Retirement Plan in Tatters

May 10th, 2012  |  Published in Retire Abroad, Retirement, Social Security  |  6 Comments

Recently, we read a New York Times article by Joe Nocera called My Faith-Based Retirement.

 It was a cheerless piece detailing the failure of 401k’s as an investment vehicle, the decline of pensions, the lack of employer-sponsored healthcare benefit plans and the consequent reduction of Boomer’s retirement expectations. A dreary, rain-drenched, out-in-the-street future was being painted focusing on stark data from EBRI that states: “only 22 percent of workers 55 or older have more than $250,000 put away for retirement and 60 percent of workers in that same age bracket have less than $100,000 in a retirement account.”

 Taking this information as the only premise from which you work out your retirement, you may as well give up. Just chuck the idea of having any appealing options, start on the cat food now and simply get used to it.

Houston, we have a problem

 Remember the 1995 movie Apollo 13 starring Tom Hanks and Kevin Bacon? The future of these astronauts looked pretty bleak also, with the seeming possibility of arriving back to earth safely being all but a lost dream. What they did – what they HAD to do – was put everything available to them out on the table and take a hard look at what they had to work with. There was no room for mental darkness, no room for whiners. And time was running out.

 From unrelated bits and pieces they fashioned the part they needed to repair a life-threatening problem and made it unscathed into their future.

 If you find yourself in a future-threatening financial situation today, you, too, need to ask yourself “What do I have available to me, and how can I make it work?”

But… but… but…

 When we retired over 20 years ago, we had no pension and no guaranteed healthcare plan. We were 38 years old and too young to draw social security. Today, that situation would be described as a crisis. In the wisdom of the current moment, we would be told that our retirement is out of the question. Talking heads would paint a bleak picture, emphasizing the drop in our standard of living and the possibility of bankruptcy due to medical costs.

 Accompanying this gloomy description from the media would be the bleating chorus of: “If only Wall Street wasn’t so greedy. If only the housing market hadn’t gone bust. If only health care was guaranteed and free. What a shame to find yourself in this state of affairs at this time in your life. Don’t rely on yourself, all is lost.”

Back to your future

 In those long-ago years we chose to look at creative combinations to fashion our future. Mind you, there were no guarantees our plan would work, and there still aren’t any today. Our stance has always been to take advantage of options that are available, and make the most of them.

 Keep in mind that it’s impossible to reach for the stars when your nose is pointed to the shadows. Caution! Looking only at the dark side of a situation is a dangerous road to walk. Believe us, you can find anything you want to support that line of thinking.

 Instead, why not reduce your spending footprint, and increase both your lifestyle and financial longevity by looking at other places to live?

Some inspiration and a practical plan

 According to the U.S. Government Social Security Website, the average monthly benefit received in 2012 will be $1,229 per retired worker. That equates to $14,748 annually. For easy math, let’s call it $15,000.

 Billy and I just finished living in Panajachel, Guatemala for 6 months on just over $34 per day. That equates to $12,550 a year, and that was for the both of us. We ate out, took boat rides across gorgeous Lake Atitlan, sent presents home to family and friends, grabbed beers at a bar with friends and drank the best tasting cappuccino every afternoon.

 It was not a hardship.

 We met other couples in the thriving Expat community doing the same exact thing – living in beauteous surroundings with views of volcanoes, the lake, or majestic waterfalls and paying as little as $200.00 per month rent. All of us chuckled to ourselves over our good fortune.

 Living in this location on one’s Social Security payment would be a breeze. If there were two checks coming in, you’d have money to spare. Medical Care in the larger cities of Xela, Antigua or Guatemala City is top notch, and there were several dentists in our town of Pana who were highly recommended.

 Don’t like Guatemala? Try Chapala or San Miguel de Allende, Mexico, Medellin, Columbia, Chiang Mai, Thailand, Silver City, New Mexico or any number of exotic, exciting and easy-to-live locations. Open your mind; open up to your options.

 If you are one of the “unfortunate ones” who only have $100,000 in retirement savings, you can still bump your $15,000 annual social security income up another $5,000, and that $100,000 will last you 20 years.

The American Expectation Syndrome

 Do you really want to keep your current standard of living? How’s that working out for you? If supporting this lifestyle involves the pressure of maintaining a mortgage, car payments, upkeep and fuel, credit card debt and hefty monthly payments – you may want to think twice.

 Just because someone else imagines that you are “taking a cut in lifestyle” doesn’t mean it’s true. It’s entirely possible that they don’t know what they are talking about!

 It may take a while for you to find the right combination in your new lifestyle. Allow yourself time. There is a natural process in letting go of the “American Expectation Syndrome.”

 Years ago when we first retired, we had been living pretty high – we had a new home, and were illustrious members in the local town. We had gardening service, house cleaning service, dry cleaning service, and we owned two new cars. Dining in the best places wherever we went, we took high priced vacations, and our medical care was paid for through our employer (which of course, is no longer the case). We expected our lives to go UP from here (which meant more spending) and we “couldn’t” see value in simplicity.

 But the stress was too much. We came face-to-face with some very significant personal choices; Keep up our expectations which incurred more spending and therefore more pressure, or simplify and set ourselves free.

We chose freedom

 To be honest, the hardest part of the transition to retirement (and our freedom-based lifestyle of today) was just letting go of the psychological and financial weight of having these expectations. Equally as hard, was letting go of peer pressure to consume, peer judgments over our choices and our peers’ expectations – of us and of themselves.

 However – just to clear away any confusion – we have been retired now for 22 years, have traveled the globe and opened our world (which has gotten larger not smaller), and our friends have continued to work for the last 2 decades. Now those same people are wondering how they can ever afford retirement.

 If you feel that your retirement plan is in tatters, why not put everything you have on the table, take a hard look and be willing to consider the possibilities that are right in front of you?

 There are many workable solutions if you are willing to look.

About the Authors

Billy and Akaisha Kaderli are recognized retirement experts and internationally published authors on topics of finance and world travel. With the wealth of information they share on their popular website RetireEarlyLifestyle.com, they have been helping people achieve their own retirement dreams since 1991. They wrote the popular books, The Adventurer’s Guide to Early Retirement and Your Retirement Dream IS Possible.

  

Responses

  1. Review Your Plan says:

    May 14th, 2012 at 7:12 pm (#)

    I have really enjoyed your blog post. It is so true that expectations of others really play a role in your life for how much money to retire early. If you simply review your plan and make some smart choices, you can live happily ever after as you two have seem to have done. I have written down the titles of your books and will look for them next time I am purchasing more.

    Thank you for sharing your wisdom!

  2. MyMoneyDesign says:

    May 14th, 2012 at 8:47 pm (#)

    Beautiful piece! The thought of retirement (and especially an early one) is a subject I explore often. I have heard of people retiring to foreign countries and living just fine for less than what Social Security provides. I’m not sure if I’d be able to do it, but I certainly like the option. Going back to the beginning though – I don’t think 401k’s have failed us. I think we have failed ourselves. We’ve got to be more disciplined if we want to beat these statistics.

  3. The 7% Solution by John H. Graves | Professional Book Reviews says:

    May 15th, 2012 at 2:15 am (#)

    […] Retirement Plan in Tatters (myretirementblog.com) […]

  4. Jeff says:

    May 16th, 2012 at 8:35 pm (#)

    Great piece! What are the negative tradeoffs with such a retirement? I would image that you are farther away from friends and family. You may be exposed to a less stable political environment. You may not have all the same amenities as in the U.S.

    Have you found the internet to be the great equalizer since you can now video call family, stay up on world events and explore alternatives if the political stability of your retirement home changes, or stream of all kinds of U.S. content for pennies a day?

  5. Wayne says:

    May 24th, 2012 at 3:43 pm (#)

    Great piece! I think the 2008 market meltdown caused people to step back and take a look at their lifestyle and the fact that paper wealth can be fleeting if not handled properly.

    The bottom line is be prudent with your investments and do not take undue risks. Also hedging positions when the market head south allows you to protect more of your hard earned capital. Risk management is paramount in your retirement accounts because the government Social Security checks may not be there in their present form for much longer.

  6. Brian from medigapgroup.com says:

    August 26th, 2012 at 9:31 pm (#)

    Thanks so much for your advice. It really is extremely helpful. I actually work with senior citizens every day, helping them cover the out of pocket gaps brought on by government Medicare. I know that they would really appreciate this type of information. I will definitely be passing it along. If you ever get the opportunity, feel free to check out our brand new website. We’d really appreciate any type of feedback that you may have. Thanks again for sharing, and keep up the good work! I’ve really enjoyed reading your blog and I’m looking forward to more.