This week, I decided to tackle the hard things-you know, all those things I’ve put off for so long I have begun to hope they will just go away by magic. After stubbing my toe for the third time on the substantial pile of boxes I placed in front of the filing cabinet in an attempt to clear out a closet so I had room for my clothes, I ditched plans for a “Downton Abbey” marathon and faced down my past.
In this case the past included a big box of sad and single gloves that resulted in reunion and triumph for a few lucky pairs, a scattering of broken, never worn and entirely unsuitable jewelry, some photographs that made me smile and a few that didn’t. At the bottom was a sorry collection of keys to I don’t know what, tangled around a clump of horizontal striped tights-what was I thinking?
While I sorted, (fortified into the evening with a glass of coastal cabernet) I thought of the neglected areas of my life that could use a good going over and top of the list was my retirement fund. Until recently, it had languished in several brokerage accounts, going nowhere, possibly shrinking with the economy. Truth is, I was afraid to look. After a short and frightening session with a retirement calculator a few months ago, I discovered to my dismay that in order to retire before I was 80 years old, I needed to save approximately 105% of my annual income for my golden years if I intended to live in modestly high style.
This sobering news sent me searching for a convenient hill of sand to re-bury my head, but some truths, once seen can never be unseen. Instead, I found a certified independent financial planner and put all my hopes for a sunny future with his firm. This wasn’t just a guy I found with a google search, I asked my more sensible friends for recommendations and in the process discovered that I was not alone in my lack of real and conscious planning.
An independent certified financial planner is someone who is qualified to manage your future money. They are rewarded only if you meet and exceed your goals. I called my retirement guy –Jim Boudreaux at Baystate Financial- to see how it was going and asked what he thought were the most important things to tackle when facing down a retirement plan that, like the contents of my closet, has not been sorted until recently. In addition to telling me it was going very well indeed with my investments–here is what he said:
1-Keep Working-we will live a heck of a lot longer than our parents or grandparents did. When they retired at 65, they had an average of five years to enjoy before shuffling off. You may want to change jobs, you may not earn the same salary, but keep working and earning till you are at least 70.
2-Defer Taking Social Security till you are at least 70. You will get up to 50% more if you live past 90 years old, and you will need the bigger payment if you do.
3-Change your Lifestyle. Buckle down and stop spending and start saving “Save every nickel you can, then save some more” Don’t wait for retirement to downsize, do it now and put the profit from the sale of your big house into your retirement account so an independent financial planner can grow it for you to use later. All of this money you save can be tax free and tax deferred with the right investments, which means a dollar saved for retirement is more, much more than a dollar spent now.
This is not sexy advice, but it rings true. It is possible to get creative and have some fun with a budget game, like some folks who are touring the world with a series of long term house-sitting gigs while their home earns them money being rented out to vacationers. One couple I know sold up and bought a houseboat where they enjoy evening cruises down their home river while saving for their golden years.
I’m taking off for the summer in Little Bird, my sleek camper home, for a book and lecture tour–hoping to combine business with pleasure. Anyone want to rent my home-'Rose Cottage' for a few months while I’m gone? The mountains are ready for hiking, there are lakes for swimming and the Mountain View Grand Hotel is only two miles away, should you want a spa or fancy meal. Best of all-the closets are clean.