It’s High Time to Roll Out the Alt-Retirement Movement

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They’re all kinds of “alt” movements around. I googled the term alt-retirement and was surprised to find that it doesn’t exist. The closest references were to a couple of government programs under the title “alternative retirement plan” that apparently exist for state governments, as well as FICA (the Social Security and Medicare tax). But it seems like it’s high time to roll out the alt-retirement movement.

No, it’s not likely that this will start out as some sort of grassroots movement with a bunch of ex-hippies holding hands, lighting candles and singing kumbaya. Our entire society is in such denial about the deterioration of retirement that it will be forced on us. But I for one don’t like having anything forced on myself. I’d much rather react to the reality at hand, and do the best I can in proactively managing the situation. That’s the best any of us can do.

It’s High Time to Roll Out the Alt-Retirement Movement
It’s High Time to Roll Out the Alt-Retirement Movement

That’s what alt-retirement is all about. Taking positive action to deal with a predictably negative result. In fact, I think of that as being positive thinking in its highest application. Positive thinking isn’t about whistling past the graveyard, and pretending everything is fine. It’s about recognizing reality, and preparing in a positive way.

Let’s try to flesh that out.

“I’m 65 years old and I only have $20,000 in savings – how can I retire?”

This is a question I frequently get – in some form – from readers, either in comments on the blog, or in private emails. I’d love to be able wave a wand and fix such a person’s situation. But there’s no wand, and I’m certainly no magician.

So here’s my blanket answer to anyone with this question: You’re not going to retire, and you need to make other arrangements.

Alt-retirement – this article – will be my standard answer to that question from this point forward.

I think most people know the answer before they even ask the question. But they’re hoping that I or someone else will have the elusive solution to their retirement dilemma.

I don’t. Nobody does.

If you’re in a situation that’s even remotely close to this, there’s a series of Alt-retirement realities that you need to get comfortable with…

Alt-Retirement Reality #1: You May Not Be Able to Retire – Ever

While many people have the expectation of full retirement at 65 or thereabouts, the numbers just don’t add up. Let’s look at what have been traditionally the “three legs” of retirement since World War II.

Pensions. One of the unfortunate realities in the past 20 or 30 years is that traditional defined benefit pension plans are becoming increasingly rare. They’re not very generous in the private sector even if you have one. Most of the bankable pension plans are in government employment. Unless you work/worked in government, you won’t be able to rely on a pension.

Retirement savings. An article that appeared in Motley Fool in December reported that the average person between the ages of 55 and 64 has only about $135,000 saved. (This is consistent with other statistics I’ve seen.) When you’re at the doorstep of retirement, that’s little more than a large emergency fund.

What’s more, with interest rates in the 1% to 2% range, a nest egg that large isn’t going to produce much income. Sure, you can invest in stocks, but you may not have the stomach for that when you’re north of 65, and don’t have time to make up for the large losses that a market crash or a prolonged bear market can bring. This is why most people favor safe bank investments in retirement.

Social Security. The Social Security Administration reports that the average Social Security benefit is $1,369 per month as of June 2017. While this is a welcome income subsidy, particularly if you and your spouse each have a benefit, it’s hardly the kind of money you can retire on.

Whatever your perceptions of retirement might be, these are the realities for the average person.

Alt-Retirement Reality #2: Most People Can’t or Won’t Invest Their Way to Retirement

We’re surrounded by well-meaning financial gurus and media types extolling the virtues of relentlessly saving for retirement. Their advice is spot on. The only problem is that it doesn’t necessarily square with reality.

It’s one thing to squirrel away 20% or more of your income if you’re making $150,000 per year. But the median household income in the US is just $57,617 – only about one third of that lofty income level.

The fact that the national number is a median is significant. Median means that 50% of the population earn less, and 50% earn more. It can be easily argued that people living in high cost areas can struggle to get by on even $70,000 or $80,000 per year.

Income statistics tend to be expense blind. A $100,000 income looks impressive, until you start considering necessary expenses. These include the plethora of costs associated with housing, health insurance and health care, maintaining one or more motor vehicles, and countless other expenses. It can be a stretch to save even 10% of your income for a faraway goal like retirement.

It’s small wonder that 69% of Americans have less than $1,000 in savings.

Sure, we can argue that people lack financial discipline, but I suspect it’s something more. Even if you’re making good money now, if you’ve gone through an extended period of unemployment, employment instability, or a cascade of major expenses, it’s not hard to adopt a what’s the use? attitude.

Yes, theoretically it’s likely the majority of people could invest their way to a comfortable retirement. But reality tends to go in a completely different direction from theory. For whatever reason, most people will either fail to do it adequately, or fail to do it at all.

Alt-Retirement Reality #3: Living Expenses Won’t Automatically Fall in Retirement

There’s a widespread belief that retirement brings about Living Expenses Lite. Once again, that’s possible in theory, but it doesn’t always play out in reality.

For most people, the expense patterns of the working years carry into retirement. There may be small reductions, due to the disappearance of work-related expenses like commuting, but the big expenses tend to stay put. For example, if you stay in the same house, your expenses won’t decline. It will happen if you pay off your mortgage, but that can be partially offset by rising property taxes, homeowner’s insurance, utilities and repairs and maintenance. It’s also worth noting that as you get older, you’ll likely become increasingly reliant on paid service providers to maintain your home.

The bulk of auto expenses are also likely to remain the same. You may use less gasoline in commuting to work, but you might make it up with recreational trips. And while driving a “beater” might be acceptable when you’re younger, you’ll prefer the reliability of a late model car as you get older.

Then there’s healthcare expenses. If anything, they’ll increase once you move into retirement. This will be especially acute if you’ve been on an employer subsidized health insurance plan in your working years. That $400 per month employee contribution can easily double when you’re on Medicare and a Medicare supplement. And unfortunately, with advancing age, comes increased health-related issues.

If your expenses decline in retirement, it’s probably by nickels and dimes. This is why financial planners often recommend that you plan for retirement living expenses equal to about 80% of pre-retirement levels. Your expenses may fall some, but it’s unlikely to be a wholesale drop.

Then there’s inflation. It’s official government policy, so we should fully expect it to continue going forward.

Alt-Retirement Reality #4: You’re Probably Going to Need to Keep Working

This gets to the heart of Alt-retirement. Most people will need to retain some sort of earned income well past age 65.

According to the Pew Research Center the number of people 65 and older still in the workforce has increased from 12.8% in 2000, to 18.8% in 2016. That’s a nearly 50% increase in the number of seniors working. And it occurred many years into an economic expansion.

My guess is that the percentage will increase in the next recession.

What’s more, nearly two-thirds of those 65 and older who are employed work full-time. In fact, seniors are the only age group that has increased its labor participation rate since 2000. Virtually every other age group has fallen, given that the national labor participation rate has been declining since the 1990s.

Clearly something is changing. This appears to be part of a long-term trend. If we connect the dots, Alt-retirement realities 1, 2 and 3 are almost certainly the reason behind it.

It’s now hard to go into any big box retailer and not see multiple seniors at work. It’s likely that many did retire at 62, 65 or 67. But after a couple of years, reality sunk in that retirement wasn’t working.

This is creating something of a retirement boomerang effect. People retire on little more than luck and a prayer, and are forced back into the workforce by the cold, biting wind of economic reality.

A proactive Alt-retirement strategy will be the best retirement plan of all for most people. That doesn’t mean you have to continue working at a job you hate. Alt-retirement is all about downshifting into preferred work styles. That is, creating a career that blends comfortably with your life, and offers rewarding work.

Alt-Retirement Reality #5: You May Have to Make Uncomfortable Lifestyle Choices

One of the biggest retirement hurdles for most people is the perceived necessity of maintaining the current standard of living. People want to retire, but they want to do it with a nice home in the suburbs, one or more late model cars, regular dinners at nice restaurants, extensive travel, and generous gifts to children and grandchildren.

The top 5% of households might be able to do that – and maybe some in the top 10%. Unless you’re in that privileged group, you’re going to have to make trade-offs. Get used to it. For the vast majority of people, retirement and a comfortable suburban lifestyle won’t be compatible.

Some of those uncomfortable lifestyle choices might involve:

Reducing major expenses may prove to be a game-changer. If your income won’t support your traditional lifestyle, then it may be time to downshift that as well.

Upshot: It’s amazing what we can get comfortable with when we embrace change. The change itself is usually the most traumatic part. After that, it’s all about settling into a new routine.

The retirement years should be when life becomes more about experiences, and less about possessions and living standards.

Alt-Retirement Reality #6: You Need to Adopt a Flexible Way of Thinking

Embracing reality is never easy, particularly in a culture where reality is increasingly considered optional. But embrace that we must.

Part and parcel of that shift is adopting a flexible way of thinking. We have to embrace the idea of a “working” retirement, living a less traditional lifestyle, and finding ways to reduce expenses. All that is possible – or at least easier – when you change the way you think.

For example, if income will be limited, it might be necessary to get into a shared living situation. It’s the kind of thing that young people do all the time. For a single person, this may be the best option, given that housing is so expensive in most markets. Couples may need to consider taking in a boarder, which could be a friend or an extended family member.

Shared transportation needs to be on the table as well. A couple may need to go down to one car, rather than two. Fortunately, this is easier to do than ever in the age of ride-sharing services like Uber.

How Flexible Thinking Enabled Me to Cut Car Repair Bills by Thousands of Dollars

There are other expense-cutting strategies to consider. For example car repairs. I hate paying for them. I’ll bet you do too. They’re one of the major reasons why so many people are mortally afraid of owning an older car. But a few years ago I embarked on a crusade to find a cheaper way to repair our cars.

I hit pay dirt. By using a combination of free services, a “backyard mechanic” and buying my own parts, I’ve been able to reduce $1,000 car repairs down to $400 or $500.

This is just one example of how you can lower a major expense by adopting a flexible way of thinking. I’m not a car guy in any way, so doing my own repairs was out. But I found a happy medium that’s saved us thousand dollars over the past several years.

You can do this with any number of expenses. Again, most of the what it requires is flexible thinking. Embrace it, and you’ll be amazed what you can accomplish.

Alt-Retirement Reality #7: You Can’t Go It Alone

Perhaps the biggest Achilles heel for most people is adherence to America’s patented go it alone lifestyle. We want to be free to be lone wolves, to live without being dependent on anyone else.

That tends to work much better when you’re riding high in life. But when you’re not, it’s completely counterproductive. We’ve all heard stories about how “back in the good, old days”, people helped each other. Family and friends stepped up during times of personal emergency, and the gesture was always returned.

That concept still generates warm fuzzy feelings in the 21st century. But most people are loathe to embrace it. Sure, we all like help in our own times of need. But it’s reciprocating where the whole construct falls apart. We don’t want to be obligated to anyone.

That’s toxic as you move into the retirement years. In fact, for each of us, as we move toward the end of life, we will become involuntarily dependent on other people. Why not embrace the concept before it becomes entirely necessary?

Part of the reason why the cost of living so high today is because of the emphasis on individuality. We all perceive the need to have a place of our own, a car of our own, etc. But that’s an expensive way to live. One man/one car may be preferred, but is prohibitively expensive. Especially when income is limited.

It may be necessary to develop shared situations to cut costs. This can include housing, transportation, and any other possession/expense we can imagine. It’s what humanity has been doing during difficult times for thousands of years.

It Can Also Work Wonders on the Income Side

Despite laws against age discrimination, it’s a common practice. By 65 you may find job opportunities extremely limited. Knowing the right people will be more important than ever. For example, it may be important to become friendly with a number of small business owners. They may provide much-needed employment opportunities.

If you’re looking to start a business, you’ll need some form of professional network, to help you launch the business and sustain it. I certainly found that to be true with blogging. Meanwhile, I’m constantly growing my writing business by reaching out to others. You can do it too.

I was listening to radio Bible teacher Steve Brown on the radio yesterday, and he said something that I think applies to all of life: Never underestimate the weakness of your adversary.

“Adversary” doesn’t mean your enemy. It’s anyone who you’re having a potentially uncomfortable exchange with. This often happens when we’re reaching out for help. When we do, we should always keep in mind that the other party also has needs. If you can work out a way to address one another’s needs, you have the common ground necessary to build a productive relationship.

Most of us attempt to live within very insulated worlds. This is completely counterproductive in a time of need. It also creates undue stress. What I’ve found in my own life is that when you reach out to people, they’re surprisingly receptive. That’s because we all have needs, and welcome the opportunity for others to step in and help us fill them. Make that assumption, and make it a part of your future existence to reach out to people, and seek genuine community.

What do you think? Is this the right time for a full-blown Alt-retirement movement?

( Photo by J_CMac )

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57 Responses to It’s High Time to Roll Out the Alt-Retirement Movement

  1. The situation is actually going to get much worse as too many people continue to vote against their own self interest. There is no trickle down ever going to happen. Making the already rich wealthier each year only gives them more power to take away more of your rights and money. They distract the public with highly emotional issues, playing one side against the other while they steal you and your children’s future to enrich themselves. Those who continue to give control of our government to such people are following the mega rich pied pipers right off the cliff.Dan

  2. I completely agree Dan, but that’s a big picture issue we can’t control, so we have to concentrate on micro-strategies. I’ve said many times on this blog that we should expect no help from The System. It’s increasingly serving the rich and powerful at the expense of the citizenry. We now live under We Say So government, constraining our choices at every turn in the name of the “greater good” – what ever that means anymore.

    But now is our time, and these are our lives, and we can’t waste them while Rome burns. The more flexibility we can build into our lives, the better we’ll be able to cope with whatever darkness is waiting for us over the horizon. What you’re describing is the foundational reason why retirement for the masses is fast becoming a fantasy. Our only rational course is to change direction and develop ways to work around the problems, while simultaneously living rich, meaningful lives. That should always be the goal.

    Unfortunately, the same dark forces impairing retirement are also impacting student loan debt, career stagnation, falling homeownership, and a a cornucopia of other ills. We can only deal with our own corner of the conflagration.

  3. This sobering article is a compelling argument for why people need to achieve financial independence as early as possible. I’m certainly glad I won’t have to utilize any of those alt retirement strategies. I might choose to do some, like I do by working some paid side gigs for fun. I do think a great many more people can become financially independent and have great retirement options if they control the insane spending that is common in our society. If you read FIRE community blogs you will see many people saving upwards of 50% of salaries lower than $50k. I believe most of those that will be forced into alt strategies will be reaping the rewards of living lifestyles above their means.

  4. Hi Steve – I agree. I’ve known people who do that, but I’d describe them as exceptional. They’re able to live on next to nothing, and bank everything else. That’s a mindset that’s ingrained early in life. If you haven’t by your 30s it’ll be a tough transition. From what I’ve seen, single people do the best with that. But it’s something even those with families can do when the kids are grown.

    But the reality is that few do. As a nation dominated by groupthink, most follow the herd and don’t even question what they’re doing (since it’s reinforced by the herd every day). What you’ve described should be Plan A. But since most don’t, we turn to Alt-retirement.

    No one is worthless despite their financial situations. But they need to know that, and to plan to move forward.

  5. Great article as usual. For most people, working at least part time is the solution to the retirement crisis with being flexible working around challenges. And maybe investing too is good for the vast majority if even later in life. I like how you see darkness, not light, in the horizon. Very realistic. It’s better to be safe than sorry with your future.

    I am 49, husband is 57. Originally our extra $400 mo. we now save was to be added to our monthly mortgage principal. A home we just bought 3 months ago. But then we realized that we could downsize, keep our 50K already saved, adding $400 mo then sell our land at minimum of what we bought it for + fees. Seems easily do-able since per the Realtor, right now it’s listed 40% higher than our buying price. So even lowering it should net us an extra 10K profit. We’d likely just break even on this house so we could wait for the market. Nonetheless should be enough $$ to buy a fixer upper home and the to remodel. Allowing the assessor and building dept privy to some remodeling but not all. They often demand to be let inside, so I’ll allow it as we’ve made some changes. But they won’t see all of them. Can decline but then they take photos from the street which may result in a much higher appraisal thus much higher property taxes.Residing in a small town means you gotta get along with everyone 🙂 including the County. So it behoves you not to necessarily decline their desires even if you lawfully can.

    To obtain a job with a supplement plan such as Aflac could replace one of our future medigap policies. This will be key on when we take SS. Keeping an eye out now for job openings. Per the statistics, hubby will likely die when I am still working p/t. If not, I have a small work 401k with 10k in it which can still grow…or not.. to help pay for his medigap for longer. California will require most employers to provide a retirement plan by law, by the year 2020. Employers can us the retirement plan California set up called Secure Choice. Except it doesn’t comply with ERISA laws so it appears riskier.

    Our move 3 months ago to a higher elevation with cleaner air plus a diet change allowed husband to loose 10 pounds. He’s down to 190 pounds. Yet still on the CPAP. His breathing is better but it might be he’ll never get off the CPAP machine. Needing breathing assistance isn’t conducive to living a longer life, typically. But my small 401k plan, at this moment, will hopefully grow to be used for his Medigap policy. I’ll always be contributing to a 401k while working.

    If things don’t go as planned, I mean really fall apart bigtime such as my health declines so unable to work well into retirement, as a last resort we’ll cap our combined SS benefits to 2k per month. Hoping Medicaid is still around since he will qualify. We would pay for my medicare & medigap.

    Otherwise delayed SS credits in any fashion or combination within us will not cover the cost of both of our healthcare. I’ve done all the calculations. Part B alone isn’t sufficient. This is a worst case scenario I do not predict coming to pass.

    They key is for both of us to continue exercising, eating mainly organic, and loose a little more weight so I can continue to work down grading to part time at retirement-somewhere in the 60’s and work forever. Until death.

    This will keep us living comfortably and not so frugal that life is not pleasurable. Luckily everything we love is free anyhow so we’d not live much differently even if we won the lottery. While having a measure of security regarding healthcare. Luckily, the stores here aren’t open everyday so that’s been the key to dieting.

    Now the only last piece of the puzzle is understanding when Social Security calculates SS benefits in relation to working -and- taking SS. Such as if you stop SS at age 62, husband at age 67 or 70, and I continue to work pt taking benefits, will they be re-calculated as I earn wages each year. Surprisingly learning the formula wasn’t that difficult so I can predict, each year, how much my SS increases by my yearly earnings. Nothings set in stone but we try.

  6. Hi Maria – I think you have a workable plan. I like that you’re saving money. It may not ever be enough to retire on, but please don’t let that stop you. A large emergency fund can buy a lot of peace of mind, even if you never retire. I’ve known so many people who never retired and they did just fine. It’s all how you see life, and how well prepared you are for the ups and downs.

    The worst will be for the people who have high retirement expectations but slim resources. Statistically, that’s most people, and that’s what has to change.

  7. Slim resources sound so grim but it isn’t because it all depends on what you consider essential necessities. I just saw a video about extreme savers who managed to put 50% of their income away to retire early and here you are writing a blog about how to have money to live to be able to grow old. First of all, retirement is a state of mind, as you are still living. The only thing one should retire from is dealing with things that stress you.
    Now the trick is to keep active doing things. Yes, we need an alt-retirement plan because society is turning towards the Bladerunner philosophy (we only need new models) and de-evaluating experience by using the thinking that old dogs can’t learn new things. The only thing we can’t do is move as fast in a physical setting except for those of us who are extremely fit (not me, for being fit, but I am healthy). I was sitting at the bus stop today (in the snow) watching all these people playing with their expensive phones, which the majority of them didn’t even have cases on. My philosophy for cell phones is that if you are going to invest that much money in it you should protect it.
    The reason I brought that up is like you stated already, is to re-emphasize that cost of living doesn’t go down magically when you retire, so to bring costs down, you need to seriously look at all expenses and cut back non-essentials. But don’t wait until you get to a certain age, do it yearly or at certain times to lower debt ratio to income. I personally re-evaluated my budget and re-set goals to a more realistic level as my New Years resolution. I have reached to point now that if I got offered a part-time position (in my dreams ) I am mentally fit to resolve what I will or will not do. ( part of realizing my personal space and denying that old workaholic attitude.) But one has also to eliminate the need for every new thing–like a new phone every year ( cell phones with updates are good for two-three years, remodeling the house, (keep up the maintenance but do you need to change furniture every year. Expenses need to be controlled. Income doesn’t.

  8. Hi Maria – The Old School approach is that you live on whatever you make – whatever that is – and preferably a little below. If you emphasize savings, you’ll always be “liquid”, meaning you’ll always have money when you need it. That isn’t being rich, but it feels like it, and keeps the stress level down. Too many people want all the stuff, and I agree with you, that patterns and habits need to be set well before retirement.

    It’s pretty true that you retire the way you’ve lived all your life. If you’ve always been broke, then you’ll be broke in retirement (I’ve seen this dozens of times), if you like to live well, you’ll keep doing that in the retirement years. If you’ve always been in debt, that pattern will continue.

    That’s why retirement planning has to be a lot more holistic than just saving money or putting in time for a pension. I’ve seen people live on next to nothing, and yes, bank 50% or more of what they earn. Not all of us can do that – certainly not me – but it’s good to follow that pattern to a more limited degree, like 20% or 30% if you can manage it. It’s also proof that you can live beneath your means, and that’s really the “secret” to financial success throughout life.

  9. Kevin,
    Great piece and a great idea.
    Alt-retirement clubs or groups could help people manage their expenses as you suggest with car sharing, joint Costco shopping, medical appointment transportation and many others. Through the groups people could coordinate car pooling to their part-time jobs and post skill sharing to barter for home or auto repairs.
    Groups like this could be advertised through condo associations, senior centers or church groups.
    I think you’re onto something.

  10. Thanks John. I agree on senior centers and churches, but I have serious doubts about condo associations. They tend to be elitist, and may prove to be an obstacle more than a benefit. I was also thinking of informal groupings, like 3-4 seniors moving into the same home – singles or maybe two couples. That would cut down drastically on housing costs, provide companionship, networking and assistance with daily living. Let’s face it, most people can’t afford senior living facilities, let alone assisted living. But some form of collective living arrangements could be an affordable alternative.

    We’re not at that point yet, people are still clinging to the rugged individualist thing. But I think we’re maybe a recession or a financial crisis away from new ways of thinking being forced on us. It’s always best to have some loose ideas noodling around before the fact. And when you stop to think how so many are living 20-30 or more years into retirement, you really have to think very long term here. It isn’t just getting to 65 or 67, but having strategies for 10 or 20 years later.

    As examples, my mom is 91, my aunt is 89, and I have two uncles turning 92 next month. I don’t think we’ll have the predictability in the future that they’ve enjoyed. And believe me, they’re all worried about what’s coming down the path, even at those ages. I suspect we’re going to have a lot more to worry about, and it’ll be coming at us a lot faster. Now is the time to hatch alternatives.

  11. I have always lived with the old school approach. Once I resigned myself to the fact that I am never retiring it actually took alot of worry away from me.

    I don’t pay attention anymore to all the so-called strategies out there, all designed by financial people. to extract fees and percentages from you. It changed my way of thinking and quite honestly my life.

    I live below my means. No debt at all. No mortgage, nothing.

    That is the best retirement advice I can give anybody.

    It is never too early to start this. It must be a lifelong approach to living. Debt of any kind is the total enemy. Your approach has to be no debt no matter what. If you don’t have money for it you can’t afford it. Yes, that includes a house and car.

    My next thing in life is getting rid of my car. It is 13 years old. Still in decent shape but once it goes I am not replacing it. I live in the city so I’ll take public transportation.

    I approach money like it’s a war. It’s a daily war. I won’t get beat by it and I won’t let temptations beat me either.

    That to me is the approach we all need to develop.

  12. That’s the best approach overall Tim, but it’s also counter-intuitive in our consumer driven economy. What I always find interesting is that the emphasis is always on investing and investment performance. But where most people miss the mark is in the inability to accumulate the money, or enough of it, to invest in a serious way. Without that ability – which comes only from being able to live beneath your means – the whole retirement planning concept goes out the window.

    I also agree on debt. That’s become an economic, and no social, cancer in our culture. You can’t live beneath your means and save money if you’re always in debt.

  13. I always found it amazing when guys I know have 50 or 75 thousand in a retirement account but owe 400,000 on their house. 25,000 on a car and have 15,000 on a credit card.
    They don’t realize they are basically bankrupt.

    They put away money for retirement but see the debt as not an issue.

    The consumer lifestyle is like a dog chasing their tail. You’ll never catch it.

  14. Yeah, I saw that all the time when I was in the mortgage business. They ignored their debt as if it was a non-factor. I think they assume that as long as they keep building up the retirement account, the debt will magically disappear by retirement. NOPE! If you live in debt, you’ll retire in debt. It’s a game people play with themselves.

  15. Everyone has great wisdom here. Also to have a retirement plan but make more money resulting in a nice surprise. Though my husband can still work, my plan is based on him not working due to statistics regarding his breathing. I am more likely to be pleasantly surprised we will do better than the opposite circumstance
    Again, better to be safe than sorry. What I love about this blog is it addresses the poorer and middle income folks. Instead of websites like Mr Money Mustache which taught me alot, but was discovered too late in life. And with so many disabilties, need to be realistic and learn to invest in Real State and of course, the 401k provided by employer but not my physical or mental abilities. This website is such a blessing! So realistic regarding the times and planning for the future. Thank you Kevin

  16. Well shucks Maria, I’m speechless! (Not really…) I figure that the times-are-good-we-have-lots-of-money-to-invest space is crowded with blogs, to I’ll concentrate on the people at the opposite end of the money spectrum, who outnumber the first group about five to one. As well, I never believe that our merit as human beings should ever be measured in monetary terms. We all have something to offer, regardless of financial circumstances. Our Creator certainly doesn’t judge us by our bank accounts, so what right do I have???

  17. Hi Kevin. Everyone here has great comments to your equally-great article. I agree wholeheartedly with Tim that being free from all debt is going to be the life-jacket so many people need. He’s right about the people with some money in retirement funds, and it looks like a lot of money, but when you subtract your debt, you’re basically insolvent/bankrupt. I also agree with the no-car approach, but I realize I’m treading on hallowed ground on that one. But if people would only realize how much a vehicle actually costs to own, they would be more practical about it. We’ll never be car-less because it’s too important to my husband, but we do only own one, and if it were just me, I’d live where I can walk to most anything I may need and rely on Uber or something like that when I need a ride. Anyway, being debt-free is going to be the most important thing.

  18. Hi Bev – Debt free is a necessity, especially if retirement savings and income are light. But it starts with cutting expenses, and that’s where it gets tough for people. We get accustomed to a certain lifestyle, then – this is the driving force – we define ourselves by that lifestyle. Unfortunately, most lifestyles are driven by costs, because we don’t know how to create compelling lives on the cheap. It’s something we’re all going to have to get comfortable with.

    There’s another Tim who comments on this blog, but we’ve been going back and forth about this post by email. He made an excellent point that today’s retirees aren’t going to be able to cut back on living expenses because they’re too accustomed to living at a certain level. I completely agree. But that’s what also leads to the debt problem. People over-estimate their assets, and under-estimate the negative impact of their debt. But I suppose if they didn’t they couldn’t live as peacefully with it.

  19. Kevin is right. God does not judge us by our bank account. Unfortunately, we live here on this earth right now and let’s face it, it is ruled by money.

    You have 8 billion people chasing 2 billion slices of pie. It causes nothing but corruption, greed, and selfishness. The key is to remove yourself from that mindset. What always helped me was every time I make a purchase I ask myself if it is a want or a need. Once you do that enough it trains you to spend money much more wisely.

    My list
    Some type of shelter.
    Food
    Clothes

    Those to me our the three basics. I understand other things become a need but they are not a daily need.
    Once you met your basic needs you put the rest away for unexpected things or long term bills that say happen once a year or so.

    After that if you have any left then you can invest or travel or what ever you want to do.

    Thinking differently is the point Kevin makes and I agree with him 100 percent.

  20. That is a broad sense of a budget.

    I live by a rule that every dollar brought in is assigned to a particular area of my life. it goes somewhere. Once it’s there that is what it is for. Nothing else.

    We can all live into older age this way. It has to be a lifestyle.

    I could go on and on but the jist of the article is something that can all take to heart.

  21. “You have 8 billion people chasing 2 billion slices of pie” – that’s completely brilliant Tim! It also defines the direction of the world going forward so we better get used to it and adjust. I think what a lot of people miss is what I’ve referred to as the savings barrier. That’s the point where you move from being a debtor to a saver. Most people never break the barrier and die in debt. But the ones who do break through have a comfort level the debtor never knows. And as the saying goes, “money goes to money”, people who have money have an almost automatic way of accumulating more.

    I think I’m going to update and republish the savings barrier post, and make it an ongoing theme. It’s really the key to everything else. After all, if you can save money regularly, it’s evidence that you’re living beneath your means, which is the foundation of financial success and independence.

  22. Is it any wonder ​Social Security benefits are the main source of retirement income for most retirees​ since pensions started being replaced with 401K’s options with little to no education on the necessity. Even some co- workers I have spoke with think their SS benefits are based on their gross pay. It is based on net pay. Many believe they will get the average full Social Security benefit at 62. Their education is lacking on retirement income, and they don’t seem to want to talk about it. And those that do talk, say they will not retire because they can’t afford the 401K plan. Society is so in debt chasing the almighty dollar, that they are blinded to the future outcome.

    I think we’re going to completely redefine retirement or get rid of the concept altogether​. ​Most people can’t save enough in 40 years of working to support themselves for 30 or more years of not working. Nor can society provide enough in terms of pensions to support nonworking people that long. I’d like to see us move in a different direction: toward a longer, much more flexible working life, with more part-time work​, instead of where​ people retire and watch their nest egg go down for 30 years. That makes people nervous, even if it’s a big nest egg. But if you keep a toe in the workforce, you can spend more comfortably because you still have some income, and you’re better protected against inflation, because wages tend to rise. ​

    ​We​ have higher​ aging​ disability rates​ in our​ society. To me, that means we need to find ways that people can work from home, ​or in the ​workplace​ with ​aging disabilities and  support people so that they can continue to work. There are very few people who are so disabled that they’re not able to do anything. I would like to see us be encourage to be productively engaged for as long as ​we​ can be.​ Companies all to often “weed out” those over 55 years old due to medical reasons increasing after this age, hence more people applying for SSDI or early retirement. This alone pushes me to spend less and save more, being 59.. I exercise and watch my diet and have yearly complete physicals. I am looking into classes to update my skills or reinvent my career. Thanks for the good article.

  23. Hi Deb – Your point about working for 40 years to provide for the next 30 hits the nail right on the head. Retirement made more sense when people worked for 50 years, then retired for 5 to 10. When I was doing accounting and tax work I saw a disturbing pattern of retirees drawing down investment principal to live. Interest rates are too low to provide a predictable cash flow. It means the older people get, the closer to broke they get. The notion that you can invest in stocks all your life is a non-starter. Most people get more risk-adverse as they get older. More and more, I think you work and save throughout life, so that you’ll have enough for the very last few years when you can no longer work at all. If you start drawing down in your 60s you could be down to dangerous savings levels 15 years later, or even be broke. I doubt we’re going to return to the days of 5% – 10% on CDs, because rates that high would collapse the economy. After all, there are more debtors than savers in 21st century America.

    I’m with you, we need to think more about work as being sustainable life-long, rather than the high powered, health strangling career that leaves you drained and discarded by 55 or 60. As profits become increasingly important, and loyalty disappears, more careers are going the “churn-em and burn-em” route. We need you while we need you, and you need to give 110%, but when we don’t need you anymore, you’re gone. That certainly isn’t sustainable as you get older. But we can’t rely on the system to make that change. We have to do our part to develop sustainable ways to make a living. That’s at the heart of Alt-retirement. It also requires staying liquid – having savings and investments on one hand, and avoiding debt and keeping living expenses low on the other. We can all certainly do that, but it requires a change of mindset. The payoff will be a more peaceful life, with more control over our futures.

  24. Bev,
    Most people, especially in America have little to no financial sense what so ever. They have no idea how much just interest on a loan costs them in the long run.

    So let’s look at some basic numbers. If you borrow 25,000 dollars to buy a car for 4 years. You end up paying back 27,283 at 4.35 percent. That’s the difference of 2,283.00. If you buy six cars in 30 years that is 13,698.00.

    Home 250,000 for 30 years at 5 percent. You pay 229,910 in interest. That’s not including, repairs, remodeling or any improvements you need to do.

    Add that together and that is 243,608 dollars over the course of 30 years you cannot recover. It’s money not invested, saved etc. You might as well take it and throw it in the trash. If you just saved this money or invested it for 30 years you would have a nice nest egg at the time later in life.

    That does not include interest on credit cards that are at loan shark levels.

    This is just a basic post. If you asked 10 people how this works they really could not tell you. As long as they can make a monthly payment they think they are ok.

    If people got smart and really thought about there decisions I would hope they would change their mindset about debt.
    I could go on with other things but I’ll save it for other posts.

  25. As long as you can make the monthly payments. Tim, that is how my entire family functioned all their lives and, sadly, still do. In all honesty, I did too because that is what I was taught. But when I moved away from my family, started reading about finances my eyes opened, and what I realized made me want to close them again and cry. How many years I worked just to pay interest to someone else. Those days are long gone now and we’re so much better off and on track to retire or just semi-retire since we own a small business that we can scale back when we want…in line with what Kevin talks about in his articles. Now, the even sadder part is the resentment from so many of them (family) because we don’t think like they do anymore. I wasn’t prepared for that, but my eyes were opened once again. Life is a touch teacher! In reading what I just wrote, it may sound self-serving, and that is not my intent, it is just our reality. I just keep reading and trying to learn. I’m open to all suggestions on how to better prepare for the future and improve our life.

  26. Amen Bev, I see myself as a perpetual student! I’m learning new stuff all the time, which is what happens when you open yourself to the possibilities. I agree with you about the way people see you when you get off the debt treadmill. Even if people know they’re in a bad place with debt, it’s their normal, and they resent anyone who has the courage to choose otherwise. It’s really a form of jealousy. They imagine you have some sort of secret advantage that enables you to make the change. But no, it’s a conscious decision, with follow through, and nothing more.

    In the beginning it can be hard to keep up with debtors. They live better than they’re incomes can afford. But as you get out of debt, and lose the monthly payments, you gain the upper hand. It’s that liquidity thing I like to talk about. You can pay cash while they swipe a card. Or, more important, you can make the choice not to participate. That’s painful for the debtors, watching someone who has the courage to do otherwise exercise they’re option. It really is sad, but it’s a choice everyone can make. Be thankful you made the transition. It’s literally life changing.

  27. Excellent article as always! Deb D really hit the nail on the head for me! I have tried to gain a lifetime of financial knowledge in the past couple of years. I understand finances to a much greater degree, so was unpleasantly surprised to learn that social security benefits are based on net pay. Another learning curve for me! Like so many of us, when the 401K started to become the retirement vehicle, I lacked any practical understanding of how that worked.

    In 2008 on, I watched many of my friends lose their jobs. They had jobs in a healthcare arena where many people to this day have difficulty comprehending job losses can occur. I personally had a 30 year mortgage at a higher interest rate, and a home equity line. I refinanced, combined my 30 year and home equity line into a 15 year mortgage with a much lower rate, but still doubling my monthly mortgage. I really took a gamble doing this, and ended up sleeping on my couch, where it was warmer, for several years, as I was not able to afford the electric bills. This did pay off; however, as I was able to recoup some of the money from my house value having gone down. I lived in a very high cost of living area, and, by the grace of God, was able to move to a lower cost area 2 1/2 years ago.

    I have taken on a 30 year mortgage, but pay much less than previously. I do have a 401K, with 2 target date funds (one more aggressive than the other), and a Roth in the 401K. I also recently converted an annuity to an IRA, taking somewhat of a hit in the process, but feel this is a better overall strategy. I contribute over 20% now to the 401K, and have a fairly good employer match. I do have student loans and credit cards. My student loans will be paid off when i am 65, and I am working on a plan to get out from under my remaining debt, having just paid off my car. While I am not yet able to see the forest for the trees, I can now define a path to get there! I so appreciate your articles and all the comments, as they have helped me in this journey, and I no longer feel so alone with this at my age.

  28. Give yourself a great big pat on the back for “getting it”. Many people never do, and many who get it late in life adopt a “what’s the use” attitude. That’s so destructive. Not only does it prevent you from ever improving your circumstances, but you also give yourself a pass to do nothing. Then you stay on the debt treadmill, always trading short-term highs for longer term financial independence. It’s like drugs or alcohol.

    The turning point for me was when I begin admitting to myself that I couldn’t afford things. That is, if I can’t afford to buy it with cash or a debit card, then I can’t afford it. That’s put me on many a financial diet. But if you can’t engage in self-denial, you’ll never move forward. I still keep the same strategy. The problem with debt is that it’s easy. Saving money is hard, at least until you get used to doing it.

  29. Bev,
    I’m sorry. Sometimes when I write things or comments it comes across as a lecture or a know it all type of attitude. That is why I don’t write articles or blogs. Kevin is much better at it than me.
    I totally understand how you were taught. I was very lucky in life to have been around people, my father being one who taught me a different way early on otherwise I would be no different.

    People have such a difficult time discussing their money situation. I commend you for writing what you do. Not many people would admit their mistakes, especially in a public forum.

  30. No apologies necessary, Tim. I like what you write; it’s helpful for people like myself who learned later in life, but still learned nonetheless. You do not come across as a know it all at all. You are merely trying to help others, as I believe Kevin is with his blog. We’re all here to learn and help others as much as we can.

  31. Kevin,
    It’s always hard to admit that you can’t afford something. That phrase was beaten into my head from an early age so I was always used to saying it. LOL

    I can remember saying this at work and guys would look at me like I was insane. We all made the same money. They all thought I had a drug problem or gambling issue.

    It’s like anything. It’s a lifestyle and a mindset. It’s like a diet. It’s not a diet it’s a lifestyle. If it doesn’t become a lifestyle it doesn’t last.

    Debt free has to be the foundation we build on. Without it, their is no use talking about anything to do with money. We can’t build on a house of cards. We have to have a solid foundation first.
    That’s why Dave Ramsey puts it first before anything else.

  32. Completely agree Tim. I just finished a article for another site about investing in individual stocks. I included the disclaimer that if you owe credit card debt, you shouldn’t be investing. The interest you pay on credit cards is higher than the long-term return on stocks, so it makes no sense to invest if you have cc debt.

  33. I totally relate on family resentment Bev with my own family seeing my progress after years of saving.. I have never charged anything in my life like them. Cash on hand or I did without while they would foreclose or file bankruptcy. What a waste of money! I didn’t want the big house with the bigger utilities and payment. We managed with our limited space, and now this home seems too big to me, since the kids have moved out. We want to sale and are looking for a smaller living area. Every Sunday hubby and I talk over retirement updates… so we both are on the same path. The more people share on here, the more I learn. Thanks everyone

  34. Hi Deb – You hit on something critical at the end of your comment – that you and your husband are on the same path. You and your husband have a plan, at least a loose one, that you follow toward your goals. Most people have no plans. They have goals, and hope that they magically reach them. But there’s no plan to get them there. By having these discussions, we’re trying to avoid aligning ourselves with the dreamers.

  35. You briefly mentioned low interest rates, but I’m just wondering how the banks are getting away with paying so low rates of interest given the large increase in rates in shorter term Treasury bonds over the last year or so. I am in a higher rate Capital One account but really wish I could keep our money in our local credit union but the interest rates aren’t any higher than 0.1%. The banks must really be making a fortune by dragging their feet.

  36. Hi Kevin – I think it has to do with public conditioning. As no other time in my life, we’re very subject to groupthink on a national level. Rates are low because rates are low, and we just accept it. Investor Doug Casey recently wrote that until a few years ago, he thought negative interest rates were science fiction – who would deposit money with a bank and lose money on it? But in many countries negative interest rates are a reality. Here the US, we haven’t gone full-on negative, as in rates below zero, but we have effective negative rates. When you subtract the official rate of inflation (just below 2%) from that 0.1% interest on savings, you’re in a negative situation. But with the real rate of inflation closer to 5%, the situation is even worse.

    It’s like the frog in the pot of boiling water. As long as the temperature rises only gradually, the frog stays in the pot, oblivious to his deteriorating condition. And so it is with us human frogs. We gladly take whatever’s being dished out, and we’re “happy” that we have anything at all. And naturally, all of this is blessed by the all-knowing, all-seeing, all-powerful and beneficent powers that be. I think we’ve collectively lost the ability to see and act on when we’re being screwed. If everyone pulled their money out of the banks and credit unions, you’d see how fast savings rates would increase. But we’ve become so dependent on banks that we just go a long to get along. They don’t even worry about competing for our business any more. It’s yet another broken system, and yet another reason why we have to have these discussions about Alt-retirement. Retiring on safe, predictable interest income is no longer an option.

  37. Savings accounts have become an almost unneeded account. I have 3 savings accounts-one with my bank that I have my checking and two small accounts at small bank that offers accounts that sends you the money at the end of a year but allows you to continue to keep open if you continue to put money in. So twice a year, I get the funds at different times. I used the money to either get some needed items or put into checking account.
    None of my savings accounts give me much “interest “ only benefits to me as a place to store my money a touch safer than storing it under my mattress. Going to using cash only transactions is not very wise in today’s electronic payment system. That’s mainly why I put money in bank, so I could pay bills. Believe me I am not a customer that the banks make big money with my accounts as I don’t keep high amounts long in account.
    Last time I tried with a small brokerage account and lost money, I reduced it to one stock and only have money in that account for the yearly fee, which considering how stocks fluctuate over the year is really no cost to me.
    Basically banking has become/or always was a place to deposit money for utiltizing the banking services that we need.

  38. I think you’ve got it right Maria. The only purpose for a savings account is as a relatively safe place to hold your money while you’re waiting to spend it on something useful. Rates are too low to support any other purpose.

  39. We think the same Kevin on that front. The only money I keep in a bank is money I use for the month. At the end of the month, the account is almost zero.

    I put my savings elsewhere. I won’t bother saying where. I don’t want to give advice or talk anybody into anything. Yes, in this day and age bank accounts, for the most part, are useless. I only use it as a convenience for paying any bills or monthly living expenses.

    I have no brokerage accounts, 401K accounts, I’ve never bought a stock. I really only believe in two or three areas of life to invest or save money.
    It has served me well and I will continue to do it as long as I’m alive. I don’t care how high things go. I have zero trust in the American financial system. Or really any system controlled by the financial institutions anywhere.

  40. Tim, generally speaking, I’m a strong advocate of investing in stocks. It’s investing in the means of production. But with today’s inflated market, I can’t recommend that anyone get into stocks. From where I sit, the downside potential is a lot higher than the upside. But the time to invest will come again.

  41. Does anyone ever feel the banking system has set us up? We get our paychecks deposited then all bills are auto pay from utilities to house payments to annuities. I can’t help but think what happens if/when the banks fail. Greece comes to mind, as that wasn’t so long ago. Any thoughts on that?

  42. You’re hardly alone in that belief Deb. I’ve talked to several people who see the same thing. After the Financial Meltdown, the government and the Federal Reserve took steps to strengthen bank balance sheets, since their loan portfolios got crushed in the meltdown. Part of that was to artificially lower interest rates so the banks paid less for funds they borrowed from the Federal Reserve.

    The banks didn’t pass the savings onto their customers. They benefited on both ends. They lowered interest rates paid to savers to near zero, but continued charging double digit rates on credit cards and other loans. The government looked the other way to allow the banks to strengthen their finances. But the policy has continued for the past nearly 9 years, and now looks to be permanent policy. Since we’re all used to the fleecing, we just soldier on and assume that’s just the way it has to be.

    But as I said in a previous comment, if millions of us pulled our money out of the banks, you’d see how fast they’d raise rates to attract depositors.

    There’s a counter theory though. Since banks can easily borrow from the Federal Reserve, technically they don’t need depositors. They attract them so they can borrow depositor money at 0.10%, which is even less than the 1.something percent they can borrow from the Fed.

    As to the banks failing, it’s an apocalyptic scenario completely beyond our control. If there’ a silver lining, it’s that the government won’t let the banks fail. The current policy is “what’s good for the banks is good for the USA”. But there are ways we can protect ourselves. Have at least 30 days living expenses held in cash at home. If the banks fail, you can live on that. They won’t stay failed for long. Also have money in other places. A brokerage account or an IRA MAY be unaffected by a bank failure, or at least relatively so.

    Apart from that, experiment with some small scale barter arrangements. They’re apparently doing that in Greece and other countries. In fact, study how people are dealing with bank failures in other countries, and take notes. It might be worth it to buy some pre-1965 silver coins, like silver dollars. They may help on the barter side.

    The prospect of a widespread bank failure is its own topic. Most Americans assume it could never happen here because of the FDIC. I don’t expect it to happen because the US government can print money in any amount. But I also believe that what you prepare for doesn’t usually happen. So if you’re worried about it, prepare then relax.

    Those are just my thoughts.

  43. It’s always good to have a Plan B. I happen to be one of those guys who expect at some point a major meltdown of some sort.
    You don’t need to be a financial wizard to see the amount of debt alone that the federal government has. At some point, there will be a tipping point of some kind.

    I am a little more comfortable with three months cash that I can get too if and when. I hope I never need it but you never know. That’s just my comfort level. Your’s might be less or more.

    Having some bartering chips like silver and gold coins I believe is a must also. It could end up cash is useless.

    These scenarios have happened all over the world.

    Of course, these are extreme things and Kevin is right that it probably won’t happen the way we think. Nothing ever does.

    Look at it as a money insurance policy. We have one for everything else. Why not this?

  44. Tim I agree with all that you say. My hesitation in saying “yeah, this is going to happen”, is that I have studied these possibilities at some length, and determined that it isn’t possible to predict with any certainty, either the event or the details. The details are important. There are so many variables and unknowns that any plan that’s too rigid is doomed to fail. I like you’re idea of having loose preparations.

    We can’t obsess over this either, if only because things can get even worse than we imagine. For example, people worry about a general bank failure or the bankruptcy of Social Security, as if such events will happen in a vacuum. They won’t. A general bank failure or the collapse of Social Security won’t be isolate episodes. They’ll be part of a general system failure, and who knows where we go with that.

    That isn’t to say that there won’t be events that fall short of economic Armageddon along the way. We’ll certainly see those, and that’s what we need to be prepared for.

  45. I hear you. It is hard to say.
    I don’t obsess over it. I know whatever is going to happen I’ll never control. I can take steps and hope for the best really.
    That’s all we can do.

    I agree though, there is a lot of fear spread out there. All these guys try and predict things but it never plays out how they say.
    There are signs and warnings but no two are alike. What happened in 08 will not play out again the same way. It might be something totally different or nothing.

  46. That’s why as I get older I put more trust in God. I can’t possibly know what’s coming or how to deal with it. As the saying goes, “let go and let God”. I constantly remind myself that. When I look back on my life, I’ve seen too many times when things turned out better than I expected, especially in times of personal or national trouble. During the Financial Meltdown, my family did surprisingly well, despite my being un-/under-employed early on. Things fell into place, and that’s how I got started doing this. We can see troubles in the distance, but we can easily underestimate our ability to cope with them. I think that comes from above (James 1:17).

    There were people who not only survived but thrived during the Civil War, the Depression, WW2, the Financial Meltdown. Many came out better than they went in. We have to trust God, trust ourselves, and have flexible plans. Not all disasters are as destructive as we tend to think.

  47. ok guys! I am reading and re reading to align my thoughts. I am still thinking on the negative interest.. that would mean we would owe the banks for holding our money??… if so I would be making a fast withdrawal, so would others.. that would collapse the banking system. Gold would be worth a lot…
    FDIC only covers up to so much but I need to check it out better. I keep my pantry stocked and keep a money stash for a month but think two months would be better? Thinking a cashless society after that time… possible a barter trade system… options.
    I like being aware and prepared, like the virgins and the oil lamps, so I listen well to what others say. Thanks

  48. Don’t panic Deb! Be aware of what could happen, so you aren’t taken by surprise. I don’t see any of that playing out in the very near term, and when it does it’ll likely be gradual. Prepare, then put it out of your head. At different times circumstances have often looked apocalyptic, but somehow we survive. For comparison sake, watch this Rolling Stones Gimme Shelter video. The maker of the video did an excellent job showcasing the troubles of the late 60s and early 70s. But here we still are 50 years later and we’re still standing. Like I wrote in my last comment to Tim, I have greater faith in God as I see more of life.

  49. Guys you are getting into the thinking of survivalist thinking, which is the extreme version of this path. Yes, we need to be able to be self-sufficient but not to the point, that we don’t interact with others. I strongly believe we are going to see changes in how we bank as more things become electronic, plus to attract those to banking who use an all-cash payment system. (pay via a debit card, etc.) Only by forcing the banks to evolve in customer service needs, will we see change. As to keeping pantry stocked, that’s just common sense, look at what happens every time there’s a big snowstorm coming when all the fools suddenly need to do a big shopping for a 24 hour period. That means that they don’t really shop but browse for the nightly meal daily, another problem that effects budget to achieve financial freedom.
    Again what we are discussing in this article is ways to be financially sane during our twilight years. I am sitting here watching a commercial about a senior living center, they make it seem so nice but they fail to mention the cost which is outrageous. I am more for remaining in the same neighborhood with ways to get assistance close by. Only some cities and towns are currently incorporating this idea, mainly because us Baby Boomers are such a large group, ignored in size until now.
    We need to get out of the instant gratification mood and think long range. (little or no debt, enough money to live on, a tidy sum set aside) Money doesn’t grow on trees,( a phrase my parents used to say to me) so we need to use what we have wisely.
    If you don’t want to work to earn more money, then learn to budget spending with the income you got.

  50. You’re absolutely right Maria. When you get into the savings dilemma we face (microscopic interest rates, or more specifically the reasons driving it) it’s natural to cross over into survivalism (is that a word???). I personally don’t. But I do think we need to prepare for circumstances that won’t be normal based on today’s standards. A big reason so many people are dangling on the edge of oblivion today, especially in retirement, is too much magical thinking. People are way too optimistic for the times. A healthy dose of pessimism might lead people to a better place.

    I hope you’re right about banking evolving. Crpyto currencies like Bitcoin hold out some hope, which is why the banks and the status quo are so opposed to them. But maybe that will force the banks to behave better, which of course is not what they want to do. In the meantime, we have to do our best to prepare for whatever might happen. The potential for change is enormous.

    Oh, and on senior living centers, I’ve been thinking of doing an article on that. My mom is in one, and it’s like $4,000 a month. She likes it, but then she likes being taken care of. To me it would be a jail, and a colossal waste of money. But they seem to be getting more popular. Still the excellent center she’s at has a few empty apartments, so it makes me wonder how many people can actually afford them. With costs as high as they already are, and destined to go higher still, I don’t think it’s something to plan for.

  51. I will look forward to your article on senior living centers which are for most of us a lost dream. If I had $4000 a month, I consider it wasted to spend there, as I can easily live at home with much less. Again, it does refer to dream ideas of what we are supposed to be doing in “retirement”. If your community settling involves interaction with neighbors, what’s the difference? Downsizing living arrangements, should not have to include living in a dormitory setting unless that’s where you’re at, plus new style apartment settings are being built to the same concept with multiple age groups.

  52. On balance I think municipally supported senior homes are the better route. They’re usually based on a percentage of your income. My mom could have gotten into that for a fraction of the price she’s paying now. Her sister was in one and couldn’t have been happier. My uncle is in one now and seems perfectly content. The expectation of a gold-plated retirement is part of the problem.

  53. Yes, I would look forward to that senior living center article as well, Kevin. I had a family member in an Alzheimer’s facility at a cost of about $4-5000/month, 15 years ago…private pay. It ate away all of his assets, but at least he was well cared for. This is another area that is out of control from a cost perspective.

  54. If I do take on that topic, it’ll be from the angle of those of us who can’t hope to afford it. I have to do some serious studying on the alternatives. Right now senior care facilities are a big thing. But I wonder if that’ll be the case in 10-20 years, when the cost doubles, triples or whatever it’s going to do. And of course, if you get someone with Alzheimer’s, you can’t care for them at home unless there’s someone there all the time who’s both willing and qualified. I’m thinking at home care (on the cheap) will be real growth occupation very soon. Facilities are too expensive, and individuals can’t do it on their own. Not sure how to go with this one…

  55. Thank you Marie Rose. I am still going to watch bank interest more, just in case. As for keeping a stocked pantry, it saves me money. I found a town that is more geared to senior living and closer to family for retirement, as I wouldn’t like a Nursing home. I have liked several Senior Hi-rises better than some condo’s. I would like sharing a home with another married couple. I will look forward to the article Kevin

  56. I would look forward to the article, too. Long term care insurance is in pretty dire straits right now, similar to many pension plans across the country. In home care can become very costly, also. I had an injury that I found never totally healed, and it left me having a tough time, as I lived in a 4 story townhouse-seemed like a thousand steps! I have since moved into a single story home, with a walk-in shower, and it made quite a difference. These are things I never would have thought of in previous years. Reading all the comments and thoughts on here is really very helpful, as I realize that going forward I will have to consider more changes, as I inch closer to that Alt-Retirement.

  57. I’ve done some research on LT care, and you’re so right, it’s in dire straights. The insurance companies are bailing out of it because they can’t get an accurate read on projected costs. The costs are rising every year and people in LTC are living longer than expected. It’s an actuarial nightmare. We may see the end of LTC insurance in a few years, which will reduce the number of people in facilities. Maybe that will bring down the cost.

    One other factor that people aren’t always aware of with LTC insurance. They’re usually for a limited term, like 1 to 5 years. Permanent would be cost prohibitive, under the assumption insurance companies would even offer it.

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