First Person: Moves We’re Making Now for a Simpler Retirement Tomorrow

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In her recent article, "Simple retirement can be satisfying", MSN Money columnist Liz Weston details the simple retirement of Jon Myhre. She explains:

"Jon Myhre didn't intend to be retired on a shoestring budget. That's how life turned out, though -- and it's OK by him.

Myhre, 78, lives mostly on his Social Security income of about $20,000 a year, which doesn't go far in pricey Southern California. But his days are filled with activities and friends. He says he doesn't miss the luxuries he's had to give up, including international travel and the big house with the pool."

To me, it sounds like Jon is living a pretty decent retirement even though he doesn't have a lot of money. But I'm all for a simple retirement, and my wife and I are taking steps today for a simpler retirement tomorrow.

Staying Debt Free

According to creditloan.com, the average American's interest payment on debt is $600,000 over the course of a lifetime. Our family on the other hand is currently debt free and have probably only paid about $20,000 in interest so far into our mid-30s. This includes paying off $50,000 in student loans, paying cash for vehicles, never paying interest on credit cards, and owning our home outright.

If we can stay debt free from now until retirement, it will save us over half a million dollars compared to the average American and hopefully put us in a better situation for a simpler retirement.

Owning a Home Outright

As I mentioned previously when discussing our debt situation, we own our home outright. While we didn't do this just for a simpler retirement, it certainly makes aiming for happy golden years a simpler proposition.

When we bought our first home, we overbought. We bought more home than we needed for a greater price than we should have. When we sold this home (at a big loss mind you), we downsized significantly. By doing so, we managed to still salvage enough equity from our first home to buy our much smaller second home outright. In the process, we hope we've set ourselves up to continue the trend moving forward, being able to continue to own outright, even if we upgrade in size eventually to accommodate a growing family, so that when we reach retirement, we will still be mortgage free.

Tracking Expenses

I've tracked my expenses for years -- almost two decades in fact. In the process, I've learned many valuable things. I've been able to watch where and how I spend. I can determine a personal inflation rate. And I can look for ways to cut and see just how much certain things have jumped in price well over the rate our government states inflation is increasing. In the process, I think I've set a precedent that will provide us with a clearer retirement picture as well as hopefully make for a simpler retirement as we will be able to enter it more confidently knowing how and where we spend our money.

Understanding Income and Investments

Knowing how we work for our money is important. I do this through income tracking for our various revenue streams. Whether it's our regular employment and the associated paychecks, or our investment income from interest or whatever, we keep track of this information and track it regularly.

I hope that keeping a close eye on this aspect of our personal finances now helps us understand how our money will in turn work for us in retirement. Knowing rates of return, dividend amounts, risk levels, and how our investments react to market and economic conditions now, will hopefully carry over into retirement so that we're prepared and feel confident and comfortable with knowing how our money will respond during our golden years, making for a simpler retirement in the process.

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Disclaimer:

The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.

Sources:

CreditLoan.com. "A Lifetime of Debt: The Financial Journey of the Average American." 2009. http://www.creditloan.com/infographics/a-lifetime-of-debt-the-financial-journey-of-the-average-american/. February 4, 2013.

Weston, Liz. MSN Money. "Simple retirement can be satisfying". January 31, 2013. http://money.msn.com/retirement/simple-retirement-can-be-satisfying. February 4, 2013.

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