In a past blog post, I listed how we planned on retiring in 2023, even with inflation looming. If you missed it and want to know how we thought we were going to do it, you can read it here.
Fast forward 2 short months. A lot has changed, and most of the changes have been out of our control.
- Our retirement nest egg: i.e. the stock market.
Since January 1st, we have lost 15% of our retirement portfolio. The stock market has gone up and down so much it rivals the Yukon Striker! For all intents and purposes, that loss equates to three years of living expenses. Because my husband is so ‘young’, we wouldn’t be able to access social security for at least seven years, so our portfolio and personal savings is what we had hoped to draw from when we retired.
2. Selling our home and moving. Our original plan was to sell our home and buy another, smaller home without a mortgage. Since we still have a small mortgage on our current home, this would allow us to be not only mortgage-free but give us some extra cash. Our home’s value has gone up 17%, but we believe finding another home would be difficult. Real estate values have exploded, and homes are going very fast BUT for way more money than they are worth. I refuse to play that game. 2006 – 2009 was not that long ago. 😉 Florida was once on our possible relocation list, but the overpriced real estate and the problems with homeowner’s insurance are making us rethink this possibility. At least for now.
3. Cash Savings. This is one thing that is in our control. My husband is still working, and will continue to do so if the market continues to be a bear. In the meantime, we are on schedule to put a year’s worth of expenses away by the end of the year. If we decide another year of work is necessary, we will continue to put cash away as well as pay off our mortgage in full.
Sometimes unforeseen circumstances require a change of plans. We are adapting to these changes – even though they may require a change in our retirement date. However, we still believe our retirement is right around the corner, and are looking forward to a new adventure.
If you are retired, or are planning on being retired in the near future, how has the present financial environment changed your plans?
JOURNEY TO RETIREMENT 
Just brainstorming- Consider buying a smaller house in the next six months in your chosen place. My gut says there is going to be a price drop in “fun” areas because of lack of income for air bnb and high interest rates. Take that higher interest rate since you will pay it off once you sell your house. DC shouldn’t drop as fast because of the inflated cost of living of gov paychecks. Just think- GS should get a 9% raise! Then sell your primary home when you are ready. I think tax laws may get really wonky in 2023 for capital gains. Jump ahead of the curve . Stay employed until you sell your current house.
We have been in cash for two years now. Missed the run up- but now the market is the same as we left it. Built, Sold, moved – it has been a wild ride. We love retirement. We spend far less since we have no mortgage or payments.
But, it is still scary sometimes. It is less scary when I wake up and enjoy the high desert air- With no traffic.
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Hi Janette! Great ideas! I believe there will be a big crash as well in the ‘fun’ areas. We are wavering – have no idea where we want to be. Our area never seems to go down in price, for sure. I just don’t want to overpay for a smaller home now, but I see what you are saying. We originally wanted to buy a smaller home at a lower price while my husband was still working, but the areas are overpriced. We will definitely stay employed, at least until our mortgage is paid off and we are in a cash position to do what we want. My husband only has to go into the office 2 days a week at this point, but as soon as they require 5 days a week, he will call it quits. It’s not worth the two-hour-a-day commute. We are definitely looking forward to that day. 😉
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Hi Sharon, this is Chris. We haven’t changed our retirement plans so far. Hubby still planning to retire in 2024. He got a raise recently and I put most of it in 401k. Still maxing out Roth, HSA and saving cash also. Hubby also got a company car this year and decided to sell his ‘11 Camry. I put that in savings also, for when he retires and we need/want another car. We may try the one car route for awhile and see how it goes.
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Hi Chris! It sounds like we are on the same time frame. It is most likely that we won’t be retiring until 2024 at the earliest. Because we have no idea where we will relocate, and the real estate market is crazy, we will need to pay off our mortgage. It will take until the end of 2023 to do so. I would love to go down to one car but am hesitant to do that while living where we are now. It would definitely save a lot of money though (between taxes and insurance). Are you moving or staying where you are in retirement?
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Sharon, we will stay where we are. We moved locations 7 years ago in anticipation of retirement. We are near our children and grandchildren. We bought a house with first floor master and laundry. Hubby is an engineer, so no problem finding a job in his mid 50s at that time.
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Yes, we would love a home with a first-floor master. That is our goal, but finding one in our area is nearly impossible. But thanks for the reminder of another reason to leave our large, 5 bedroom home. 😉
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We have been retired since 2001. My husband was 51 and I was 48 when we retired from our telecommunication jobs…we had two children still in college. We have been through so many ups and downs with the stock market since 2001 we kind of ignore the roller coaster ride. We did retire with no mortgage and sold a house in the DC area and moved to a smaller town in 2004 but built a house for the same amount we sold our DC house for. The value of our existing home has gone up and down too. We have been about 70% stocks since we retired and we are multi-times above the amount we retired with and have been living on the dividend income from our investments all this time. My husband took SS at 62, I just started taking mine at 69 last month….so now have $5k a month in social security. We also received a modest inheritance which we haven’t touched. I also want to note we did have health insurance provided by our former employers until medicare (they still pay for our supplemental) which was a biggie. Don’t let the ups and downs of the market scare you away from retirement. My retirement date was 9/13/2001….two days after 9/11….I almost cancelled my retirement. After 21 years of retirement we have absolutely no regrets, it’s been the best years of our lives.
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Rebecca, I LOVE this. Two days after 9-11? Wow! Dividends are a great way to go. I’m not exactly sure what ours are at this point since we have them re-invested. And, we, too will have about $5000 in social security, but not until I’m 69 and my husband is 67 which is 9 years from now. Health care is HUGE, and you were fortunate to have employers pay for it. That will be a $20K proposition for us to pay before Medicare kicks in. I imagine we will sell our home eventually, but we want to wait until we have no mortgage. May I ask how you decided on where to move? That seems to be our biggest decision-maker at this point. Oh, I have so many questions for you! Like, how did your expenses change, how do you occupy your time, do you travel…..Would love to hear the details!
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Hi Sharon, I lost the original comment I was writing when I tried to check the maximum benefits of Social Security at 66 it’s $3,240 and $4140 at 70. Rebecca posted her love of dividends . I love , love dividends especially in my Roth so they are not figured in the Social Security worksheet that you use to find out how much of Social Security is taxable. Right now , At 16% monthly dividend just over $201, 000 gives you more then the maximum $3,240 SS check! With a 2.25 % fixed rate mortgage I wouldn’t be in a hurry to pay it off. I would use the money to increase your monthly retirement paycheck. I have use zero interest loans on my appliances and .9 percent car loan and taken the cash and invested in high dividends REITs and preferred qualified dividend paying stocks . Their prices are fluctuating greatly so I am using the low- high stock price channel and taking Capital gains also. I can now pay all of these loans off with the gains but my CPA says to pay the minimum monthly payment and reinvest the gains for more monthly income. I also like using rewards offers and credit cards to lower my monthly expenses. Sincerely, Lara
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Lara,
Wow, I really wish I knew more about dividends. Which companies give you a 16% monthly dividend? Sign me up! My husband and I want the satisfaction of having a paid-off house. We are no longer adding to the stock market, but putting our cash in Ally for now. I will research the dividend stocks and see if I can send some of my money there. We were late to the game for Roth, although I hope to convert some of our money when we don’t have to take an income. It sounds like you have a handle on your finances, for sure. 🙂
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You can invest in these now in your traditional IRA and do tax efficient Roth Conversions of the dividend stocks and REITs when their prices are low throughout out the year after you retire. Then use the dividends for income tax free. The blogger at Go Curry Cracker pays estimated taxes with new credit cards with rewards throughout the year to qualify for credit card rewards bonuses . I actually stopped doing Roth conversions this year, because my state is stopping how they tax RMD reducing 25% each year for the next four years. on traditional IRA and reducing taxation on pensions this year. (42%). Lara
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You can invest in these now in your traditional IRA and do tax efficient Roth Conversions of the dividend stocks and REITs when their prices are low throughout out the year after you retire. Then use the dividends for income tax free. The blogger at Go Curry Cracker pays estimated taxes with new credit cards with rewards throughout the year to qualify for credit card rewards bonuses . I actually stopped doing Roth conversions this year, because my state is stopping how they tax RMD reducing 25% each year for the next four years. on traditional IRA and reducing taxation on pensions this year. (42%). Sincerely, Lara
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I have a lot of research to do, thank you so much for the information!
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We visited many places (in the south) before we decided where to move. We ended up moving to a college town (lots going on here). The logistics at the time played into our decision….the location was close to both our children and my father who was still living then. My husband loves golf and we live in a golf course community. We have made lots of friends here and never been bored. I walk 5 miles every morning with 2 friends, attend yoga 3x a week, we ride our beloved electic bikes and spend a lot of time with family and friends, and do some volunteer activities. We now have 4 grandchildren and spend a lot of time with them. My husband loves to travel, me not so much because I hate flying. We have done a couple of cross country road trips in retirement, have spent many winter weeks in Key West and Hilton Head a beach week every summer with the kids/grandchildren. My husband and son have done several international trips. Of course not much traveling since Covid.
Our expenses haven’t changed a great deal since we retired. As we have gotten older we have tended to spend more as we consider how many years we have left to do things.
I truly believe having your house paid off when you retire is important. We also buy new cars and pay cash for them but keep them a long time. With no mortgage, car payments or health care costs are expenses are low. Actually our biggest expense (other than taxes) is the golf club membership. Now that we are both are on Social Security, if things really got bad in the stock market we could live on our SS (of course the golf club membership would have to go).
The scariest time in our retirement so far was the 2008-2009 stock market downturn. Our portfolio went way down but we hung in there and it came back. We have never had to sell any of our stock holdings….as i said we use the dividends for income. When we first retired Fidelity managed our portfolio but when we realized what we were paying them to do that we educated ourselves and started managing it on our own.
It sounds like you have a lot saved for retirement and are planning it carefully. I hope you can retire soon!
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OMG. You are living my IDEAL retirement!! lol. Thank you so very much for sharing!! My kiddos are here (except for my son who is deployed at the moment). All of my grandchildren are here as well and it seems it would make sense to stick around. Wintering in a warmer climate sounds ideal without actually purchasing anything or moving there. My husband and I are both active, and as soon as my foot is completely healed we will be joining a hiking club. We love golf. We love cruising and hope to cruise to many of our bucket list places (Italy, Norway, Alaska, Greece, Japan). We want to visit ALL of the national parks. We have ideas for how our retirement will go, but there are still some unknowns. We now have some work to do to get an income flowing from our investments. Thank you so very much for sharing! I hope people will come to the comment section and see all of the comments. They have been amazing. 🙂
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Think about that $20k health care costs. Now look at your overall budget. Is it worth the continued stress on you and your husband to not be able to enjoy a good life while you are young? It is scary to push back from that “free health care” . I get it.
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exactly.
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Sharon, I’ve been retired for 21 years and the first thing I learned about my retirement plans was that you shouldn’t have any retirement plans. Things change and change and change and change. Everyone’s retirement style is different. For us, I wanted to base my retirement on our guaranteed income which was 2 social security checks and one pension check. I also planned my own retirement should my husband pass on before me. That would be 1 social security check, 1 pension and hopefully life insurance money. The monthly income either way amounts to $40,000 a year. many people refuse to live on such a meager amount but we thrive at it.
You have to be nimble and have the ability to change your life and your finances on a dime. There is NO way in hell I would ever depend on Wall Street for my retirement income. I’ve seen too many retirees thrown to the wayside because of the stock market. No matter how much money they would claim to have made, they would get knocked down and out during a crash and then take years to recover only to wind up back to square one. No thanks.
We down sized in 2001. I don’t think it’s possible anymore to downsize because of the outrageous housing prices. My sister bought her Florida retirement home 8 years ago for $450,000. Her home today is worth $840,000. She actually thought she could sell, and downsize again and remain in Florida. Her new home cost? $830,000. Yup. You read that right. It was a lateral move and she gained nothing.
We relocated to Sarasota from NY in 2014 to a condo. I thought my retirement prayers had been answered and kept nudging my husband to sell our marital domain back in NY. He refused. After 1 year, the HOA fees rose from $7,500 a year to $10,000. I quickly realized that on a fixed income, this was NOT a retirement dream come true. In fact, every single retiree I met, had a side job. Didn’t matter if they once were a doctor, lawyer, nurse, teacher, homemaker…..almost everyone had to take on extra work to keep up their lifestyle. Thankfully, we never sold our NY home and we moved back to NY (sold the condo for a slight profit) a little bit smarter and more grateful. The NY home was already our downsized home since we moved there in 2001. We will always be New Yorkers and we just relocated to a less expensive area within the state. To this day, that has worked out fine.
We still keep looking for another place to retire and keep coming up with the same result: where we are already is the best place to be retired. NY has great cost reductions on property taxes etc to lower income retired people such as ourselves. Another BIG thing we have learned in these past 21 years, that as retirees, it’s best to have a side job. The extra money comes in handy, retains our lifestyle and keeps us on our toes. My husband loves his part time work. I adore the extra income. If you think you can stop working and be retired, wake up! Even my sister, who is retired on $100,000 a year, works on the side. Ditto for her husband.
If you want to learn more about today’s retirement trends, I highly recommend you watch the YouTube channel ‘Holy Schmidt’. It’s a weekly video from an exceptional CPA who understands today’s retirement requirements and how to achieve a great retirement. I love him! I learned a lot of smart ideas from him. His link is: https://www.youtube.com/c/HolySchmidt/featured
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Hi Cindi,
LOL, I’ve been following you since you started — I knew all of this. :). Yes, I’ve seen Holy Schmidt. I’ve watched quite a few of his videos. As far as retirement, I look to my parents. They traveled, owned a cottage at the Cape, and lived comfortably. They had two SS checks and one pension. I remember my Mom saying my Dad had $40,000 in a retirement account when they retired, and they used it to travel. Their fixed expenses are about $948 a month (I was just there and wanted to see what they spend). They were fortunate that my Dad’s company continued to pay for healthcare. Their variable expenses don’t add up to more than $500, so all and all they spend about $1500 a month. I couldn’t believe it when I saw it, but it is true. I know Joe and I will be just fine in retirement. We have a substantial amount in our 401Ks, IRAs, etc. even with the bloodbath the market is taking. Last year our portfolios rose 28%, so I imagine this is a correction. As far as working? I’m still trying to figure out my second act — I hope to be making some sort of money!
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Your parents had a dream retirement. They were most fortunate. I could only hope to have lived so well. 🙏
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Your parents live in upstate New York if I recall? Personally I think that upstate NY is a well kept retirement secret. Just sayin’.
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Yes, upstate NY. A small village, near Binghamton. Lots of senior benefits. 😉
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Sharon, you proved the point I was trying to make. NY, for Nick and I, turned out to be an ideal place to be retired. Who knew? Lots of senior benefits, I suppose because NY wants to keep its citizens in NY and not leave and relocate down south (especially in Florida). I wish more media attention would be given to upstate NY because whenever there is a report about the best place in America to retire in is, they always calculate in New York City and those 5 boroughs always brings the state of NY down. Oh well.
Give your mom a hug from me and prayers going out for your dad. Hope all is well.
PS: I still keep your son in my nightly prayers. XOXOXOXO
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Cindi, that means a lot to me. Thank you! xoxoxox
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They were truly blessed!
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Hi again, I have been retired for 24 years and I agree with Cindi change is inevitable. The last nine years before this high inflation period my expenses increased by 1% excluding medical. At 65 I went on Medicare and off of my deceased husband employer subsidy. So I started using my HSA for my medical expenses. Watching my grandson 2-3 days a week will end in June. This and Covid has put a hold on my genealogy trip to Europe, but plan on going in 2023. I work on next year’s budget in October . My proposed 2022 budget after 24 years of retirement is still below my guarantee income. But all this inflation after having 22 years of less then 1% personal inflation rate made me aggressively try cutting expenses. I have had great success doing this. So cash hanging around is losing 9% so I will invest in high paying dividend stocks and REITs (ARR) is one of them . Another thing I am investing in is energy. My favorite is Devon (DVN) energy . It raise its quarterly dividend ,from $1.00 to $1.27. Over a 7% return . But last week on Tuesday I invested low and sold high and set this aside for another low price channel to come along which happened yesterday. Sincerely, Lara
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Thank you so much for sharing! I’ve been busy cutting expenses like crazy, and none of them are going to change my lifestyle — Wish I had done this sooner. :). My husband and I are investigating income-producing investments, and we should be all set to go in a year or so. 🙂
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