(Updated 26 November 2018)
Has anyone ever got enough “retirement money” to feel secure?
Probably not, since fear of not having enough income and savings to meet expenses is perhaps the most common fear of retirees and pre-retirees.
Two Common Misconceptions
First: The accepted pattern of life is, you are born, grow up, work until you are 65 or so and then “retire”, (meaning sit on your ass and do nothing) until your money runs out or you die. Hopefully, you die before the money runs out. Or, should you hope the money runs out while you are still alive?
What a hell of a conundrum.
My thought is, why “retire” and sit on your ass, waiting to die, when the years between retirement age and death can be some of your most productive, enjoyable and perhaps even profitable?
Second: The only way to ensure you have enough money to last until you “check out” is to save. And save more. And then save even more, living life so frugally that you make George Washington cry out in pain every time you squeeze out a quarter.
Why far be it from me to tell you not to save. You should, and you should be saving generously from a very early age.
And you should be thrifty, even frugal if that fits into your lifestyle and comfort zone.
I have been tempted many times to start a whole separate website dedicated to nothing except “retirement savings”.
I have some great ideas and techniques many of you may not even be familiar with.
But I’m not going to do something like that, mainly because there are a thousand … maybe tens of thousand … other sites doing the same thing. Some have great ideas even better than mine. So I encourage saving and conventional investments, but I am not going to write about them.
That’s why my articles are always written about “Retirement Money”, not “Retirement Savings”.
Remember one important point
It’s almost impossible for the average American with a regular job and a family and the normal amount of expenses and debt to save “Enough” retirement money. Yep, close to impossible.
Check out this recent report:
10 years after Great Recession, retirement savings remain scant
How far will your savings go?
Let’s look at some retirement savings challenges older workers face. Boomers report that they’ve accumulated a median savings of $157,000, but their assumed target savings amount is $500,000. Simply put, most boomers don’t have enough remaining years of work to close this gap.
But here’s another challenge: While $500,000 may sound like a lot of money, it’s not if you expect it to last another 20 to 30 years. Let’s do a rough estimate of the amount of retirement income a boomer worker with $500,000 in savings might expect:
Using the 4 percent rule as a ballpark estimate of the amount of income that can be generated by savings, $500,000 can generate a lifetime retirement income of about $20,000 per year (4 percent of $500,000 is $20,000).
According to Social Security’s “2018 Fast Facts and Figures” report, the average monthly Social Security benefit was $1,460 per month for new retirees in 2017, or $17,520 per year. Add that to the income generated by savings and you get total retirement income of $37,520 per year.
If you’re married, the average monthly Social Security benefit for spouses with new benefit awards in 2017 was $627, or $7,524 per year. In this case, the total retirement income for the married couple would be $45,044 per year.
So What About You? So You Have $500,000 Conservatively Invested?
No? Well, what about the much more attainable national average $157,000? Got that handy in a passbook savings account?
Well, I don’t either, so join the club.
What can you do, then? My own solution?
Before you close this tab in disgust, let me explain. I’m not advocating you keep working at your current job. In fact, I don’t advocate having a J*O*B at all.
But it’s been 15 years since I had a J*O*B, with a salary, working hours, company policies, etc., and I am still working.
I work every day (if I chose to) and I have never enjoyed my time more than I do now.
And I won’t be living off savings, or solely dependent upon a government dole, no matter how long I live.
Stick with me and I can show you how to make this happen.
First, a Real World Question: How Much Do You Need To Retire At 55?
Tough choices ahead
The fact is, most older American workers haven’t saved enough to retire full-time at age 65 under their current standard of living.
So they .
They’ll need to work beyond age 65, reduce their standard of living or do some combination of the two.
To help make these critical decisions, workers need to understand they can expect to generate at different possible retirement ages.
Retiring in your 60s and living to your late 80s or 90s won’t be easy. You’ll need to do your homework to make sure you can live comfortably for a long time.
In a nutshell, I have built and am continuing to build an online business which brings me income now and will continue as long as I live and am able to read or type.
Isn’t that risky? Well frankly it’s a hell of a lot less risky than having a J*O*B at 55 or older. Consider these facts:
I Can’t Be Fired or Laid Off.
I started with absolutely zero dollars invested and have only time and learning invested.
I am totally location independent. I can run my business anywhere I can connect with the Internet. (great for those who are thinking about retiring overseas to make their money go farther, as I did 13 years ago).
I don’t need to sell anything.
I don’t need to ship anything.
I don’t need to contact or be in contact, with anyone I don’t choose to. (No selling and pestering friends and family)
I can work strictly the hours I want to.
This is working very well for me. Let me know if you want me to write more about retiring at age 55 (or any age you desire) and still having enough Retirement Money.