Rethinking retirement

The foundation for my argument is now built.  The modern American retirement model seems normal, and everyone advises us to pursue it as hard as we can.  But it is really normal?  Throughout history do we see people working for a certain number of years, and then voluntarily leaving their work and lounging around while still in good health?  Do we see men and women seasoned with wisdom, experience, and understanding, having truly mastered their art, just abandoning it because they hit a certain magic age?  Even today, do other parts of the world see life this way? 

I think normal isn’t really normal.

I’m young, healthy, strong, and have lots of energy right now.  My wife is beautiful and energetic, and my kids are small and filled with wonder at their surroundings.  We have two investment options.

1. We can save lots of money in a retirement account, hope the government doesn’t change the laws and take it, hope it earns interest and grows, hope we maintain good health, hope our community remains peaceful, hope we don’t have a fatal accident, and hope we have enough money to raise our kids and love people around us.  And one day, we’ll get to spend all that money on ourselves doing fun stuff, if everything works out just right.

2. Or we can take most of the money we could be saving for retirement and have more family time to train our children, teach them how to love learning, teach them how to live life joyfully, and teach them skills they will use the rest of their lives.  We could invest in our marriage, going out on dates regularly, having time to hang out, take some inexpensive out-of-town trips, work on dreams and hobbies together, and cultivate our lifelong bond.  We could invest in other people, helping friends in need, giving money to complete strangers, and supporting a local charity or church.  We won’t save much for retirement, but we’ll have built lasting relationships and changed the lives of not only our children, but many others who we were able to touch.

In the next post, I’ll tell you why I think we’ve chosen #1, even though #2 sounds much better.

Is saving for retirement hopeless or easy?

My last post probably made you think this blog is turning into a financial blog. 

It’s not.

But in order to look at the concept of retirement as most Americans understand it, we must see some things.

1. Most people want to stop working completely when they turn 65 yrs. old (or 67 if you take the government’s suggestion).  We think this because that’s what everyone tells us is normal.

2. Most people don’t really know what they want to do when they retire.  They have vague dreams of travel, leisure, family time, and hobbies, but no real concrete plans.

3. Financial experts warn us to save money for retirement, but it’s hard to know how much.

We’ve discussed #2 a bit, and #1 is where I want to go, but in order to do that, we need to look at #3.

Confusing I know…

I got onto several popular websites today to calculate how much I’ll need for retirement.  I was asked to enter my age, income, and expectations for how much I’ll spend in retirement, and how well I thought my investments would do over the next 40 years.  Obviously, there’s a lot of guessing in this game. 

I looked at AARP, CNN Money, and Yahoo Finance.  Each one gave different answers, but they all agreed that if I wasn’t planning on Social Security helping me when I retire, I needed to save somewhere between $1.1 million and $1.35 million to maintain my current lifestyle after retirement.  That’s a ton of money, but this is not counting the help from Social Security, if it exists when I retire.

That’s a big IF.  I don’t think that America’s finances will allow a retirement program by the time I retire unless we make some major changes now that no one seems willing to do.  If America continues to be in a bad financial situation, and it can’t offer any retirement help to me, then my retirement plans will look very different than if it can offer me help.  The example below explains what I mean:

 

If Social Security exists, and I want to maintain my lifestyle after retirement…

AARP says I need to save 1.5% of my income every year, about $450 per year.

Yahoo Finance says I need to save 1% per year, about $300 per year.

 

If Social Security doesn’t exist and I want to maintain my lifestyle after retirement…

AARP says I need to save 20.5% per year, about $6150 per year.

Yahoo Finance says I need to save 10.5% per year, about $3,150 per year.

CNN Money says I need to save 12% per year, about $3,750 per year.

 

I hope you see the huge difference.  With Social Security, I have plenty of years to save so it will be pretty easy, as long as I’m consistent.  Without Social Security, I’ll need to save $3000 – $6000 every year.  I earn about $30,000 per year, so those numbers look impossible.  If I counted every penny and never gave any money away to anyone…

I still couldn’t do it.

I’m left in a sticky situation.  My only hope for a decent retirement is a government program I don’t think will exist when I need it.  And it won’t exist, not because someone decided to change a law, but because we literally won’t be able to afford it. 

I know all the experts say that if Social Security isn’t here, then something else will take its place.  I certainly hope it does, but I’m not holding my breath.

So now that I’ve wrecked your day and mine, we’ll re-evaluate some assumptions and see if we can’t see another way.

Retirement – what will I do?

I’ve discussed the need to clarify my dreams for retirement.  I’ve said that there are some retirement dreams that I cannot fulfill with any amount of money, and so I’d best not try.  There are other dreams I have for retirement that I can experience now, and if I can do that, I should.  After all, I might not even live until I retire, or I might be in such bad health when I do that I can’t pursue my dreams.

So what dreams do I have for retirement? 

1. Are they something completely new that I can’t do at all now? 

2. Or will I be more completely devoting myself to a dream I’m living now, since I will no longer have the restriction of trading my time for money?

For the first, Rachel and I would love to spend some months living on a house boat while cruising the Intercoastal Waterway that runs along the Atlantic coast from Texas to New Jersey.

For the second, I can mentor young men now, teaching them about bushcraft, firemaking, fixing things, weaponry, and being a man.  But without the need for full time employment, I could devote more time and attention to this dream.

In the next retirement post, I’ll talk about the safety net called Social Security, and whether I think it will fall apart before I retire.  And if it does, what in the world will we all do?

Dreaming about Retirement

Most everyone has heard the American Dream by now.  You know the one – get a good education, find a fulfilling job at an honest company, marry a good looking spouse, buy a nice car, live in a nice house, have a couple of kids, give them a good education, enable them to pursue their own life, earn plenty of money with that honest company, save some for retirement, and then one day…  Retire. 

But after that, things get a bit hazy.  What does “retirement” mean to me?  What does it mean to you? 

What would you like to do once you retire?  Travel, golf, vacation, write, sleep? 

Why aren’t you doing those things now?  What is holding you back from pursuing your retirement dreams today?

And if we can do those things today after all, what dreams are left for our “Golden Years”, and how does that change our retirement financial strategy?

These are some giant questions, and I’m only now realizing I don’t have answers to them.  If you want to explore them together, let’s go.