America’s 60-Year-Olds Are Staring at Financial Peril

[PigsDad]

Keeping up with the Jones's is still very much alive and well here in the US at least. It's tempting to do so for sure, since many around us are always making large home improvements every few years - most all of which is debt financed, but we've largely been able to resist doing so during the course of our adult life. Only now that we have paid off our home mortgage are we making some major improvements later in life without using a ton of debt financing.

Very similar experience. We live in an area that was built out in the mid-2000's, so most homes are coming up on 20 years old now. As background, this neighborhood built out fast during the building boom of that time, and most buyers were young families at the time due to neighborhood amenities (pool, parks, etc.) and very close proximity to good schools (walking distance to elementary, middle and high schools). It is a very homogeneous neighborhood. The only major home improvement we have done (we built our home) was to finish out the full basement. It was a big project (~2000 sq. ft.), but we were our own general contractor, and I did what I could myself to keep costs down (electrical, painting), and we cash flowed the expense -- no borrowing.

In the meantime, I can't believe how many of our neighbors and friends in the area have completely remodeled a good portion of their homes, starting when they were only about 10 years old. I'm talking gutting and re-doing kitchens, bathrooms, and other major remodels. They all seem to be wanting to keep up with the latest "trends" so their houses look just like newly-build houses. Some have even gone through two major remodeling cycles (yes, re-doing the same rooms (kitchens, bathrooms)) twice in their ~20 year old homes! To me, that is just crazy, but I'm more of the outlier than the norm around here. Poor us, we still have mostly original appliances in our kitchen -- have only replaced a couple when they failed.

After 20 years and a paid off house, we are looking at cash flowing some modest remodels (updating surfaces in kitchen and baths, etc.). But we're not chasing the latest trends, as they wouldn't go with the rest of the house. The funny thing is that many of my neighbors who are about the same age (mid-50's now) are slaving away at their jobs, still paying mortgages (which I'm sure they refinanced many times to pay for all those remodels, new cars every 2-3 years, etc.), while we are enjoying retirement, traveling extensively with no worries about money. Even bought myself a Porsche as a retirement gift. Life is good.

Bringing this back to the original thread topic, it may be a bit callous, but I don't have much sympathy for those who find themselves in dire straits when approaching retirement age because they lived beyond their means throughout their lives and never properly planned for retirement. Sorry, but not sorry.

Kurt

 

[joestein]

Keeping up with the Jones's is still very much alive and well here in the US at least. It's tempting to do so for sure, since many around us are always making large home improvements every few years - most all of which is debt financed, but we've largely been able to resist doing so during the course of our adult life. Only now that we have paid off our home mortgage are we making some major improvements later in life without using a ton of debt financing.

I think that social media has made keeping up the Jones way worse than it use to be. I think people see all sorts of stuff on social media and have FOMO. I dont care what people think about what I have or do.

Also... I am very debt adverse. Since we started automatic savings (which we increase every year after getting raises) after our first home purchase, we have not used debt to purchase anything - other than a car about 13 years ago - and that was at 0.9% financing. We didn't always make the kind of money we earn today, but we got serious about saving up front to pay for large purchases early on.

 

[easyrider]

A question for you (and others): do you manage the rentals yourself, do you hire a rental manager, or combination? Did it change when you retired? What is your long-term plan?

We manage our own properties. We do our own repairs and maintenance. Currently, it doesn't take up too much time. We do use a CPA often, attorney rarely and contractors rarely so nothing changed after I retired except the amount of cash flow from my company.

We plan on keeping the rentals and our family will inherit them. At that time these properties can be sold with a new cost basis. If we do sell anything it would be on a private contract to a family member with us collecting principle and interest. It really isn't that much work at this time. Our plans could change.

It wasn't always this easy. It is interesting thinking back to when we were struggling to pay the mortgages on some of these properties, the high interest rates back then, the different renters, the landscapes, the work involved and the neighborhood changes.

Bill

 

[HitchHiker71]

I'm a big believer in multiple streams of income for retirement as well. For us, it is farm land rental / oil royalties, retirement savings and SS (when we start taking that - we are less than 60 now).

I have always liked the idea of residential rentals, but knew I would not care for the time requirement needed (maintenance, inspections, move out/move in refreshes/remodels, finding good renters, etc.). That would probably be ok in my working years (younger, doing less travel), but I knew I would not want to keep that up in my retirement years -- I want to be footloose and care free! I am very happy with what we are doing now, as there is very little management of the farm land rentals (we've had maybe two renter changes in 20 years), and the oil royalties is completely hands-off.

A question for you (and others): do you manage the rentals yourself, do you hire a rental manager, or combination? Did it change when you retired? What is your long-term plan?

Kurt

We use a combination approach for our rentals at present. I've got a long time property manager that, historically, has always handled my tenant acquisitions, leasing contracts, and property turnover services. Her company handles the property inspections for exiting and entering tenants, handles the security deposit/damages documentation, makes recommendations to me on required turnover work, and optional property improvement work, etc., but I don't use her full-on property management services at present, I handle the incoming maintenance requests. At the end of the 1st year of my son's lease two years ago, I started using Zillow's rental property online portal, so I took over the lease contract management portion myself at that point, and that same service allows me to advertise my property on Zillow for rent, and it offers a tenant acquisition services that manage the tenant application and vetting process, so I may go that route and take over the tenant acquisition piece of the puzzle, however I'm still likely to utilize my property manager for the turnover services as she is very skilled at that whole process, has a good sense of where to make improvements based upon local market demand, etc., whereas I don't really have good skills in this area in comparison.

If my son ultimately does exit our townhome rental property, I'm going to start increasing the rent in 5-7% increments for the next three years at least. I'm still young enough, turning 53 this year, to handle the occasional maintenance issue at both properties. My plan as we get older is to have my property manager eventually handle the properties full time, which if we move away from this area, will be a requirement by design since I won't be local to the properties any longer. I have a goal to acquire a multi-unit property by age 55, that should provide 30-50k in annual net profits reliably - on top of the two properties we currently own - whether in the local area where we live today - or wherever we land for our retirement living if we end up moving sooner rather than later.

 

[HitchHiker71]

Very similar experience. We live in an area that was built out in the mid-2000's, so most homes are coming up on 20 years old now. As background, this neighborhood built out fast during the building boom of that time, and most buyers were young families at the time due to neighborhood amenities (pool, parks, etc.) and very close proximity to good schools (walking distance to elementary, middle and high schools). It is a very homogeneous neighborhood. The only major home improvement we have done (we built our home) was to finish out the full basement. It was a big project (~2000 sq. ft.), but we were our own general contractor, and I did what I could myself to keep costs down (electrical, painting), and we cash flowed the expense -- no borrowing.

In the meantime, I can't believe how many of our neighbors and friends in the area have completely remodeled a good portion of their homes, starting when they were only about 10 years old. I'm talking gutting and re-doing kitchens, bathrooms, and other major remodels. They all seem to be wanting to keep up with the latest "trends" so their houses look just like newly-build houses. Some have even gone through two major remodeling cycles (yes, re-doing the same rooms (kitchens, bathrooms)) twice in their ~20 year old homes! To me, that is just crazy, but I'm more of the outlier than the norm around here. Poor us, we still have mostly original appliances in our kitchen -- have only replaced a couple when they failed.

After 20 years and a paid off house, we are looking at cash flowing some modest remodels (updating surfaces in kitchen and baths, etc.). But we're not chasing the latest trends, as they wouldn't go with the rest of the house. The funny thing is that many of my neighbors who are about the same age (mid-50's now) are slaving away at their jobs, still paying mortgages (which I'm sure they refinanced many times to pay for all those remodels, new cars every 2-3 years, etc.), while we are enjoying retirement, traveling extensively with no worries about money. Even bought myself a Porsche as a retirement gift. Life is good.

Bringing this back to the original thread topic, it may be a bit callous, but I don't have much sympathy for those who find themselves in dire straits when approaching retirement age because they lived beyond their means throughout their lives and never properly planned for retirement. Sorry, but not sorry.

Kurt

When we lived in the townhome that is now a rental property - we finished 3/4 of the basement - did all of the work ourselves back then. That was quite a large DIY project. I miss my old basement as I built in a home theater, which our current house cannot accommodate with it's current design. Our kitchen in our current home is still largely original to 1985 when the home was built, as are our bathrooms, though the countertops were all updated to Corian - still have the original oak cabinets in the kitchen, and we've only replaced kitchen appliances as needed. The home is currently paid off as of a little over two years ago now. We've got a HELOC that we can tap at any point in time - I used a bit of HELOC monies for a large backyard transformation project that we're about 75% through now - we'll pay it off in about a year via cashflow. We had an aging inground pool that required updating, and we ended up replacing the old cement decking with hardscaping and adding upper hardscaped patios off both sides of our sunroom which looks down on the inground pool area. This project was a bit of a splurge for us, but we'll enjoy the heck out of it for however long we're still here, and we'll get back about 50% of the monies spent on resale eventually, and it simply looks stunning from a before/after perspective. I'll try to find a couple of before/after pics to post if I can.

BEFORE:

AFTER:

 

[joestein]

When we lived in the townhome that is now a rental property - we finished 3/4 of the basement - did all of the work ourselves back then. That was quite a large DIY project. I miss my old basement as I built in a home theater, which our current house cannot accommodate with it's current design. Our kitchen in our current home is still largely original to 1985 when the home was built, as are our bathrooms, though the countertops were all updated to Corian - still have the original oak cabinets in the kitchen, and we've only replaced kitchen appliances as needed. The home is currently paid off as of a little over two years ago now. We've got a HELOC that we can tap at any point in time - I used a bit of HELOC monies for a large backyard transformation project that we're about 75% through now - we'll pay it off in about a year via cashflow. We had an aging inground pool that required updating, and we ended up replacing the old cement decking with hardscaping and adding upper hardscaped patios off both sides of our sunroom which looks down on the inground pool area. This project was a bit of a splurge for us, but we'll enjoy the heck out of it for however long we're still here, and we'll get back about 50% of the monies spent on resale eventually, and it simply looks stunning from a before/after perspective. I'll try to find a couple of before/after pics to post if I can.

BEFORE:

View attachment 97487

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AFTER:

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Very nice.

What kind of stone is that around the pool? concrete pavers? or travertine?

 

[HitchHiker71]

Very nice.

What kind of stone is that around the pool? concrete pavers? or travertine?

The pool coping itself is real travertine - the deck hardscaping is Nicolock Stone Ridge XL pavers - the roundish stones that form the borders around the fire pit and the first part of the double border around the entire patio area are Nicolock raven Mosaic stones - with Nicolock raven Vienna bricks forming the outer border. The fencing is all being replaced (yours truly is doing that), with black aluminum no dig fencing - which matches up against the raven color of the outer borders. We looked briefly at using real travertine for the entirety of the pool deck patio, but it's a good bit more expensive than the pavers, and is actually less stain resistant over time, and given how many trees we have surrounding our back yard, we didn't think using the travertine for all decking would be a wise move over the long term. The upper patios are still being installed, so the pics I have are pretty raw for that area, if interested I can post more pics later this week once the upper patio work is complete.

 

[ScoopKona]

The pool coping itself is real travertine

Travertine is lovely. But if any acid gets on it (lemonade, for instance) it will etch. I'll never use it again. (Not that I have much choice now that I've moved.) Be really careful with cleaners.

 

[joestein]

The pool coping itself is real travertine - the deck hardscaping is Nicolock Stone Ridge XL pavers - the roundish stones that form the borders around the fire pit and the first part of the double border around the entire patio area are Nicolock raven Mosaic stones - with Nicolock raven Vienna bricks forming the outer border. The fencing is all being replaced (yours truly is doing that), with black aluminum no dig fencing - which matches up against the raven color of the outer borders. We looked briefly at using real travertine for the entirety of the pool deck patio, but it's a good bit more expensive than the pavers, and is actually less stain resistant over time, and given how many trees we have surrounding our back yard, we didn't think using the travertine for all decking would be a wise move over the long term. The upper patios are still being installed, so the pics I have are pretty raw for that area, if interested I can post more pics later this week once the upper patio work is complete.

As I was burning the soles of my feet this weekend on my concrete pool deck - I was wishing it was Travertine.

Popping my feet into my crocs that I left in the sun was not much better.

 

[HitchHiker71]

Travertine is lovely. But if any acid gets on it (lemonade, for instance) it will etch. I'll never use it again. (Not that I have much choice now that I've moved.) Be really careful with cleaners.

Yep - it's sealed partly for this reason - but the seal wears off over time and has to be reapplied. This is partly the reason why we went with manufactured pavers in a lighter color with Pavershield protection. All of the paver manufacturers offer pavers with their equivalent of the Pavershield option from Nicolock. It really helps over the long term to avoid staining and resist wear. The challenge in our area is that our water is naturally alkaline, and most of the rainstorms we get push my PH pool water levels up into the 8.2-8.4 range - which is too high for pool water chemistry. So I'm constantly applying acid in either liquid or powder form to bring PH down to the 7.4-7.6 range during pool season. It's somewhat of a catch22 since the PH down powders tend to be harder on the actual pool surface, where the liquid is better for the pool surface, but tends to evaporate faster and therefore must be applied more often, and the only way to add liquid muriatic acid to your pool is by mixing it in 1/4 gallon increments into a five gallon bucket and pouring it slowly into your pool - and no matter how careful you are - it will splash onto the coping even if in only minute amounts - but it adds up over time.

 

[HitchHiker71]

As I was burning the soles of my feet this weekend on my concrete pool deck - I was wishing it was Travertine.

Popping my feet into my crocs that I left in the sun was not much better.

Yeah - I haven't given the new hardscaping the bare foot test in full sun yet - but I'm sure it's not going to resist heat like real travertine. The pool coping pretty much stays relatively cool regardless of how hot it is outside.

 

[BJRSanDiego]

My job was eliminated at age 54.5, but did include a sizeable buyout. I drew unemployment for two years, sent out 250 resumes to get 3 interviews. One guy said I can't hire you, you'd have my job in six months. I liquidated all my investments and with the buyout was able to make it until 59.5 to start drawing a minimal amount out of my 401k. Worked a small job to keep me busy. Started SSI at 62.5. I'm now approaching 68. Have a younger spouse that will work 2 more years then retire at 65. Both our 401k's now exceed $2,000,000, thru dedicated saving during our working years. With conservative spending, the $1,000,000 number is more than enough, as long as the markets don't get too crazy with our ever changing political environment!

For me, I'm in a similar situation.

But what really irks me is the inflation that we experienced in the last couple of years has had the effect of reducing the value of my savings by roughly 20%. So, if I buy food, insurance, a car, a house, an evening out, etc., it now takes about 20% more $ to buy those things. But other than continuing to be frugal, there isn't much we can do.

 

[joestein]

For me, I'm in a similar situation.

But what really irks me is the inflation that we experienced in the last couple of years has had the effect of reducing the value of my savings by roughly 20%. So, if I buy food, insurance, a car, a house, an evening out, etc., it now takes about 20% more $ to buy those things. But other than continuing to be frugal, there isn't much we can do.

Frugality is a great trait to have. As long as you don't take it to the extremes. Sadly - it is becoming a lost trait. As Social Media and FOMO seems to be in control.

 

[BJRSanDiego]

Frugality is a great trait to have. As long as you don't take it to the extremes. Sadly - it is becoming a lost trait. As Social Media and FOMO seems to be in control.

Thanks for the comment.

@joestein , I always was a saver and lived below my means. My folks were blue collar workers and did the same. I guess that I learned that from them. Who learned it from their parents during the depression. I did almost all my own house maintenance, a bunch of framing and drywalling and a bunch of car repairs. I generally drove older cars. Bought them new and kept them running for a long time. At one time I had three vehicles whose average age was about 25 years old. Ha ha. I never overhauled an engine but I did my own brakes, a couple of head gaskets, a few clutches, suspension parts, U-joints, mufflers, wheel bearings, plugs, points (while cars still had them), oil changes, rotating tires, etc. Anything to save a buck or two that I was capable of doing.

Saving a substantial amount of a person's income and starting early is a good way to have a comfortable retirement.

But, now I'm at the point in life where I don't want to lay on a creeper under a vehicle and as a result, hire out most things like that. I'm moderating my previous intense frugality. Ha ha.

 

[HitchHiker71]

Thanks for the comment.

@joestein , I always was a saver and lived below my means. My folks were blue collar workers and did the same. I guess that I learned that from them. Who learned it from their parents during the depression. I did almost all my own house maintenance, a bunch of framing and drywalling and a bunch of car repairs. I generally drove older cars. Bought them new and kept them running for a long time. At one time I had three vehicles whose average age was about 25 years old. Ha ha. I never overhauled an engine but I did my own brakes, a couple of head gaskets, a few clutches, suspension parts, U-joints, mufflers, wheel bearings, plugs, points (while cars still had them), oil changes, rotating tires, etc. Anything to save a buck or two that I was capable of doing.

Saving a substantial amount of a person's income and starting early is a good way to have a comfortable retirement.

But, now I'm at the point in life where I don't want to lay on a creeper under a vehicle and as a result, hire out most things like that. I'm moderating my previous intense frugality. Ha ha.

We've done the same, made unpopular choices to save more money over the years, even with having three kids, and paying for their college tuitions outside of the base stafford student loans they all took (gotta have some skin in the game on some level IMHO). Others doing the same were also taking on more mortgage debt improving or over-improving their homes, and don't get me wrong their homes were beautifully improved, whereas we went without in comparison, only making improvements when actually needed, and paying college tuition bills with a mix of 529 plan savings and then out of cashflow when the 529 plans ran dry about 50% of the way through paying for three kids going through college, including our last child going through flight school in addition to college, which is quite expensive. We're finally done with all of the college tuition bills as of end of 2023, so now we're able to shift some of that cashflow into home improvements that we have put off for a long time now. Our home is paid off, my truck is paid off, and we have one very reasonable car payment on my wife's Tesla (2023) after having put 50% down when we bought it (including a trade-in using a paid off 2017 Honda Accord). We're taking on a bit of zero percent debt on a couple credit cards to fund our backyard transformation, and are paying it off over the next 12 months via cashflow. Once that is done, we'll start on improvements to our kitchen and baths, most of which I'll likely end up doing myself since I still can.

On your last point, I think frugality earlier in life leads to an ability to choose to be less frugal as we get up there in our years, which is how it should work, since doing some of the physical labor items gets a bit harder as we age. Like you, I don't particularly want to be on a creeper under a vehicle like when I was younger. I still do my own oil and filter changes on my truck, and have done some minor repairs DIY over the years as well, to save money. I also did most of our oil and filter changes on past vehicles, and tire rotations in our garage, DIY. I get the tire rotations done at Costco (bought the tires there when my OEMs wore out) these days since it's cheap, same with our Tesla when needed.

We are still maxxing out our retirement savings and have been for many years now. We both contribute the maximum of $30.5k to our 401k plans, plus we save a good chunk of our rental income every month into a savings account - I pay the one rental mortgage we still have out of our cashflow - and we try to absorb our periodic rental maintenance costs into our monthly cashflow whenever feasible. Just saving the rental income puts almost $50k into our savings annually, so it creates a nice buffer over time for unexpected expenses or if we choose to make rental improvements or home improvements. It all adds up over time without a doubt - making harder financial choices to go without earlier in life - pays off in spades later in life due to compound interest over the long term.

 

[joestein]

On your last point, I think frugality earlier in life leads to an ability to choose to be less frugal as we get up there in our years,

I haven't thought of that way, but it is such a true statement.

So many of our friends (and most of America) do it backwards. They spend way more than they should and then complain about being able to afford retirement.

We were out to dinner with some friends about 7 or 8 years ago (who we continue to see all the time). These friends spend non-stop on vacations and going out. And it is often over the top. One of them had just celebrated a 50th birthday for which they had a trip to Vegas, during which they rented Ferrari's and drove around the desert among other things. We didn't go, we had no one to watch our kids and I have no urge to overspend on the sort of things they do. So, after telling us about the trip, they said we never splurge on anything. I said we splurge on vacation. They said we just go on a couple of cruises a year - that is not splurging, that is just ordinary. Meanwhile at the same time they needed to sell their house and buy another in a different town because their son had some sort of problem with some other boys in his school and wanted to move him to a new school district. They couldn't afford to do so without asking his mom for financial help. I am guessing they were mortgaged to the hilt. I might not be a splurger, but I have never taken out a penny of equity on my home to spend.

These days we talk about doing more because we have the money and no debt other than a small mortgage, whereas they are talking about no longer being able to afford to do this or that because they want to be able to retire one day. Yet, they still spend more than us. Just coming back from their 2nd trip to Italy this year. But at least they say no to some things because it costs too much. They never said no before.

 

[CalGalTraveler]

Very similar experience. We live in an area that was built out in the mid-2000's, so most homes are coming up on 20 years old now. As background, this neighborhood built out fast during the building boom of that time, and most buyers were young families at the time due to neighborhood amenities (pool, parks, etc.) and very close proximity to good schools (walking distance to elementary, middle and high schools). It is a very homogeneous neighborhood. The only major home improvement we have done (we built our home) was to finish out the full basement. It was a big project (~2000 sq. ft.), but we were our own general contractor, and I did what I could myself to keep costs down (electrical, painting), and we cash flowed the expense -- no borrowing.

In the meantime, I can't believe how many of our neighbors and friends in the area have completely remodeled a good portion of their homes, starting when they were only about 10 years old. I'm talking gutting and re-doing kitchens, bathrooms, and other major remodels. They all seem to be wanting to keep up with the latest "trends" so their houses look just like newly-build houses. Some have even gone through two major remodeling cycles (yes, re-doing the same rooms (kitchens, bathrooms)) twice in their ~20 year old homes! To me, that is just crazy, but I'm more of the outlier than the norm around here. Poor us, we still have mostly original appliances in our kitchen -- have only replaced a couple when they failed.

After 20 years and a paid off house, we are looking at cash flowing some modest remodels (updating surfaces in kitchen and baths, etc.). But we're not chasing the latest trends, as they wouldn't go with the rest of the house. The funny thing is that many of my neighbors who are about the same age (mid-50's now) are slaving away at their jobs, still paying mortgages (which I'm sure they refinanced many times to pay for all those remodels, new cars every 2-3 years, etc.), while we are enjoying retirement, traveling extensively with no worries about money. Even bought myself a Porsche as a retirement gift. Life is good.

Bringing this back to the original thread topic, it may be a bit callous, but I don't have much sympathy for those who find themselves in dire straits when approaching retirement age because they lived beyond their means throughout their lives and never properly planned for retirement. Sorry, but not sorry.

Kurt

We are in a similar situation on our home. Some of our neighbors have spent a fortune renovating their homes. One just spent $600k on a gut addition and new backyard. We made some minor remodels e.g. replaced 20 yo carpet with lux vinyl, added a closet to an office so we now can call it a bedroom to increase comps. We never added a pool because we have a pool club down the block. Nice to look at but we wouldn't use it now that our kids are grown.

I also think about the earth and sustainability. If my granite or tile countertops are not the latest so what? I still like them and I am keeping them out of a landfill. Pools use a lot of water and water is very expensive and scarce here. (so saving some money at the same time.) I also look at those open cupboards and see them as a waste of space. Cheap composite board instead of wood.

We have always put away the maximum into our retirement. We can retire when we want. We drive our cars into the ground. We drive an eGolf for commute even though we can afford a lux car. I have seen many others in our generation that squandered their money.

 

[Tia]

Wide variety of incomes and spending habits is interesting here. I've always tried to save but I also stayed home with kids for 16 yrs. So our one income did not allow for much savings, we did not take regular vacations and drove old cars. We saved before the kids and that grew.

I do have one friend who is always saying she has no money then takes another vacation trip. I believe she makes very good money but her male friend of the last 6 years has not, he expected to inherit but did not. She always gave big $$$ gifts to her sons at Christmas and now they are both married with kids. In the past I've seen her current male friend pull out a credit card but then need to change it to pay their bill. It's hard to watch so have cut back on seeing them.

 

[HitchHiker71]

I haven't thought of that way, but it is such a true statement.

So many of our friends (and most of America) do it backwards. They spend way more than they should and then complain about being able to afford retirement.

Agree 100%. My father was horrible with money and my parents fought like cats and dogs during most of my upbringing over money issues. I went to school to learn about money as a result, finance/economics/securities analysis focus. I learned all about the power of compound interest over decades early in life. I recall one lesson, if a person saves $10k per year from age 25-35, and stops saving at age 35, and another person saves $10k for the rest of their life starting at age 35, assuming a 10% annual ROI, the second person will never catch up to the amount of savings that first person put aside in only ten years' time. That lesson has always stuck with me as a basic life lesson about money and the power of compound interest over time. I taught it to my kids, who are all saving into their retirement accounts starting in their early 20's right out of college. Granted, 10% ROI is a pretty generous assumption these days, but still, the lesson is what's most important. I did exactly this from age 25-35 - saving at least $10k per year (sometimes a bit less, sometimes a good bit more as my earning potential rose) that was from age 1996-2006- during our young children years - when we were living on a single income for the most part as my wife stayed home full time from 1997 when our second child was born, until our youngest entered school full time in 2004 timeframe, after which she started teaching again on a part time basis and eventually moving back into full time teaching in 2007 or so. So we really sacrificed during those years to save for our retirement, but now it's paying off for us some 25+ years later.

We were out to dinner with some friends about 7 or 8 years ago (who we continue to see all the time). These friends spend non-stop on vacations and going out. And it is often over the top. One of them had just celebrated a 50th birthday for which they had a trip to Vegas, during which they rented Ferrari's and drove around the desert among other things. We didn't go, we had no one to watch our kids and I have no urge to overspend on the sort of things they do. So, after telling us about the trip, they said we never splurge on anything. I said we splurge on vacation. They said we just go on a couple of cruises a year - that is not splurging, that is just ordinary. Meanwhile at the same time they needed to sell their house and buy another in a different town because their son had some sort of problem with some other boys in his school and wanted to move him to a new school district. They couldn't afford to do so without asking his mom for financial help. I am guessing they were mortgaged to the hilt. I might not be a splurger, but I have never taken out a penny of equity on my home to spend.

This paragraph reminds me of why we started timesharing in 2018. We wanted a better quality of life, but we didn't want to break the bank taking vacations constantly to major destinations that cost thousands of dollars every time. So we bought into Wyndham in 2018 and have been enjoying a much better quality of life, without breaking the bank every year on vacations. We have no interest in taking very expensive vacations to Vegas or Italy on a regular basis. Sure we do something like that as a special occasion, but honestly we are exceedingly happy with our timeshare vacations every year, such that we really don't have much desire to go on expensive excursions overseas constantly. To each his own I suppose, but we try to live within our means and when we do choose to take on a bit of debt, it's always with an accelerated pay-off plan and always for something that adds value over time.

These days we talk about doing more because we have the money and no debt other than a small mortgage, whereas they are talking about no longer being able to afford to do this or that because they want to be able to retire one day. Yet, they still spend more than us. Just coming back from their 2nd trip to Italy this year. But at least they say no to some things because it costs too much. They never said no before.

We could stop saving for our retirement today, and we'd be fine by age 65. Not one penny more needs to be saved. We save because we can, and we will continue to do so for as long as we can. I suppose I've always been "a penny saved is a penny earned" type at the end of the day.

 

[joestein]

Agree 100%. My father was horrible with money and my parents fought like cats and dogs during most of my upbringing over money issues. I went to school to learn about money as a result, finance/economics/securities analysis focus. I learned all about the power of compound interest over decades early in life.

I had a similar situation growing up. Even though my Dad started to earn a lot of money late in life (mid-60s), they always lived paycheck to paycheck. My mom shopped for clothes non-stop. They went out to eat at the same restaurant at least 4 times a week (not a cheap restaurant). My Dad went into debt to cover their spending. One time he mentioned that they couldn't afford to eat out so much and my Mom didn't speak to him for a week. I had my own money issues with him. Thankfully he worked for the SEC and would get a federal pension or they wouldn't have been able to retire. Never saved, never invested and never talked to me about saving. Always worried about how they appeared and what everyone else had.

I think my wife and I finally understood the concept of savings when we found ourselves married at 25 YO with nothing but $40K in CC debt. I mean we had some furniture and an old car that seemed to break down each month - but that is it. We decided to live bare bones and paid down that debt. Of course we were young professionals who were increasing our salaries each year at a decent pace - which helped. We paid off the debt and managed to scrap enough together for a 5% down payment on a house within 6 years. Then we were broke again - struggling to afford the house. Twins 2 years later only made money tighter.

While we realized then that savings had to continue so that we would have money for emergencies - we didn't think about the concept of compounded interest for savings. We didn't really contribute to our 401Ks. Not until the mid to late 30s did we think about contributing, and not the max either. I am not sure what triggered us starting to save in our 401K, but I am glad we started.

In retrospect, I wish we started to save even earlier and more, but maybe that is a pipe dream as we were trying to get out of debt and save for a house and the twins were expensive - especially daycare.

 

[DrQ]

Condo HOA fees jumped 60% in South Florida in past 5 years. Why higher costs are ahead

https://www.miamiherald.com/news/business/real-estate-news/article290320049.html

“Everyone agrees to the maintenance, ‘Oh, it’s normal.’ It’s not normal,” said the 71-year-old Kats. “Increase the reserve plus maintenance. It’s not normal.” This is the most he’s ever paid for his home of 24 years, the same place he bought with his wife to raise their son. He wants to stay, but said he has to make a big sacrifice to do so. “I cannot retire, because I have no money for food, car insurance, gas,” Kats said. “All of these payments — HOA, reserves, special assessments — is from my Social Security.”​

 

[SmithOp]

I always remember the TV commercial with the guy flying back in coach, then it showed his retired self sitting up in first class. It was a financial services company, maybe the one that made money the old fashioned way.

We were always frugal, stayed in the same home for 25 years, then downsized for retirement. My only regret was waiting until 2 years before we sold to upgrade the kitchen and master suite, would have liked more time enjoying the upgrade.

 

[Luvtoride]

I always remember the TV commercial with the guy flying back in coach, then it showed his retired self sitting up in first class.

Thus my quote that we live by in Retirement…”If we don’t fly First Class, our kids will.”

Thanks for the reminder!


Sent from my iPhone using Tapatalk

 

[Carolinian]

I ran across this chart comparing a $100 investement over the last year (2023) in treasury bonds (purple line), international stocks (green line), US stocks (red line) and gold (blue line). I wish they had included real eatate as well

 

[Ralph Sir Edward]

I ran across this chart comparing a $100 investement over the last year (2023) in treasury bonds (purple line), international stocks (green line), US stocks (red line) and gold (blue line). I wish they had included real eatate as well

It's hard to chart real estate, because it is so location dependent. Some types and places go up, some don't.