Retirement Planning: Reduce Your Standard of Living Today If You Want Any Standard of Living in Retirement

Welcome to the new retirement where your retirement wishes may be fantasy. The odds are high that you will exhaust your retirement savings after 10 or 20 years of retirement, according to the latest Retirement Readiness Report.

About half of those now aged 56 to 62 are at risk of not having sufficient retirement income to pay for basic retirement expenses and uninsured medical expenses, according to the study.

The study also found lower-income retirees are most likely to run out of retirement savings after 10 and certainly 20 years of retirement, and higher-income retirees are least likely to run out of money.

In fact, retirees don't run out of retirement income. As they age and wind down their assets, they reduce their standard of living dramatically.

In other words, people do not completely run out of money even though the studies say that retirees will. They take action either to spend less or to go back to work to earn more retirement income.

Other research found that about 65 percent of American households are at risk of not having enough retirement income to maintain their living standard in retirement.

Both studies assume that people will retire at age 65.

That is not likely, however. Many Americans are forced to retire earlier and most even if they want to work later cannot find a job in retirement. So before you make your retirement speech, include your spouse in your retirement plan, have some fun at work, and start saving big time - at least 30 percent of your income as I have been doing to insure that my retirement plan is sound.

Plain and simple: Saving a lot more money and reducing your standard of living now might be the only way to be reasonably certain you will enjoy any decent standard of living in your retirement and be able to write letters about the joy of not working.

Some retirement quotes to put things in perspective:

People who don't respect money don't have any.
— J. Paul Getty, Billionaire Oil Tycoon

It is better to have a permanent income than to be fascinating.
— Oscar Wilde

Money will appear when you are doing the right thing in your life.
— Michael Phillips

One week into retirement, you'll be so damned bored that you'll want to stick bicycle
spokes into your eyes. You'll probably opt to look for another job or start another company. Kinda defeats the purpose of waiting [for retirement], doesn't it.
- Timothy Ferris in The 4-Hour Workweek

Teacher's Retirement Motto: I Used to Teach. Now I Have No Class.
— Unknown wise person

I have retired, un retired, and retired again all in the past 10 years.
— Unknown retiree

The Ideal Retirement Plan: Marry an old rich broad and wait for her to die.
— Ivan Wilson (commenting on an online article about retirment.)

It [retirement] was absolutely boring. You can't go and say, 'I'm retired now. That's it!' It won't take long and you're really gone for good and someone throws the last shovel of dirt on a coffin with your name on it. That's the moment you're really retiring — when you die.
— Ozzy Osbourne

Running out of Retirement Income Scares Retirees More Than Dying

According to a recent survey of 3,200 baby boomers by Allianz Life Insurance Co, about 61 percent of retirees and soon-to-be retired say they fear outliving their retirement money more than they fear death.

What's more, 31 percent of these baby boomers said they don't know what their retirement expenses will be, and 36 percent have no idea if their retirement income will last.

In response to this survey, several financial and retirement writers have been advocating that baby boomers calculate how much retirment income they will need to retire comfortabley. In other words, they should find a good answer to the question, "How much do I need to retire?"

Following was my comment to an article in which someone was advocating that baby boomers spend some time calculating what their retirement expenses will be and how much retirement income they will need:

As you say, the exercise in determining how much money you will need for retirement will not result in perfect information.

But even if people could come up with perfect information, most people won't make use of this information because they aren't about to increase their savings much, if at all, and will likely need at least some type of retirement career.

There are two problem conditions that most North Americans suffer from:


1. A need is any luxury that their neighbor happens to have.

2. Instant gratification takes too long.

I have just started writing a book called How NOT to Retire BROKE in which I am going to make the point that saving 10 percent of your income is for amateurs and losers and people should save at least 40 perent of their income, like I started to do when I turned 45 because I had no money saved at that time.

Of course, I think I have done well by saving 40 percent of my income and not all that concerned about not having enough for retirement.

But I was delighted to hear that someone is doing even better with their saving rate.

On January 17, 2010, in reply to a blog post Five Reasons Why You Will Retire Broke and Unhappy, an individual who writes his or her own blog post stated:



"I personally am taking my retirement savings seriously and have by living very frugally been able to increase my savings to 60 percent of my gross earnings. I’m targeting a very early retirement. Achieving this high rate has been partly achieved by watching my Lifestyle Creep as you identify in Point 5. As I achieve pay increases I have actively decided not to change my standard of living."


In short, knowing how much money people need to retire comfortably will do them absolutely no good if they can't handle money. Saving for retirement takes handling money properly.

Now for one of my favorite retirement quotes:

It was J.P. Getty who said, "People who don't respect money don't have any."

Ernie J. Zelinski
Best-Selling Author, Innovator, and Creativity Consultant
Author of How to Retire Happy, Wild, and Free
(Over 125,000 copies sold and published in 9 languages)
and The Joy of Not Working
(Over 250,000 copies sold and published in 17 languages)

The Secret to Social Security Is to Appreciate the Pleasure of Being Terribly Deceived

In a an article called 7 Ways to Protect Your Retirement Savings, Emily Brandon of USA News states, "Social Security is one guaranteed income stream that most retirees receive."

This was my comment along with some retirement quotes that I posted after the article:

Your comment "Social Security is one guaranteed income stream that most retirees receive" is totally absurd!

This reminds me of an Oscar Wilde quote: "The secret of life is to appreciate the pleasure of being terribly, terribly deceived."

How can you say that the American Social Security System is a guaranteed retirement income stream?

Even winning the lottery may seem like a safer bet.

The Social Security Administration, contrary to popular belief, doesn’t have any funds in trust or investment accounts, such as stocks, bonds or savings accounts.

The Canadian Government Pension Plan (CPP), on the other hand, does and I still don't consider the CPP a guaranteed source of retirement income.

The entire American Social Security System is actually a giant Ponzi-type pay-as-you-go scheme that takes the payroll taxes of Americans who are still working and distributes it to American retirees.

Individuals who promote similar "retirement plans" are charged and sent to jail once convicted.

Interestingly, it’s OK for the American government to run such a Ponzi scheme.

CATO Institute researcher William Shipman noted in a project, “Retiring With Dignity”:

“Any surplus is not saved or invested for pensioners. Those funds are borrowed by the federal government to pay current operating expenses and replaced with government bonds. The federal government lends itself the excess in return for an interest-paying bond, an IOU that it issues to itself .... The funds are not invested for the benefit of present or future retirees.”

What a brilliant idea, having the government borrow money from itself and issue IOUs to itself, promising to pay it back sometime in the future as retirement income to its citizens!

This would be okay if the American government in itself wasn't so largely in debt that it can be considered bankrupt big time.

So, would you trust an IOU from someone or an entity that is bankrupt big time?

I still find it amazing that Americans are in denial that there is a problem with their Social Security System.

Fact is, sooner or later there is going to be a massive restructuring of the system and Americans are going to find out that they have no Social Security, or very little, to rely on for a retirement income.

The safest retirement income may be to have a retirement job, if they are still healthy enough to work.

I semi-retired when I was 35 and had a net worth of minus $30,000.

Even though I have worked less than half of my adult life, I can retire comfortably.

The reason is that once I started earning even a modest income, I started saving over 40 percent, because I have never ever placed any confidence in government pension plans to guarantee a retirement income for me. My retirement plan, by the way, still involves some work.

It was J.P. Getty who said, "People who don't respect money don't have any."

This, along with relying on the government for a retirement income, precisely explains why so many Americans and Canadians will be broke in retirement.

Ernie J. Zelinski
Author of How to Retire Happy, Wild, and Free
(Over 125,000 copies sold and published in 9 languages)
and The Joy of Not Working
(Over 250,000 copies sold and published in 17 languages)

Retirement Planning - People Who Are Changing Their Saving Money Ways

This posting recently appeared in the Reporter Connection

Looking For People Ages 50+ Who Are Changing Their Money Ways

Submitted By: Katrina Hunt
Title: Freelance Writer
Media Outlet: Personal Finance Magazine
Company: Meredith Publishing

I'm working on a piece for a personal finance magazine co-published by Principal.

We are looking for singles or couples ages 50-plus who are changing their retirement savings strategy as they see retirement coming on the horizon.

Maybe you've ramped up your savings, or cut your spending, but we're looking to interview and photograph people whose new habits or life experiences could provide insights for other pre-retirees.

Thanks!

Below is my submission.

TO: Katrina Hunt, Personal Finance Magazine
FR: Ernie Zelinski

Question 1: Based on the above, what do you have to offer? Give me a brief pitch below.

Answer: I have never had a budget and I have never had a written "retirement plan" but I am sure that I will be okay in retirement.

I didn't start saving for retirement until I was 42 and I am 60 now.

After living under the so-called poverty line for several years, and once I finally started making some money, I started saving 40 to 50 percent of my income.

That is why I have no sympathy for baby boomers who made great money and haven't saved anything for retirement.

As I initially stated in my international bestseller "The Joy of Not Working", money is actually quite easy to handle. Indeed, there are only two secrets.

The first secret is: Spend less than you make.

If this doesn't work for you, then the second secret is definitely for you:

Make more than you spend.

That's all there is to money.

Question 2: How have you changed your retirement savings strategy?

Answer: Now that I am close to 61 and have a little nest egg, I have actually started spending more money that I used to.

My retirement savings strategy, however, is to save more but also make a lot more money.

See My Retirement Plan on The Retirement Cafe

Part of my strategy and retirement planning resources involves spending money on my personal education and learning more about internet marketing and even writing and publishing so that I can continue making even more money that I have been making, allowing me to save more.

I spent over $4,000 for two courses by two of the top Internet Marketing Gurus in the world and I know this will pay off with a great earnings which lead to great savings.

In one of my books I state, "Your Prosperity Will Grow to the Extent That You Do."

I also state, "Try to Spend More on Your Career Training and Personal Development than on Your Next Hairstyle."

Question 3: What was the catalyst for this change?

Answer: Even though I have a nice nestegg, I have decided to create more income and more savings for myself because I don't want to be poor as I get older. I live in a cold climate and I want to have the funds to go to Hawaii for 2 or 3 months a year.


Question 4: What new strategies have been working for you so far, and-or which ones have not?

Answer: All my strategies are doing just fine.


Last Question: Anything else you`d like to add?

Answer: J.P. Getty said, "People who don't respect money don't have
any." This is an important quote for retirement.

Ernie J. Zelinski
Author of How to Retire Happy, Wild, and Free
(Over 125,000 copies sold and published in 9 languages)
and The Joy of Not Working
(Over 250,000 copies sold and published in 17 languages)

How much money do I need to retire

Particularly if you are a baby boomer quickly approaching retirement, you may be concerned whether you are saving enough for retirement.

The good news is that many people may be overestimating how much money they need once they leave the workforce. Several research studies show that people generally spend a lot less as they age.

Even so, this is not a reason to become casual about how much you are saving. Right now, 44 per cent of working Canadians have no retirement plan or RRSP. In the private sector, only one in five workers belongs to an employer pension plan. And only one-third of Canadian households are saving enough to cover their basic expenses in retirement.

Pension funding issues, bankruptcies and the lack or loss of personal savings have, unfortunately, left more Canadians to rely solely on Old Age Security and the Canada Pension Plan in retirement. Those retirees, who receive an average of $500 per month, are living in poverty.


Here are some retirment sayings and retirement quotes:

We only need to save $49 a month for a happy retirement. That's how much we'll need for our cable TV bill.
- from Glasbergen cartoon

It's an absolute fact that as people get older they spend less money.
- Rick Ferri president of money-management firm Portfolio Solutions in Troy, Mich.

You can be young without money but you can't be old without it.
- Tennessee Williams

By the time I have money to burn, my fire will have burnt out.
- Author Unknown

Money isn't the most important thing in life, but it's reasonably close to oxygen on the "gotta have it" scale.
- Zig Ziglar

If you want to retire happy regardless of your income, then you should read How to Retire Happy, Wild, and Free. It gives retirement wisdom that you won't get from your financial advisor.

See:

• How Much Money Do I Need to Retire


• How to Become a Millionaire


• The Best Places to Retire


• Retirement Income


• Retirement Quotes by Ernie Zelinski


• Retirement Jobs for Retirement Income

How Much Retirement Income Do Retirees Need to Retire Comfortably?

Conventional wisdom in the financial industry says that people need about 80 percent of their pre-retirement income to be comfortable after retiring. Some financial advisors are now raising this to 90 percent, even 110 percent of pre-retirement income.

In my opinion, this is ridiculous. In my book How to Retire Happy, Wild, and Free, I give eight reasons why, generally speaking, people should get by with 65 percent of pre-retirement income.

In fact, highly respected Canadian actuary Malcolm Hamilton says the true number is closer to 50 per cent.

Hamilton points out that the investment industry has a vested interest in telling people that they need a high retirement income because the retirement income and most of them seem quite satisfied with their financial circumstances after they retire," Mr. Hamilton says.

Check out some of my latest webpages and posts:

The Joy of Being Retired: 365 Reaons Why Retirement Rocks (and Work Sucks)

What Makes a Good Retirement Friend