I Can’t Afford To Retire: Essential Tips On Filling The Gap

AdobeStock_192798999.jpeg

I was on Reddit r/PersonalFinance last week, I was just browsing when I came across this  quote:

“There’s no insurance, no loans for retirement.”

If you’re short on cash to retire, well then you’re just SOL.  Straight up, prepare to be homeless if you don’t have family to help you out or are unable to continue working through your 60s and 70s.  It’s a rude awakening for so many of our elderly population.  I see older homeless people all the time and I wonder, “Why???”

When I think of my own retirement, I think about living in Florida, poolside somewhere in some assisted living luxury community.  I don’t think about the reality of just trying to keep my food costs down so I can pay the taxes on my house and not end up homeless.

The truth is that so many American families are living hand to mouth, check to check, that they are forced to decide between eating and saving for the future.  Where is the extra disposable income they can put in their 401K or IRA?

Here are some things to consider when trying to build a retirement fund.

Social Security Will Not Be There:

There are still some people holding on to the idea that Social Security will be enough. STOP IT.  There is not enough social security.  It is a Ponzi scheme.  And to be honest, to be a real conspiracist, Social Security’s main role is no longer to provide financial support for the elderly and other people unable to provide for themselves.  I mean, maybe that was never the purpose.  Social Security and their designated numbers are a means to track you for tax collection purpose.

I work with many elderly people to get them apartments and when I see their social security statements, I can’t even consider that income for the purpose of qualifying them for the apartments.  It’s a pitiful amount.

The other day my client Jenn had 1.4M between annuities, 401K and other investments.  She was sharp, I could tell she had been working her whole life.  She was earning $819 dollars a month from Social Security!  Try living in NYC with $819 a month, you wouldn’t last a week!  This is someone who probably paid into Social Security $100K+ over her lifetime and now when its time to collect she’s getting $819 a month? Something isn’t adding up…

Start Early.

Everyone tells you this but OMG this is the best and greatest financial advice anyone can give you.  At 18, nobody’s really thinking about their retirement.  They’re thinking about the future, “what career path will I choose, what will I major in at school?” But even putting $100 a month towards your retirement is a HUGE jump start.

I played around with a retirement calculator and here’s what I found:

When I was 18, I was working a shit job selling pretzels at Auntie Annes, working minimum wage.  I was lucky if I earned as little as 600-700 a month in pocket money.  If I started putting $100 a month into an IRA or 401K from the age of 18- 67,  I would have roughly $500K saved by the time I’m ready to retire.  And that’s ASSUMING, I don’t increase my contributions as my earnings increase over the years.  Not enough to retire.  But not a bad figure to start with.

Now let’s consider someone a little older:

Life got me good and I had all these expenses, children, a mortgage, an expensive marriage, an even more expensive divorce.  I wasn’t able to get it together until I’m 40 to start saving for retirement.  I would have to contribute $500 a month at the age of 40-67 in order to have roughly $500K saved by the time I’m ready to retire.  But that’s still not enough to retire with and at 40, time is no longer on my side.  I’ll need to double down and make monthly payments of $1100.  That’s the only way I can save enough so I have at least 1M available when I want to retire at 67.  I still don’t think that’s enough to retire on but you can work with that.

Moral of the story: If you’re able to start young (most people can) and save a modicum amount, you are still in a much better position than someone who is older and needs to play catch up.  Compound interest is a bitch like that.

Get a Side Hustle:

Money doesn’t grow on trees.  If you don’t have the money now to set aside for retirement, when will you?

“If you always do what you did, you’ll always get what you got.”

In this type of scenario, somethings gotta give.  You’ll need an additional source of income.  A lot of people reading this now are going to start shaking their heads thinking, “I don’t have money and I don’t have time.”

Well, make time because old age don’t feel so good when you’re broke.  The time to make a move is when you’re young and capable.  It might be hard, it might be challenging but side money is the kind of money you can put ASIDE for retirement.

Here are some ideas on low cost ways to make money:

  • Uber- Drive and get paid.  You already have your own car so thats already taken care of.  Keep track to mileage, maintenance and gas costs.  Hustle for tips.
  • Work a 2nd job.  Any job.  Work at the McDonalds across the street.  Let your kids hang in the seating area quietly if there’s no one to watch them.  Don’t worry if you get fired, it’s only a side job, so speak up for what you need and hustle until it works  for you.
  • Blog and Youtube- this is actually a very long process to build income off of.  I would only recommend this if you have the time and the means to do this.

Mortgage vs Retirement vs Kids College

The truth that none of the other retirement gurus really are able to touch on is that  99% of us will only be able to makes so much money in our life time.  Most of us are on a fixed income of salary and paying off fixed expenses.

A lot of us are still paying off student loans, we have mortgages, car payments, insurance costs and the list goes on and on.  This is just a reality for most Americans.  There might be some left over to save, but is it enough?

Probably not.

In this case it’s important to prioritize the most important needs first.

Mortgage- when deciding to buy a house, there are so many factors to consider. I’m not going to go into buying vs renting, that’s for another post, but here are my top tips on how to make sure the mortgage burden does not overtake the other financial responsibilities.

  • Live in the cheapest, smallest apartment you can comfortably manage. Of course you wanted the nicer and bigger house in the better neighborhood but you need to really consider your reasons for wanting that home.  Is it ego?  Is it an expectation you had for yourself?  Is it maintaining the lifestyle you had as a child?  It’s time to reconsider and evaluate your expectations. Times have changed, money don’t flow like it used to.
  • Only consider a more expensive neighborhood if it means a better school district for your children.  And even then, consider a cheaper neighborhood with the option of a good private school.  Compare the costs.
  • Small is good.  You can dress up small.  Trust me, I’m a real estate agent in Manhattan.  There’s no such thing as too small.  I’ve actually seen some charming 400sqft studios!  But more importantly, small is cheap.  You don’t need the extra bathroom, it’s just more space to clean.

Retirement: As I discussed earlier in my post, retirement is the main priority.  Make it so. Focus on maintaining a retirement fund that will at least allow you to maintain the same quality of life you’re used to.

Kids College: As someone who had to spend 12+ years paying student loans, I don’t think I want my children burdened with that same issue.  At the same time, I don’t think it would be fair for me to burden my children with my living costs if I don’t have adequate retirement funds.  Paying for the kids colleges is the least important financial concern you should have. It’s nice if you can afford it but the kids can take out student loans or go to community colleges, there’s no loan for retirement.

————————————————

To cut to the chase retirement is something we need to think about NOW.  Pensions and social security are out the window. They can be considered supplements but not a fall back.  Make efforts to educate yourself on what you need to do to meet your financial goals.

Wishing you the best of luck!

Check out my other posts:

Flashpass to Retirement: FiRE and LeanFiRe Strategies

Why I Budget and How to Budget: Personal Finance In A Nutshell

Motivational Book Club: The Total Money Makeover by Dave Ramsey

 

How To Get To Early Retirement: FiRE and LeanFiRe Strategies

Get to early retirement Reddit LeanFiRe
Get to early retirement Reddit LeanFiRe

LIKE THIS POST? SUBSCRIBE TO MY MAILING LIST FOR UPDATES!

Keep This Blog AD-FREE, Become A Patron

“If only I didn’t have to go back to work.” I think this WAYY to often, especially on my Sundays before I have to clock back in for my work week. I often daydream about how to get to early retirement as I surf through reddit leanFiRe strategies.

My friends say, “Alex, I think it’s time for a new job. You’re burnt out. There’s another company that can be the right fit for you.”

But I think it’s much more than that. I think I just don’t like work. I don’t like feeling obligated to go and be somewhere at a certain time.  I don’t like commuting. I don’t like being on teams I didn’t choose for myself. I don’t like not being able to spend my time as I choose. And at the bottom of all those things I don’t like is the basis for a job. In college, I didn’t like not having money either so I went into the world and made a career for myself.

Sometimes I have to remind myself to grow up.  Like, having a job is just part of life. A majority of our society NEEDS to work in order to put food on the table or clothes on their back. But then I started to wonder about an alternative. What if, I didn’t have to work? What would it take to live like that? Is it possible for me?

That’s when I came across FiRe or Financial Independence and Retire Early. I’ve been following Personal Finance on Reddit for a while and stumbled across the subreddit. On reddit I also found LeanFiRe strategies. It’s not just people retiring early at 50 instead of 63. It’s people retiring earlier and younger at 35 and 40! I honestly can’t look through Reddit LeanFiRe without feeling a tinge of jealousy. I really want to be those people.  I want to know how to retire early. I also want to know how much I need to retire early.

The concept of FiRe goes beyond Personal Finance-which discusses getting out of debt, buying a house and paying for college, as well as other difficult financial choices that neither high school nor college ever prepared us for. FiRe is just specifically about retiring early and what it will take to get there and the kind of sacrifices you need to be willing to make.

Looking through the subreddit, I can’t help but feel…what’s the word for it? Ah yes, INADEQUATE. I feel inadequate because here are these 19 year old kids that are planning their hustle for the next 10-15 years to be totally independent off a job! At 19, I was buying Frappachino this and coach shoes that.  I was twiddling away my hard earned money because, at the time, I didn’t consider my minimum wage slave money to be……real money.  It was just money I was earning before I had a career; before I made a real salary.  Talk about regret over missed opportunity. Regardless, now that I’m aware this is possible maybe there’s time for me to turn things around.  I’m making 3-4X what I was making on minimum wage, so hopefully I didn’t miss too much of an opportunity.

Personal Finance and FiRe pretty much go hand in hand but FiRe is a long term game. Once you pay all of your debts and start really gaining wealth, FiRe commits to continuing to live a modest lifestyle until you reach your FiRe goal date. For people that are successful at FiRe, this means living at your parents home until you’re 30 or putting a $10K pay increase towards a portfolio option instead of taking a much needed vacation. It means couponing; living on a cash basis and giving up the convenience of the credit card.  It sounds so simple, “Just don’t spend money? I hate spending money, I only spend money when I need to!” But DO you? Do you REALLY??  Credit cards/subscriptions, Venmo are super convenient. For credit cards, any points you earn on the card are already spent on the overspending you did due to the “convenience.”  And we all like convenience. Retiring early means less convenience and less money spent on pleasures that we usually indulge in as a reward for hard work.

It takes an incredible amount of self control to retire early. Year after year, you’ll need to make sacrifices in your own indulgence, spending habits and choices. Vacation to Miami with friends? Nix that. Those really nice designer shoes? Nope. Weekly happy hour bar tabs with coworkers?  Um, no. Forget about the new car lease and living without roommates.  What you’re sacrificing in quality of life now, you’re planning to get back later when you’re able to retire 15-20 years early.

You’ll also need to be somewhat knowledgeable on tax laws. Should I invest in a 401K or IRA or both? What should I do after I max on my contributions? I’m about to surpass my income tax bracket, what can I do to minimize this years taxes? These are decisions you can’t just leave to the wind when planning an early retirement. Because year after year the wrong decision will cost you.

Once you start saving all this additional money, how do you optimize it to allow an early retirement? Well, that’s entirely up to you. Some people invest in individual stocks, mutual funds or rental properties, or a mix of diversified options. The choice is yours depending on the skill set you have. Some people like to park their money and not think about it again until they need it, some like to be more involved in the trades, others like the idea of home equity. Some enjoy high risk, others low risk. To make FiRe truly effective you’ll need to take some risk to optimize your hard earned money.

Now let’s talk Reddit LeanFiRe. What is that? How could FiRe get any leaner, you’re already cutting out the pleasures of life! Oh it can get leaner.  Way leaner. Some of you may have read this article rolling your eyes, like “I don’t make that kind of money, Alex. I’m not overspending and there’s nowhere to cut.” Lean FiRe is early retirement for those who make an average or below average earnings. I swear, the Lean FiRe Reddit is no joke! They will make feel shame for your current lack of retirement plans. These are people making 40K -70k a year (or less!), and killing it with their retirement goals.

How do they do it? Incredible sacrifice and resourcefulness. These are people who really hate their job and are like, “Oh hell no! I can’t be doing this forever!”

I read about this one guy that ditched his car even though it was a 40 minute bike ride each way. Luckily he lived in a place where the weather was nice nearly all year round. He was saving money off of the weather! Other people are gardening and living off the literal fruits of their labor and land, thus cutting down food costs.

Then there are the people who are extreme in their housing solutions. One guy was homeless for a year! You heard that, homeless! Like, living in his car and showering at the gym while going to work every day and pretending he had a home. The moral of that story is that he really saved a lot at the time since housing is probably our largest expense. A lot of the Reddit LeanFiRe people take to frugality and minimalistic living. There was one couple that bought a Tiny Home and lived in a trailer park. Their Tiny Home cost 15k and they bought it outright, then parked their home for a couple hundred dollars a month at a trailer park. They really didn’t need to earn so much money after that.

Theres also strategy to increase their income and put that money aside for retirement purposes only. These people were resourceful with their talents and skills.  They started blogging, and you-tubing to earn some extra cash. It’s a slow income stream but it’s cheap and easy to get into. Some opened etsy shops, making homemade soaps, balms, greeting cards, ornaments and whatnot. Some just did the good old fashioned way of getting a second job and driving Uber on the side.

Those Reddit subreddits really put me to shame. When I hear real life stories like that, I wonder WHY CAN’T I BE LIKE THAT?

Because I don’t want it enough. I’m not willing to sacrifice my daily pleasures or I do, and then I can’t stick with it long term. But practice makes perfect, and I’ll keep at it until I’m finally willing to make the sacrifice long term. In the meantime, I’m going to keep reading the inspirational stories FiRe and LeanFiRe have to share with me. Because with a little inspiration, who knows, maybe I’ll be able to retire early too.

Feel free to like, share and follow this post if you found it interesting.

If you like “How To Get To Early Retirement: FiRE and Reddit LeanFiRe Strategies” Check out my other similar posts:

Review: “The Total Money Makeover” by Dave Ramsey
 

I Can’t Afford To Retire: Essential Tips On Filling The Gap

Marriage, Finances And Money: The Benefits And Pitfalls

How to Budget: Personal Finance Basics


LIKE THIS POST? SUBSCRIBE TO MY MAILING LIST FOR UPDATES!
Keep This Blog AD-FREE, Become A Patron

How To Budget And Personal Finance Basics

I used to sit with my dad as he combed through the finances, his brows furrowed in concentration. Little did I know that on those mornings I was subconsciously learning how to budget and personal finance basics. They say we learn everything from our parents.

He’d sit on a stool at our open kitchen and just devour the information over a cup of joe. I was curious. Why did he devote all this time to his spreadsheet? Was this a work project?

He went over how he calculated all the household expenses and income and balance it all. He kept tabs on check balances and even his car depreciation.

It kind of went over my head. I was busy just trying to figure out what I wanted for breakfast or how to laze around for the day. I honestly spent a majority of my 20s not knowing much about my finances or how much I made. I always worked during college and had a plethora of jobs after. I could afford the things and experiences I wanted, but I didn’t really know how much was being spent; how much was wasted or saved. To this day I wonder how much I could have been saving during this time.

The first time I had to budget I just made a list of the income and combed through every single expenditure that I made. Then at the end, I subtracted the expenses from the income. Every coffee I bought, every lunch I ate out, and every trip to Target I took was recorded. It hurt. I literally cringed when I realized how much was being wasted.

I mean, did I really spend $50 on coffee this month??

And what was that subscription on my card? They’ve been charging me for over a year!

I realized I could be saving thousands a year and making more out of my money if I accounted for it all and held myself responsible on how it was spent. However, I realized this wayyy too late in the game; the money was already spent. I felt really bad after realizing how much was wasted. Part of me didn’t want to keep going and budgeting, that’s how bad I felt.

Now It’s been 4 years of budgeting. 3 years. I keep it all on a spreadsheet. Google Spreadsheets :). I can track how much my income has increased in those 3 years. I can track how much my overall spending has been by category. I can brainstorm on ways to cut costs or increase income. I can make long term goals like paying off all my debt and estimate the last payment date.

Omg I love spreadsheets!

And I don’t spend hours upon hours on it. I pretty much spend a half hour tracking my spending twice a month. Once in the middle and again at the end. Literally ONE HOUR a month. I recommend setting mid month goals and then reassessing for the latter part of the month if your unclear or are unable to meet your goals.

Below is a simple sample of what you can do.

Income

Take home Salary $2500

Expenses

Rent $-700

Food $-250

Transportation $-200

Internet $-50

Electricity $-50

Phone $-70

Misc (shopping/medical related costs/eating out) $-600

Credit card payments $-100

Student loans $-150

Total expenditures= $-2170

Savings $330

Tip: Put your savings towards credit card debts and student loans to make the payoff date faster. Or save part of it for an unexpected expense.

I wouldn’t say budgeting will fix any money problems overnight but it will definitely give you a sense of control over your finances, plan for a rainy day and create a long term plan with goals. But personal finance and gaining control of your spending/earning is the first step.

Websites like Mint and Money Trackin can help you keep it all if you’re not crazy about the spreadsheet idea.

Update: I have saved sooo much money this way, literally thousands of dollars. It’s a very simple strategy but it 100% works. It’s all about motivation, perseverance and keep up with the tracking.

Feel free to comment below on your goals or feedback on your budget!

Check out my other post:

The Biggest Financial Decision You’ll Ever Make

The Inside Scoop on Swagbucks. Is It Legit?

How To Save Tons Of Money On Groceries 6 Easy Tips!

Why Corporate America Is A Necessary Evil


LIKE THIS POST? SUBSCRIBE TO MY MAILING LIST FOR UPDATES!
Keep This Blog AD-FREE, Become A Patron

Surviving Corporate America is hard. The corporate environment sucks the life out of you

Corporate America is a necessary EVIL. I’ve never made more money than when I worked in a corporate environment.  So I need this job to make money but why am I at this job?  Can your career give you inspiration to live the best life?

Propaganda: information, especially of a biased or misleading nature, used to promote or publicize a particular political cause or point of view.

I’ve been searching for the past few years for a job that can give me meaning.  A purpose.

I envision being part of a group that is warm, friendly and a team environment.   Surrounded by positive people, positive thinking and inspiration. We’ll go out for drinks once in a while.  I’ll also get an hour lunch.  The workload will be totally manageable with time to spare.  I’ll be able to take initiatives over everyone else and be recognized as a performer.  I’ll be well-liked and have good benefits/salary.

I would say 97% of the population does not have a job like the above.

Most corporate environments do not offer that kind of environment.

Why?

Bottom line.

Corporations generally are in the business of making money. Making money means squeezing all your resources for what they are worth, including human resources.  As soon as money is involved, individuals tend to get crafty, shysty and overall unfair to others in order to get a leg up.  And then big bosses and companies will turn a blind eye, because it’s not effecting bottom line or rocking the boat will effect a bottom line. Financial decisions don’t take into account emotions, personal development, or personal growth.  It’s only about company and business gains.

Still, many companies in corporate America have mantras, company values, and goals.  Many of them include excellence, honesty, integrity, teamwork.  Of course you can try to buy into this.  I did. And every time I was disappointment when I was overlooked for a promotion or someone who totally lacked these values received a better review.  The reality is that these values are a stick and carrot method of propaganda, meant to keep employees motivated and drive revenue.

In reality, company culture/values is nothing more than clever branding.  A way to keep people motivated as well as sugar coat any negative culture the company has.

So how do you stay motivated? Especially once you realize that the company values is a load of BULL*****.  How do you keep the inspirational thoughts and inspirational quotes alive in your head?

Well, take a moment to think about your own values and financial goals.   “If I work here X amount of years, what can I accomplish?” “What’s my next step, If I find this company isn’t working for me anymore? Can I go and do my own thing?”  “Does the work itself give me happiness?”  “Will this help me get to retirement/financial stability?”

Having a reason in your mind will help you get through the hardest of days and the darkest of nights.  Patience and time will always be on your side, so keep at it.  But don’t believe the propaganda in corporate America because truth always has a way of coming to light. And motivation built on false propaganda is like a house made of sticks.

Check Out My Other Posts

Dealing with Toxic Work Culture

Work Smarter, Not Harder

How To Get Ahead At Work Without Brown Nosing

The Biggest Financial Decision You’ll Ever Make

img_4400
LIKE THIS POST? SUBSCRIBE TO MY MAILING LIST FOR UPDATES!
Keep This Blog AD-FREE, Become A Patron

Find Out What The Biggest Financial Decision You’ll Ever Make Is And Why Getting A High Paying Job Won’t Cut It

From about age 16 we hear this question over and over. “What do you want to do with your life?” “What degree are you getting?” It’s difficult, what you choose at 18 or 20 decides a lot about your lifestyle. It’s a huge financial decision to make. Maybe you’ll aim to be a traveling DJ with partying lifestyle. It’s flashy and fun but involves all your weekends and most evenings. You’re your own boss but have to hustle hard in the beginning to bring in clients. Or maybe you decide you want to be an attorney, you’ll need 3 years of law school and a lot of debt. You graduate in the middle of your class and struggle to get a job that will cover your living expenses and your debt. Or maybe you decide to go into banking, it’s a high paying job and great money at first but now is going automated or overseas.

You get the picture, your career needs to last 30-40 years! That’s a huge commitment! You need to think longevity. Can your industry last 40+ years? Is your career mostly age/appearance related? What is the growth opportunity?  How will you grow and find jobs in your industry?  Are you going to enjoy your work enough to do this for decades? These plus many more questions have to be carefully thought out for your future!

The timeline goes something like this:

20s: finish college, flail around trying to figure out what works then find a niche. Start at the bottom.
30s:grind out security in your field/job. Maybe do other adult things like marriage/family.
40s: Some progression/growth opportunity may have occurred at this point, but still trucking along.
50s: start really preparing for retirement and sending kids off to college.

The point is that for most of us, delaying choosing a career or even frequently changing careers past your 20s is detrimental for financial/personal stability.

You can’t spend your 20s and 30s working in odd n end jobs and expect the same return as someone who settled in a career at 25.

This post is not to offend those living alternative lifestyles that appreciate freedom over security. I just want to encourage and inspire everyone to be very conscious in their choices and think about your career as a major financial decision. It’s easy to start off in a job with you thought will be temporary but end up with 6 years in the hole with little advancement. It’s easy to keep changing directions, searching for a high paying job, and then end up really nowhere but at scratch again.  There’s a lot of inspiration in life, you just need to find your niche.

What you choose as your career matters. You can switch your major a few times or change a few jobs but eventually….you choose a career or your career chooses you.  If you want to find a job, your dream job, then you have to start now.

I went to my 10 year high school reunion and it just a bunch of adults standing around saying where did the time go? As a follow up, I’m going to go over goal setting and achieving in another post. Hopefully more of us will be able to tackle our goals and be able to be proud of how our time was spent.  This post is about nothing else but love, good thoughts, positive thinking and motivation to inspire..

Check Out My Other Posts

I Can’t Afford To Retire: Essential Tips On Filling The Gap

Flashpass to Retirement: FiRE and LeanFiRe Strategies

Review: “The Total Money Makeover” by Dave Ramsey