Your retirement

may be just around the corner, or retirement may be along way off, but from this day forward it’s up to you – and no one else – to save enough money to live on happily after retirement.

As far as Social Security, the nay-sayers and dooms-dayers say it won’t be there – but, just in case it is, (and I can’t imagine any politician who values their political life not working to keep it functioning) then that will be an added bonus to make your retirement comfortable!

Ways to do it:

If your employer offers retirement savings plans

– take full advantage of them. Contributions are taken out of your pay before taxes – and the savings will earn interest, and you won’t be taxed until you – usually in retirement – take the distributions. And, believe me, in retirement, most of us have a lower income – ergo – lower tax ratio. Win-win – you saved, let it gain interest, and the taxes will be less when you receive the money. If your employer offers a matching plan – take full advantage of it! Contribute as much as is allowed. Same scenario as above paragraph, plus you double your savings!

Once you have a plan established, don’t borrow on it! You’ll find it’s almost impossible to replace the money you already saved – and you’ll be paying back interest too boot!  Keep your eyes open for penalties! If you take distributions before 59 ½, those withdrawals may have penalties!

So, try to wait until at least age 62 to retire – you’ll find health insurance can be a huge expense on your own – try to hang in there until 65. Medicare is wonderful! 

 Now, assuming you’re a bit nearer that golden year of retirement, and have already put the above plans into action, here are a few thoughts to ruminate:  Your retirement does not involve only yourself. Your spouse or partner is going to take that ride with you.

Sit downand have many discussions about your hopes, your expectations, your desires you have for the future years. Dick and I have always found a lot of easy conversation while driving and relaxing – find a comfortable setting for you, and share.

Figure out just where your income is going to come from and how much you can plan on receiving – here, a financial advisor may come in handy. Most banks have that service offered for free, but we’ve found you can get a lot of information by just getting out pencil and paper and doing some figuring!

By now you should have a budget figured out – see where you can cut down, where you will be able to save. Use coupons and take full advantage of sales. You’ll probably find that during retirement, you’ll have more time than money, so make a game of coupons… and don’t forget to always ask for the good old “senior discount”! Dick and I would feel really bad if we were to pay full price for almost anything anymore! 

Just for the fun of it – go though last year’s financial records. Find out just what you actually spent for the year, and see where you can cut down. Even if you have unlimited funds, you should feel very proud not to just waste money.

And what a wonderful lesson to pass on to your children!

Now, you should be in full retirement mode – but – woops – what happens a little later…when the car needs a major repair, the roof starts to leak or the plumbing gives up the ghost and needs a major rework – or maybe your washer just stops in the middle of the spin cycle, never to spin again? All those savings you’ve been able to put away will be a life saver.

Expenses don’t stop just because of retirement!

Saving for retirement article by Barbie

San Agustin

Here is another email from my good friend, Lorna, who is living the good life in San Agustin, Mexico.

It’s inspiring, insightful, and full of many hopes and dreams realized.  It could be your dream, too.

Hi Barbie!

I just wanted to say thanks for the info you provide, it’s so helpful and practical!

I am not much for writing e-mails, but I wanted to tell you that I have been living in San Agustin for the last two years and I love it!

The weather is perfect, the rent is amazingly low for my 3 bed, 2 bath casita ($2200 pesos (Barbie – approxmately $220 American dollars) a month, includes water and a great gardener)!

Banana plantation

I pay aprox. $175 every 2 months for electricity, gas is aprox and I pay 300 pesos every 3 months, for phone, cable & internet. Combined is only 450 peso a month!

I live on a small pension plus I teach English at a local San Agustin school. I am the only “gringa” living in my coto, and my neighbors have taken me in with warm hospitality.

Guadalajara is a wonderful, diverse, cosmopolitan city with so much to see and do! San Agustin is only a 2 1/2 hour drive (on the Colima road) to the beaches in Manzanillo… 3 1/2 to the beaches in Nayarit… 4  hour s to Puerto Vallarta.

What more could I ask for? Life is good!

Thanks again for your newsletter, keep up the good work!

Cheers, Lorna

San Agustin article by Barbie

We are all faced with many decisions when

contemplating

retirement!

Logically, and sensibly, your choices for your retirement years should be based primarily on your finances.

Do you want to do a lot of traveling? If you choose that lifestyle, then why would you start looking for a large home, with a lot of upkeep demanded?

You may decide to just stay put – perhaps near family – in the home you’ve been in for years.   Or, have the family already scattered, so you are free to move where you can really make the most of your retirement years, and just enjoy their visits ?

Some of our friends, retirees also, have felt they must have extra bedrooms and baths for the relatives who come to visit (usually once a year). Just contemplate… how much would it cost you to simply rent a motel room for them, compared to the upkeep and expense of having that extra space you’re going to pay for ??

Think of the original cost of the extra room, the extra taxes, the heating, the cooling, and just the upkeep!

You can pay for a lot of overnighters in a motel for what you will pay for that extra room that isn’t even used 95% of the time. And heading to a private motel room is usually a wonderful break – for everyone – to part at the end of the day for some private time and recuperation time!

Do you plan to do a lot of entertaining – either family or friends? Again – why get a humongous home you’ll be constantly cleaning and keeping up, when friends are just as comfortable in a more intimate setting.

Remember, you and your friends are getting older each year, and the wild parties of your 30’s and 40’s possibly are not the evenings you will be experiencing in retirement.

Keep your taxes low, keep your utility costs low, and enjoy a higher, more leisurely lifestyle like you can do if you move to Mexico.  We’ve fallen into the nicest concept…It’s called “pupu parties” … I guess it’s Hawaiian for hors d’oeuvres party. You just call a bunch of friends – they each bring a nice snack, your supply the drinks, and it’s a wonderful, easy, inexpensive and casual get together. Not too much work for anyone, and a great reason to get together with friends!

If you have a lot of equity in your home, (I always stress that hopefully by the time you are contemplating retirement, your home is paid for) and you should decide to sell it, buy smaller, have less expenses, put the profit into an investment portfolio and enjoy the interest.

Then, you may decide to just stay put – in the home you’ve been in for years.  Just realize that air conditioners eventually will need replaced and the plumbing – possibly, etc.  And if you have a lot of equity in your home, if you sell it, buy smaller, and put the profit in the bank – voila!  Interest to help with expenses, or to grow for a long desired item!

Don’t overlook renting – an apartment or a condo – everything is secure when you take those trips, and you won’t have to own a lawnmower or snowblower anymore!

Your retirement maybe be just around the corner,

or it may be along way off, but from this day forward it’s up to you – and no one else – to save enough money to live on happily after retirement.

As far as Social Security benefits, the nay-sayers and dooms-dayers say it won’t be there for long – but, if is, then it will be an added bonus!  But, long before your retirement date, you should contact your Social Security office, and get all the information you can – they can tell you when you can start drawing on Social Security, and how much you can expect to receive – invaluable information for planning your life!

Suggestions: If your employer offers retirement savings plans – take advantage of them – they are taken out of your pay before taxes – and the savings will earn interest, and you won’t be taxed until you – usually in retirement – take the distributions.  And, believe me, in retirement, most of us have a lower income – ergo – lower tax ratio.  Win-win – you saved, let it gain interest, and the taxes will be less.

If your employer offers a matching play – take full advantage of it!  Contribute as much as is allowed.  Same scenario as above paragraph, plus you double your savings!

Once you have a retirement plan established, don’t borrow on it!  You’ll find it’s almost impossible to replace the money you already saved – and you’ll be paying back interest too boot! And you may be taxed twice – when it was earned and again when you withdraw it at retirement.  Keep your eyes open for Penalties!  If you take distributions before the qualified age, those withdrawals may have penalties!  So, try to wait until at least you qualify for Social Security and their insurance to retire – you’ll find health insurance can be a huge expense on your own.

Retirement article by Barbie.