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Thoughts From a 65-Year-Old

January 6, 2018

This week’s blog post is the second installment of my new series on Financial Fixation, the “Thoughts from” series. “Thoughts from” features an interview with a unique individual who will detail their thoughts on personal finance, the retirement industry, and their own journey towards retirement. We will feature people of all different ages to get different perspectives on the various topics and to see what matters most to people at different ages. Starting with a current retiree, we will work our way to the younger generations, finishing with someone who is relatively new to the workforce and retirement planning altogether. The first post in the series can be found here, and features a 73-year-old current retiree.

 

 

Earlier this week I had the pleasure of interviewing Betty, a 65-year-old who will soon be retiring from her day-job. She has strategically planned her retirement date to maximize her social security earnings and fuel a more comfortable retirement. I wanted to better understand the challenges that people her age experienced during their working lives and also get an understanding of her concerns going forward. I also wanted to understand how she went about saving and investing for retirement and her future goals.

Background  

 

Betty grew up in a suburb of Detroit, Michigan. She’s 65 years old and has always held secretarial/administrative-related jobs, mostly in law-related fields. She has a bachelor of arts in business administration which she obtained over the course of several years while working full-time.

 

Interview

 

Financial Fixation: How long have you been at your current job?

 

Betty: 12 years

 

FF: Over your career have you had any side gigs to help raise extra funds? These could be anything from being paid to pet sit to working a weekend job. 

 

Betty: I’ve done pet-sitting, worked at a home improvement store, inspected vacation rentals, worked at a law office and been a poll worker at elections.

 

FF: Of those side jobs that you’ve had, which one was your favorite and why? 

 

Betty: It’s hard to pick a favorite, they were all diverse and short-term, which made all of them fun. The longest was part-time for 15 months at the home improvement store, where I worked in the garden center. I loved being outside year-round working around beautiful plants and flowers. A bonus was that nearly everyone I came in contact with in the garden center was happy. They were buying things to add instant appeal to their homes.

 

FF: It’s always nice working with upbeat people. I think I remember you saying you paid off a large amount of debt in a short amount time, can you describe the amount of debt and also how you were able to pay it off so quickly? 

 

Betty: Following a personal family tragedy, I had about $267,000 in debt. Because I was working only part-time for 8 years before the debt became mine alone, I knew I would probably have to relocate and go back to work full-time for several years in order to make more money and pay my debt down. I then sold everything I didn’t need – including recreational vehicles, a sports car and small truck which, in turn, lowered my insurance costs. I rented out my primary residence, packed up my clothes, tv and dog, and drove several hundred miles away where I had a full-time job waiting.

 

Before I left, I found a very modest rental online to move into. I put every extra dollar I had toward the principal of my debts so as to lower the interest that was taking so much of the monthly payments. I didn’t travel, go to restaurants, or spend money on entertainment or even newspapers and magazines. Yet I didn’t feel deprived. The satisfaction I got from knowing how much progress I was making far exceeded any feelings I might have had of missing out on anything. I knew that the peace of mind of having no debt trumped everything else. My debt was fully paid off in 4 years and 10 months.

 

FF: That’s very impressive. It sounds like you have no regrets in putting all of your extra money towards the debt payoff?

 

Betty: No, not a single moment of regret.

 

FF: After you sold most of your possessions it sounds like you became quite the minimalist. Once you did this did you feel as if a weight was lifted off your shoulders?

 

Betty: I did. I still found plenty of things to worry about – that’s a personality flaw that I have. But there’s no question that I felt the load was lighter. It also helped that I had a long-term renter in my home who I trusted and was able to fix things that went awry.

 

FF: Once the debt was paid off, what did you do with any extra money that you had left over each month?

 

Betty: I increased contributions from my employer’s pre-tax investment plan to position myself better for retirement, and am building a cash reserve as a rainy-day fund. I’m sure part of that will have to go toward a new vehicle in the next year or two, as my current one is 13 years old.

 

FF: That sounds like a great strategy. When are you hoping to retire? 

 

Betty: December 31, 2018, barring any unforeseen catastrophes.

 

FF: That’ll be the best one-day work week ever. When you do call it quits, do you think it will be difficult to all of a sudden stop working?

 

Betty: That would be an emphatic, NO. I want to enjoy life while I still have good health.

 

FF: Once you retire, what hobbies or activities do you see yourself taking part in? 

 

Betty: I will become a full-time volunteer for a local animal rescue I have worked with, and in doing so, feel I can help make a difference.  I also want to resume piano lessons, and maybe take art lessons (although I’ve been told I have no talent). And finally, I want to take a few vacations and spend more time with my family.

 

FF: It sounds like your retired life will be just as busy as your working life. That will be good. What sources of income do you expect to have once you retire from your day job? 

 

Betty: I’ll have a modest retirement and annuity from my current job, a pension from a prior job, will be drawing from an IRA and, although I will be eligible for full social security benefits, am hoping to hold off until I can maximize them at age 70, by adding 8 percent to my benefit every year from ages 66 to 70.

 

FF: That’s smart to have multiple income streams in your retirement, just in the extremely rare instance where something happens to one. You mentioned that you’re renting out your primary residence right now, do you plan on continuing to rent it out during retirement? 

 

Betty: Coincidentally, my renter had to relocate and just moved out. I’m planning on keeping the house unrented until I retire and then moving back into it until I decide what my next best move will be.

 

FF: A quick sidebar – one thing you may want to consider is renting it out short-term, such as through Airbnb or VRBO to provide some extra income before you move back.

What have you found to be the most difficult part of preparing for retirement?  

 

Betty: Hoping I have thought about everything because there’s so much to consider.

 

FF: Do you have any worries financially about your retirement? If so, what are you most worried about financially?  

 

Betty: I’m told I should be worried most about not having a long-term health care plan in place, which I haven’t done. We can all hope for the best and try to plan, but really there’s no way to know the turns that life will take. So that’s on my mind, but the lack of a crystal ball keeps me from making decisions on that topic. Right now, anyway.

If I find I can’t make ends meet, I might have to downsize and/or relocate. I definitely will live within, or even beneath, my means.

 

FF: Yes, no matter how much one accumulates they can never be sure of everything. To know that you will have an annuity, a separate pension, and social security for the rest of your life should be comforting. Although rare, some people today are trying to reach financial independence at a very young age, such as 35 or 40. (not extremely high earners either, some earn the median wage or slightly above). Do you think this is achievable?   

 

Betty: Absolutely. Technology has brought those opportunities to the forefront.

 

FF: Do you think millennials have it easier or tougher to prepare for retirement than when you were going through your career? 

 

Betty: I think in general they have it easier. There are now so many versatile professional opportunities.  Millennials were brought up in technology, so they have much more earning power. I think they’ll take on more, and experience more, and technology has made that possible, but it’s up to them individually.   When I was young, there weren’t a lot of choices. Often people chose a company to work for and stayed there for their entire career. Then many were forced out of their jobs because of age or down-sizing and benefits were also reduced or eliminated.

 

It’s totally different for the younger generation. They’re not banking on social security to carry them through their retirement years and many have a totally different mindset. Often, it’s refreshing.

 

FF: What advice would you give to someone today who is looking to better their retirement situation? 

 

Betty: For those still working until later in life, like me, I would stress exercise and staying as fit as possible. My dog gives me motivation to take many walks, and I exercise regularly. I want to have strength to give back to others. I also want to be able to hike and climb some hills and see new things first-hand.

 

FF: That’s great advice. Health should be a top priority for people of all ages. Thank you so much for taking the time to let me interview you and best of luck as you approach retirement.

After speaking with Betty I realized that no matter how hard a person plans for something that things can change unexpectedly and you have to stay agile with your planning. It also became evident that through hard work one can achieve whatever they prioritize. For

Betty, this meant decluttering her life in an attempt to quickly pay down her debt and secure a comfortable retirement.

 

Check back often as the next installment of the series will see us interview someone in their 50’s who may still be several years away from retirement.

 

 

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