As one of the younger guys in the office, I hear a lot about retirement planning from people at the office. Some if it is pretty solid advice like “start saving now or you’ll regret it later” or “don’t wait till your mid thirties like I did”. Unfortunately, this is all stuff I already know, so I read articles in magazines and on blogs for more information. I also have met with a financial planner before, and they all suggested that I would need a very large amount of cash when I retire.
I’d need all this cash to keep myself healthy and take a lot of medicine and go to the doctor all the time. I’d need a lot of cash to make sure that I’d be able to cover inflation costs and keep food on the table. I’d need a lot of cash to visit children and grand children, unless of course I wanted to put my grandchildren to work so they can pay for their own plane ticket to come see me.
I’d also need a large pile of cash so that I can stay in my own home as long as possible before I moved to the basement at my kids house. Clearly, this list is not exhaustive, but it is exhausting. With so many things to consider and the amount needed to save seeming so large, it’s no wonder that people put it off. “It will be easier when I earn more money” as they say.
Still A Long Way Out, But Better Plan Now
Obviously, I’ve got quite a bit of time before I retire (40+ years), so there’s plenty that I can do starting now to make sure that I wont need as much cash as the estimates (which were north of a million bucks). I’m all for living lean, so the more I started thinking about it, the more ideas I got. I’ll share a few.
This past weekend, I was a few miles west of a small farm town in Wyoming at a property auction. I wasn’t really looking for anything in particular (though they did have a nice 15 year old truck with very low miles and a few other interesting odds and ends), but got a number anyway and started poking through the stuff. Most of the people who were at the auction were old – probably older than 55, and just about all of them were men (this auction had a lot of tools for sale).
As I got to seeing who was bidding what for things, It began to dawn on me that I was in the midst of a great way to reduce retirement income needs. As these guys were purchasing the right tools, the would head back to their place and start fixing things and making other things that they need. You no longer need to pay someone to fix the sink, change the oil or any home maintenance. With the proper skills acquired over a long period of tools and the proper tools, you open yourself up to fixing many things. In addition to this, you can even sell your fixing services to your friends and neighbors – the benefits will be two fold: you’ll be able to practice on someone else’s stuff, and you’ll get an income boost.
As I mentioned earlier, these guys were old. They aren’t women who would chafe at being asked their age, but I didn’t ask them how old they were. A lot of them were in really good health though – All standing for the entire 3+ hours that I was at the auction with out assistance, moving around quickly and mocking the auctioneer for taking such a long time. These guys were still sharp, and they had clearly taken care of their health in younger years. None were overweight, or had any other visible health problems – most likely from farming or doing some other type of physical labor for their entire life.
There was quite a few things that were auctioned off – half full propane tanks, an old metal swinging lawn bench, plenty of tools, a welder and some other choice goods. Many of these things could be gotten for great deals (including a 50 ft extension cord for ~4). Sure, these are things you can buy new, but if you can get them used for 20% of the price, why bother? Instead of spending tons of money on a new tool or extension cord, they were able to buy a product that served their needs used. Doing this over a lifetime and continuing in retirement can begin to add up, and it will surely decrease the amount of cash you need to save for retirement.
Easy enough right? Just be frugal, stay healthy and learn quite a few skills – you’ll lower your retirement cash needs in no time.
Readers: Do you think increasing skills and having more time that retirement provides will give you something to do in retirement and help you save money in new ways? How are you planning to manage your retirement? Do you want a vault of coins like scrooge mc duck so you can pay everyone to do tasks for you, or are you more interested in doing things on your own to occupy your time? If you do pay everyone for tasks, what would you do all day?
I think doing both would be appropriate. Having a nest egg is always a wise thing to do, but understanding frugality is wise as well. In addition to this, I would suggest investing in something that would yield a monthly cashflow as well – perhaps real estate or a passive business of some sort. All 3 combined and you could live as long as you want and still afford your mansion on the water! :)
I think that you’ve got a good addition here derek – a passive income stream like a rental property or a cache of dividend paying stocks would be quite handy to supplement frugality and skills
Learning a new skill can be both rewarding and save you a ton! With all the time at retirement, no reason not to learn something new!
Agreed MC – there’s nothing better than sitting down with a problem and figuring it out. Just last night I replaced the door lock on my back door. It wasnt difficult and i’ve never done it before, but that’s 1 more skill I dont have to pay for (and its so easy they dont
Man, I remember the days of being the ‘young guy’ in the office. Then, one day I just wasn’t. Maybe it was the gray hairs.
I agree that getting used stuff like that can be a difference maker. I have always heard about estate sales and property auctions being a great place to find stuff, but have been too lazy to ever do anything about it. This will definitely help me get some extra motivation to check it out.
Beagle, I’d heard a lot of things about this too, but you really need to look over the sale sheet. It really depends on the peoples hobbies as to what they’ve got. Some arent worth the time, and others they basically give stuff away – it’s totally crazy.
I like to think of retirement more like time freedom instead of not working. I know that my grandmother worked well into her 70s until health problems forced her to stop working.
I like to know how to fix things and if I can do something myself without paying someone else, I would most likely do it. So in retirement my plan is to work some, relax some, travel some and enjoy being old and crotchety! lol
I want to be old and crotchety too! My grandmother worked until she was like 76 or something, and no one could figure out why – aside from the fact that she didnt really want to retire because she wanted something to do. It sounds like she’s found quite a bit of volunteering things to keep her busy though.
I agree that frugality offers you many more options in retirement. As you mentioned, it helps present a better picture of retirement; not just one sitting around doing nothing, but actually doing stuff. I like it… although, going to auctions for tools doesn’t sound that appealing to me. I guess everyone has their preferences.
It does make it seem like retirement isnt all bridge and golf if you’ve got things to fix or other projects around the home. I had never been to an auction before, and I didnt have anything really to go for. I just figured i’d check it out
I’m a big do-it-yourselfer now. But, when I get to retirement I don’t want to be stuck under a sink all day fixing a leak. Heck, I don’t want to have to do that 10 years from now. I’d rather work hard doing what I love and pay someone to do the things I don’t want to do.
I think that’s a good point too – if you hate fixing sinks and it only costs 35 for you to pay someone to do it, just part with the money and save yourself the stress. The guy who is fixing it will probably be happy because he loves fixing sinks, which is why he does it every day.
Awesome idea. Saving money though do-it-yourself repairs keeps you active and keeps money in the bank. I just got my first electric drill recently and used it a handful of times during my recent move. Over time, I hope to keep learning more ways to fix my own home rather than pay a contractor to do it.
Those drills will save you quite a bit of time, not to mention money. The bad thing i’ve found (if yours is cordless, which I’m assuming it is) is that the battery is ALWAYS dead. I’ve got an old corded one my dad gave me that works awesome and is never dead.
”It will be easier when I earn more money” – It’s much better to save early and often! A lot of the reason this fails is because:
1) Kids
2) Buying a house in your peak earning years
DIY is also good for other reasons – like the feeling of pride when someone compliments the work you did on something. And, like you said, people will spontaneously hire you to do work for them.
We are not DIY people but I think to save money and be able to do other things instead, it would be worth for us to start leanring new skills. :) Especially in retirement.
The skills are not only good during retirement, but good after as well!
I just hope my back holds out!
Our kids keep us tied to an ‘acceptable’ living standard- I figure once they are out of the house I’ll be following Mike up to a cave to live in….I just hope it’s a cave in Hawaii!
Great point molly – you’ve got to be healthy to make all of this work.
That is a really good point. I really like doing my own things, but I don’t find myself having too much time now. However, in retirement I will probably do most of what I can by myself, as long as I’m healthy enough to do so.
I think its a great way to think about it – you may not have plenty of time now, but you’ve got the money to make up for it. Later, you wont have quite the same amount of money, but you’ll have a lot more time.
I love it! I’ll be joining the old guys in a few years. I think it’s a great way to keep busy during retirement and save/make money at the same time.
It is a great thing joe, and now you can practice with the new 4 plex you bought! You can learn plenty of handyman skills when things break.
As an old(er) person, my plan will be to spend some of my money. I worked hard and saved all my life, I expect spend some of it. I achieved financial independence at 38 years old. For the last 26 years, I got to do all the things I enjoy and work because I wanted to. I will retire in 5l.5 years and we will enjoy it traveling, taking classes, volunteering and doing anything I want. Savings provides choices in life!
I could’t have said it better myself. I am saving for retirement and I plan on using that money to enjoy things I like to do. I think it is good to be frugal but I also think you need to enjoy your life. We only get one chance.
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I am only 28 and I contribute 30% into my 401K every paycheck, plus a Roth IRA which I max out every year. Right now it’s not a whole lot of money, but if you believe in the power of compound interest, you must start as early as possible.
I agree with Derek. I started putting away 15% of my income when I got out of school. I never missed the money cause I never got used to getting it. All the other things you mentioned are a super way to decrease your life costs. And making money with those skills are a great idea, unless you can earn more in other ways. There is more than one, two, or even three ways to skin that cat….(whatever that means:)
I haven’t thought about what I would do during retirement. I love being in company of people. As for now I don’t plan on to retire to seclusion ever. I like to do things and want to be amongst the people. About saving for retirement, I advice every one to maximize 401(k) and IRA contribution. Once you do that you’re free to do anything you want with rest of your income.
I love trying to fix things myself as well as making things so I think I’d have plenty to keep myself busy and entertained during retirement. The more skills we have the more options we have! I also put as much as I can into my 401k because the funds really do add up esp with employer contributions.
The idea of playing golf or bridge all day is actually a nightmare to me. I wouldn’t ever want to retire in that sense — but I am perfectly down with getting out of the cubicle, or at least working on your own terms. :)
So, definitely agree that fixing more things yourself and becoming good at it can be a good way to be busy and entertained when you become very old, so long as you enjoy it!
Jeff, I swear you were at an auction in small town Kansas where my extended family lives. Only those auctions often have older women there too! You can get a lot of great deals at these auctions whether you’re older or a young family.
To answer your question, I think you should do both — save money to pay for those things you can’t do yourself and fix things you can. Unfortunately, my husband only repairs with glue and rubber bands (just kidding… a little).