January 11, 2012

Retirement will Come.

Sooner or later, if you live long enough, you will reach retirement age.  Then what??  Will you be able to retire or will you need to put off retirement until you can afford it.  Or worse yet - will you ever be able to retire?

In March I will be 53 and my husband will turn 54 in April.  We are just a little over a decade away from retirement.  If you think that 13 years from now is a long way off, all you have to do is think about what was happening in your life 13 years ago and then you will realize how quickly time passes by.

I have realized over the past few years that financial decisions I make today can really affect me for a lifetime.  If I purchase a new car, for example, I will pay $25,000 to $30,000 for that vehicle having to finance all but a downpayment.  Yes, the vehicle is new and that is always fun, but what if I bought a used vehicle for less than $10,000?  Even if I financed it for 2 or 3 years, I would still come out ahead than if I purchased the newer vehicle.  The difference is money in the bank or money in our retirement account.  

We plan on living in this house through our retirement.  The house will be paid for before we retire.  Two scenarios we played with is that perhaps we would sell this house and buy a two bedroom, ranch style home to live in during our retirement years.  We would do this only if the selling of our home and the buying of a smaller home would be a wash financially.  The other scenario is that we would side this house for low maintenance.  Siding our house would cost quite a bit of money.  Is it worth it?  We're not so sure.  It would be less costly to hire someone to paint the house every 5 years than to pay for siding. 

Again - it's about money in the bank and in our retirement account. 

What about the picket fence?  Should we replace the wooden picket fence with one of those vinyl kind?  Would it be worth a few thousand dollars for a low maintenance vinyl type of fence?  We decided, no.  We can still pay someone to paint it every few years and we will still come out better than paying for a vinyl type of fencing.

When we purchased a new refrigerator last summer we bought one that is a basic model - no frills.  This means that if we want chilled water, we have to keep a pitcher in the fridge.  If we want ice cubes, we have to refill the ice cube tray.  The result is a savings of around $600. 

I have always thought that it is the little things that add up to big savings, but I have started to think about where to save on the big ticket items.  It is easy to be lulled into believing that vinyl siding and vinyl fencing is a necessity when it really isn't.  When we go into retirement we will only need 1 car and a good used car will meet our needs.  Appliances with all the whistles and bells are nice, but I rarely use all the features of an appliance.  I find that filling my own ice cube tray and emptying the contents into a ziplock freezer bag is just as easy to use as an automatic ice maker. 

Saving $20 a week on groceries adds up to $3,120 over the next 13 years.  What seems like a small amount adds up to quite a bit of money over time.  That is how we need to view saving and living frugally.  We also need to live like there will be a tomorrow and make a plan for retirement.  Not talking about it because you are afraid is not a plan. Make it a priority to think about your retirement when it comes to spending your money today. 

One thing that we have learned over the past 5 years is that you must plan for your future and not live beyond your means.  Retirement will come and we must be prepared. 


Rocky Mountain Homemaker said...

You and your husband are the same ages as my husband and I.
Retirement is something we plan for as well.
I agree with you that living simply now will benefit us in the future.
I always think too that the skills we are learning now and have learned in the past will benefit our future.
Also, my husband has invested in some equipment such as an air compressor and a generator that we can use in the present and we will be glad to have in the future.
One thing to consider, rather than having someone paint your house and fence is to do it yourselves. If you're not experienced painters, there are classes at the larger hardware centers or you-tube videos.
In our family, my husband builds things and I paint or stain them as needed. Sometimes I wonder if learning to paint was such a wise thing. Ha!
Thanks for your quality posts.........Denise

Juhli said...

You make really good points about the longer term costs of buying decisions. It is great that you are taking these steps now.

Sharon said...

Turning 50 was the pinnacle point for me...Saving is on my agenda...

Great post Martha, love your thoughts on the subject!

Martha said...

@Rocky Mountin Homemaker:

We paint the house now but when we get to retirement age we may not be able to go up on a ladder and paint the peaks and such. That is why I factored in the cost of hiring someone to paint. I did a lot of painting last year and soon I will be painting the kitchen and two bedrooms.