Seven Ways to Retire When You Can't Afford To

US News lists seven ways to retire during a recession, but the list to me reads more like "seven ways to retire when you can't really afford to." Here's their list:

• Spend less.
• Save more.
• Work longer.
• Don't raid retirement accounts early.
• Downsize.
• Get advice.
• Stick to the plan.

Gotta laugh at the first two. Either that or say "duh!"

Anyway, I think most people will use a combination of working longer and downsizing -- not because they want to, but because they have to. And these two are the only real choices most people will have since they are often unwilling or unable to curtail their spending and start to save more.

Personally, I'm saving like a fiend for retirement -- fully contributing to my 401k, saving in a SEP-IRA from my side business, and putting money in a taxable account to boot. Of course, the stock market isn't helping me any in this pursuit (a friend from work and I joke every day the market goes down, "That's another year we'll get to work together!"), but I still have a 20-year time horizon, so I should be a big investment bump between now and then. In addition, I'm saving as if Social Security will pay me nothing, so if I do receive anything from the government, it will be a windfall.

Comments

[Bill]

The best advice is to spend less, but most people have trouble making it work. Here is a tip: think differently. You can't live without a cell phone (at $100/mo.)? What did people do 15-20 years ago? Somehow you can make it work. Do you pay for cable or TV? If you have a net connection most of the shows can be seen on the computer...get movies from the library and watch them...or read a book. Most of the stuff you pay for, you realy don't NEED...you just want it or like it.

If you are young, do you pay for life insurance? Accident insurance is much cheaper and the most likely cause of death if you're under 40 (personally I get some lfe insurnace and some accident insurance to balance the two types). Where you live makes a huge difference in what you pay for car insurance and I'm talking about zip code vs zip code not moving from CA to FL.

Making use of health care and dependent care reimbursement account cuts your taxes and oh by the way that money is free from SS taxes too (an extra 7.6% savings!!!).

Keeping 1 car instead of 2 is a huge savings that most people don't really appreciate. If you are near work or have public transport or can carpool you can save car purchase, insurance, registration, excise taxes, gas (and gas taxes), repair, and don't need as big a garage now (i.e. if you downsize your garage, you're property taxes go down too.)

Get rid of your crap...do you know how much your stuff is costing you? Lawnmowers, snowblowers, chainsaws etc. all require service and fluids. Ipods require batteries and songs (which come free on youtube or streaming radio). Toys (many) require batteries and electricity (my boys favorite toys are still cheap old matchbox cars).

Vacation at National and State Parks...you already pay for them and they cost significantly less than Disney World or Six Flags. I still have yet to see anything as impressive as the natural wonders in this country. Flying is worse than driving, expecially if you need a rental car at your destination. Go camping, it's a lot cheaper to buy a tent and camp that staying at a hotel with 6 people.

[poor boomer]

Shhh, don't say "windfall" - someone will want to tax it.

It's getting easier to live without a car in big cities; an emerging option is a membership plan (e.g. Zipcar, Flexcar) where for a modest yearly membership fee (~$25-$50) you have access to rental cars by the hour with gas and insurance included in the rates (no need to fill the tank or to pay for ripoff insurance add-ons). By contract with cities, these cars are distributed across various locations around town in specially designated parking spaces, so you probably don't have to go too far to find one.

Some crap has potential to make you money. Anyone in my area with a snowblower (surely a rarity) can make BIG BUCKS right now since the area has been socked in for a week, nobody born here is used to it, and a lot of people are itching to get OUT. I'm looking for a good cheap electric lawnmower for making money in the summer.

[Brett]

Or postpone spending any money for a few years. I was in the Pace Corps and half the group I started with was over 40. You receive a monthly living allowance and some money at the end. Health care is covered. You would likely spend a few bucks for travel on your vacation, but nothing overall like living at home. Plus, it would really teach you some frugal living skills for the remainder of your retirement. Assignments are usually two years but you can extend for a third year if they are happy with your work and there is the need. Check it out.

[poor boomer]

Re: Stick to the plan.

A man, a plan, retirement. Panama!

i.e. retire abroad

[Associate Money]

I like your attitude of saving all you can into the 401K and assuming that Social Security is one big scam.

Anything they pay out in future will truly be a windfall and money which you don't really need.

[Rich]

Isn't downsizing and spending less basically doing the same thing? I'm with you, if you can't afford to retire, don't. If you have too than I guess these are good tips, but they seem like common sense, and should be something you're doing anyway if you're on a fixed budget.

[Bill M.]

I said duh to all the above options that were given. I'm 65, used my 401 (which is shrinking to nother now) to buy a used 2002 car for my retirement buggy. Social Securtity Retirement only pays me $12K per year after all the years I paid into it. Medigap and Prescription drug coverage eat's up a larg chunk of that $12k. Utilities ran me $296 last month to heat my old 1955 house. My auto insurance, home owners insurance and my annual property taxes for the City and County eat their larg chunk as well. I as much to feed my two small dogs as myself. I guess I must be spoiled because I have a phone at home and basics TV on comcast. I'll have to drop the internet soon, as the special is about to expire before me. Hmmmmm. But, I'm am a fortunate person in that I've lived a fair and honest life. I used my company insurance to pay for most of my heart attacks, triple bypass, and pacemaker. I am also fortunate to have 4, now adult children, which I get to see once in a while (when they can travel). Divorce and don't have to live up to another persons needs and standards anymore. Yes, I can afford to retire, but so far, am making it at 65 years of age.

Peace be with you all,

A Time Treveler

[Bill M.]

P.s. ~ With my medical disabilities and not marketable except for a live at home job...

:o)