Retirement Myths and Realities
Posted on 08. Sep, 2010 by Forest in General, Opinion, Saving Money & Finances
I’ll be honest, I have been a little irresponsible about thinking about my retirement. However as my earnings and debt stabilize I am looking more into retirement myths and realities trying to make sense of the whole thing and working out what will be needed to sustain a reasonable lifestyle when I hit old age.
Retirement is so debated though, it’s a huge problem for anyone trying to run the numbers. Comprehensive articles like this one from Yahoo hint that you will have to save around $1000000 for a 25 year retirement and if starting late around 30% of your income. However other articles like this one put the figures at around 6% only, a huge difference in opinions!
The reality is that if you want to continue a relative lifestyle in your current situation you do need a lot of money. Some people are forfeiting so much in life now for a future they may never have. Being rich in old age is all about comfort but retirement can quite easily bring time for regret. Regret that you did not see the world when you was young enough and fit enough to run around an explore instead of sitting on a bud of old fogey’s slowly following a guided tour. Of course old age does not have to be that way but it could be!
Social security in USA is rumored to be something that the current young generation will not benefit from. A rising old population due to increasing medical health is putting huge strain on the system and although the rumors may not be 100% true many reports think that the social security pensions may only be covering 25-40% of a traditional income.
Things are looking bleak for retirement!
I don’t think it has to be looked at this way. I don’t live on much money right now and I have met many older retired people living here in Cairo. I wouldn’t choose Cairo in my old age but there are and will always be cheaper paradises to retire to. Right now many people are retiring to places like Belize and surviving just on their social security checks.
It makes sense to max out your 401k’s every year and keep extra savings but be careful not to make life too much hell in the present. Memories and a good life will be very important in your older years. As I said before the time given by retirement gives plenty of time for regret! Planning is essential but if like me you are heading into your 30′s and you have not started saving then you don’t have to have a break down over the whole thing.
Retirement Myths and Realities, what I think….
It will be great to not have to work anymore! – You know I love working. I work full time online and hope to partially fund retirement through my websites and passive income as well as actively running websites. You can find passive income ideas all over the web. I can’t even imagine to begin to think what the blogging world will look like before my retirement but you can be sure that if I keep up to date I will be expert enough by that stage to keep going. I am not stopping working ever!
Healthcare gets more expensive in old age: - Ok this is partially true but if it is really scaring you then you can do things about it. Obviously keep yourself very healthy, reading regularly about health, alternative medicine and super foods. Don’t fall for the hype but do keep up with what the doctors are saying. I know a lot of older people who have near perfect health. Like saving for retirement they paid attention at a young age. There will always be some things out of our control but they could happen to anyone at any age. Just stay insured!
Early retirement is good for you! – I think early retirement can be dangerous. When purpose is lost from your life and you feel retired it’s easy to slip into a monotonous routine and an unhealthy lifestyle. You really could end up dying early! Personally I would always opt for a partial retirement or leave the corporate run to pursue a passion that still requires a large amount of work-like involvement.
There is so much more to think about but this is just an idea of the things that cross my mind. Many fellow Yakezie network members have been writing on retirement and have an array of interesting perspectives. I think you should read their perspectives so I have linked a few of their articles.
Well Heeled Blog discusses Balancing your retirement with short term goals, Len Penzo takes a look at why his children may not be getting inheritance, Daniel at Sweating the Big Stuff wants to know how much you need for retirement and runs the numbers. Redeeming Riches looks at some of the benefits of using a retirement calculator whilst Early Retirement Extremes shares an early retirement story, 20 Something Money looks at poor retirement planning and early withdrawal, Consumerism Commentary gets down to the benefits of target retirement funds, Monevator looks at an extreme methods of retiring, Wealth Pilgrim looks at the best investments for retirement, Bucksome Boomer asks is phased retirement for you? If you are planning on living past 100 (or at least older than 50) then Kevin from Invest it Wisely has an awesome post “Living to 100 and Beyond: Building an Infinite Portfolio“.
Wow that is a lot of info!
As always I would love to know your thoughts on this whole matter!
Have a great day.
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19 Responses to “Retirement Myths and Realities”
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Monevator
08. Sep, 2010
Thanks for the link, Forest.
I agree that retirement is a bit of a mixed goal. I think the best aim is to retire from ‘forced’ work. But keeping some work or income generation going afterwards can keep you involved in the community, and make retirement less financial precarious.
The key is to get to a place where it’s on your terms. Being a part-time park ranger on $10K a year might be great if you’re not doing it for the money, for instance, if you love the outdoors and meeting people, etc.
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Forest
08. Sep, 2010
Hey Monevator,
That’s a great way of putting it. I’m hoping I will not be living in forces work long before retirement so hopefully I will never have to announce such a thing
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Daniel
08. Sep, 2010
I think people are overreacting. Recent reports showed that no changes to the social security system would give people 75% of retirement benefits for the next 70-80 years, so the ‘end of the world’ remarks are ridiculous. And there will be changes.
I do agree that if you live below your means and save regularly from a young age, you’ll be in good position later, regardless of an social security.
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Forest
09. Sep, 2010
Hey Daniel, I think you are right about the over-reacting. The media are reporting all sorts of figures and we know the media loves a good scare story so you just have to prepare in your own way and maybe ignore them!
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Red
08. Sep, 2010
I agree about working! Though it’s easy to feel this way at 23 when I’m still able to work, I can’t imagine stopping. Once I am physically UNABLE to work, I want to have the option of stopping, but it’s not my goal at all to completely stop working at some predetermined age. I want to have a job that I actually enjoy doing, not something that makes me think, “Oh, goody! Only 20 more years of working for this dump!”
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Forest
09. Sep, 2010
Hey Red,
You are right I am just turning 29, have no idea how I will feel in 30 more years.
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Khaleef @ KNS Financial
08. Sep, 2010
Since we have so much debt, we haven’t given much thought to retirement either.
For me, retirement just means that I am in full control (as much as humanly possible, anyway) of my financial situation. Right now I am working to pay off previous purchases (including education), so I’m not in control!
I don’t envision sitting around doing nothing in retirement, but I do want to work for myself and spend more time with my wife. A great thing for us is that we do not need to spend much money to enjoy ourselves. So a frugal lifestyle isn’t about giving up fun and having regrets, it’s just about having sound priorities and spending toward them.
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Forest
09. Sep, 2010
Hey Khaleef, yeah I think you need to gain control first but the biggest worry about retirement savings is that ever year not saved is extra time to make up. However increased health and a changing job market is making it easier to work at an older age.
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Jason @ Redeeming Riches
09. Sep, 2010
Totally agree that we need to have purpose in our retirement. Actually, I think it should really be no different in our working lives – the only difference in retirement is that you have a choice to walk away from your day job!
Thanks for the link.
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Forest
14. Sep, 2010
@Jason, absolutely
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BeatingTheIndex
09. Sep, 2010
I’m with you on the early retirement being a partial one since i have tons of stuff i would like to do and learn if I ever get the time!
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Forest
12. Sep, 2010
Yeah learning may well be my priority once I move down my working days to just a few a week.
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Kevin@InvestItWisely
13. Sep, 2010
Give me a laptop, internet connection, and a decent online income, and I’ll be happy
Although I want to get out of the rat race, I’m going to take advantage of these years to build up savings, until/unless online income can really take over.
Thanks for including my infinite portfolio article!
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Forest
14. Sep, 2010
I’m working on the debt and then the savings then I will be happy as Larry
….. Got $2k stored against my debt so far…. Another $1.5k coming end of this month so getting there.
I have $40k debt though!!! However I think I can settle the whole lot on about $20k so I can see a light at the end of the tunnel.
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Khon Kaen
20. Dec, 2010
You are soooo wrong about early retirement. if you can do it, then do it. I retired at 57, have been retired now for 9 months, and my life is hardly monotonous.I exercise daily – bicycle ride for about 45 mionutes. I moved to Thailand for my etrirement and enjoy travelling – for a day, overnight , or for a week or so. I do ‘stuff” online – chat with friends. play fantasy football, maintain and build websites, and make a small income from my online activities. I eat better, drink less,nad exercise more since retiring. So, don’t knock early retirement.
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Forest
21. Dec, 2010
Hey Khon, you sound like you are dealing with retirement exactly the right way. At 57 though I wouldn’t call that very early retirement. However you are also still doing a little work and I think that is an important element to keeping yourself active and bringing a little supplemental cash in.
I plan to go into semi-retirement much earlier than 57 if I can!!
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fitness girl
29. Jan, 2011
Saving for retirement without compromising how to enjoy or explore life at early age could be the best. But most people at early age overlook this concept.
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Forest
10. Feb, 2011
Absolutely Fitness Girl, you need to sensibly enjoy all life!
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