shoes :-)
ReplyDeleteChanging car or home is a costly task here. My home is up over 600%. The one across the street rents for $3500. It is 1b/1b larger than ours but seriously? I cannot in any remote way afford that!!!!!!!!
Tincture of time will help you feel a bit more settled in these unsettling times. Your planning and thought-filled journaling here is very therapeutic as you reflect. Hugs.
We've been her 35 years as if March. The house has been paid off for 15 years, in time for having two kids in college while still having chemo or care costs. Those were slow save years, but we did what we could. Yes, I need to get time under my belt to see what I breakout need, where to invest in my house, and to include travel.
DeleteI don't know if you will find this helpful, but in my/our case, I find ongoing peace of mind by being very conservative in our withdrawal rate. I know the trade off is a possible delay of adventuring or purchasing in our more energetic years, but the conservative approach helps me be at peace with no longer drawing paychecks. I was very, very creative in our earlier retirement years on how to create a vibrant life on a 2% withdrawal rate, and it feels like we are now reaping the benefit of that conservative entry into retirement given the positive impact it had on our portfolio over time.
ReplyDeleteRe: travel - There are so many ways to travel if one is willing to go-slow, and live like a local. Although we no longer do this so much as we did for when we first retired, we very much enjoyed it. Our approach was a one month rental via VRBO or Air BnB. There were cost benefits in staying a full month, including a waiving of cleaning fees and city taxes in some instances.
Re: charitable giving - Although we still give, we do not do so in the same percentage we did while working. My feeling is that we gave and gave and gave when we had ongoing paychecks, and now, in this season of life, it is just fine to take a step back and enjoy the fruits of our labor. So now I give my time primarily, which I have much of compared to my working years. I am at peace with this, and continue to feel engaged and proactive in my community.
To be honest, your blogging and things you've shared was part of the success stories of balance I was thinking of! You seem to have a very good approach. It's hard being alone to think about slow travel though as it's hard being on your own in strange places. But, I'm looking at what's doable for me. Controversial to some, I decreased my giving to my church as a regular amount. There's other places/causes/missions I want my money to go and it's just me now, not a whole family as members.
DeleteGreat post. I also swing between two levels.
ReplyDeleteThank you for visiting my blog.
God bless.
@Jackie since blogger wouldn't let me reply to your comment. I think I'll constantly swing between the levels. I do life admin, including finances at least a morning a week. If I need to cut back I'll get on that instantly but if I think I'm good to spend, the money is either paid so I know it's done or set aside separately. I'm hoping that strategy helps my mindset of balance.
ReplyDeleteReplace stuff when we need to is one I love a lot. Because I'm not on the time line of someone else or a even a holiday. And I'll wear jeans until they are just beyond wearing. Same with shirts. I love that sorta stuff. And using up what we have to eat too. That one is important to me.
ReplyDeleteWishing you a good rest of the month. Whoosh. Just cannot believe how fast January flew.