The Money section of the local newspaper - yes, I still have one delivered each morning - featured, a while back, an article about the cost of The American Dream... the "Good Life." Their estimated cost for a family of four was $130,357, or $32,589 per person. That includes only one car (not very realistic for two adults in most parts of the country) and about $22,000 in savings (probably more than most people save in a year these days.)
These figures surprised me! Especially since that figure is quite a bit higher than the median income for a family of four. What about the Good Life for retired folks, either a single person (like me) or a couple? What kind of price tag would you put on that?
I guess the answer is an obvious. "That depends." I know retired people whose annual incomes approach six figures, but who feel impoverished. And I know other people with incomes below $1,000 a month who seem pretty happy.
As I've thought about this, a couple things come to mind. First, living happily on a shoestring requires a certain mindset. You have to appreciate and creatively use... to the max!... what you do have. The most pathetically unhappy poor people I've known are the ones who are bitter and angry about not having the money and things they used to, and that they think they deserve. Bitter anger is not compatible with happiness or contentment, and it's also not a state of mind that allows you to recognize the blessings you have and to grab onto and use the opportunities that come along... all the time.
Second, maximizing the resources you already have... your blessings, really... requires you to learn to plan and make smart choices. If you still have a big mortgage payment in retirement, that can strap you pretty fast. Car payments and expenses can make a big dent, too, as can medical insurance and treatment costs. I recall a statement by a financial planner that made sense. He recommended that you go into retirement debt-free. Now, that's just smart, to reduce your costs as much as possible. People sometimes don't want to down-size, but it makes sense if you can end up living mortgage-free.
Car costs can be significant, too. Per the article, AAA has estimated an annual cost of $11,039 to own a four-wheel-drive SUV, which is what everybody around here seems to want to drive. That's almost $1,000 a month! If you buy an older car outright (no payments), one that gets good mileage, you can knock a huge amount off AAA's estimate, including fuel, registration, and insurance too. Personally, I chose a place to live that is close to public transportation, so I was able to give up my car. (And that was lucky, because my eyesight then deteriorated to the point I couldn't drive a car even if I wanted to!) I buy a bus pass, heavily discounted for senior citizens, every month or so, and walk to many places I need to go.
I've seen that even people on very low incomes can, with planning and maybe a little luck, manage to live fairly well. I know retired people who have been able to obtain very nice low-income apartments. And food stamps (or SNAP, as it is now called) can keep the cupboards from going bare for those who qualify. A friend of mine who is on a very, very low fixed income was at her wit's end because they kept raising her rent, to the point she had almost nothing left to live on. But she applied for low-cost housing, and in a few months was able to move into a nice efficiency apartment in a decent area of town. It's an older building, but her apartment had just been renovated with new carpet and appliances. Because her income is so low, her rent is less than $200 a month. The place is small but adequate and has spectacular views from the 12th floor. There is a bus stop right in front that will take her downtown or to the mall or various grocery stores. She also gets food stamps that help a lot with her grocery bill.
There are so many ways to save money when you're retired, but you need to stay alert. Many of them are not well-known, and some will require some flexibility, such as shopping at a certain store on a Tuesday rather than Wednesday (not too hard, I don't think). Many cities and counties offer discounts on property taxes and water bills, and I understand that many people don't know about these (somehow they don't seem to advertise them much), or just don't bother to apply.
Another example: I got a flyer in the mail that contains a list of "helpful phone numbers," and I was surprised to see that there is a Senior Citizens Affordable Taxi service. You have to buy tickets and get a picture ID to verify age, but it uses Yellow Cab and offers a 50% discount. Cabs are expensive here, so it still wouldn't be cheap, but this would make it easier to get back and forth to places where the bus doesn't go, or at times when it is not running. I've never heard of anyone even using that service. In fact, if you start looking, there are many, many discounts offered to seniors and most of us don't know about them, or don't bother to use them!
I used to do volunteer work helping adults of all ages and income levels who were having problems involving domestic violence. One thing that really struck me was how differently people on low incomes fared. Some did super well. They figured out how to take advantage of every opportunity that was available to them, and were good at finding those opportunities. They obtained housing they could afford (even if far from ideal), shopped at Goodwill and yard sales, used food stamps to help feed their families, and accepted help from friends and family. Others... well, frankly, they were just very inept. They lived way beyond their means and racked up huge debts. And that, in turn, made their lives so very stressful and chaotic.
We all have choices to make regarding how we're going to live, whether we're luxuriating on a fat pension or investment income, or struggling a bit on a small fixed income. Either way, I've seen that the chaos and discouragement caused by poor decisions, impulsive spending, and failure to just get a grip can be turned around. It just takes a change in mindset, so that opportunities are found and recognized, and more rational, and less emotion-based, decisions about how we use our money and resources are made.
These figures surprised me! Especially since that figure is quite a bit higher than the median income for a family of four. What about the Good Life for retired folks, either a single person (like me) or a couple? What kind of price tag would you put on that?
I guess the answer is an obvious. "That depends." I know retired people whose annual incomes approach six figures, but who feel impoverished. And I know other people with incomes below $1,000 a month who seem pretty happy.
As I've thought about this, a couple things come to mind. First, living happily on a shoestring requires a certain mindset. You have to appreciate and creatively use... to the max!... what you do have. The most pathetically unhappy poor people I've known are the ones who are bitter and angry about not having the money and things they used to, and that they think they deserve. Bitter anger is not compatible with happiness or contentment, and it's also not a state of mind that allows you to recognize the blessings you have and to grab onto and use the opportunities that come along... all the time.
Second, maximizing the resources you already have... your blessings, really... requires you to learn to plan and make smart choices. If you still have a big mortgage payment in retirement, that can strap you pretty fast. Car payments and expenses can make a big dent, too, as can medical insurance and treatment costs. I recall a statement by a financial planner that made sense. He recommended that you go into retirement debt-free. Now, that's just smart, to reduce your costs as much as possible. People sometimes don't want to down-size, but it makes sense if you can end up living mortgage-free.
Car costs can be significant, too. Per the article, AAA has estimated an annual cost of $11,039 to own a four-wheel-drive SUV, which is what everybody around here seems to want to drive. That's almost $1,000 a month! If you buy an older car outright (no payments), one that gets good mileage, you can knock a huge amount off AAA's estimate, including fuel, registration, and insurance too. Personally, I chose a place to live that is close to public transportation, so I was able to give up my car. (And that was lucky, because my eyesight then deteriorated to the point I couldn't drive a car even if I wanted to!) I buy a bus pass, heavily discounted for senior citizens, every month or so, and walk to many places I need to go.
I've seen that even people on very low incomes can, with planning and maybe a little luck, manage to live fairly well. I know retired people who have been able to obtain very nice low-income apartments. And food stamps (or SNAP, as it is now called) can keep the cupboards from going bare for those who qualify. A friend of mine who is on a very, very low fixed income was at her wit's end because they kept raising her rent, to the point she had almost nothing left to live on. But she applied for low-cost housing, and in a few months was able to move into a nice efficiency apartment in a decent area of town. It's an older building, but her apartment had just been renovated with new carpet and appliances. Because her income is so low, her rent is less than $200 a month. The place is small but adequate and has spectacular views from the 12th floor. There is a bus stop right in front that will take her downtown or to the mall or various grocery stores. She also gets food stamps that help a lot with her grocery bill.
There are so many ways to save money when you're retired, but you need to stay alert. Many of them are not well-known, and some will require some flexibility, such as shopping at a certain store on a Tuesday rather than Wednesday (not too hard, I don't think). Many cities and counties offer discounts on property taxes and water bills, and I understand that many people don't know about these (somehow they don't seem to advertise them much), or just don't bother to apply.
Another example: I got a flyer in the mail that contains a list of "helpful phone numbers," and I was surprised to see that there is a Senior Citizens Affordable Taxi service. You have to buy tickets and get a picture ID to verify age, but it uses Yellow Cab and offers a 50% discount. Cabs are expensive here, so it still wouldn't be cheap, but this would make it easier to get back and forth to places where the bus doesn't go, or at times when it is not running. I've never heard of anyone even using that service. In fact, if you start looking, there are many, many discounts offered to seniors and most of us don't know about them, or don't bother to use them!
I used to do volunteer work helping adults of all ages and income levels who were having problems involving domestic violence. One thing that really struck me was how differently people on low incomes fared. Some did super well. They figured out how to take advantage of every opportunity that was available to them, and were good at finding those opportunities. They obtained housing they could afford (even if far from ideal), shopped at Goodwill and yard sales, used food stamps to help feed their families, and accepted help from friends and family. Others... well, frankly, they were just very inept. They lived way beyond their means and racked up huge debts. And that, in turn, made their lives so very stressful and chaotic.
We all have choices to make regarding how we're going to live, whether we're luxuriating on a fat pension or investment income, or struggling a bit on a small fixed income. Either way, I've seen that the chaos and discouragement caused by poor decisions, impulsive spending, and failure to just get a grip can be turned around. It just takes a change in mindset, so that opportunities are found and recognized, and more rational, and less emotion-based, decisions about how we use our money and resources are made.
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