Warning: Retirement Ahead. Now What? A few months back Mr. SH turned 60 and we have been dwelling on the topic of retirement. Actually, Bestie and I have been agonizing over this topic forever. Questions like: Are we ready? How much will we need? What if we live to be 100 years old?
A few years ago Bestie shared with me a getting-ready-for-retirement story that I will never forget. Her sister had sought the advice of a retirement counselor who informed the couple that they would need $3 million dollars to retire!
Uh, shut-the-front-door! I don’t know about you, but we’ve never gotten around to stuffing our mattresses with that kind of money. I’m thinking Mr. SH and I will need another plan. Fortunately, we aren’t completely bereft of options.
In reality, we have unburied our heads from the sand and started moving in a direction that will hopefully see us through our golden years and possibly allow us to have an adventure or two.
Here are some of the measures we are taking as we stare down the road to retirement.
1. Downsizing
Many of you have read about our downsizing story. We sold a larger home that was starting to need expensive repairs and built a new home. What I haven’t really talked much about is the financial side of this. Austin is booming right now and our old house was in a premium location. We purchased it for a good price and it appreciated significantly. Because of this we knew we could sell it for a decent profit. However, purchasing another home in the same area wouldn’t have done us any good financially. Instead, we bought a smaller home a little further out where the Austin housing boom had not reached ~ so we sold high and bought low.
By doing this, were able to put down a large sum of money as a down payment. This will allow us to pay off the house before Mr. SH retires. Because we bought a new home (with warranties) this reduced our maintenance costs. Our old home was getting close to 20 years old and would’ve need expensive repairs in the coming 10 years. Although there is no guarantee that we won’t have home maintenance expenses, we’ve reduced the likelihood significantly and will be able to pocket those savings.
Purchasing a new home in another county dropped our property taxes significantly. Home values within Austin are soaring at a ridiculous rate, and people are seeing property taxes increase. Imagine your $250K house is now worth $500K. That’s putting property tax costs into the $700-$1,000 per month rate. By moving when we did, we now are saving about $2,000 per year over our previous property taxes. That’s money we can definitely use to save for retirement.
We made energy efficiency a priority in our new home. Our new home has spray foam insulation, low-E windows, and a super efficient HVAC system. Our utility bills are significantly reduced each month by $200-$300. Austin has ridiculous utility rates with add-on taxes. For instance, our old house had a $22.00 monthly rider on the water bill. That’s $22.00 BEFORE a drop of water has been used. Every month our water/sewer/garbage bill hovered in the $150-$200 per month range. Being in a different town and county has reduced this to the $100 range, most months well below this.
By downsizing early, we were able to take advantage of the market and get a great price on our new home which ultimately lowered our monthly bills. This allows us to save more for retirement, but also enter retirement in a home that won’t be cost us a fortune to live in.
2. Nothing Fancy Around Here Anymore
This one ties into our whole downsizing philosophy. The needs-it-all-to-look-perfect-Leslie would’ve said, “This builder’s grade stuff has to go.” The new retirement-minded-Leslie is all, “Who cares about those builder’s grade fixtures.” And, I mean that, too. It would be so easy to take a stash of cash and replace less-than-perfect light fixtures and faucets. But, that just isn’t going to happen.
There was a time when I thought I needed high quality stuff in my house. As in, a dining table that seated a platoon and enough chairs for said table. Gone are those days. I sold my massive dining room table and replaced it with one from Ikea. After all was said and done, I had money left over from that transaction. The same with our home office. We spent around $500 out of pocket after selling what we didn’t need and replacing it with practical storage pieces from Ikea.
With our new, smaller home came several options. We made decisions based on the next 30 years. For instance, we chose a floor plan that didn’t have a formal dining room or a lot of hallways. This way, we have enough rooms with enough space, but no rooms that sit empty. One of our three bedrooms doubles as a guest room/library. It has a trundle bed and a large open space. It makes a great open area for grandkids to play. In the main guest room we chose a queen bed with drawers underneath (Ikea, of course) and that is where my grandkids have most of their toys.
Another area we have really worked at reducing our expenses is in the yard. While there have been up-front costs, we are now reaping some of the rewards. We chose a property that is much smaller and we are fine with that. We’ve purposely reduced our overall lawn area because it is expensive to keep it watered and mowed. We also chose drought tolerant plants that are hearty and don’t require special treatments. That means savings today and savings down the road.
All-in-all, we have spent very little money out of pocket setting up our new home. With reduced payments, reduced expenses, and lower taxes this has made an enormous difference in our budget. And, we are rapidly stuffing our mattresses trying to save a reasonable sum of money.
3. No more Hoarding
I don’t know how to say this any plainer than: I no longer seek self-glorification through the accumulation of things. Put another way: I’m sooooo over stuff.
We’ve been cleaning out my parent’s home for the past several months. Months! Why, because they never threw away anything. My mom had saved slips of paper with useless information from 60 years ago. And, the sewing room was full of unused, never touched sewing notions, patterns, fabrics, and you-name-it. The same story in the kitchen. All I could see was money spent on useless things that are now going to be sold in a yard sale, donated to charity, or thrown into the garbage. It is a sad waste of resources that could’ve been used for their elder care.
All of this has me looking at the way I buy stuff. Or rather, don’t buy stuff. I look at things and think, “Is this purchase something that my kids will just toss in the garbage when I’m gone?” My plan for retirement is to not be buying the latest and greatest thing or hoarding stuff for projects that will never get started. Instead, buy what I need for a project and then complete the project.
And that goes for books, too. Yep, I’ve been a bit of a book hoarder, but I’ve become very selective about the books I purchase and keep. The rest, I borrow from the library or purchase for my Kindle. Our library even has eReader books, too. And, I’ve de-stashed many of my books, too.
Don’t get me wrong, we still have a way to go in this area. But, overall, our philosophy towards conspicuous consumption has changed dramatically and we no longer look for things to buy. Like I said: I’m sooooo over stuff.
4. Vehicles
Buying, maintaining, and driving vehicles is expensive. And, there is no way to avoid this. Currently, we own a 2006 Honda Accord and a 2007 Nissan Frontier. The mileage on each hovers around 100K miles. We know we will need to eventually replace these vehicles.
Most financial planners will say that it is best to drive a car until the wheels fall off and I wouldn’t disagree. We are hoping to purchase another vehicle in the not-so-distant future. Here’s the quandary ~ what do we buy?
Our current vehicles suit our current lifestyle but we don’t know what our life will look like in retirement. And this keeps us from buying something that suits us now only to need to replace it in a mere five or six years. Currently, one of our daughters lives in Newfoundland, but that won’t be the case five years down the road when Mr. SH retires. They may live driving distance from Texas, and we might want a vehicle that is good for long trips.
Since this is a significant purchase we are putting it off for right now and crossing our fingers that neither of our vehicles will need costly repairs. We hope that getting closer to retirement will give us more clarity on this topic. In the meantime, we hope to get by with what we have for as long as possible and just add that money to our retirement fund.
5. Earning Money and Saving Money
By the time my husband retires he will be eligible for a pension from the state of Texas. He also receives a small pension as a retired fire fighter. Combined with Social Security and savings we should be able to manage on a day-to-day basis. At least, that’s the plan.
We aren’t naive where money is concerned. We know that there will need to be a way to supplement our income. We’ve reduced expenses, downsized, and put off costly purchases. However, supplementing our income is still a pretty fuzzy picture.
One thought is for me to continue blogging. I know this sounds weird and off-beat, but blogging about retirement (or any subject, for that matter) can actually bring in extra money. And, I’ll be able to do this around whatever road life takes us down.
Being able to blog about different experiences will allow us to write off the costs surrounding the experiences. In doing this, we can be certain that our income taxes will be lower. Without a mortgage or other ordinary write-offs we will need a way to lower our tax burden.
6. Be Flexible
I’m going to share a little story about Bestie, here. Several years ago she and Mr. Bestie built their dream home with retirement in mind. A place that their children and grandchildren would want to visit. Well, life never really turns out how we plan it. All three of her children live far apart in different states. So, Bestie and Mr. Bestie got a new plan. They sold that dream home and bought an RV. They got rid of a TON of stuff and put the remainder in storage. Now, they go where the kids are (with a few stops in between). They also have plans for a small place near one of their kids when they get off the road. Being flexible helped them create a new dream.
Being flexible will also help your kids down the road. I’ve watched my parents not have a plan and now my sisters and I are having to make hard decisions on their behalf. They were not flexible when they should’ve been and because of this they are having a hard time adjusting to a new place. And, an even harder time letting go of their things.
We cannot possibly know what the next few years will bring, but we can think smart and start planning now. Taking a few simple steps years ahead of time will hopefully give us a head start on retirement.
teresa says
June 11, 2015 at 2:29 amHmmm. Just doing some Cont Ed tonight and chose Retirement Planning. I’m definitely getting my fill today. You’ve made very wise decisions. Unless you really enjoy entertaining, gardening, etc, the simpler, the better. Bravo for you. P.S. Your husband might seriously consider putting off claiming his SS early. The difference is amazing and one can’t go back on that choice.
Betsy says
June 11, 2015 at 5:29 amGreat post. I am in my 50’s and already downsizing.
GabiP says
June 11, 2015 at 6:01 amA great read this morning. We are in this exact spot ourselves and doing the same thing! We have so much stuff and I truly am tired of it! Down sizing, a retirement plan…it’s a good thing!
Cathryn says
June 11, 2015 at 6:04 amWhat a great blog post! We, too, are entering this stage of life and have exactly the mindset you do. My mantra is, “Simplify!” Thanks for today’s blog post. I thoroughly enjoyed it.
Carole @ From My Carolina Home says
June 11, 2015 at 6:46 amGreat post, we have been thinking of retirement too.
melissa c says
June 11, 2015 at 6:58 amThank you for this much -needed, well written article. You put such realistic and easy-to-actually-do steps in your list!
Best of wishes to you and Mr. SH in your future new “season.”
Sandy says
June 11, 2015 at 7:03 amGreat post. My husband and I are thinking along the same lines. We have a huge home and I am dealing with my mom after my step dad’s death. The amount of stuff they have is absolutely incredible. We are having a massive garage sale this weekend. I am dreading it so bad. Then what? Lots of questions for her. IT has definitely gotten me thinking.
Kim says
June 11, 2015 at 7:07 amRetirememt, something I think about and look forward to a lot! I have two more years before I am fully eligible to retire under TRS or ERS as I can choose which one. Hubby wants to continue working at his job until he is eligible for SS as he actually likes his job. ha We are looking in other states for a suitable home with a little land to have a garden and chickens, maybe a goat or two. On the homefront, having two garage sales this summer and donating items is on my list of things to do. Getting rid of inherited pieces is hard for me, but I am getting closer to being able to do it.
Lisa says
June 11, 2015 at 7:16 amVery interesting reading. I’m 53 and hoping to retire in 4 years. But spending all our money on our kids over the past 20 years has left very little room for saving for retirement!
Maryann says
June 11, 2015 at 7:17 amCouldn’t have said it better myself, Leslie. Really great post !!!
Betsy says
June 11, 2015 at 7:51 amThank you for your thoughts…I am retiring this fall; my husband retired a few years ago. We are going through the phase of downsizing and it is a struggle as I am the keeper of family history. I look forward to reading how you and Bestie spend your time in the years to come. I will want to supplement my SS and spend my time not in a rocking chair.
Priscilla says
June 11, 2015 at 9:20 amGreat post! We’re in our mid 60’s & lots of talk about retirement. We already live in a small home & hopefully will have the mortgage paid off in 4 more yrs. We don’t need to buy much of anything anymore, but just need to maintain what we have. Cars are costly to keep up, but better than buying new ones. We have cut back on other things that just are not as important as they used to be!
Thanks for the info you offered.
Barbara says
June 11, 2015 at 9:45 amMy husband is 50, I will turn 50 later in the year. We have 14 year old twins! It’s hard to think about downsizing at this stage in our lives, but I’m seriously considering it. We have no debt and we are keeping it that way! I’m thinking of all the quality time we could be spending together instead of maintaining our stuff….THANKS for your thought-provoking post.
Sharon Mobley says
June 11, 2015 at 11:01 amGreat article! We are now 48 and 50, Hubby wants to retire now, but that just isnt possible. So I have us on a 10 year plan. To pay off every thing, downsize and for him to retire in 10 years. We actually love the idea of downsizing. Already did once after our 3 kids grew up. We sold our big house and bought a double wide mobile home. And looking to downsize again to a smaller one on a little more property. (1 acre). We have a plan in place, Now lets just hope noting messes with that plan.
Cheryl @ Artzzle says
June 11, 2015 at 6:47 pmWise information here, Leslie. I would add to the younger people commenting, especially … save-save-save and we find as new retiree’s that less is best; we want less, need less and so we spend less. And it’s possible to make a little extra cash, selling some of those “things” collected over the years. We bought a “better fit” home 11 years ago and love it. As former military, we both got all our traveling done long ago. Now we tell people to come here and visit if they want to see us. We still find plenty of fun things and events to do. The “Senior Discount” that many places offer is nice … but be sure to ask “everywhere” because they often forget to mention it. One of our children suggested we look into what AARP offers, so that’s on our TO DO list. So far – so good.
Torry says
June 12, 2015 at 1:42 amI love all of the downsizing stories. We had a different plan: we bought a “starter” house, raised two children in it and paid off the house. It is a rambler, which means easier care for old bones. We are never moving, until or unless we need care.
DH is retired and I plan to keep working at least part time until I can not work any more. I love my job and can work part time if I need/want to do that.
monica says
June 12, 2015 at 7:39 pmSo true so true I ended up withe a bunch of my mom’s stuff even though I wanted to get rid of stuff we still have two in college and one in high school but I would love to downsize and get an rv! My husband is retired but I must work for the health care which would be outrageous if not for my employment. That’s another thing to think about when you retire.
Sarah Fuller says
June 13, 2015 at 8:01 amYes, nothing like cleaning out a house to motivate to great rid of stuff. My family member had even saved the used wrapping paper from years of holidays in case she could use parts of it again.
Mary @ 120 Spring Street says
June 14, 2015 at 5:30 pmDon’t see where you mentioned this, but you can draw Social Security, too. Did you work and pay into it so that you can draw on your own account? If not, the law is that if you were married to the man 10 or more years, you can draw under is Social Security – not reducing his, but you getting a check which is a percentage of his. For us, I’m 2.5 years older than my husband. He’s still working. I just turned 62 and immediately began drawing Social Security on my own small-ish earnings. I’ll be banking all that money. My husband doesn’t plan to retire until he’s 65-66. Then he will begin drawing his full amount, and at that time, I will switch over to drawing under his SS. Yes, this is the law, this is how it works. Look into all these things so you can optimize your earnings and savings from Uncle Sam.
Mary
Brittany says
July 6, 2015 at 5:31 pmThank you for this! I am 27–not coming close to retirement. But I *am* approaching the point of purchasing a home and settling down and settling into a career, too. I really love the way you explained your thinking for each item in the retirement list, particularly how you’ve adjusted your lifestyle to fit your future. Bookmarked 🙂
Lisa Johnston says
January 18, 2016 at 7:59 amLeslie, thank you for this post. I am 55 and my husband is 61. Our youngest is a senior in high school. We have a 2300 sq ft home on almost 8 acres and though it is beautiful it is expensive to keep up. We are talking about downsizing. Because I want to be careful about how we spend our money with retirement in mind If we had more money, I would love to stay here at least until our son graduates college. I just wonder what you and others think about the timing of downsizing. I would like our son to have a familiar place to come home to and I’d love to stay in the house we raised them in, but I really want to save money.any thoughts about the timing of downsizing? Thanks.
Leslie says
January 18, 2016 at 9:59 amLisa, you are wise to start thinking about these things right now. From my own perspective, I would say that saving money and wisely using your money are the smartest things you can do. We’ve seen how fast money evaporates when dealing with my Dad. Personally, hanging onto an expensive home with some future plan that may or may not materialize might be worth reconsidering ~ but that is a decision only you and your husband can make. While downsizing is really, really hard – you eventually hit a spot where you say, “I’m so over this stuff!” and that’s when you know you’re ready!
Patty says
March 28, 2016 at 7:14 amBeen there – done all of this!!! Especially after both in-laws and my brother passed away within a few years of each other and just a portion of each of their estates ended up filling my basement to the rafters. We excused ourselves from those items by having an antique booth for a year, donations to charities & churches for their building funds, garage sales, Craigslist & ebay sales, auctions, etc. It was a HUGE pain in the patooie! Cosmetic repairs, moving things we wanted to keep to short term storage and staging for a quick sale and sold home w/i 21 days. We gave ourselves a year and half out deadline to get it on the market. By April 15 of said year we would be divested of items, packed up, staged & ready for the realtor’s visit to list it. Hubs was a dragger of feet, but we made the deadline and got ‘er done!
Like you we had an aging home that was going to need a new roof and a new HVAC system plus had a very difficult multi-level acreage to boot. So long! Bought a ground floor, no one above us, no stairs, condo that was all inclusive in its very modest hoa fees. Well, we stayed a year while finding out that in our state the condo is a ‘government of it’s own’ and pretty much outside the laws of our state regulators. We had a rogue manager who ran the HOA board instead of the other way around. Yes, we had tried to do our homework. Well shoot, somehow that fact escaped all our good intentions & questions. Ahemmmmm, flexibility? Here we come. Sold again – much easier this second time. Easily staged and sold w/i 7 days. This interim ended up costing us $1,000 for the year. Cheap rent if you consider it that way.
Now in a 4 yr. old home many counties away from the rest of my family which has some pluses and some minuses. We’re both introverts…not so many drop in visitors! YEAH!!! Driving further to visit my aging parents, a bummer, but on good highway. Plus we bought a home on a septic, free trash service from the county, our own well so no water bill. Currently saving for a solar system so hopefully in the future the only ‘bills’ I’ll have is house insurance, taxes and any entertainment such as internet service. So, for us getting in to the right place? Took about 2 1/2-3 years. But we are much better off. Paid cash so no mtg. payment.
We bought in cash a new to us car a year back. Paid cash. We currently also have an older paid for truck. I encourage everyone to sit down and calculate exactly how much having two vehicles in the drive is costing them. Any car is expensive to maintain. Two of them? PRICEY. Add it all up…payments if you’ve got them, warranty if you’ve got it, insurance, gasoline, tags, batteries, tires, oil changes, greasing & realignments, driver’s license renewals, tolls, etc. OUCH!!! OUCH!!! O.U.C.H.!!!!!!!!! One day in the near future? We’re going to just one vehicle. We’ll adjust and we’ll live to tell the tale.
NICE GOING on getting yourselves into a better position. Flexibility here is key. I too have left the builder’s grade fixtures. Instead I’m saving a bit each month to replace the roof and HVAC and electric well head should I need them down the road. We retired in 2009. We’re making it on WAY, WAY, UBER-WAY less than 3 mil. In the meantime? You kidlets, start saving yesterday. Tomorrow is coming and it’ll be here before you know it!!
J. O'Connor says
March 28, 2017 at 12:58 pmGreat post, Leslie. Quite thought provoking. As we approach retirement, I am increasingly drawn to simplification. One consideration I would add for people planning retirement is planning for long term care. One partner entering a nursing home can wipe out a couple’s retirement saving pretty quickly. Long term care insurance might be the answer for some, but the most important thing early on is to recognize the possibility and start educating yourself. When my Mom suddenly needed nursing home care, we had no idea where to look, what was available or how to pay for it. That is an emotional stressful time for all involved– better to do the research and learn as much a single possible ahead of time when it’s easier to think rationally.