I’ve been thinking about retirement a lot lately, not because retirement is imminent (it’s still several years away). It probably has to do with feeling insecure about my job and the nagging worries about finances that I had during difficult times in my past (single parenthood, student debt, unemployment).
Over the past decade, people have started asking if I was retired. At first, I was surprised and, I must admit, slightly offended (do I look old enough to retire?). Of course, if I had a spouse with a good income or had been able to save a lot over the years, perhaps I could have afforded to retire early.
My own financial scenario includes neither a spouse’s income nor large savings, however. For much of my life, I’ve had more debts than savings. This was my situation from my early 20s until mid-life:
- Life abroad: I lived abroad in my 20s and worked mostly as a contractor, which meant no savings nor contributions to social security (in the U.S.). My then husband and I were barely making ends meet, so our money just went to pay the bills.
- Lengthy studies: When I returned to the U.S., I was a student forever and a day (graduate school). My pay as a teaching assistant was barely adequate; therefore, contributions to the social security system were small.
- Single parenthood: Living on one income is often tough, whether married or divorced. In the early years, I was an adjunct university instructor, which meant low pay and no benefits (another added cost).
- Modest income: Later, I worked as a teacher, so while I at least got insurance, the pay was modest.
Now I work in Corporate America, so I do have a 401(k), but we’re talking about less than two decades before retirement, not a whole career, and for one of those decades, I was still supporting kids. By mid-life, many of us have some money here, some money there, but usually not enough to retire early or perhaps not even at the traditional age.
Looking over my finances, I know that I have some funds set aside for retirement, just not enough. My situation isn’t too unusual. In fact, if you google “Americans and retirement planning,” the situation for many is much worse than my own. It made me feel a bit better, but not by much. If you’re worried about retirement, your details may differ from mine, but the result is the same: too little income, too little savings.
I asked people in several minimalist social media sites about their thoughts on planning for retirement or, if they were retired, how they were managing. Here are the most common responses:
- Those who recently discovered minimalism wish they had started earlier, especially when it comes to decluttering and cutting costs, but at least they have begun now.
- Those who have been on the journey longer appreciate how minimalist principles have helped them get rid of unnecessary possessions, especially if they decided to downscale to a smaller home.
- Those living in smaller, simpler homes found it much easier to save for the future or manage retirement better.
- Many emphasized paying down debt, especially mortgage, to give them more financial freedom.
- Those living in the U.S. discussed how health insurance costs prevented them from retiring early and those already retired agreed this was a challenging issue. Even with Medicare there are added costs, so it’s important to consider those expenses.
- Many discussed how learning to value experiences and relationships over possessions helped take the focus away from finances.
- Some specifically discounted the commonly stated advice that to retire, one would need 75-80% of pre-retirement income. If you own your home and live simply, you can reduce this percentage significantly.
- I’ve always lived relatively simply, and over the past several years, as I began to think more and more about growing older, retirement, and finances, I started making a conscientious effort to decrease my cost of living.
The general precepts of living a minimalist or simpler life are to appreciate quality over quantity, emphasize experiences over consumption, and cherish people over possessions. I’ll continue on my minimalist path of saving, investing, and paying down my mortgage as much as possible. I’ll continue reducing my cost of living as much as suits me and my chosen lifestyle. Hopefully, this will give me the option to retire when I’m ready.
RESOURCES
Joshua Becker/becoming minimalist: 8 Countercultural Decisions to Find Financial Freedom
Kathy Gottberg (see also her blog, Smart Living 365): How Rightsizing & Minimalism Prepares You For Retirement, Midlife Minimalism—How Your Focus Changes & The Rewards Increase
Optimal Finance Daily (podcast on personal finance)
The Minimalists (a good concise yet comprehensive guide): Retirement Planning: How to Plan for a Successful Retirement
Other books, blogs, podcasts, films can be found here: Resources
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Despite the fact that my husband & I planned for retirement (property, 401K, annuity, savings, etc.), it wasn’t until our 40’s and then circumstances (his death, economy crash) took every last cent & I suffered major losses. But my biggest regret is that I did not seek out a FINANCIAL CONSULTANT to help me handle what little money I had left. If I had it to do all over again, I would pay for someone’s expert advice & wisdom on how to budget, spend, transfer funds, taxation, etc. I made big mistakes that cost me. My financial problems affected family members & that bothers me the most. But I thank God I have them to help me out.
Good advice to get a professional to help make financial decisions!
As for consumerism, my sister once saw a book with a great title. Instead of the usual “How to get what you want,” it said “How to want what you have”. She didn’t buy the book, she just took the idea home with her. Didn’t take up a bit of shelf space.
That really is a key to being content – not constantly wanting more, more, more!