How to Retire On Less

Thinking about retirement? Don't have millions of dollars in the bank? You're not alone. Find out how you can retire without millions. This article synopsis of some of the principles in the book, "Who Said You Need Millions? Retirement Strategies for the Rest of Us," by Jonathan D. Edelfelt

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Pencil
• Ability to think differently about retirement

1. Is it true that baby boomers may not be able to retire? No. The fact is that everyone will have to retire someday. For most people it will be physically impossible to work until they drop dead. So, the question really should be: What will retirement for baby boomers look like? Will they be eating caviar or cat food? The answer is that they'll probably find themselves somewhere in between those two extremes, but few have a clear idea of where they'll end up on the spectrum.
   It's surprising that, despite the quantity of information available about retirement planning, most people are still ignorant about what real retirement looks like. As a result, those people who have planned and are saving for retirement may actually be saving too much or postponing retirement until they won't be able to enjoy it. Those people who have given up on retirement altogether may not realize that, with a few lifestyle changes, they could put themselves on the right path.
2. One of the biggest misconceptions about retirement is that people assume they'll be much wealthier than they are now. Somehow people get the notion that in order to retire they must wait for the day until they have millions of dollars and no money worries. But, where do they get this idea? Who said you need millions? Financial planners, mutual fund companies, stock brokerage firms, real estate developers, and their enablers in the media, who are in the business of selling a dream retirement few will actually achieve, are mostly to blame. You see this dream retirement in slick TV and magazine ads: slightly graying but still attractive couples, the men wearing freshly pressed khaki pants, golf shirts, and no shoes; the women well-coiffed and dressed in cotton sundresses that scream leisure; the wind blowing lightly in their hair; their smiles wide and confident, as if they have a secret. These people could be you, the announcer says, if only you invest one or two million dollars at such-and-such mutual fund company or buy a million-dollar condo at Sunset Acres.
3. But, wait a minute. Why are we buying into this baloney? At about $39,000 per year, the average wage in America, it would take you almost 26 years just to earn a million dollars. That doesn't take into consideration eating, clothing, and housing yourself and maybe a family during those 26 years. The dream retirement that you have been conditioned by advertising to expect is just that-a dream-especially if you want to retire early. The ultra-high standards of living that people achieve today using credit cards and other types of credit are based on the assumption that they have an unlimited future during which they'll tighten their belts and pay all the borrowed money back. If you live that way (and almost everyone in the U.S. has at one time or another), you have to realize you can't continue to do so in retirement unless you become rich, and that's unlikely. That doesn't mean you can't have a comfortable retirement. It just means your retirement probably won't look like the ones you see in TV and magazine ads.
4. What is the Secret to a Successful Retirement? Success in retirement is all about attitude, so consider changing the way you think about retirement.
5. First, reject the idea that money alone is the key to a successful retirement. Since you can't retire on credit, for most retirees, especially early retirees, the secret to a successful retirement isn't huge personal savings, but a less expensive, simpler lifestyle. Americans are a clever and resourceful people, and many have put these traits to good use in developing exciting low-cost retirement lifestyles. The key is to figure out a way to make your retirement lifestyle fit your income. Perhaps you'll work part-time, downsize, or join the voluntary-simplicity movement. Maybe you'll live full-time in an RV or shed most of your worldly possessions and spend your days traveling the world without a home base. The bottom line is that you'll have to design a lifestyle that you find interesting and that's within your means. You'll probably worry about money from time to time, but not as much as you might think. The adage that money doesn't buy happiness is often true.
6. Second, reject the dream retirement that the retirement business is trying to sell. Most people can't afford these high-priced fantasies anyway, so don't let the hype make you feel like a loser if your retirement doesn't look like the one's advertised on television. You'll feel a lot better.
7. Third, accept that you'll probably have to take the plunge before resolving every possible contingency. Most people struggle with money for their entire working life but believe that they can't possibly retire until they're sure they'll be free from financial worries. Many retirees have told me that if you postpone retirement until you think you've amassed enough money to cover every possible problem that your vivid imagination can conceive (most of which will probably never happen), your retirement date may never come. The problem is that once you've reached a savings goal-whether it's $300,000, $1 million, or $3 zillion-you'll find that it's never enough. Although few retirees think they have enough money before they retire, many people actually report having more money than they need after retirement.
8. So how to you get you started on your road to a successful retirement? Start your journey by exploring what retirement is and whether it’s really for you. The reality of retirement may be different than you imagined. Next, you'll need to work on some financial items like achieving financial independence, basic investing, living on less, and determining how much you might need. But don’t worry. These topics aren’t as daunting as they might sound.
   Next, you'll need to figure out what resources you can tap for your retirement like Social Security, pensions, home equity, and savings plans like 401(k) and 403(b) plans and IRAs. When you finally retire you'll need to learn how to get health care insurance, how to minimize your taxes, and what to do in the event your retirement plan doesn’t go as intended.
   Finally, you'll need to develop your personal plan. In my book, "Who Said You Need Millions? Retirement Strategies for the Rest of Us," I cover these topics and more so you can start on right road to a sensible, affordable retirement.
   Good luck,
   Jonathan D. Edelfelt

Tips & Warnings

• DISCLAIMER This summary of some of the principles in the book “Who Said You Need Millions? Retirement Strategies for the Rest of Us” by Jonathan D. Edelfelt contains the author's personal ideas and opinions. Neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services. If such assistance is required, the services of a competent professional should be sought. The author and publisher are providing this book and its contents on an "as is" basis with the understanding that neither the author or publisher shall be held liable for damages arising out of or in connection with the use of this book. The author and the publisher make no representations or warranties of any kind with respect to this book or its contents. The author and publisher disclaim any and all such representations and warranties, including for example warranties of merchantability. In addition, the author and publisher do not represent or warrant that the information in this book is accurate, complete, or current. This is a comprehensive limitation of liability that applies to all damages of any kind, including, without limitation, compensatory, direct, indirect, and consequential damages.