There’s nothing that can cure a financial screw-up, such as myself, than the reality of the cessation of steady paychecks coming into your life anytime soon. When you’re on your own, such as in retirement, you tend to get your financial act together pronto otherwise you might find yourself in financial hot water. There’s no doubt in my mind, looking back over my lifespan so far (thanks to my steady diary diet since I was 14 years old) that I’ve made several financial bad decisions. I had the mis-pleasure yesterday of re-reading some of my diary notations dating back to 2005. I kept making the same financial boo-boos over and over again and yet I couldn’t figure out what I was doing wrong. Now, that I’m fully retired and ‘woke‘ so they say, I have seen the error of my ways. I’m happy to report I’ve corrected so many of those financial boo-boos. I would have given anything to have told my 2005-self what I was doing wrong!
Perhaps those financial mistakes I made were all part of the growing process. Maybe we all need to go through that in order to become wise and competent. I don’t know. I’m just so glad I finally got my financial act together, learned to live within my means and faced my true financial identity. I’m also glad that ‘better late than never‘ can apply to me. How many people are still walking around dazed and confused, not having a clue on what to do? Who’s to say that I have learned it all yet? Perhaps there are more lessons under the covers I have yet to learn? In any event, bring them on. I’m ready for the challenge.
It’s perfectly alright to admit to yourself that you don’t know everything. Making mistakes, however, as you age, gets a little tricky. The older you get the greater the fear you have of making any errors. You have less time to make up for your mishaps. The faster you get your financial house in order, make your corrections, the better it will be for you in the long retirement haul.
The most important thing you can do in retirement, IMHO, is to create a budget and stick to it. Figure out how much income will be coming in to your life and match your expenses to it. You quickly find out what needs to be cut, what needs to be added and how to adjust your lifestyle to equal your new financial challenges. Three of the top mistakes most retirees-to-be make are: underestimating what your expenses will be in retirement (health expenses are the greatest concern), assuming Social Security will cover ALL of your expenses. They won’t. You still need a back-up savings account. Finally, not having a withdrawal strategy out of said savings account. (click here for more info).
Lastly, not everything I’ve done has been wrong. I’ve made some pretty good, sound financial decisions that in the long run, have turned out to be excellent choices. We need to celebrate our good decisions as well as our bad decisions. The main great one being selling our marital home in 2001 and downsizing to a less expensive, brand new, custom built, fully paid-for home in a less expensive area (lower taxes, lower utilities and lower home maintenance costs). Every day we live here turns out to be better than the previous day!
Locking away $200,000 in untouchable funds back in 2005 turned out to be a godsend in 2019. No matter how desperately we needed money back in The Great Recession of 2008, we never touched this money! Good thing because it turned out DH had a lot of unemployment over that time period and we would have drained this special account. Instead we learned how to live as extremely frugal as possible and meet each and every financial challenge that came our way. We’d have practically nothing now in our retirement years if we had tapped that untouchable resource.
Since I was the lower earner over my employment years, it was beneficial to us, for me to take early Social Security at age 62. This choice tided us over till DH, the higher earner could collect a larger Social Security check nearer his full retirement age. This decision turned out to be a very good choice for both our bottom lines!
Finally, I learned from my mother’s early death at age 59 that you have to live your life fully each and every day. You really can’t wait or think you can live out your dreams after you retire. Some people, such as my mother, never get to live that long. My mother worked hard her whole life and sacrificed everything for her children. She never took a vacation and went without too often to count. When she finally took her first vacation, at age 58, she and my dad took a 6 week trip to Italy. Upon arrival my mother felt ill. They came back home after only 3 weeks. My mom went to her doctor, had a series of tests and was finally informed that she had an incurable, terminal rare cancer and given only 3 months to live. My mother lingered for 11 months and died a horrible, horrible death.
My mother’s early death taught me to take risks, travel as much as possible while still young and enjoy each and every day fully! My risks included starting two businesses that eventually went bust. But I wouldn’t change those experiences for anything. Thankfully, DH and I traveled a lot while we both were gainfully employed because now, in retirement, my husband has been diagnosed with a rare heart defect and he couldn’t travel now like we did back then even if he wanted to!
As I sat on my mother’s death bed and watched her life slowly slip away, I vowed right there and then that I was going to be daring and carefree and live out my life to its fullest. My mother never got the chance. But I did.
I may have been financially foolish over my lifetime but what I ascertained in experiences can’t be duplicated or bought. So, my main advice to you is yes, follow the retirement financial guidelines suggested but please, oh please, if you have the urge to soar, take it! You just may never get that opportunity again.
Best of luck.
Regardless of R. Kelly, I often played this song to myself for inspiration and encouragement: