A More Reasonable Retirement Strategy From David Bach.

David Bach, the self-made millionaire who brought us the ‘Latte Factor’,  has a much better approach to retirement (IMHO) than what we heard from Suze Orman the other day.

“There’s this new advice out there that 70 is the new retirement age. That is ridiculous,” he tells CNBC Make It. “First of all, the life expectancy for men is 76. You want to retire at 70 and have six years left to retire? Ladies, for you, it’s 81. You want 11 years in retirement?

Bach’s responding to an idea popularized by personal finance maven Suze Orman, who, in 2017, wrote on Money: “70 is the new retirement age — not a month or year before.” Orman then reiterated that advice to CNBC Make It: Don’t retire, or claim Social Security, until you turn 70.

There you have it, ladies and gentlemen. One of the main keys to a successful retirement is knowing how long you are going to live. There’s a good chance that if you are 65 today, you may make it to 95 and that’s where many financial advisors cause us to worry about running out of money. My personal gut feeling is that 85 is more of a key age. David Bach pegs us even sooner for our demise.

In any event, I’m tending to agree more with Bach than Orman when it comes to claiming your Social Security age. I think 70 years of age is too old. I’m leaning now more towards the realization that 62 is too young. For DH, 65 is turning out to be his perfect retirement age. It’s just unfortunate that his health deteriorated so his continuing to work part-time needs to be curtailed. Thankfully, we have enough savings to tide us over till he fully retires.

It’s uncanny, that just last week I was thinking about David Bach when I went on my pumpkin latte craze. Each time I ordered one (@$3.49 each) I thought about all the money I was losing due to the latte factor (click here to learn about the latte factor). Now that we are finally earning 3% to 4% on our savings, putting small amounts like a latte spend, into a savings account, can really make a difference in our retirement savings.

In other words, NOW is a good time to save money where ever we can, regardless of how big or small the amount. NOW we can really make a difference in our retirement savings, which in turn will help us survive quite nicely in our longer living years.

latteSo, I picked up this all-natural, creme-based pumpkin spice coffee enhancer for $2.24 at WalMart and it helped discontinue my Dunkin’ pumpkin latte’ obsession. I also baked a loaf of pumpkin bread with lots of sugar and cinnamon topping, so that cured my apple cider donut crave.

I also started cooking more soups (butternut squash and chicken rice) and making more sandwiches at home which cured my newfound habit to eat lunch out. The air is getting a bit chilly here anyway and we’re just naturally wanting to stay in a bit more. Staying home more is saving us a lot of money. Saving money NOW is going to help us much later on in our retirement years.

The biggest money-saving thing DH and I both did this past week was look over our biggest expenditure right now, which is travel. We’re not going to stop traveling BUT we are going to travel a lot differently from here on in. I like to stay at KOA’s because I like the conveniences, amenities and the services. All of those come at a premium cost. Do I really need cable, wi-fi and a hot shower every night? We all know the answer to that is ‘no!’ So, I am not going to renew my KOA membership. Why? Because we just discovered the convenience and low-cost of staying in our country’s national and state parks. Rather than pay $90 a night to stay in a Florida KOA, we can stay in a top-notch Florida state park (with only electricity and water hook up….we have to do our own sewer dumping, which is fine) for only $22 a night or $154 a week! Many of these Florida state parks are either on the ocean, the Gulf of Mexico or on a lake, stream or a river.

It’s too late for us to schedule a 2019 Florida state park stay (trust me, I called almost every one of them) but we will be on-time for 2020. In the interim, I contacted the KOA we are staying at this February and asked for a site sans sewer and that lowered our costs from $2700 ($90 X 30 days) to  $1917 ($63.90 X 30 days). That’s a savings of $783, or to put it in a better perspective…….that’s $783 we don’t have to spend. Next year our 30 days will cost us only $660. Can you imagine? And I’ll be aiming for a beach site!

We’re applying the state park stays also to New York and Maine. There’s a plethora of campsites for us to choose from. We’re psyched because we are still going to do what we enjoy best BUT we’ll be doing it at a much lower price. We’ll be ‘roughing’ it more but in the end, spending less. Well worth the money saved.

Needles to say, I just transferred the $800 we won’t be spending this year in Florida out of checking on over to a money market that is paying almost 2% in interest AND a monthly dividend. It took me a while to figure all of this out. I have to admit DH’s health sent me into a tizzy but I’ve recalculated and am happy with the adjustments we are making. DH is more involved with our day to day financial decisions. I’m happy that I don’t have to do this alone anymore.

Another great travel point DH and I recognized was the accumulation of our airline points. I had totally forgotten all about them. We both had enough points to book a week long trip in Las Vegas, including hotel and car rental for Spring 2019. We’re finally seeing The Grand Canyon, as well as The Hoover Dam and The Valley Of Fire Park (only 15 minutes outside of Las Vegas).

valley of fire park.jpg
The Valley Of Fire Park, Nevada

We also have enough points left over to book a 2020 week long trip, air & hotel (we’ll rent motor scooters to get around) to Bermuda! Plus, starting from now, we’ll probably score up enough points to travel somewhere in 2021. If not, we can always go back to Bermuda. I wouldn’t mind that!

To sum it all up, I’m in a much better mood today. I’m a lot more hopeful about our retirement future. It took me a while to transfer my minset out of my spending mode and back into my saving mode but now that I’m here, I’m doing AOK. DH is back to mowing our lawn. He’s gearing up the snow blower for the winter (we discontinued hiring outside help). I’ve streamlined our food supply, shopping schedule and we’re back scouring Goodwill, flea markets and yard sales.

I always advise when faced with a hurdle, to look for another way through the maze. It always helped me. It always helped DH. And I hope it helps you.

Live well and prosper, my friend. Live well and prosper.

21 comments

  1. Way to work the math and to get inspired about the future travel plans. I’m taking notes…I turn 54 this month and am not able/ready to retire yet, but I want to plan better as I have time to do so. Maybe you could write a post to your 54-year-old self and tell (me) it what to do to plan better knowing what you now know? Thank you for sharing your tips. PS – the latte crap (sorry) is SO bad for you, if you give that up, and keep up with the homemade soups, you’ll be better off financially and health-wise. Just sayin’…!

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    • Hi Shelley. Thanks for the nice comment. The advice I would give my 54 year old self would be these two things: travel more, save more. One thing hubby and I are very glad for right now is that we did a lot of travel during our working years. We’ve been all over Europe and we visited almost every caribbean island there is. I’ve been to Bermuda A LOT! over my college years ($99 round trip airfare back then) Hubby has never been, so we’re looking forward to going next year. The one thing we’ve never done, believe it or not, is see more of America (which thanks to our little RV, we can now do).
      I regret not working a bit longer (I quit in my 50’s) and I regret not saving more. I spent too much money foolishly in my lifetime (trading new cars in too early, too many new RV’s and buying vacation homes that didn’t increase in value)
      My mom died at age 59 and never traveled internationally anywhere. She was waiting for her retirement. Big mistake. I learned from her mistake. Live your life NOW, within reason. Don’t wait because you might not get the chance later on.
      Thanks again for your comment. I hope my little words of advice make sense.
      Good luck!

      Liked by 1 person

    • Hi Shelley, I stopped work at 45 to care for aging parents 500 miles away.. My husband accepted a golden handshake two weeks shy of his 55 th Birthday six years after. And did so because they continued health insurance but with a slightly higher premiums and threatened they probably not continue this in the future. On the outside market place, health insurance would have cost us $18,000 in 2004 to get a similar policy because we had pre existing conditions. We had plan on his retirement starting soon after he turned 55.
      We thought we had loads of time to do travel and the kids were just finishing college and law school so we had rented a beach house already for the summer and decided we would do the trips to visit family and hold the trip to Europe for 2006 which never happened. So I would suggest if you have a trip that you do it sooner then waiting.
      Financially, we had too much in the taxable 401k and traditional IRA. From the IRA we separated some of the IRA into a separate IRA and then took 72t distributions to give us 10 % more then are take home pay was. Taxes were also drastically lower and covered the added health insurance premiums. Auto insurance went down because we drove less. I wish we had put more in savings outside of retirement accounts looking back.
      I suggest to everyone to become knowledgeable of how their taxes are going to be when retired. Run your figures using the Social Security worksheet. Be aware of what income limits are that you’ll be charged increased Medicare premiums a $300 a month increase. They look back to your last year year’s income. A CPA retired at 64, three months to reduce his looked at income to qualify for the $134 rate. And to have all his Social Security not taxable when he took it the next month.
      Find something that you can be passionate about when all of your hours are free time.
      Sincerely,Lara

      Liked by 2 people

      • So becoming a widow at 53 Sucks. And quite frankly handling rectifying a three million dollar ten month medical bill is even worse to assure you only pay what your share is. Because I was three years younger I had the already halved pension cut to 22% pension for three years My husband bet he would live longer so maximize the pension he collect with a Fifty percent reduction if he died first. His logic he wouldn’t die before turning sixty. So if there is a choice to be made on the percentage the spouse gets try to get a better deal. Lara

        Liked by 1 person

  2. I liked your post this morning, so upbeat and full of plans. Love that you’re using up your credit card points. We have been traveling on them for around a decade. We have easily saved around 15K in that time period. Just got back from a trip around the south. Airfare was free, courtesy of Southwest Airlines and EIGHT NIGHTS in a row of hotel fare was free while we used up points from several different hotel plans. We practically broke our arms patting ourselves on the back.

    Where are you getting 3 to 4 % on your savings? I can’t even get that with CDs at our credit union.

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    • Anne, you can get a high rate of return (like 3.65%) right now on callable CD’s with the major brokerage houses, such as Fidelity and Vanguard. I’m getting a combo of 4.21% BUT they will be holding my money for 10 years. I don’t know if you want to tie your money up for that long. The money doesn’t compound so I have the monthly interest transferred to another interest bearing account (all government bonds) plus it pays a monthly dividend. I’m very happy with the returns but concerned should I ever need the money. I could redeem it BUT I’d take a loss which I am NOT willing to do right now. I get my whole entire principal back in 10 years. It’s sort of like a self-induced annuity. That’s how we are thinking about it.
      It takes me a while to think myself through yet another obstacle laden maze, but eventually I find my way. I’m feeling very positive and hopeful once again, happily looking in to our future. We both got those airline mileage cards back in 2015 because we thought our daughters and grandkids would be visiting us in Florida. Never happened. Now, those accumulated miles can give Nick and I more travel options. Bermuda is only 12,000 miles. Aruba and the rest of the Caribbean were 30,000 miles. So, Bermuda it is! Who knew? Plus Las Vegas is very, very inexpensive. I could go there again, rent a car and then see the midwest.
      See what I mean? Hopeful and many possibilities.
      Thanks for your comment.

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  3. Hi Cindi, I am so glad you are in a better mindset. The planned trips from airline miles and the savings on camping that will allow you to still travel are fantastic. And using your old Thrifty ways definitely will help to keep a little more of your interest money for the future,
    I too believe, David Bach is much more attuned to the middle class reality in his philosophy then Suze, and the majority of seniors don’t wait or can’t wait till 70 to collect Social Security. Nick’s health insurance needs being fulfilled with the $20 monthly premium from his NY plan till he is 65 definitely is a great benefit and sadly causes his postponing Social Security till he has to switch to Medicare.
    Ah, those fall cravings strike me to. I bought a six pack of large pumpkin donuts last week on sale for $2.50 to satisfy that fall craving and I have the ingredients to make pumpkin bread or pie this weekend. I usually make soups this time of year too. Cooler weather makes me want to cook more oven meals. Probably buy a turkey today for next week. Haven’t got one all summer and I love love turkey noodle or rice soup. Sincerely, Lara

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    • Lara, we just made chicken rice soup from the bones of a roasted chicken we had the other day. Delish! The cooler weather means we can hike more, for free and we can cook more, for saving even more money.
      I am so psyched about camping at state parks. Nick and I visited two of them when we were living in Florida and they were beautiful. There’s also a bunch of them down the key West side that are to die for. Who knew? Trick is to call early and the booking date is already posted on my calendar.
      David Bach is a more realistic person. Orman is just a fear monger. That was very unfair of her to say such awful things. Doom and gloom while she lives a fantasy life. UGH!
      Thanks for your comment. Talk to you soon!

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  4. Love packaging the turkey slices in package size that I can make a sandwich, stir fry, Or fajitas or turkey fingers, or tetrazzini, or over salad which makes a meal so,quickly that I can’t even drive to a restaurant and order in the time it takes to get it on the table. Lara

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  5. Usually pull the turkey out in the morning from the freezer but I have also defrosted them in the microwave in a pinch. When I come home from watching the grandkids I can easily resist buying fast food and pizza take out on the way because turkey is so much more healthier and Cha Ching the savings stays in the savings growing growing growing!

    Liked by 1 person

    • Hi Lara. I do this with chicken. I love chicken cutlets. Very versatile. I buy them on sale @$1.69 a pound at Aldi and then freeze them in freezer bags, only to defrost each one per meal for the two of us. Works out great.

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  6. I did a 23 lb turkey in beginning of June and froze a lot of it and then bought Aldi chicken cutlets, ground turkey and salmon. These are my go to meats because I avoid using the oven in summer. Right now pork chops are on sale every where so I am stocking up at 99 cents a pound. After losing power in May I was lucky enough to not have that much stockpile so didn’t lose a lot in food spoilage. Lara

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  7. HiCindi, I know you took Social Security at 62 and now are questioning if it was the right thing to do. So I am wondering with Nick’s income if any of it has been taxable? I was wondering if I could respond to Shelley question of what I would do differently? Lara

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    • Hi Lara. I’m certain Shelley (as well as I) would love to hear your advice on what you would do differently.
      The difference between my taking SS at 62 vs 66 was only $100. NOT worth waiting for. As it turned out, by the time I turned 66.5, I got the extra $100 anyway.
      Nick pays his own taxes on his income which BTW, is very very little. Does not affect me at all.

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  8. Hi Cindi, sounds like you have a lot of camping plans and I am not sure if your travel rewards card reimburses camping fees. The Bank of America Travel Card does.if you apply online it’s 20,000 bonus points (worth $200) but I can’t remember how much you needed to spend and the length of time you have to charge to get the bonus. I also like that you have a year to credit your points to a travel purchase and can redeem smaller amounts to a big charge. I maximize the benefits of their rewards by transferring a $100,000 IRA CD from Fidelity to Merrill Edge that gave me 2.65 % back for all items I charge. I also then get 75% bonus on my Bank of America 123 rewards card getting 1,75 / 3,5% on groceries including Aldi/ / 5.25% on gas. Does anyone else’s cards reimburse camping fees? Sincerely,Lara

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    • Lara, I never heard about any card reimbursing camping fees? I have to look in to that.
      As of right now, I was able to score a few weeks at a Florida State Park….right on the ocean! for only $24 a night. That’s a hellava lot better than the nearly $70 I was going to pay at a KOA. I’m still working on it to get the whole month done!
      I don’t have many charge cards and there’s a freeze now on everything! I’m done. I like what we have now, easily manageable and trackable and working out just fine. We have one card that gives us cash back on gas and some other expenditures in increments of $25. When we get to the redeemable limit, I just apply it to the bill. The airline card that we do have gives us double points on Aldi, groceries, restaurant meals and some other stuff. I get 4X to 9X the points when I book a flight or vacation package.

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  9. So if you are using the Travel card for your food budget 0f $400 monthly you get $200 bonus and roughly $150 more to apply to camping fees. You need to do a trustee to trustee transfer And Merril gives a bonus for the IRA transfer of $300 at the time which in January to April they give better rewards. Check out the details at Bank of America site . As A Premier Honors client the perks are fantastic. Sincerely ,Lara

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      • So I thought you would have filed jointly . The reason I ask is any of your Sicial security taxable with your investment income and side hustle. ? With the increased standard deduction for 2018 You maybe like me and not have to itemized. And have lower taxes.

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