The Book

Book Excerpt:

12 Ways to Retire on Less: Planning an Affordable Future

Aging in Place or Not

Housemates, Roommates, and More

Three-quarters of those 50 and older want to stay in their current home when they retire.1 Yet almost four in 10 retirees have moved since retiring.2 What is right for you depends on your personality, lifestyle, financial resources, relationships, and personal preferences on climate, activities, and proximity to friends and family.If you want to lower your cost of living before or when you retire, finding ways to spend less on housing could be your single best strategy. If you are in your 50s, it’s an ideal time to strategize about the next phase of your life. “Housing is absolutely the huge issue,” says Jane Cullinane, author of several books on retirement, including The Single Woman’s Guide to Retirement.3There are a variety of ways to cut your housing costs as you approach retirement. One major way is to eliminate your mortgage. Even if you can pay it off, you’ll still have to pay property taxes and insurance, and possibly homeowner’s association dues or condominium common charges. If your building’s board hasn’t stockpiled a reserve for capital improvements, you might be faced with a monthly or yearly assessment for capital improve-ments. Factor all of this into your housing costs as you plan for the time when your paycheck is gone.4As you head toward retirement, consider three primary options: aging in place, relocating, and downsizing nearby. Many people equate self-worth with the home they own and find it difficult to consider selling, says Mary Hunt, author of The Smart Woman’s Guide to Planning for Retirement: How to Save for Your Future Today. Most people “slip into denial,” she says. It can take a “cataclysmic event” to push you to evaluate your situation, Cullinane says. Maybe you’ve lost a job, faced unforeseen medical expenses, or begun to realize that your expenses are too high to allow a comfortable lifestyle.5

Eliminating Your Mortgage

Some people strip the equity out of their home by refinancing and taking cash out for a European cruise, an in-ground pool, or college tuition and then find themselves with little or no equity. “They’ve spent their future,” Hunt says. “You’ve got to get rid of your mortgage.”6
Hunt, who has been writing the newsletter Debt-Proof Living since 1992, sold the house she and her husband had lived in for 27 years. At first, they thought they would refinance the Orange County, California, home to get a lower interest rate. But, at that time, the mortgage payment was just too high, at $2,000 a month plus property taxes and insurance. “We started to face the truth, and age”—she was born in 1948—“and it all collided. We knew what we had to do. We have to sell this house. We can’t afford it.” So they did, leaving enough cash for them to move almost anywhere in the country. They chose Erie, Colorado, halfway between Boulder and Denver, where they bought a less expensive house with all cash.7

Know Your Priorities
Among the first things to consider, experts say, is how you would like to live the next part of your life. This is a time to reflect on where you have been and where you would like to go.10

Excerpt from CHAPTER THREE
Reframing Your Golden Years as an Adventure
What Do You Really Want to Do?

Satisfaction in retirement varies. A lot depends on your expectations: What did you anticipate retirement would be like, and what is the reality? It also depends on what life has been like before you make the transition into retirement.
If your expectations are unclear, you may find entering an unstructured period of your life unsettling, even disappointing. Often those who have worked intensely for 30 to 40 years look forward to a time when they can do whatever they want, whenever they want. Or they choose to spend more time with their grown children and grandchildren. Others prefer to work at their own pace, no longer commuting to an office each day. Some want to give back in one way or another such as through pro bono work or serving
on a board. Overall, the key to the next part of life is attitude. Health plays a big role too. There are many unknowns, so focus on the certainties. Unless you keep working or have significant resources, your options may be limited.
Be realistic, and you will be better able to plan and enjoy your life.

Find Your Purpose
To make the most of the years ahead, define your purpose. What will you do?
What will make your days meaningful? Enjoyable? The answers are different for everyone.
I spoke about setting expectations for retirement with Bob McDonald,
retired chair, president, and CEO of Procter & Gamble and former Secretary of Veterans Affairs. “The most important thing is knowing your purpose,” he told me. This means knowing where you are going rather than “meandering through life without direction.”1
McDonald is one of those fortunate individuals who knew from an early age what he wanted to accomplish. In sixth grade, he applied to West Point, the US military academy, and ultimately matriculated there when he was 18, in 1971, graduating in 1975. He was keenly aware that he wanted to “free people from communism” and believed by filing an early application to West Point he would increase his chances for acceptance to the elite academy.2
At age 67, as of this writing, McDonald says that, if anything, he is too
busy, even in retirement. He still maintains leadership roles in companies, serving on the board of directors of the Xerox Corporation, the McKinsey Advisory Council, and the Singapore International Advisory Council of the Economic Development Board.
Not everyone will accomplish what McDonald has in retirement, yet
each person can find meaning in their own endeavors. It may take some soul searching and self-evaluation to figure out what you like to do, what you have access to, and what your skills and talents are beyond working.
“You don’t have to set the world on fire,” McDonald says. “Don’t allow
other people to define your success for you.” Helping one other person in a day can represent success, McDonald says.3

from 12 Ways to Retire on Less

Rowman & Littlefield, May 2021

 …how to make the most out of retirement by ensuring that your dollars go as far as possible

— Wade D. Pfau, PhD, CFA, RICP, professor of retirement income at The American College and founder of

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