decided to retire fifteen years ago, I believed my wife and I
had it "made," even with my health problems. We had a good
nest-egg and the economy was perking along. I figured we could
both live past a hundred and still leave a fortune for our
kids, but reality has a way of squandering best-laid
I retired at the age of 61 in
1998. My cardiologist advised that with the continued stress
of my job I could soon be dead or at least severely disabled,
but if I would get my life-style under control, I could expect
to live past my actuarial age of 85. I resolved to beat the
medical issues and live well the next twenty-five
My wife and I had both stashed money into
self-directed 401K accounts. I had an IRA-SEP left over from a
previous business venture, owned a block of stock in the
company where I worked as VP of Engineering, and had a sizable
chunk of options in that company that should be worth a cool
six figure total. We were not worth a million, but we were not
too far away.
We sold our condominium in Northern
California and moved into an RV (recreational vehicle), a
35-foot fifth-wheel trailer pulled by a Dodge Ram pickup
truck. My financial analysis showed we could live in that
environment for about half the cash flow required to maintain
a fixed home while we traveled. Besides, we planned to spend
most of our time driving about to see the whole United States.
Fuel was cheaper back then.
Most of my plans worked
well, and we have enjoyed our roaming life-style. It has been
good for my health, and I now fully expect to reach 85 or even
Our financial base proved to be less solid
than I had assumed. My former company did not hold its great
value. My stock options never came above water, and the stock
I owned dropped in value faster than I could sell it off. We
combined our tax-deferred accounts into new IRAs and managed
them more carefully. However, a portion of our wealth was
entangled in the Dot.Com bubble, and we lost on those
investments. We also enjoyed a comfortable life-style that
used more savings than prudent.
today, my wife and I are both relatively healthy. We live on
Social Security payments plus cash generated from liquidating
our remaining retirement funds. Five years ago I moved most of
our liquid assets into a gold ETF and gold stocks, so we have
been lucky to see a nice appreciation in value and miss the
low rate of return and capital deflation that followed the
Like many in a situation similar to
ours, I have come to realize that living to the age of 85
could be a curse. We face the prospect of exhausting our
retirement funds in the near future, and when that happens a
substantial portion of our retirement cash flow will simply
disappear. Several of our contemporaries in the retirement
community where we live have either gone through this
transition or are about to do so. We like those others must
develop a plan and learn the habits of living on less.
My first step in developing a
plan has been to create a list of actions to take before or
upon the reduction of retirement income. Most are obvious,
especially when you stop and think about them, but it helps to
have them written down. Maybe my list can be of help to you.
-- Eliminate all debts and pay no interest to anyone.
It is okay to use credit cards, but pay them off each month.
If you forget to pay some credit card bill, let paying that
interest and late charge be a lesson.
-- Reduce or eliminate your more
frivolous and expensive habits such as eating out at
restaurants, gambling, and smoking tobacco. Give up drugs if
you use them. Purchase basic foods for less money and develop
a habit of preparing good meals at home. Do not purchase
"toys" simply because you want them; buy only what you really
-- Focus on controlling your diet. Reduce your
food intake, both frequency and portion size. My wife and I do
breakfast in the morning and "linner" in the mid-afternoon. We
limit extra snacks and drinks.
-- If you eat out,
split an entree with your spouse, skip desert, drink water.
End unhealthy and expensive habits like smoking and high-class
-- Exercise will keep you healthy longer and
improve your quality of life, and it provides an excuse if you
want to eat more. Of course, exercise can add to the curse of
-- Pick your retirement community with
care; chose one where neighbors have much in common and help
each other. We live in a 55+ years or older community for
RVers with very moderate maintenance costs.
-- Both might consider getting
jobs, but do not expect high paying jobs. Retired executives
and their secretaries are not in high demand once they are
fifteen years out of date.
-- Purchase everyday
clothes from thrift stores or second-hand shops. Some
specialty second-hand stores even offer inexpensive glamorous
-- Check out your health
insurance plan. Maybe you can go with a cheaper supplemental
health plan. If you live in the right area, consider going to
Mexico for medications and dental work.
-- Put a plan
in place for possibility you may require assisted-care. This
can cost hard-to-find money, but you could need this kind of
care at the worst possible time, as your life is ending.
-- Travel in an RV is still viable, but go for shorter
trips and stay in each place longer. That becomes more
important as the price of fuel rises.
-- Keep a
detailed accounting of what you are spending month by month.
You may find some periodic expenses are being charged to your
credit card without you even thinking about it. Determine if
you can live if you only have Social Security. Plan ahead.
The next suggestions are controversial to some, but I
find them to be practical.
-- If you still have a life
insurance policy, cash it out. Some people do like keeping a
small policy to pay for the expenses of dying, but your spirit
will not be there, so keep things simple.
-- If you
own a home, consider selling it now to get whatever money you
can from its value. If you still have a mortgage on it, this
can be especially important because you to eliminate those
monthly payment and the debt. In fact, I suggest not owning
any real property, so you pay no property tax or extra
insurance. For an RVer this allows you to chose which state
you want as your domicile.
-- Do not plan to leave an
inheritance for the kids; you may need the funds yourself. As
my Dad said, "I expect to spend my last cent the day before I
die." He almost succeeded. But do have a will to cover
momentos and whatever valuables that might be left when you
-- Stop providing financial help to the
children or grandchildren; they must learn to provide for
themselves, and you may need the funds more than they do. It
helps to sometimes warn them that you may have to ask them for
help in the future.
Finally, do not fool yourself by
thinking everything will be fine. Mrs. Murphy suggests
something could go wrong. Plan ahead, and strive to make your
life worth living, whatever resources you may have to live it.
Penny, July 1,