Thanks to everyone who has stopped by to read and/or comment on my return to blogging. I am hoping to move over to some of the fun things about retirement, but comments and emails have let me know folks have some questions and concerns about how we did it. Here are some of my thoughts on what got us to the point we could retire.
First and foremost it started with saving. I wish it had been as easy as putting money in a savings account that paid 5% interest. If you are olden enough you may remember those days when a standard passbook paid that rate. You may have read about a janitor who saved big sums of money doing just that. Unfortunately, those days are gone, I suspect forever. Our history of saving started when I went to work for a company that had a 401k when they started in 1978. RangerSir and I started saving then and have not looked back. No matter who we worked for, we have always participated in the 401k, always making sure to saved enough to get the match even if it meant we had to cut out other things.
You can not have it all, and many things really aren’t necessary. We lived in apartments in fringy neighborhoods. I never had a car until after we were married for nearly five years. I took the bus to work, grocery shopping and everywhere else I needed to go because it was much cheaper. Everyone has guilty pleasures. I was willing to cut out things or work a second job to be able to afford my wants that were not necessary. I will freely admit I have a love affair with good shoes. I have been known to visit the Hostess stale bread shop regularly to save for that magical pair of hunter green leather shoes I still remember 30+ years later. When Ranger Sir and I built our home we wanted new furniture because it was about 2.5 times the size of our prior home. We did not need a second table for the formal dining room, our old one was in the kitchen and perfectly functional, but we wanted it and so much more. I went to work for a store that carried furniture and he went to work for a home store that had appliances and hardware. We both had good white-collar jobs at the time, but we did not want to save for a year or more to get what we wanted and so second jobs made it possible much sooner.
My parents never owned a home, and RangerSir’s parents did not have their own home for many years. We felt that our parents not owning their home was one of the things that made retirement for them near impossible. We were convinced that we would not only own a home, but it would be paid for before retirement. I will say the downpayment was one of the hardest things we ever had to come up with. It was one of two times we dipped into our 401k (paid the penalty and the taxes.) Our first home was not as nice as our prior rental, but it was that foot in the door. We constantly were putting extra money on our mortgage all the time. On our first home, every Friday we would round down our checking account and take the excess to the savings & loan who held our mortgage and put it on the principle. Sometimes it is the little things that make a difference. In the end, we met our goal of having our home paid for before we retired.
Another thing I think made a difference for us was every promotion and raise was split with us and our 401K. Even if it meant we lost ground. What I mean here is when you get a raise of $50, and your health insurance premium went an additional $50, we still split the raise $25 more to the 401k and $25 to us. I can say there were many times we felt like we were losing ground, and on paper we were, but knew we wanted to retire someday and so we realigned our spending. Sometimes it was very hard. I feel it is getting harder and harder to be middle class.
Lastly, the thing we did that I think was the hardest was we took control of our 401k as we changed jobs. We never took the money we saved and spent it. We generally rolled it from the 401k to an IRA. I honestly would have been happy if it was as simple as that and letting it compound interest like the old fashing savings account but it wasn’t. I am sure we could have done different things and made more with our IRA/401k money. We have had five, if my memory serves me correct, financial advisors. We have asked each of them how they make money on us point-blank. If we didn’t like the answer they weren’t for us. We have told them how we feel about risk in real terms i.e. if my IRA lost $2000 how would we feel. Not some imaginary “how risk receptive are you?” question. There is nothing real about that; it is all relative to each, the person asking the question and the person answering the question. As we approached retirement our financial planner said we should take our money from our house when we sell it, put it into the market where we would make more money than the new house mortgage payment each month. My risk tolerance said, “are you smoking crack?” We remember market corrections before and we are due in our minds for another one. One of our retirement goals we have always shared is to be mortgage-free. To have an advisor we had been working with for nearly ten years suggest that said he wasn’t listening to us and we sought out someone else. We have found that as we have gotten closer to retirement our risk tolerance has gotten less and less. Managing your money is hard. I sure think that the idea of having no 401k and instead some business with all their smart accounting types setting up and managing a defined retirement plan would have been much nicer, easier and less stressful. But those days are gone. Businesses models have changed and it isn’t going to happen for most of us. Our retirement is going to be at least partially sponsored by how we save and what we do with our savings.
What worked for us will not work for others, because each of us is different in our wishes and what we are willing to sacrifice to get there. Our goal was to save like crazy, pay off our home and retire at age 55. We were willing to work more than one job at times, forego vacations, and purchases to make it work for us. We missed that age goal, but the rest of it we managed to do and it all made retirement possible. We plan to travel some and have budgeted for it. My wish and statement to others thinking about retirement is to make a goal and then move toward it every day. Know you can not have it all ever. There is a cost to everything and sometimes you have delay what you want because the time is not right. There is a give and take to everything in life. Make the decisions that will allow you to control as much as possible of that given and take and when and how you do it.
Wishing you much success.