Can You Live On 40% Less?

Thirty years ago when I heard people talking and planning for retirement, I heard that when people got to be retirement age, they would spend about 40% less than they did when they were working. They would not need to spend money on gas getting to work. No spending money for new clothes so you were to be in fashion at the office. Retired women do not wear makeup and stockings every day – some days, but not every day. That means dollars saved there also. No more lunches downtown with the guys or girls from the office. No having to go to Happy Hour after work every Friday. No stopping in for Starbucks before you got on the 5 in the morning. And on, and on, and on. Look at all the money you can save when you retire.

Cutting Back

All of these things you are not doing when you retire would be saving you money. You would not go out to eat at nice restaurants as much and stay home more on Friday and Saturday nights to have your feet up. Your house would be paid for and the kids would be out on their own living their own lives. More money saved there too. So there was a good argument that most people would be saving a lot of money by not doing this or that. And by saving money that meant that they would not need as much when the day came to retire and get your gold watch. You could get by on 60% of your pay. Maybe less if you were frugal.

So What Happened?

Well the kids can’t find work and are still living at home even though they are in their mid twenties. And you are paying for their cell phones and texting. And since you didn’t save for their college, you are making payments to someplace for student loans that the kids were supposed to pay but they can’t since they don’t have a job.

Did You Upgrade Your House and More?

When times were good ten years ago, did you upgrade to a better house, better neighborhood, better car, better golf clubs, better schools, better friends, better vacations, better cruises, this better, that better, everything better? Did you roll your 25 year equity from the old place into a new 30 year mortgage with about the same payment that you had before? But since you have only been there ten years, you still have twenty more years to go before the mortgage is paid off. Sound familiar?

Are You Fifty This Year?

Lots of people who are fifty this year and joining AARP, are still making a mortgage payment. Don’t think I didn’t do the same thing. I moved up too. But I moved up when I was thirty and not when I was fifty. I was three years from paying off my first house when I sold it and bought my new place. I bought a fixer upper and lived on a nice street but I lived at the wrong end. When I bought it, I was on the poor end. I was also very lucky. The neighborhood grew and the poor end got swallowed up by the good end. When I sold I was not living on the poor end any longer. As I said, I was very lucky and I made a good profit when I sold.

I am not telling you all of this to brag. I have been planning to retire early since I was a teenager. I thought about making a career in the Army, but with the wars, and all the deployments overseas, I decided to get out and make my own way.

I Hope You Are Thirty This Year

I am hoping that you are reading this when you are thirty and you can start your 25 years to retirement plan and can learn from my mistakes and my planning. If you are forty, you need to start today. You only have 15 years before you are 55. If you are fifty this year, you can still retire early, but you will probably have to work part time; some place that will hire sixty year olds. If it comes to that, you might as well give up retiring early and stay where you are until you get to be full retirement age with Social Security, assuming it is still around.

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Jeremiah John

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