How much will you need to live on in retirement?
You'll often hear the big financial services companies offer this rule of thumb: Plan to replace 80 percent of your working income in retirement.
Instead, she developed a plan to live well on less than half of what she had been making. Executing that plan helped allow Wagner, who's been widowed since 2008, to retire at age 58.
Wagner's story underscores an important point about retirement planning: Income and assets are just one set of values in the
retirement security equation; on the other side sit lifestyle and spending. There's a growing focus on this side of the equation,
thanks to writers like
Farrell makes the case for a new frugality based on values that are good for pocketbooks and for the environment at the same time. The core of his argument is that a conservative approach to consumerism leads to green decision-making, such as downsizing your home, using energy-efficient appliances, recycling and using public transportation instead of cars. And from a pocketbook perspective, Farrell's frugality doesn't mean pinching pennies; instead, it means spending on quality -- buying the best you can afford but no more than you need.
Vernon has pointed out other creative ways to slash spending. "(Live) like you did in your college years. Take in a roommate or two. Maybe beg your kids to move back in with you in order to share expenses," he says. "Grow your own food. Entertain yourself and your friends by renting DVDs and sharing a
"My husband was killed in an accident in 2004. I decided to sell our house in
Here are the key areas where Wager cut spending:
Downsized real estate:
Wagner sold a 2,000-square-foot house in
"My homeowners' assessment in the condo is less than I used to pay monthly to have the lawn mowed! And my southwestern exposure provides passive solar heating all winter, when my furnace does not generally get a lot of use. Downsizing drastically in what I own has reduced stuff and clutter to just the right amount. This was the largest cutback in living costs."
Simplicity at home:
Wagner stopped worrying about having all the latest and greatest in her home. "I stopped wanting to have newer, upgraded appliances, devices, etc. In the
Simplicity in diet.
"I stopped eating out very often and also doing much shopping. Instead, I cook at home, which I absolutely love to do, and entertain friends here with excellent food and reasonable wines. Also, I use our great public library for books I want to read, as well as the place to donate books I no longer want."
"Now that I'm retired and living in a walk-able city with great public transportation I am putting half the miles on my car each year, which saves gas and wear-and-tear. And car insurance is cheaper now since I drive less."
Along with extending her retirement income, Wagner feels good about the new lifestyle values in her retirement equation.
"The general result is that now I can honor my ethical principles," she comments. "I use less, buy fewer new things, and tread more lightly on the planet in general. Ultimately, my life feels very luxurious because getting rid of the meaningless extra stuff has enabled me to choose what matters most to me and what I most enjoy from day to day."
Available at Amazon.com:
- 5 Retirement Myths
- Looking for Overseas Retirement
- Do You Live in a High-Debt City?
- 10 Historic Places to Retire
- Don't Get Caught in Sticky Web of Credit Card & Bank Fees
- The New Retirement Plan: Watch the Expense Side of the Equation
- Recession Prompts More Americans to Tap Retirement Security to Make Ends Meet
- Preventive Care & Electronic Medical Records Guidelines Set
- How to Tell if You Have a Good 401k Plan
- Insurance for Boomerang Kids
- Boomers Take On 'Necessities' May Not Be Grounded in Reality
- Avoid IRA Tax Pitfalls
- New Rules Slash Credit Card Fees
- More Consumer Protections on Bank Overdrafts May Be Coming
- Most Okay With Higher Social Security Taxes
- How to Retire Gradually
- Plan Ahead For a Comfortable & Potentially Rich Retirement
- To Understand Your 401K Plan Just Focus on the Fees
- Buying Coupons for Deep Discounts Carries Risk
- How New FTC Rules for Debt-Settlement Firms May Protect You
- 529 College Plans Not Completely Trouble-Free
- New Website Helps You Navigate Health Insurance
- Prepare For the Rising Cost of Long-Term Care
- How Much Life Insurance Do You Need?
- The Great College Scholarship Scramble
- The New High-Risk Health Insurance Pool: Common Questions
- Misunderstandings Rampant on Health Care Reform & Medicare
- How to Talk to Your Parents About the Estate Tax
- Should Young People See a Financial Planner?
- 10 Ways to Ruin Your Retirement
- Understanding the Psychology of Retirement Planning
- Five-Year Rule for Roth IRA Withdrawals: A Primer
- Hard Times Triggering Spike in Consumer Fraud
- New Sites Empower Students to Build Their Own Scholarships
- 10 Things You Didn't Know About Social Security
- Costly 'Add-On' Insurance More About Profits Than Benefits
- Teaching Your Child Money Habits for Life
- Retirement Living Decisions Don't Require Hand-Wringing
- Sears Brings Back the Christmas Club
- Will You Run Out of Money Before You Run Out of Years?
- Best and Worst Places to Build a Nest Egg
- 21 Ways to Make Extra Money in Retirement
- Do You Trust Financial Services Companies? Trust Index Says Not So Much
- Don't Be Intimidated by Medicare Labyrinth of Letters
- 2010: Good Year to Die For Your Heirs' Sake
- The Dangers of DIY Estate Planning
- The Economy's Lasting Impact on Your Retirement
- Unconventional Retirement Investing Strategies
- Another Retirement Challenge for Women: Income Gender Gap
- Launching Your Own Business After Age 50
- Key Questions to Ask Before You Hire a Financial Adviser
- The New Good Life: Living Better Than Ever in an Age of Less
- 15 Ways to Tell if You Are Ready to Retire
- How to Maximize Your Social Security Benefits
- How Working Longer Helps Build Retirement Security
- How to Find a Low-Tax Place to Retire
- Investing Your Social Security Check? Consider These Factors
- Alternatives to Traditional Retirement
- Change On the Way for Retiree Health Benefit Programs
- Two New Medigap Plans to Consider
- Sizing Up Your Retirement Nest Egg Needs
- Biggest Sources of Retirement Income
- Assembling a Sturdy Retirement Portfolio
- Withdrawing from Retirement Accounts Early without Penalty
- Social Security Inflation Adjustment Debate
- Biggest Sources of Retirement Income
- Don't Neglect Long-Term Care in Retirement Planning
- How the Health Care Bill Impacts Retirees
- Jobs With the Best Retirement Benefits
Personal Finance - The New Retirement Plan: Watch the Expense Side of the Equation
(c) 2010 Mark Miller