Are you a “baby boomer?” Are you looking at retirement? I would suggest that you learn to spell “budget,” that is b-u-d-g-e-t. Actually I don’t mean to be cute because there is nothing cute about budgeting and retirement. I retired several years ago and here is what I found out:
Most everyone is aware of the fact that for the second straight year Social Security has not allowed a cost-of-living-adjustment (COLA). Unfortunately as you age that is what you run in to. Your funds get frozen or reduced and the cost of living just goes up and up.
For many of us we had money but not enough time. When you retire you have time but for most of us we now don’t have the money to do what we want. Rarely do retirement funds keep pace with earnings and even if they do initially ultimately they will reduce.
Here are some key issues to be aware of:
If you retire before age 65 (often that will be age 62) then you are limited to what you can earn. People mistakenly think that if they earn more than allowed while on retirement then the government will simply take a dollar off their check. A person is allowed to earn $14,100 during the age 62 benefit year. If they exceed what they can earn by even one dollar they lose the whole check for that month. Then you get into a situation where there might be payback.
The longer you can put off taking your benefits the better.
Of course taxes and cost of living such as groceries continue to rise. In my case I had a small pension as did my wife. At the time I anticipated working a “very” part-time job and then doing some traveling. After I started writing I though perhaps I could write travel pieces so my wife and I could travel.
Then my wife got sick. Travel became a secondary issue.
Over time it became necessary to take all bills and pay them out of all funds at the first of the month. The remainder was what we had to live on and it wasn’t much.
That would be hard enough but utilities go up along with taxes and groceries and then there is the cost of ancillary health insurance coverage because Medicare does not pay everything.
To have an effective retirement you must either have a pension, part-time job and Social Security (remember a pension is unearned income) or have been able to remain free of Social security until age 66. At that time you may earn all that you want.
It is most important to have your home paid for or a long-term low-overhead lease to protect yourself.
Frankly from my experience however people are expecting to have to pay for groceries and gas and utilities. What really ruins retirement is seeing that little doll you know your granddaughter would love and not being able to afford it. You know your wife needs a cane and you can’t buy it. Your 50th wedding anniversary rolls around and your “Big Day” is spent over a Whopper at Burger King. Your son and daughter-in-law need $5,000 more to buy that dream home for them and their three kids and as they look longingly at you, you just smile weakly. You want to go on a second honeymoon but can’t afford it and in fact it seems like you can’t afford anything as financial issues move closer and closer around you.
The retirement issues turn out, from my experience, into being family issues.
Save money and take into account these things I have mentioned. Many people find that it makes more sense (and more people stay healthier) if they simply cut back their work and go into part-time retirement.
Whatever you do, good luck!
Christian Science Monitor Website, Donald Marron, “Social Security: No Cola in 2011”