Jill Schlesinger, CBS News Business Analyst, has a book out entitled ‘The Dumb Things Smart People Do With Their Money. Thirteen Ways To Right Your Financial Wrongs‘. While almost all of Schlesinger’s wrongs stem towards ordinary day-to-day living, Dumb Thing #8 applies to many retirees: You Indulge Yourself Too Much During Your Early Retirement Years.
I have to say that I am guilty of #8. Unfortunately, I also know several fellow retirees who are equally if not superior to my guilty plea than I am. The exuberance one feels when freedom is finally achieved in retirement can cause one to loosen up those purse strings. After decades of sacrifice and savings, is it any wonder? Schlesinger doesn’t wag her finger at retirees such as us. She knows we did our best to fund IRA’s, 401Ks, 403Bs and other retirement plans. We all know how to save. What we didn’t know was how to spend. And spend we did.
Before I divulge my sins, listen to what my other retirement friends did. Some bought very expensive homes. Others remodeled and refurbished their existing homes. Some took luxuriant vacations. Some went on permanent vacations. Others bought second vacation homes (guilty), RVs (this is where I come in), some bought bigger better, sportier cars. Some miscalculated how much money they needed in retirement and withdrew the wrong amounts out of their savings. Others are amazed at how long they are living and how little their money is lasting.
If you are 65 today, odds are in your favor that you will make it into your 90’s. Will your retirement money last as long as you will? What about your stock market holdings? Will they outshine another recession or dip in growth? What about getting ill early on in your retirement? Did you plan for long term health problems? What about a spouses early death and the reduction in income that death will bring upon your retirement income?
Jill Schlesinger has seen it all AND she has advised her clients all. What she writes about in her book, are her clients who, for whatever reason they spouted, did not follow her advice and now find themselves at 70 to 80 years of age, struggling from lack of adequate funds. If you are already in your 60’s and find yourself tight for retirement income funds, Jill says there really isn’t much you can do. You have to downsize, make drastic spending and lifestyle cuts and live with your distress. To the others, Jill offers several catch-up strategies that might ward off any future retirement nightmares.
I think I am guilty of all of the above. While I thought I had the most perfect retirement plan strategy, what I didn’t calculate was for Factor X. What was my Factor X? That was my husband getting sick with a life-threatening disease along with his accompanying inability to work any longer at age 59. How’s that for a kick in the retirement butt? Prior to my husband’s illness, I bought a vacation home, a second home, bought three RVs, several new cars and withdrew way too much money out of our savings. After all, I reasoned, hubby was working. He could always make more money and replace what I withdrew. Wrong!
Since both hubby and I are in our 60’s there isn’t much more we can do. We cut our losses, reigned in my spending and downsized our lives down to the bone. The only one saving grace is that hubby was going to apply for Social Security now but for health reasons, he’ll be applying at 65 rather than 62. That will increase our income by several thousand dollars per year, but we have to wait the three years in order to benefit.
Do I have any regrets? Not really. I should have laid off the frequent car buying spree but other than that, I have no regrets. That’s because hubby is sick currently and we can’t do now what we did before. We did have fun. But I shouldn’t be posed as a role model. Thankfully we caught ourselves before it was way, way too late! We still have a fair amount of money in the bank, well invested, supplying us with that third leg in retirement income planning. Hubby has his pension, which is a rarity today. I have my social security (early) benefit. And DH will have his soon enough.
We already downsized to a smaller home back in 2001. The home we live in is still the best all around, least expensive, most affordable option we can find. All second home, vacation homes have been sold. Profit and/or losses duly noted. We have to make due with the cars we have now and drive them into the ground. There’s only room in our future budget for one more car purchase and it had better be forever. Ditto for our current RV. No upgrades any time soon. We should feel blessed that thankfully we have what we already have!
The hardest thing for me to adjust to was curtailing our lifestyle. I had to prioritize what was important to us and how we were going to find another way through the maze of life. We RV at state and national parks now. We learned how to boondock (no utilites at zero costs). No more meals out, movies or expensive entertainment/travel packages, more DIYing, no retail clothes buying, no expensive foods…….yada, yada, yada……..we all know the drill. Been there. Done that. I know it all by heart now. So much so, that I no longer consider cutting back a sacrifice. It’s just another stepping stone in this giant thing we call ‘retirement life’.
If you’ve made dumb money mistakes in your life, I highly recommend Jill Schlesinger’s book. Jill covers such other topics as taking financial advice from the wrong people, buying financial products you don’t understand, taking on too much risk, failing to protect your identity, saddling your kids with your own money issues, to name a few.
*There’s something in Jill’s book for everybody. Because we’re all smart people and we all make dumb mistakes with our money.
*You can get Jill’s book from the library, as I did. No need to buy it and spend any more money than you have to!