Saving for Retirement and Beyond, Stress Free, starting at ANY Age, even if You are Retired
By: Bill Myers
Tags: Retirement, Saving, Life Lessons, Debt, Money

One at a Time ( Photo by Sharon McCutcheon on Unsplash)

Money Management

Saving for Retirement and Beyond, Stress Free, starting at ANY Age, even if You are Retired

These techniques may even help you to get out of a mess, retired or not, also if you are younger. Bill Myers Jun 17, 2019·5 min read

Twenty years ago, I was nearly broke, and retirement could be as little as 10 years away. I had a mortgage for a larger house than I needed, a car payment, a little bit of credit card debt, and about $6,000 in my 401k.

I was living the American lifestyle. I thought about the size of the payment, not the balance. That’s what they advertise on TV!

If I continued, I would be living on Social Security, which was always intended to cover about 2/3 of your retirement and to keep you from starving. Any savings would be used to cover a mortgage and debt. Then, I would need a part time job for the rest of my life. Not a happy prospect.

However, I got lucky.

1. I found and married the perfect partner, who is a lot smarter than I am

2. I was able to work until I was 70 and a quarter

Having a marriage where both partners work together makes a big difference. I sold the house and used what little equity was in it to pay off all debt and part of the car.

I could have done the same thing when I was single — if I thought of it.

401k

Contribute the 4% if you work for a company with a match or partial match. If your company doesn’t have a 401k plan, put 4% into an IRA at the bank the day you get paid. You will not miss it after a while AND you don’t have to pay taxes on the contribution.

At least I was doing that.

If you don’t have an emergency fund, set up a separate savings account and split that 4% equally until you can at least buy new tires for the car.

How to buy a car

The banker told me when I was 16 that cars caused more financial problems than anything else. Credit cards may have eclipsed cars by now and doubled the problem.

My wife’s idea is to pay cash. If you must take out a loan, buy the best car where you can pay off the loan in 2 years. Then pay a savings account the same amount for 2 more years. You don’t need a new car!

Then, do the same thing again. After the third car, you will always pay cash for a new car. Banks let you set up more than one savings account.

Cars are a personal expense. We both had car savings accounts.

Splitting expenses

We decided early in the marriage to live as close as possible on one salary. We used the rest to pay off all debt, after maximizing the 401k’s, including the house, and to save for retirement.

You have lots of options if you have no debt.

We didn’t split expenses that way, though. We split household expenses based on each percentage of the total salary. The mortgage, utilities, insurance, vacations, and food were household expenses.

The car, clothes, toys, work lunches, and gifts were personal expenses. Anything after household and personal expenses went into savings. We each have our own savings accounts.

Therefore, the household expenses were split fairly, based on salaries. Restaurant dinners together were household. Kids gifts from a separate marriage were personal.

That way, we could take each other out on dates.

We each lost a job due to corporate reorgs and cutbacks, but not at the same time. It had no impact because we just recalculated the percentages, which were usually about 90:10, depending on the unemployment amount.

We also cut savings and discretionary spending, except for the 401k, until the other was back to work.

Retirement - Know what you can afford

We retired when I reached age 70 and a quarter so that we would not take money out of the IRA at the same tax rate that we put it in.

After traveling around a few months looking at retirement communities, we retired to The Villages, FL. I don’t know how we ever had time to work. My dad said the same thing. I thought that he was joking.

We bought an older house costing less than The Villages average, with the 20-year street bond paid. We had to fix it up some: Cost & Experience of Moving into Our Final Nesting Place when We Retired (How we saved $11,400 doing some tasks ourselves and using points during the move and remodel).

Retirement Spending

We are managing retirement spending the same way. We spend all of the retirement income from the oldest person.

We are withdrawing all of what remains from the oldest person’s savings first. Most of the second person’s retirement income is going into their savings accounts and will support us when the first savings account is gone.

After setting aside emergency and health funds, the spreadsheet deducts the prior year’s Travel balance and then tells us how much to withdraw for the year, based on the number of remaining years. It’s labeled “Travel” and has a running balance.

We deduct travel and any amount over-spent in the monthly retirement budget from it. We DO NOT borrow from a future year, but carry over the balance from the prior year.

This method is self-adjusting because the calculation is based on balances at the beginning of the year.

Conclusion

This method told us how much we could spend on housing, travel, and monthly expenses. It is also self-adjusting for interest rates, stock fluctuations, and emergency costs.

The only thing that I see that could damage the plan is hyperinflation. Of course, hyperinflation would be bad for everyone.

The spending plan got us to this point. I thank my wife for that.

This article is for informational purposes only, it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions