Thursday, February 24, 2011

Living Richly in Retirement: Do We Need As Much As They Say?

Recently Grace over at Graceful Retirement has a blog post on the exaggerated cost of retirement. Grace figures that many of us won’t need the eighty five percent of our salary the analysts tell us we need. While everyone’s needs are unique, overall, I tend to agree.

I’ve made no secret of my financial status, or the fact that because I was forcibly retired at fifty something (and spent all my savings in a few years) that I will need some stream of income to make the difference. But in my case I manage to travel, pay a mortgage on a house, and support a college student part time and still have monthly expenditures of much less than 85 percent of our salary when my husband was working. And by a certain amount of downsizing, I could live on much less comfortably.

Why is this true? I would say that there are three ways that make it possible for many retirees to live cheaper than previously.

First, most of us have most if not all the basics in terms of furnishings and clothing. While we may need to shop to “fill in”, we’re not spending money on household basics. While I occasionally need to replace items, at this point I have a household that functions well with things on hand. I have pots, pans, dishes, pillows, furnishings and clothing, just to name a few. The only “things” I see myself needing to buy in the future are clothes, and that’s only because I’m in the process of losing 100 pounds, other than that I would be set for life. This doesn’t mean that I will never buy a thing, just that those things aren’t needs and that I can pick and choose what and if to buy.

We don’t have work related or financial expenses. I’m not commuting to a job. While I enjoy looking good, and maintain myself well, I’m not spending money in the manner of my former dress for success life. I’m not saving (for college or retirement); paying income taxes for the most part or dry cleaning my clothing.

Most importantly in this equation (at least to me), is time. Because I have time, I can do for myself things which may have been hired out before. I cook for myself as much as possible rather than eat out (although I enjoy eating out, now it’s a special occasion rather than a last minute rush). Having a surfeit of time also means that I can investigate specials and discounts and take advantage of last minute and one time deals quickly. I can take a relaxing road trip to, say, New Orleans because my time is my own. When I fly, I can volunteer to wait until the next flight since I don’t have to be at work. I can travel off season, and on the weekdays. I can take advantage of free entertainment, Wednesday movie specials, you name it.

Obviously, lifestyles will differ. And eighty five percent of minimum wage is certainly less than eighty five percent of say, $60,000 per year. A person whose hobby is flying will need more than I do for quilting, travel and genealogy. And I suppose the argument could be made that we are two now instead of three (although with the exception of some travel expenses I don’t think our regular living expenses would increase by adding another person significantly). But overall, I think many folks can manage well on less than they thought or had hoped they would have, without significantly altering lifestyle choices.

Coming next………what costs increase in retirement??


  1. I totally agree. We are six months in and have not touched a "retirement money" penny. We can live on pension and my small side job. We are traveling and enjoying. 85% - heck we were supporting four (sometimes up to six) people, helping with moving and college, feeding track teams and keeping up professional wardrobes. I see people buying things now and have to stop myself from saying...and you need that why? They are still in the accumulation phase. I am in the ditching phase.
    We are saving right now though. Our son will be getting married soon and we need the "honeymoon" money---and the costs of getting us there and finding rooms. We are putting away pension money so nothing goes on a card for more than 4weeks:>)

  2. The 85% figure for retirement income is bogus and scares way too many people. The same experts who claim such a high figure are the same ones who tell us the stock market and housing are safe investments.

    My wife and I lived on 70% of our income while I was working. The other 30% went into savings.

    Now, we live on 75% of that 70%. You are absolutely correct; most of what we need we have and most of what we don't have we don't need.


  3. I like the new look of your blog. Easier to read.

    I'm living in semi retirement on 40% of what I used to live on when the kids were at home. That's 60% LESS!

    I've got everything I need. Now I just have to enjoy it and upkeep it. (but I'm working on even reducing the latter)


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