Countdown to Retirement

To celebrate Financial Literacy Month, my regular Monday posts in April have focused on my experience planning for my looming retirement. For most of my career, retiring has been an abstract concept — something far, far away. But now that I’m pushing sixty, the time has come to get real about where, when, and how I’ll retire.

Where is easy. I love Athens for the mild winters and all the gorgeous, fragrant plants that thrive here. Knowing I’d probably die in my next house, the low-maintenance design, stair-free floor plan, and tiny yard heavily influenced my decision to buy my current residence. Frankly, at this stage of the game, I’d rather die than face another move.

When I got serious about saving for retirement, I accepted working to age seventy as my punishment for waiting so long to start. Discovering more than a decade later that I’d somehow managed to move up my retirement five years to age sixty-five was a pleasant surprise.  I couldn’t wait to see the revised projections my Certified Financial Planner prepared.

Without cutting my expenses or increasing my savings, I can still retire at 65. Trimming my expenses by twenty percent and investing the difference would move my retirement up to age 62 — maybe even 61. Talk about motivation! 

The timing for an expense reduction campaign couldn’t be better.  After making triple payments all last year to pay off several “same-as-cash” loans for furniture, flooring, and improvements, I’m finally seeing the payoff from my December 2012 move to a smaller house. Before meeting with my planner, all kinds of ideas competed for that money. The winner now — hands down — is to save those payments for my retirement. I’m not going to eat cat food, but there are lots of little things I can do to cut my expenses.

Retirement plans are like snowflakes — no two are the same. The options and opportunities vary with individual circumstances. But some advice applies to everyone. To wrap up my series, a few tips to think about.

Embrace frugality. Conspicuous consumption is out. Blame the Great Recession and the Kardashians. Reducing your living expenses frees up money you can invest for longterm goals — like an early retirement.

Take full advantage of retirement plans offered by your employer. Some employers still offer pension plans providing a percentage of your income for life after so many years of service. Most don’t. Instead, you pay into a plan with many employers matching all or part of your contribution. If you contribute less than the maximum they’ll match, you’re leaving money on the table.

Consider the Opportunity Cost of Spending Decisions. Enjoy taking pricey vacations every year? I know. You work hard, so you deserve the break. But cutting your vacation budget in half and investing the difference year after year would make a big difference in when you retire. 

Hire a Certified Financial Planner®. Having taught personal financial management for thirty years, I know more about retirement planning than the average person. I’m telling you, this shit is complicated. I understand the concepts and what I’m supposed to do, but selecting the right investments from thousands of options and keeping the portfolio balanced in a constantly evolving market is beyond me. Fee-only planners like mine do a great job and don’t earn commissions on the investments they select for you.

Do Not Procrastinate! It’s never too late to start saving for retirement. Whatever you accumulate will be more than you would have had otherwise. The longer you wait, the less help you’ll get from compounding and the more you’ll need to sock away to reach your goal. 

I hope you’ve enjoyed my retirement planning series. Perhaps you learned something new or given more thought to your own retirement plans. Older You can thank me later. Feel free to make your contribution to my early retirement. To make donating easier, I have PayPal now. Or you could just buy my books.