I’m in my 50’s now, rolling toward my Golden Years. At my age, we think about retirement. We read about it, too. Mostly, we think and read about how we can’t retire because we don’t have enough money. To that, I say “Balderdash!” (I say that because I like the word “balderdash” but rarely get the chance to use it). I read somewhere that 20-30% of Americans think winning a lottery is their best chance to pay for retirement. I don’t recommend that plan. If that many American win the lottery, the pay outs will be so low, you won’t get hardly anything.
If you have a generous pension plan or trust fund or guaranteed inheritance, you may want to stop reading at this point. Little of this will apply to you. You have a safety net in place to assure your comfortable retirement. For the rest of us, it takes some planning.
We can, in fact, retire if we know what to do. First, we must understand what retirement is not.
Retirement is not unemployment. Unemployment is the drunk brother-in-law of retirement. The only thing it has in common with retirement is the lack of gainful employment. It’s very easy to be unemployed. AARP doesn’t publish articles on how best to become unemployed. We all know many tried and true methods: incompetence, sloth, thievery, amateur pornography, insubordination, felonious behavior, economic downturns, job outsourcing, bad luck and many, many others.
Retirement is not disability. You might be disabled and thus unable to work. That sucks, unless you are really a malingerer in which case you’re okay with it. Regardless, you’re not retired. You just can’t work. There’s no retiring from disability, unless death counts.
Retirement is not wealth. Perhaps you are incredibly wealthy and haven’t really ever worked. Whether you attained this status through dumb luck or the largesse of your ancestors, you aren’t retired. You are a ne’er-do-well or man about town or socialite or some other such fortunate soul. You can’t retire from those “jobs.”
So what exactly is retirement? Retirement is where one works his or her ass off for years until the point that he or she can no longer stand it and quits. Unlike unemployment, the retiree has sufficient income or assets upon which to live some modicum of a decent existence. Pensions, savings, Social Security, inheritance and the like all qualify.
Now that we know what we’re dealing with, what can we do to be prepared? If you’re my age or older and you haven’t thought about that yet, here’s the plan: Work until you die. You’ve waited way too long. Maybe you’ll get lucky and get disabled at some point. For everyone else, there are few things you can do–or not do, as the case may be.
1. Work. This one is simple enough. You can’t retire from doing nothing. Get a job. Pay your taxes. Set up an IRA. Contribute to a 401K if you can. Every little bit helps. Better yet, get one of those jobs that pays scads of money, like movie star or hedge fund manager.
2. Live Within Your Means. We’ve all heard this but spend much of our time either totally ignoring it or looking for loopholes. Anyone can understand that you shouldn’t spend money you don’t have or incur bills you can’t pay. That’s pretty basic stuff. If you don’t understand that, there’s really no hope for you. Even if you do understand, you aren’t out of the woods. Read on.
3. Spend Your Own Money. Do you still have your parents around? If so, good for you. If they are good people, call and visit them often. Be helpful to them. Pay them back for the many years they cared for you. Don’t mooch off them. Maybe your parents are generous sorts and willingly give you money and things. Here’s the deal: If the only reason you go on vacation or have a car or a house is because your parents still provide for you, you don’t live within your means. You live within their means.
Of course, many young people depend upon family to help them get started in life. That’s fine. If you’re 40 years old, you’re not a young person. If you haven’t gotten your start yet, it ain’t happening. Learn to support yourself.
You may be counting on your parents to actually fund your retirement. That plan may well work. Unfortunately, unless you mooch off them, it requires their deaths. That’s a high price to pay to retire. But, if that kind of thing doesn’t bother you, just look forward to the reading of the will.
It is equally wrong to plan to sponge off your children. This is particularly true if you have already bled your parents dry. Your children will be counting on you to support them forever, too. A cataclysmic clash of cultures awaits sure to tear your family asunder for generations to come or, at the very least, leave you all pondering which unfortunate relatives upon which you can descend.
Another sure sign of not living within your means is borrowing money. I’m not talking about loans for houses, cars or business reasons. These are, to a great extent, unavoidable in today’s world. Have you ever borrowed money to go on vacation? Here’s a thought–STAY HOME. How about a “pay day” loan where you can cash your paycheck before you get it? Here’s word for you to learn: USURY.
It is axiomatic that drug and gambling debts are red flags. In fact, all debts are red flags. If you can’t afford your lifestyle while you’re working, what are the chances you can afford it when you don’t work?
4. Require Others to Live Within Their Means. Nothing good can be said about loaning money to people for personal reasons. Perhaps you are a business person and you do so as an investment. Assuming you’ve done your due diligence, that’s a business decision. Loaning money to people who just need money is like paying someone for doing nothing for you. Naturally, it can be difficult to refuse a close friend or family member during hard times. Here are a few responses which can gently dissuade such requests:
- “What do I look like–a bank?”
- “What do I look like–an idiot?”
- “I’m just going to pretend that you never said anything.”
5. Save First, Spend Second. This is a basic concept. Save money, then spend–not vice versa. Why? Because we Americans tend to spend all our money. We like to own things–or at the very least make payments on things. Famed motorcycle daredevil and spendthrift Evel Knievel once said:
The country singer Garth Brooks once said that he’s made more money than he could ever spend. Write me a check Garth – I’ll show you how to spend it in 24 hours.
That’s the American way. It’s also the way to guarantee that you die at work. Don’t die at work.
It’s Retirement, Stupid. With these few guidelines, we can all retire if we have reasonable expectations. You shouldn’t need as much money when you’re retired as you did when you worked. This is especially true if you have children–that is, assuming they heed the no-mooching rule and get the hell out of your house at some point.
Do you plan to travel the world when you retire? Good for you, but that takes money–a lot of money. You can retire without living the lifestyle of a Kardashian. Excuse my language, but if you can’t afford shit like that NOW, you probably can’t when you retire. That’s okay, you can still retire.
Here’s what you do. Work and save money and you should be okay. Then again, maybe not. There’s always the lottery.