For several years now I have been talking about the idea of retirement evolving into something much different that what most people think of by necessity of circumstance. In this decade we have had two events that have cause some people to be permanently underemployed, stocks have not had a normal decade, collectively we have not saved enough, assumptions about home values have been mucked up something awful, some folks have financial burdens of adult children or aged parents (or both) and there are probably other items we could include on this list.
I enjoy exploring the topic and writing about it because I view it as a problem to be solved and think there is much to learn in how people are going about trying to solve the problem.
The catalyst for this post is an article from Yahoo Finance titled 10 Reasons You Shouldn’t Retire. Some of the ten reasons were the usual suspects like staying healthier, not needing to tap you retirement funds so soon, continuing to get benefits like health insurance and having more meaning to your life (this is tie in to staying healthier).
One point I have made many times before is that when the time comes you have what you have that is your reality. It does not matter how much you made when you worked or how much you had in your portfolio ten years ago, you have what you have. A lot of the content here is aimed at giving yourself the best shot of maximizing how much you have mostly by avoiding some stupid actions and side stepping certain things but if you lived a $200,000 lifestyle when you worked but only have $1.5 million in your portfolio then something is going to have to give (taking into account the 4% rule $1.5 million would generate $60,000 per year) and social security won’t make up the difference.
So how we retire needs to evolve. An easy way part of the solution can be reducing your overhead. Easy in that it is easy to say but not so easy to actually do. This other article from Yahoo Finance talks about cutting expenses by downsizing you car, cable TV package, cell phone package, dropping the health club (to go jogging instead), refinance your mortgage and eat out less.
These are fairly typical suggestions. I think the best way to cut expenses are more long term oriented which is having no mortgage, as opposed to refinancing, and have no car payments. Obviously a car needs to be bought every so often but not every five years. Toyotas often can last for 200,000 miles. One thing I disagree with vehemently is the one about the health club but that’s just me. Not working out is the easiest thing in the world to do but exercising obviously provides a chance for keeping health costs down which are obviously much more than $50 or $100 spent at the gym.
In addition to keeping the overhead low some sort of job would seem to be another obvious way to relieve some of the burden from your portfolio. Some sort of job not any old job. I’ve made the point before about trying to figure out how to monetize your hobby. Some people can do this but I think it takes a lot of planning, time and figuring and not everyone will be able to do it. Obviously if you love your career then staying with it longer would seem like an ideal solution.
I’ve written about a few off the wall solutions as well. I have mentioned my 78 year old neighbor who does backhoe work countless times (how many hours at $60 per would you need to supplement the income from your portfolio?).
Another one that I just found out about via Joellyn’s animal rescue work is that a rescue in Phoenix has a house that they use as a 1-5 day layover for dogs and cats (no more than four of each) in between going from animal control to their foster (or permanent) home. They need someone to live there and care for the animals. They can live there for free and can work outside the home. This would be a bad fit for the vast majority of folks but will be ideal for someone. Someone is going to get a free place to live and get to help animals.
Depending on the type of town you live in there is seasonal work at sporting events. Prescott has minor league sports so the seasons are short in terms of number of home games. The possibilities are only limited by a person’s ingenuity. This is a problem to be solved with innovative thought. Often the comments on this sort of post include very inside the box thinking. Successful solutions will require creativity.