When You Retire...

When you retire, how much money do you need to have saved?

 

If there is a million dollar question, or a $4 million, or $10 million, I guess this would be it.  In my personal finance class, a student asked how much money you will need to retire.  We started going through the time value of money equations -present value and future values of lump sums and annuities to calculate how much one would need; which started me thinking long and hard about this questions.  I told my students it was keeping me up at night and this is why it is such a hard question to answer:

1. It depends on when you want to retire.  I asked my class and it ranged from age 45 to never retiring.  The person who retires at age 45 will need a lot more money saved in retirement than the person who never wants to quit working.  I’ve always said, “If you can turn your passions into profit, you never have to work a day in your life.”  I also believe that meaningful work provides you with self worth and increased happiness. So if you love your job, maybe you won’t retire; you may just slow down a little.

 

2. It depends on your lifestyle when you retire.  Experts are saying that you will need 80%-100% of your current income in retirement.  BUT….do you want to cruise the seven seas and stay a five star resorts or do you want to work around the house and live off the land?  There are a lot of retirement calculators on the Internet where you can find out how much money you will need to replace your current income or a percentage of it.  Lately we have been trying to live off the land and it is amazing how much we have saved in groceries.  Even with a small garden and a few chickens, you can save big money, eat better and be closer to your food source.

 

3. What will Social Security and health care cost be in the future?  I don’t know what government plans will be around when I retire, so I’m planning on being self-sufficient.  I would rather have too much in retirement savings then not enough.

Just some figures so you can check to see where you stand with the average American.  According to Gallup’s annual Economy and Personal Finance survey, the average American expect to retire at age 61.  This is up from age 57 when the survey was conducted in 1991. However over fifty percent of the non-retirees age 58-64 expect to retire past the age of 65.  Gallup also found that 61% of Americans are worried or very worried about having enough money for retirement.  The highest percentage of Americans worried about retirement savings is ages 50-64.

This delay in retirement could be due to a change in values, lack of financial resources, uncertainty about future expenses, or decreased mandatory retirement age.  I hope that you find your passions and can turn it into profit. Let us know what you think. 

When do you plan on retiring and how do you envision your retirement lifestyle? 

Image Source: http://www.gallup.com/poll/148058/lack-retirement-funds-americans-biggest-financial-worry.aspx

Maynard

This past Saturday we lay to rest my neighbor’s father. He was a famer, rancher, cowboy, gentleman, and a friend to all. He died doing what he loved doing best, checking on his cows and spraying fences. He was teaching this 50 something city boy professor how to become a farmer and I kind of think he enjoyed seeing an old dog try to learn some new tricks; a desk jockey work a field and get cow sh*t on him.

His untimely death got me thinking about balance and how we live our lives each day. Personal finance is about planning and saving for the future, but it is also about living for today. How do you find balance in your personal finance life? Do you save every penny so you can retire like my roommate from college who just retired after 30 years of teaching? Do you plan on working until you are 70+ and therefore not need so much in retirement to still afford your lifestyle? What do you plan to leave to your heirs? Someone said you lived your life right when the check to the undertaker bounces, meaning you just outlived your savings. Do you agree or disagree?

I hope you all find your passion and that you are able to do what you love to do; that you find balance in your finance goals to support that passion. Personal financial success is your definitions of success, whether it is to retire when you are 53 or never retire. The important thing is to have a plan and be proactive at that plan.

I hope we all find that balance.

- From a green farmer who is happy learning how to work cattle and smell like a famer after a hard day’s work

Control

Hello Blog.

Maslow's theory suggests that the most basic level of needs must be met before the individual can address higher level needs. Our ability to give attention to creative outlets such as this blog (Self-Actualization) was trumped by the task of addressing logistics of a move to a new home (Safety).

In a nutshell, that is the hurdle to many budget dilemmas - energy to control, especially if your foundation is shifting. When life gets hectic, it is more difficult to tend to the detail of budget on a daily basis (Bob’s preference) vs. blast a flash plan when new needs present and attempt an ‘auto play’ strategy, hoping it is executing well until you can tend to it again(Kristy’s preference).

When your foundation shifts (a move, your health, a new job, a relationship change), there can be so many unknowns that your historic estimates are thrown to the wind and you are overcome with a great sense of uneasiness over the lack of control. Decisions sometimes have to come fast. You may have little control on the options and hope that the contingency fund (and if need be, the emergency fund) covers the unknowns.

It is interesting that no matter your age, your job, your salary; you will find yourself in situations where you are overwhelmed by changes coming fast, where you grasp for control and you will not feel content until the basic security of control is restored.

We look forward to completing the move and gaining back ‘control’.

Modern Day Gypsy Guide: 7 Tips on How to Make Your Money Last

While in Belize with a group of MBA students, I met Vienda, self-proclaimed ‘Modern Day Gypsy’. Her life is the true essence of frugal fun. In the spirit of spring break, we invited her to share a posting on the topic of travel, fun and frugality.

Modern Day Gypsy Guide: 7 Tips on How to Make Your Money Last

I've been travelling around our pretty globe for 10 years now covering over 30 countries, with a couple of pit stops along the way; 18 months in London and 2 1/2 years in Sydney. People whom I meet along the way often ask me how I do it. I work, naturally, and have several different income streams but that's a post for another day. 

How much money you have is generally less important than what you do with that money. Travels can last much longer if you use your money in thoughtful and clever ways, and think outside of the box. Here are seven of the most poignant tips on how to make your money last.

1. Be Flexible.

Being flexible is probably the No. 1 tip I can give anyone who wants to become a traveler. That means be flexible with your plans, with where you want to go, with whom you will meet and what you will do. Leave it up to the travel gods. They will always guide you to have the best experience possible! For example, late last year I had to make a decision. I had been in the UK for a month, doing some work, and had to decide whether to stay for the winter or move on. London is an expensive city if you don't have a conventional lifestyle, and though I could have stayed and worked, my heart was yearning to go somewhere warmer. Both India and Mexico were calling my name. So I started researching flights and my decision was made for me. I found a $250 flight from London to Cancun as opposed to the cheapest flight to Mumbai in India which was $800. I saved $550 simply because I was flexible, and have been having the most incredible time in Central America ever since. This is true for so very many different scenarios. It's so important to remain open and flexible at all times when you're a modern day gypsy, as you never know when and what kind of opportunities will appear.

2. Don't Make Solid Plans.

This may seem counterintuitive for many people who haven't had a lot of experience travelling, but actually making solid, fixed plans such as hotel bookings, trips and tours may be your demise because you often can't change them if something better shows up. In many parts of the less-developed world, you won't get the best deals and experiences by booking them online. You get them by talking to the local people, making friends and connecting in "real" life. Only a couple of weeks ago I was working at the ‘Envision’ music festival in Uvita, Costa Rica. They had camping sites available for staff but I wanted more comfort (I may be a modern day gypsy but I definitely enjoy and indulge in simple creature comforts!). So a friend and I went to a local cafe and started speaking with the waiter, the owner and some other locals. Luckily my Spanish is fluent enough to make these kinds of conversations and within minutes the news was out that we were looking for a place for two people with kitchen facilities. The next day we were taken to a beautiful row of local tourist apartments, each complete with a private kitchen and bathroom, a fabulous swimming pool, hammocks, a lovely outdoor area and a five-minute ride to the festival site. We wouldn't have found this if we hadn't gotten in with the locals, and we praised and felt gratitude for our lovely temporary home every day.

3. Always Barter the Price.

This is really important. Always, always, always - ask for a better price. You won't always get it but more than often than not, you will. I do this everywhere I go because I know that my buy is valuable to the seller and that if you don't ask, you don't get. Not only did we find a beautiful place to stay in, but we also got a really good price because we asked for it. When we initially spoke to the locals about finding an apartment to rent during our stay in Uvita, we told them that we were planning to stay for 15 nights and that our budget was $20 per night for the two of us, so $10 each. We knew that the prices in the area were mostly above and beyond this unless we wanted to stay in some dodgy backpackers but we both know from experience that you generally always get what you put out to the universe. It's just how modern day gypsies roll! Because we were staying for more than two weeks, and it meant that the owner of the Cabinas had a definite income for that entire time, and we paid in cash, he was happy to fulfill our needs. The apartment we received was normally priced at $60 per night so we actually saved $600, which is HUGE in the grand scheme of things.

4. Be Generous.

This tip is based on the law of attraction. What you give out you get back, and when you're on the road there's nothing more beautiful and fulfilling than giving something to someone who is in need. Not only does it feel great, but it also has the added benefit of your generosity being reciprocated in the most unexpected ways. This may not happen directly from the people you have been generous with, but you simply never know. The amount of times that wonderful things have happened to me is countless: complete strangers offering me a place to stay, free taxi rides to airports when I ran out of local currency, a shared meal with people living below the poverty line, generous gifts of books or other things that I've needed along the road. Being generous is a wonderful attribute to take with you wherever you go, and although this act should come from a pure place without any expectation, you will find that when it is reciprocated, it will often save you money in the most unusual ways.

5. No Bills.

One of the wonderful benefits of being a modern day gypsy is that I have no bills. I don't own property, I don't have any ties, I don't have telephone, electric or gas bills. I pay for the things that I need as I go. Certainly this makes the way I care for and spend my money quite different. I'm very aware of what my expenditures are and deal with money on a day-to-day basis.

6. Stay With Friends.

After having travelled for such a long time, and having made lots of friends wherever I go, I have the wonderful opportunity to stay with friends in many places along the way. I am always so incredibly grateful for every single individual who is kind enough to open their doors to me and share their home. I always make an effort to reciprocate their kindness and hospitality by putting my homemaking talents to work and making some beautiful meals and leaving some kind of light, love and inspiration behind wherever I go. This obviously also means that I get to save on accommodation expenses which is definitely one of the biggest costs when travelling.

7. Travel Slow.

I like to take my time wherever I go. I'm not a tourist or a backpacker, I'm a modern day gypsy which means that I want to immerse myself in the place and culture that I am visiting. This means that I like to stay in one place for longer periods of time rather than move around quickly. And this can really help make your money last longer. When you live like a local, you pay local prices and you get to know the people. You can rent a place for longer periods of time at the fragment of the price of a hotel or other tourist accommodations. You learn to shop where the locals shop, prepare your own meals and live and love a more simple life. Taking your time when you travel is not only good for your pockets, but also much more fulfilling for your soul, as you get to really experience the place that you are visiting rather than just pass through it.

Life as a modern day gypsy has so many adventures, twists and turns, and how you use your money is definitely one of the important aspects that you face on a daily basis. What tips do you have to make your money last longer when travelling?

Bio: Vienda Maria is a writer, life coach and modern day gypsy. She is the creator of The Empowerment Project + the Build Your Own Business Blog guide. You can immerse yourself in her musings over at Vienda Maria, tweet her your love and joys on Twitter, as well as  join her on Facebook.



Waiting for Spring

February always seems like the longest month of the year; all 28 days. This February seems longer than ever. We have had more snow this month than all of winter and the cold days are not going away. In fact, we are in the midst of another winter snow blitz as we post this blog. We are peppered with a warm day every now and then, where you can shed the winter coat, but it is just a tease of what is to come. Perhaps that is why it is such a long month.

I’m also looking at seed catalogs and dreaming about a bountiful harvest from my backyard garden. I’m anxious to start to work in the dirt, plant seeds and see nature take its course. The taste of fresh tomatoes, sweet corn, lettuce cut from garden is something I’m longing for. A back yard garden is not only good for your health; it is good on your wallet. You can harvest loads of fresh fruits and vegetables for pennies comparatively.

The sun is coming up earlier and setting later. In walking the dogs over the gardens in the snow, I can visualize the vineyard I am going to plant this spring, and the straight rows of corn in the field.

Maybe all of this dreaming of what is to be -is making February longer; but it is my way to get through the longest month of the year…February. Let us know how you get through February and what your dreams are for Spring. It will be here before we know it.

Sequester = Politician Self-Interest

We are only a few days away until the automatic government budget cuts and Congress and the President can't come to agreement on specific budget cuts and/or increasing revenue. Ramifications will be across-the-board cuts, effecting defense, education, national parks, air traffic controllers and all services provided by our Federal government.

Why can't the congress agree? To me it all comes down to self-interest, not willing to step up to hard choices and not agreeing on common values. Roy Disney is quoted as saying "When values are clear, decisions are easy." What does Washington value? “How I am going to get reelected” -not what is best for the country?

If a family is in debt, they have to agree on how they are going to reduce that debt. It typically is achieved by a combination of reducing spending and increasing income. If the family agrees to common values, decisions on what to cut and where to increase income become easy. The family looks inward on where to cut and makes sacrifices to balance their budget. The cuts are difficult but the family makes the difficult decisions and works to balance the budget.

On the other hand, our Federal Government can't make difficult decisions so everyone gets cut. It saves the politician's political career because they did not vote to cut anyone's project. Yet they can look good by restoring federal funding. As a country, we need to decide what we value.

The sequester tells me what the politicians do not value the fiscal commitments of the United States. They do not value how hard the tax payers work to earn money to pay their taxes. The sequester could put our economic recovery on hold which impacts everyone. The politicians do not value cooperation and working for the common good.

Politicians were elected to work for the common good. Now is the time to get to work, make the hard decisions, put aside partisan politics, and agree to a budget before the sequester goes into effect. Please do what you were elected to do - damn it!

MarketPlace Money Fun

From Barbara Bogaev on Marketplace Money, “We're still fresh off of our love hangover from Valentine's Day here at Money this week, so we've invited a couple of personal finance experts to answer your questions about money and relationships. Bob and Kristy Walker ..."

The show airs this weekend (2/15/13) on most National Public Radio Stations. If you don't find it on your local NPR station, here is a link where you can listen: http://www.marketplace.org/topics/your-money/letters-how-can-i-budget-when-im-self-employed

It is a great show, regardless if we are on or not so we highly recommend you tune in weekly to enjoy and learn. -Happy Listening

Can’t Buy Me Love – Happy Valentine’s Day

As Valentine’s Day quickly approaches, I think back to the Beatle’s song “Can’t Buy Me Love.” The Wall Street Journal was also thinking of the little things that show love in their article “Small Acts, Big Love.” By putting the other person’s needs above yours, spending a little time, and being creative in your approach, really shows that you appreciate and care for them and you don’t take them for granted.

Some key things to remember when you demonstrate your love through actions:

• Don’t expect a pay back

• Think about what your partner would like, not what is easy for you

• Put your partner’s needs first

• Show respect and appreciation

Here are a few little things that say ‘I Love You’ every day of the year:

• On cold days, start their car and scrape the ice off the windshield

• Make the bed

• Pack their lunch

• Open doors

• Leave the toilet seat down

• Leave the bathroom sink clean

• Pick up after yourself

• Empty the dishwasher

• Make a meal

• Say “thank you”

• Anything that your partner usually does for you, take your turn and do it for your partner

Show your love and appreciation 365 days a year, not just on Valentine’s Day. It doesn’t have to cost a penny and to quote the Beatles “Money can’t buy me love.” Happy Frugal Fun Valentine’s Day – every day of the year.

Building Blocks

Hosting a baby shower? Hate shower games? Pinched for funds?

Try this one. We took scrap wood and cut them up into 2x3x3 inch blocks, sanded and painted a baby-powder white. As the guest arrived, they selected a number or a letter to feature on their block. We had acrylic paint pens for everyone to work with. It was a fun opportunity to release our inner artist. We coated each block with a protective spray, and wa la! Our guest have collectively created a one-of-a-kind set of blocks.

The project cost $5 in paint material and provided not only a group project, but a very special gift for that little one.

Very frugal and fun!

Cleaning Up

Have you ever thought about making your own laundry detergent?  The other day, we were shopping at our local farm/home supply store and found coupons that had all the items necessary to make your own laundry soap on sale.  The total cost to make the detergent for 288 loads was just under $15.00 or about 5 cents per load, about 3 times the savings over commercial laundry detergent.

We tried the laundry soap and it works great!  Kristy is excited because she feels it works better and it is how her grandmother made laundry detergent. The directions:

• 2/3 bar Fels Naptha soap*
• ½ cup Borax
• ½ cup washing soda

Grate the Fels Naptha soap. Mix in the Borax and washing soda.  Store in an air tight container.  Use 1 – 2 tablespoons per load.  Can be used in HE washers.

* Freeze the Fels Naptha soap prior to preparing the mixture to keep it from clogging the grater. 

Happy Washing!

PS. We have had questions following this blog posting asking for the liquid form of the detergent:
• 1/3 bar Fels Naptha Soap
• 1/2 cup Borax
• 1/2 cup Washing Soda
• 2 gallons water (32 cups)

Grate Fels Naptha Soap. Heat 6 cups of water and add grated Fels Naptha until soap melts. Add Borax and Washing Soda. Sir until dissolved. Remove from heat. Pour 4 cups of hot water into 2 gallon bucket. Add soap mixture and stir. Add remaining water and stir. Let sit for about 24 hours until it gels. Use ½ cup detergent per load of laundry. Can be used in HE washer.