AARP Bulletin gives advise on getting ready for retirement.

[catmother]

i was reading the bulletin yesterday and i was shocked that even some people who have good incomes have car loans and credit card debt.

i would expect that from those making lower incomes. i imagine people are forced to use credit cards for necessary expenses, but those with higher incomes i can't understand. there was one particular couple bringing in $100,000. their assets were $341,000 which is probably their house, but they had $184,000 debt which was mortgage, car loans and credit card debt. their credit card debt was $9,800. i can't even imagine the interest on that.

my husband and i fall into a higher income. we haven't had car loans in about 15 years. we keep our cars for a long time, most times buying them a year old and when we need or want a new one, we pay cash. as far as credit cards, we use them for everything, but whatever the bill is we pay it. we get 1% cash back on the cards so we're actually making money on them.

i've listened to the financial experts over the years who say if you want to live well in retirement you have to live under your means while your working. we have followed this. don't get me wrong. we're not deprived of anything. we have found ways to enjoy life and pay less. an example, we never go out to dinner. we go for a late lunch when the prices are half of what they are dinner time. we have direct TV with HBO and Show and we rent DVDs from netflix. i have not been inside a movie theater since 1974.

my husband tells me about people he works with who he knows are making less than him. they get new cars every few years, go on fancy vacations, buy computers for their nieces and nephews.

is it our american society that tries to force us into debt? each month when i get my credit card statements they attach checks which i tear up. i constantly get literature and phone calls asking if i want to refinance my house.

as far as the house, i pay a few hundred dollars extra every month toward the principal. so we only owe $94,000 on an $800,000 house.

when we were young, we were constantly in debt, car loans, billpayer loans, credit card debt. We had beautiful clothes, and jewelry and went out all the time. we had no savings. well we had about $2,000 in the bank. we even went out to eat scrambled eggs. my father in law used to lecture us and we would laugh and say "oh dad, you're just old fashioned". i hope that wherever he is now, that he's proud of us, because we finally got the message.

[BOSSHOG]

1. I'm happy that at an early age

I became addicted to saving money and I consider money management a hobby which I look forward to doing about once a week. May I suggest you invest in a shredder instead of tearing up your credit card checks? Everything that has any information about us goes in the shredder. Identity thieves are very ruthless in their search for information. DO you belong to AARP? I'm 52, have been approached by them but have yet to make a commitment to such an organization, although I am a member of the Fleet Reserve Association which looks out for the interests of Retired Navy Personnel. I did alot of financial counseling in the Navy and I'd always have a guy within six months of retirement saying "well, I guess its about time I started saving money." Sad, indeed. An extra hundred bucks on the mortgage principal is at least three hundred bucks in the bank.

[catmother]

4. you're right about the shredder. i've been a member of AARP

since i was 50. my mom enrolled me as a birthday gift. i'm 64 now. it only costs about $12 a year and i find it very helpful.

about 8 months ago they had a story about a man's whose wife passed away. she took care of all the finances. he had no idea what to do. a representative of AARP helped him out. i'm in a similar situation. i handle all the money. my husband makes it. it gets direct deposited into the bank and i take care of everything even making adjustments to his 401k contributions. we put in the max which is $20,000 if your over 50, but sometimes he gets a bonus and i have to readajust the percentage because if we reach the max to soon, we lose his employer's contribution.

i was in the bank one day making a deposit. the bank teller said "are you having a good day". i said "as long as i'm making a deposit and not a withdrawal it's a good day".

it's funny though. i bought a new car last year. my car was 8 years old, still in great condition, but i wanted a mazda miata. i said to my husband "i want the car but i don't want to take the money out of the bank". after i bought the car i remembered that we had some excess money in his life insurance cash balance fund. so i moved the money out of that and back into the savings.

[eleny]

2. You can't put a price on peace of mind

Hubby and I did what you're doing now. Sounds like you're going to have a comfortable retirement or maybe you're enjoying that now. We are. After not having a first mortgage in years, we did get a short term one for some remodeling 3 years ago. But we can pay it off now if we want to. No car payments. First movie I went to see in years was Da Vinci Code. That was with a girlfriend for the early show. We rarely go out to eat since cooking is so enjoyable. And it helps to be able to do a lot of household repairs.

I have to admit that I'd love to have someone clean my house. But our home is small enough that it's easy to talk myself out of it. Maybe down the road as I age I'll have that treat. And we do have a camper. But tightening our belt when we were younger is paying off now. We can enjoy camping during the week when the mountains are virtually empty except for some vacationers. And with gas prices I think most will be locals like us.

It's not always easy to say no to things you want, especially with kids. But there's a huge payoff when an emergency arises and a family has the means to deal with it and not lose sleep.

This sounds like a good article to post in one of the Frugal forums here at DU.

[catmother]

6. i'd like to have someone clean the house too. but nobody

cleans like i do. i've asked some cleaning people if they get down on their hands and knees to wash the floor. the answer is "no". they mop it. well that's okay, but every month or so i think it needs to be done the old-fashioned way.

didn't know about the frugal forum. i'll check it out.

on edit. i just bought a "roomba" last week. you know the little robot vacuum. well he's doing quite a good job -- even gets under the beds and dressers. less strain on me and my back.

[eleny]

23. I've heard that the Roomba does a great job

I dry dust the floors a lot since we have laminate floors now. That Roomba might be a good thing for me. Now if they made a Furniture-ba, we would never have to dust!

There are a couple of forums dedicated to frugal living. Lots of good info in both. :hi:

[Tierra_y_Libertad]

3. Experience is a great teacher.

My wife and I followed much the same path as you did. Went to Europe thinking it would easy to live there inexpensively after we retired. Came back with that illusion shattered. Took out a loan to pay off our credit card/high interest debt. Then paid the loan off as quickly as possible.

From then on, cash-only, or, if necessary to make a large purchase (i.e. refrigerator when it broke down), used credit but paid it off as quickly as possible - usually within a couple of months.

Focused on buying things for their real purpose. A car is for transportation. If your aim is to impress your pals (or, the world in general) it cost's more. We've been driving the same two cars - bottom of the line '91 Tercel paid $5000 for new, and a '94 bottom of the line Toyota pickup $13,000 new. Amazing how long cars will run if you don't have all kinds of breakable gewgaws and gizmos to repair.

We then started living on our projected retirement income and putting the excess into retirement funds (IRA's and company plans).

We certainly didn't live like paupers and when we retired 7 years ago, we actully have MORE spendable income than when we were working.

We live on 3 acres of meadow and woods, in a house valued at about $400,000, give rather generously to charities, as we always have (Planned Parenthood, Oxfam, Amnesty International, etc), and don't worry about bills.

Our biggest "entertainment" expense is at the local used book store.

Retired on time at 55 and enjoying every second of freedom.

[spinbaby]

7. What are you doing for health insurance?

We could afford to retire soon if not for the health insurance part. Being in our 50s and with health issues, one of us (me) needs to keep working full time just to keep up the insurance.

[Tierra_y_Libertad]

13. Fortunately, I was able to carry my insurance when I retired.

Low option BCBS which has been excellent (as far as Health Insurance goes) at about $150 per month for both of us.

We also are paying a rather steep price for "long term care" insurance - (about $500 per month) because we have friends are in serious trouble because one of them (the husband) is suffering from dementia and the cost of full-time care is so incredible.

I don't know what to tell you, except you will (probably) discover that your living expenses will be less once you retire, and that you may be able to afford decent insurance with the excess.

[catmother]

14. talk about long care insurance. that's my biggest fear. we have

a policy on my husband. it's about $117 a month, but they won't insure me because i have chronic fatigue syndrome and i take certain medications for sleep.

my mother in law had a substantial amount of assets. she did not have a long term care policy. she had a stroke and was in a nursing home for the last 10 years of her life. it was a nice place, but everything had to be signed over, her house, social security, father in laws pension. when she passed last year she had $1500 left. we and my husbands sister had to pay for the funeral -- a little over $10,000.

[Tierra_y_Libertad]

16. Same thing with my wife's mother.

She had a rather substantial amount of money/property. All of it disappeared by the time she died. Fortunately, she had selected cremation, so the funeral costs were minimal.

My wife was the one who had to talk me into the Long Care Insurance. It seemed exorbitant to me, but her mother's predicament, and our friends, convinced me. Plus the fact that neither of us have family that is in the least bit dependable - or even likeable, for that matter.

[catmother]

19. my mother in law had a phobia about cremation. she knew

that those were my wishes and it freaked her out. we felt that it was like taking $10,000 and burying it in the back yard, but sister-in-law is very traditional. she made all the arrangements. my husband said it was very nice. i did not go. it was in new york and i have not been back there in 17 years since we moved to phoenix.

we don't have family that's dependable either. my husband's twin nieces are very fond of him, but you can't expect family to take care of you.

my mom is 83 -- basically in good health. having trouble with short term memory. she has always said that she didn't want her daughters taking care of her. i personally am not capable of doing it, another sister lives in canada and the one who would have taken care of mom is in vermont and mom is mad at her and hasn't spoken to her in 3 years. i'm hoping that when the time comes she just goes quickly. i certainly would not like to see her in a medicaid nursing home. right now, my nephew who has been successful in the music business is paying mom's rent. hopefully if something happens he'll still help and with her social security and savings she can be somewhere nice. my mom also wants to be cremated -- she says go as cheap as possible -- not even a ceremony. that's fine with me because my thought is once the soul leaves the body -- that's it. doesn't matter what you do with it or where you put it.

a friend of mine died of a heart attack at the age of 42. his ashes are scattered over my property. we did it before my house was built. climbed up to the top (we're on a small mountain) and did a little toast with some wine and then scatterred the ashes.

boy i went off on a rant, didn't i? lol

[Tierra_y_Libertad]

22. Well, there's nothing like getting old to make one think of such things.

I've certainly been reminded of an Eastern Philosophy prof I had asking us what we were doing in a philosophy class. "You should be out there garnering experience of all kinds, figuring it all out is for old people who've been there."

I don't fret much about death and dying, but I've watched myself grow a lot more "philosophical" about it and find myself in wonder about all the time I wasted getting upset about all sorts of things that seemed so terribly important at the time, but ended up being sheer nonsense. All those heartbreaking love affairs, becoming a "man", changing the world, etc.

Fortunately, I have a good sense of humor and enjoy laughing at my youthful grandiosity and ridiculous antics. And, feel not a little pity at the youth of today attaching the same great importance to things that turn out to be as ephemeral as stubbing your toe.

Speaking of rants. :)

[catmother]

24. i have a good sense of humor too. actually my whole family

does. even my mom at 83 although she's still harbouring hate for my father who passed away 2 years ago. they had been divorced for about 48 years. and now she has this hate for my sister. she said something a few months ago about when she goes to heaven. i said "you're not going to heaven". she was quite surprised and said "why"? i said "with all that hate in your heart you can't. jesus said you have to forgive". she said "he did"? i said "you're the religious one, you should know". she did not respond. i would say she's a "non-practising catholic". i lean towards the eastern philosophy.

actually when i look back at my younger years, some of them were good, some not so good, but i wouldn't change anything. it's all been a learning experience.

just wondering what's going to happen the rest of my life. will i ever recover from this illness? i keep my options open and i never say never anymore. i never, ever considered leaving phoenix, but just recently i was planning a fact finding trip to costa rica as a possible retirement place. changed our minds. so much information came to me right before i was ready to leave. cancelled the trip, but i still feel some connection to that country. i'm still reading one of their english language newspapers. inasmuch as my ticket was not refundable and i did so much research for 2 years figured i'd go down in december. that's when they have their good weather. instead of fact finding i think i'll go to one of the beach communities and just enjoy myself.

[spinbaby]

17. I don't think we could cut expenses that much

The last time we checked, high-deductible health insurance for the two of us was well over $2000 a month. Gotta keep working for the insurance. Believe you me, if this country had affordable universal health insurance, I'd be outa here.

[Tierra_y_Libertad]

18. You have my complete and utter sympathy.

Health care coverage in this country is disgraceful. Without affordable insurance it's disastrous for those wishing to retire.

I recently had rather minor surgery (prostate). The bill was around $30,000, not including the follow up, which is ongoing. Our cost was about $2000 out of pocket. I can't imagine being without Med Insurance and hoping to live a comfortable life for very long.

Good luck to you.

[catmother]

21. unfortunately i don't thing we're going to see universal health

care in our lifetime. i believe we're the only "civilized" country who doesn't have it. we were thinking of moving to costa rica where you can buy into their plan for about $50 a month. you can live pretty cheaply there unless you go to the american communities. the prices have gone sky high and i'm told that they have to be gated in with bars on windows and barbed wire because of the crime. we could go into one of the costa rican neighborhoods but with the kind of house we want to live in we would stick out. if you want to live in a small tico-style house there, you can do well on american money.

[catmother]

8. yes. experience is a good teacher. my husband is 58 1/2. has

37 years with the company. could have retired after 30. he loves his work. right now we're looking at age 62 when he can take social security at a reduced amount. but if he's still in good health and the company still wants him (we worry about outsourcing) he'll still work.

[Tierra_y_Libertad]

15. There's a big difference between wanting & having to work.

Had a friend who used to berate me about saving for retirement. He claimed he would retire and become a bartender, which appealed to him. Finally got through to him about the want to/have to aspect. He retired, comfortably, 2 years after I did. The bartender idea never panned out when he realized there were other things to do that didn't require showing up at work every day.

I, occasionally, enjoyed my work. But, most of the time it was sheer boredom broken by periods of despair, terror, and outrage at the bosses. I was an Employee Assistance counselor dealing mostly with drugs/alcohol, child abuse, spousal abuse, divorce, just plain lunatics, and all the rest of the human dilemma. Gratifying at times, mostly not. Of course, the bosses' solution was, "Fire them".

So, now my first big decision in life is deciding what to do today - with the luxury of knowing that I can change my mind without having to answer to anybody.

40 years of work was enough for me.

[catmother]

20. my husband jokes that he would pay them to let him work. i

stopped working at 48. when we moved here i became ill with chronic fatigue syndrome. worked my ass off for years though. worked with lawyers, sometimes around the clock. the overtime money was great, but sometimes i think maybe that's how i got sick. i liked my work, but my last 6 months working, i was burned out.

i figure if i added up all the overtime hours, it would probably come out to me working till 65. lol

[Asgaya Dihi]

5. Credit is a killer

There was a show I saw recently which detailed how the credit industry has trained and shaped the way we do things. One segment had people like you describe who all had money in the bank but carried high credit card debt. They were asked why they didn't pay it off and every one of them said they might need the cash later, wouldn't want to have to depend on credit cards then.

Huh?

Paying avoidable interest on credit is nothing more or less than a conscious choice that we'd like to have a little bit less of everything in the long run. Pay it off and we not only stop paying interest on it but we also can invest or earn interest ourselves on the money we used to give away.

[spinbaby]

9. Not always a bad idea

We have about $7000 in credit card debt from last year's remodeling project. It's staying on the card because we got a 1% interest offer. Right before it expires in December, we pay it off with money currently earning around %5 in a money market account.

[catmother]

11. well that certainly makes sense. when i bought my car i was

asked how my credit was. i said "i'm paying cash unless you can give me 1.9% interest". i was getting 2% in the bank then. it's up now.

my husband bought a rolex watch from jared. it came to $7380 with tax. no interest if you pay it in a year. so the down payment was $1500. we pay $480 a month, but we put it on the discover card. so we'll make $73.80 in a cashback bonus.

i recently bought a new washer and dryer from sears. got a 15% cash rebate and no interest for six months. so let the money stay in my account. when the 6 months is up, they get their money.

i'm also only renewing our CDs for 6 months, because the interest is going up. when i renewed in october it was 3.85%. in april when it was up i renewed at 4.75%.

[catmother]

10. they say the average family has a mortgage, 2 car loans and

$8,500 in credit card debt. why pay all that interest? we have interest on our small mortgage but the experts say not to pay it off, that we still need the tax deduction. and with interest rates going up in the bank we want to keep it there. got out of the stock market a few years ago. can play around when your close to retirement.

one thing i don't understand. my sister and her 2nd husband who is a banker set a very bad example for my nieces. they kept buying them new cars every 2 years. i asked "why". sis said "they have to have something reliable". well if you buy a toyota or nissan you don't have to worry about reliability. just change the oil. maybe every 4 years, new tires and brakes. helluva lot cheaper than a car loan. one niece and her boyfriend have been using 1 car for almost 2 years now. my niece takes public transportation. but the other one has a car loan.

[Asgaya Dihi]

12. I used to

When I was younger I worked construction and my wife worked so we did ok and didn't worry too much about things. Then I had three tendons severed in my right wrist and only two could be fixed, those not well. That ended construction as a trade and offered me the chance to learn first hand about the idea of carrying debt into problems.

As spinbaby points out there are reasons for it sometimes, a part of how we got out of debt was we finally shifted the full credit card debt to a lower interest loan and paid that off, but if it's at all avoidable we should probably do that instead. We almost didn't make it. It's both a matter of having less in the long run due to the interest payments and a Sword of Damocles of sorts hanging over us if something does go wrong. The new bankruptcy laws are no help there.