What have you learned about preparing for retirement?

Carla Carpenter Retirement Party

Photo by Grant Laird Jr via Flickr

“The warning delivered for years to people in their 40s and 50s: You never saved enough in good times, your home and investments took a huge hit in the recession and now, near retirement, there’s no easy way to catch up,” via the Daily Circuit.

“Personally, I think the gloom runs too deep. Still, saving is a good idea, and who doesn’t feel the need to set aside more for the last third of life?” writes Chris Farrell, economics editor of Marketplace Money and author of “The New Frugality: How to Consume Less, Save More, and Live.”

Farrell says people buy into the financial services industry’s promise of big investment returns as the answer, and don’t focus enough on spending less in the decade before retirement.

People also assume thrift in the pre-retirement years means a reduced standard of living. Farrell says that’s not necessarily true.

“The Mad Men of advertising have done a bang-up job equating the good life with owning lots of stuff paid for on an installment plan,” he says. “A welcome side-effect of thrift is it’s easier to save, but far more important is the embrace of ‘judicious expenditures.’”

Farrell and CNBC consumer reporter Kelli Grant will be on the Daily Circuit at 10:20a this morning.

Gallup public opinion data indicates that the average American plans on retiring at 61. “The U.S. Census puts the actual retirement figure at about 64 for men and 62 for women,” writes Mitch Tuchman in Forbes. “The earliest age at which a U.S. taxpayer can collect Social Security is 62, and many do. Some might simply be tired of the grind and ready to jump ship as soon as they can.”

Today’s Question: What have you learned about preparing for retirement?

  • Gary f

    I’m 48 and will have to pay for all the government baby boomers have created in the last 40 years.

    Live within your means, stay away from debt, diversify your assets, and get healthy.

    I’d be real careful putting too much on your 401k. They will be coming for that next

    • JQP

      the government didn’t make the baby boomers… the baby boomers made the government. and 98% of baby boomers were private sector.

      • Richard Wied

        I believe that’s what he said – …pay for all the government that the baby boomers have created…

        And, depending on who you believe, government workers make up between 7 and 12% of the working population.

  • Gary F

    Work for 25 to 30 years, the retire and live another 25 to 30 years?

    Just whom do you expect to pay for it? What a selfish generation.

    • Gary F

      Our nation is currently borrowing 40 cents for every dollar it spends and we now see what is happening in Europe.

      What happens when the remaining people pulling the cart stop pulling?

  • JQP

    1) turn off the bitterness and expectations…. & turn on the reality

    2) happiness in retirement isn’t 24/7 play time … its being useful with your own time and ideas. MY advice – test a few ideas now… . but leave some latitude for changing your mind.

    3) your neighbors may not want to support you… but that doesn’t mean you have to turn into some bitter St. Paul crank. Be nice, helpful and useful

    4) Get rid of stuff. Possessions are maintenance burdens. Get a smaller house, get rid of any “rental-storage” you have, quit running around to every new thing. Learn to live with yourself.

    5) Save what you can, invest if you trust the system, work while you can, …. and work some more in retirement.

    6) Retirement is the jump from one big stage in life to another. It doesn’t mean you’ll be sipping tuna-colada’s in Bora-Bora. It could mean you’re busy volunteering your life away.

  • Jim G

    When I was 48, I was married to another woman, and lived in a new house we had extended ourselves to purchase. Fifteen years later I have divorced, sold two houses, remarried, moved into my new wife’s house, remodeled, and sent a step-daughter off to college (She’s employed thank goodness as a graphic designer and she married an industrial designer last October. STEM jobs are worth the extra effort.)

    I retired in 2008. One of the reasons I decided to retire was my maternal grandfather died of a sudden heart attack when he was 48, and my mother has had heart disease since her first heart attack at the age of 53, so I thought it might be prudent to take retirement when it became available. My wife is not so sure I made the right decision, but that’s another today’s question.

    My truck is now 10 years old, my bicycle has over 7,000 miles on it; my lawn mower is fifteen years old and the snow-blower twenty-five years. The way I look at we can prepare, but life is what it is. Don’t let anyone make the important decisions for you. Take life as it comes, one day at a time, until …well it doesn’t.

  • Emery

    I gave up on active trading years ago. My retirement savings are in a
    variety of Vanguard funds with expense ratios ranging from 0.05% to
    0.18%, while a lot of active funds are charging as much as 2%. And I
    have rolled over all of my 401(k)s just as soon as I moved jobs.

    I could teach someone enough about passive index investing to take them
    through to retirement in under 2 hours. Anyone who doesn’t learn this
    stuff deserves to live their retirement years in relative penury (and
    they will). I blame elementary school math teachers who taught their
    students to fear simple math. People honestly prefer fear and poverty
    to learning a few basics about compound interest and the basics of
    finance.

  • James

    Unlike Jim G and many others, I will be retiring without a defined benefit pension and will be living on savings and earnings from part time jobs. (Expect to see me at your local Home Depot!)
    Although the prospect is not horrifying, I will admit to feeling a little bit jealous of those large company and government employees who have defined benefit penions and who don’t need to choose between 1% returns from CDs and between +20% and -50% returns from the stock maket, don’t need to navigate the BS of financial planners and don’t have to guess about how long they need to make their savings last.

    Retirement without a defined benefit pension is just a decision to start living without income. Retirement and unemployment seem awfully similar.

  • sb

    I’m 29, finally have what seems to be a stable job that pays reasonably well. Unfortunately, I’m $80k in the hole from grad school and undergrad. Paying that down is the highest priority for me right now.

    Even so, I’ve put a few grand away and in the next two years should be up to about 12-15k, which compounded over 35-40 years is a start. Nothing can substitute for time. I’m parking my money in index funds and will let time work it’s magic. Over a long enough horizon risk is mitgated and the market’s trajectory has been upward.

    My peers are moving into bigger places, driving nicer cars and such, and I’m not. I share a 13 year old car, live in a studio apartment with my partner and shop at thrift stores. I hope it pays off in the end.
    I think the dream of retiring at 55 or 60 will just be a dream. I just hope I can keep finding meaningful, compelling work as I move through my career.

    • Jeff

      The worst part is that Social Security is going to be gone at least a decade before you reach the age of 65. Thanks boomers.

      • kevins

        Maybe thanks to the WW II era folks that created the boomers because before that, most didn’t live long enough to collect SS.

        • Jeff

          Actually the WW2 people had the system correct, they did die before many would take advantage of it so it was sustainable. The boomers are refusing to increase the age of benefits and yet the life span has increased by more than a decade since WW2. It’s a basic math equation and the boomers are too selfish to make any sacrifice.

          • Jim G

            In the Reagan presidential years, Tip O’Neal and Reagan made a deal. Imagine two of the most republican and democratic leaders adjusted SS to make it solvent. We need the republicans and democrats to make deals to solve the SS again. It’s fixable, but one side in not willing to cooperate to make deals. It’s their way or nothing.

          • Jeff

            That was my main point, I just see the boomers get irate when simple, common sense adjustments are made to SS. Look how much flack Obama received when he suggested that we need to use a chained CPI to save SS. The other suggestions are heavily resisted by boomers like increasing the age of benefits, which is crazy since all of those proposals would have no affect on anyone aged 55 or older…it’s almost as if boomers are refusing to allow the future generations to fix SS for ourselves.

          • Jim G

            Don’t tar all baby boomers with your brush. It’s like painting the Mona Lisa with a 6 inch brush. We’re a very diverse generation ranging from the first of us in 1946 through the early 60′s. We are Vietnam Vets, Hippies, union members, farmers, teachers even some KKK Members, and CEO’s of Wall Street Investment banks.

          • kevins

            I’m not sure dying early is a great trade off, but it certainly does obviate the need to worry about retirement.

          • kevins

            PS Jeff…my dad, survivor of the Battle of Huertgen Forest, is still kicking, and still takes good care of his resources in case he needs them down the road. I’m not sure I agree with your broad statement that boomers are selfish…seems like an oversimplification.

  • momcat

    At age 66 I inherited a substantial amount of $$ that I could finally invest for retirement. I also had modest IRA and 401Ks that had accumulated over the past 40 years. Now I intend to keep working fulll-time, maybe part-time as long as I can to give my investments time to grow and to delay the point when I have to start using them to live on. So what have I learned? Keep working, if you can, and if you enjoy it; and ignore the people who say, “Haven’t you retired yet?!”

  • Cab

    Start early, get a plan, stick to it, pay yourself first, live within your means, and remember, you aren’t what you drive. I retired at age 56, and my husband is retiring in less than 2 weeks at age 60. We are very grateful that our needs are met and our wants are limited.

  • John

    I have learned that we are pretty much a the mercy of a privately owned entity call the Federal Reserve. Which at any time can reduce what you have worked for all of your years to virtually nothing, if you keep your investments in dollars. Printing money out of thin air and taking your saving away is what they do.

  • The Fed1

    Until we audit the federal reserve, which few seem interested in, and then remove the corrupt Federal Reserve run by a handfull of billionairs that have no concern for the country, retirement is always at risk. Obama added another 5 trillion to the deficit and allows the Fed Reserve to print more unbacked money_ that_ is a crime. The 2008 stock market crash will seem pale in comparison to what is coming once the bond rate interest starts to go up, bec ause then the Fed will be insolvent with all the unbacked loans.

  • The Fed1

    As long as we have Obama in office, the average American won’t retire with a pot to pee in….his socialized ideaology is killing the country. Contrary to some media false reports, Obama affordable Health Care act does not measure up and as in California, single health premiums are going up 146%..How’s that for Hope and Change?