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.
So, 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).
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.