I’m reading a book called The Clash of Generations, by Scott Burns and Laurence Kotlikoff. It’s about how broken our country is, and the politics that has put us in this position. I like this book because it supports my view, that Congress is a bunch of crooks looking out for themselves and supporters. It’s not just another book complaining about everything (well it does), but they have solutions to the problems, that make sense.
I want to offer a few excerpts of the book that I find useful to retirement minded folks. This section talks about our choices at retirement, and how we can stretch our fixed incomes. You’ll have to read the book to get the whole story, but here are the options in a nut shell.
1. Work longer
2. Own your home vs. renting, vs. RVing!
4. Move out of the country
5. Costs of our drugs
6. Senior Spending
These are all personal choices we have the power to plan for.
Since I like RVing, I want to share what they have to say about that. So, you retire, and say your house is paid off and is worth about $250k. You’ve been working and earning about $65k a year and your wife has worked some during her career, bringing your total Social Security benefits to about $25.5k a year. Oh, and you have about $250k in a 401k plan. Sounds like you’re sitting pretty good, doesn’t it?
Now your house is a little older and is going to need a new roof in a few years, appliances will need to be replaced/updated, and what about that kitchen remodel you’ve always talked about? Using some financial software, Scott Burns came up with housing expenses should average out to be about $15k a year. The same software says you should expect to live on $15k a year for everything else.
What are your options?
1. Stay in the house and mow the lawn for the rest of your life, and pay to keep up the house, having about $15k to spend.
2. Or, you could sell-and rent a house; that would increase your available spending limit to almost $29k a year.
3. Or, you could sell, buy a used, nice sized RV and tour this beautiful country of ours! After expenses, Scott figures you’ll have $39k a year spending power. WOW!
4. If you can’t do that, then you could still save a bundle by moving to another part of the country where cost of living is lower and save between 20 and 50 percent from what you are paying now. See Where to Retire magazine for broad overviews of the economic benefits and liabilities of moving to a different region.
What have you got to loose? Do you really have deep roots where you are now? The kids have all grown and scattered like seeds in the wind, why can’t you? This book explores these topics more in depth, and how to fix Social Security, Bank problems (we are no way out of the woods yet), investing, income tax reforms, and health insurance for all. This is from a pure economic point of view, completely non-partisan (other than Washington has really screwed things up).
I encourage you to read the book, and let your Congressman know how you feel. Vote Purple! (you'll have to read the book to know what that means)