Retirement for Seniors

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When I was in my mid 20’s I got involved with a direct marketing business selling health and beauty products. While attending the weekly meetings I met a gentleman who was also involved with the business and about to retire. He had worked his entire life and managed to build up a full year of paid vacation time. Those saved up days would be his income for the next year until he officially reached “retirement age” at 55. Part of me thought “how lucky” as I thought of my $5.16 in savings, while the other part of me said “you have your whole life left to worry about retirement.”

Retired at last
In a blink of an eye its 2010 and I am scheduled to retire. According to my job, I am expired. I make more money than I should and they would rather pay someone one quarter of my age to do the exact same job for one third of my pay. The stock market has crashed again, the economy has been on the rocks for several years and my hard earned dollars paid into social security have been sucked up government spending leaving me holding countless unpaid bills that are increasing by the moment and no income or savings to cover them. Can you relate to this scenario? Over half of all seniors living in the United States are facing the exact same situation. The need to work but being under qualified, over-paid or over age for nearly every job that is available plagues our daily life. So what is a person to do?

Planning for Retirement in a Broken  Age

Planning For Retirement








Planning for your retirement NLT age 45

Let us rewind just 10 years earlier. By the time many of us reach 45 years old we are starting to count down to retirement. We have paid our dues to society, worked to the bone and it is time to sit back and relax and enjoy what little time is left in our lives. If there is one thing that people should have learned by now, it is that our money is not safe in a 401k or bank savings account. Numerous funding sources have diminished or dried up as a result of over lending and exaggerated economic spending by other people. Financial guru Dave Ramsey repeatedly talks about how it is better to save on your own that rely on the promises of any company during an unstable economy. No matter when you figure it out, you have to start saving and planning for the future. For the sake of this discussion, we will say that age is 45.

Downsize your life

Budgets are already tight, where on earth are you going to find money to save. If you are like me, you are paying out on mortgages, car payments, car insurance, numerous utilities, students loans, medical bills and credit card debt all at the same time. Every month it seems more overwhelming that the next, but it is too late in the game to start working a second or third job when you are already exhausted from working one job at the end of the day. Now is the time to reevaluate your life. Look around, how many things are in your home that you do not need? It is time to start downsizing. Start by reducing the clutter in your life. Not only will this help you earn some money to get ahead of bills but it will also be helpful once you retire and need to downsize your living space. No family members want the burden of sorting through years of collected junk.

Consider each item you have, is it worth something? Will someone want it? If is not an item that is wanted by your heirs, then it should be sold. If it may be worth something, such as an antique, have it appraised for value. Utilize sites like Ebay to auction off valuable items; you are likely to get more than what you are asking for that way especially if the item is a hot commodity. For everything else that is unnecessary, hold a garage sale. Remember, one man’s junk is another man’s treasure.

Organize your finances

Now, categorize all of your miscellaneous bills and expenses in order from lowest outstanding balance to highest. These should be all of the items that exceed your necessities for living. Put all of your “necessities” into their own list, in order from lowest to highest. As for the list of miscellaneous expenses, determine what you are paying each month on each item. The goal is that by selling items you do not need (or working side jobs for one month or extra hours at work) you will pay off that lowest outstanding bill. Now the money you were originally spending on that rolls up into the next bill. By finding a way to earn a little extra income one month, you can start to pay off debts quicker. Continue to roll each amount into the next bill on the list until all are paid off. Using this method can cut down your payment time on credit cards, hospital bills and loans dramatically. Additionally you will decrease the amount of penalties and interest charges incrued by making larger payments.

Next evaluate the list of “necessities” and figure out what you do and do not need. Do you really need high speed internet, a home phone, cell phone and 250 stations of cable television? The answer is no. Consider downsizing your cable and cell phone bills to smaller plans that fit your lifestyle. Next, eliminate the costly home phone and opt for a low-cost payment plan of $5 per month or less using internet calling programs like Skype, Yahoo or Google Talk as a home phone. Continue to go through your list and determine what expenses are excessive. This includes eating out regularly, picking up that coffee on the way to work, smoking cigarettes and excessive driving. I personally spent $15 on a coffee maker and $15 on coffee, creamer and coffee filter for one month to make coffee at home. That alone saved me $70 per month. Every time I stop at a gas station for coffee I want one of those warm breakfast sandwiches, making coffee at home eliminated that additional $90 per month. If you MUST smoke a pack of cigarettes a day, buy a carton. Consider this, the average pack of cigarettes in New York State (home of the highest taxes) is $10. That same pack of cigarettes is $57 for a carton of 10. Do the math…that is $43 in savings. Buying a carton saves you $129 per month, plus the $160 you are already saving by not stopping for a morning coffee. Now you have managed to save $289 by making a few life changes for one month.

Planning Retirement

What could you do with an extra $289 per month? It is rare for someone to honestly say that they are not overspending in some area of their life. That extra money can be contributed to the outstanding bills. On average, by following that simple system, a person can get out of debt, without working any additional hours at work or taking out any loans within 5 to 7 years. Now we fast forward to age 50 where you are working the same, living smarter, spending even smarter and no longer carrying the burden of debt over your head. The average American will have an estimated $500 or more per month at this point that was originally poured into excessive, unnecessary spending and is now able to be saved.

Because you have learned to live on a lesser income, saving this money should not be a challenge. Each paycheck put the necessary amount into an interest bearing savings account. While these rates are not typically much, they are enough to add a few extra dollars. If you are 45 now and start this debt management and savings plan you can estimate to be out of debt by age 50. If you are planning your retirement age at 65 and you save $500 per month until then, you will have saved $90,000 (plus accrued interest) by the time you retire. This is of course on top of the 401k that your employer sets up for you, Social Security benefits and any disability, pension plans, or veteran’s benefits you may receive upon retirement. Nearly any person can follow this type of savings plan and start at any point in their life to plan for retirement.

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