Today is the first day of FinCon14, and it’s also the launch of a free eBook on successful retirees!
“The Retiree Next Door” is based on a survey of over 500 financially independent people who volunteered their advice. (Disclosure: I’m one of them.)
You’re going to learn good news about what works. You’ll read how we saved, invested, and planned for retirement during our working years. You’ll see how we live, earn, and spend in retirement. Best of all, over two-thirds of these retirees got there with less than a million dollars.
The eBook was inspired by Jeff Rose’s 2012 Roth IRA movement (yep, I was there) and it’s partnered with FinCon14. It was produced by MoneyTips.com and their financial professionals. They host a site of volunteer (free!) financial professionals to answer your questions about investing, loans, insurance, and retirement. (I’m spending the next three days at Fincon, and MoneyTips is here too.)I’ll write more about MoneyTips at the end of this post.
Golly, imagine if someone wrote a book about financial independence for military veterans and families. But I digress.
The retiree survey was designed by CFPs, CPAs, wealth managers, and personal finance bloggers. It was conducted during July-August 2014. 510 retirees self-reported (without verification) their situation and their advice. Over 80% of us are fully retired and in their 60s or 70s. (I’m one of the 6% in my 50s.) Over 70% have at least a bachelor’s degree. Only ~10 of us are military (2%) although 9% of American citizens are military veterans.
We retirees are in good financial shape. (Hey, we’re retired.) 25% have a net worth between $500K and $1M, and 44% have a net worth below that. 31% are millionaires. 40% of us are spending between $50K-$100K/year and only 27% spend less.
We largely saved and invested for our own retirement, and we’re spending it prudently. Only 10% are spending their assets faster than the safe withdrawal rate of 4% and only 13% received a financial windfall.
We’re living all over the country, and most of us have a spouse or significant other. Only 20% of us have kids or grandkids living in our house with us.
The retiree survey shows that this is not rocket science.
- 92% are comfortable with their current standard of living.
- 19% are certain they have more than enough assets to last a lifetime, even though…
- 44% of retirees spend less than their monthly income.
- 36% reduced their retirement living expenses, but…
- 61% admitted to not spending frugally.
Over half of us have no financial worries! However, many of us are concerned, too:
- 48% are awake at night with financial worries.
- 28% are concerned about outliving their savings.
- 24% worry about healthcare expenses.
- 22% aren’t sure they can maintain their standard of living.
We have a variety of ways of preserving our wealth. The most frequent responses were “Medicare” and “owning a car that’s at least two years old”. Yeah, I know, not much help there, but here are five other popular techniques:
- 43% own their home outright.
- 41% manage their own finances & investments.
- 35% cut back on luxuries and extras (“cut back”, not “cut out”).
- 34% collect passive income (interest and stock dividends).
- 24% carry long-term care insurance.
Interestingly, only 17% continue to work and only 10% own rental properties. (I would have expected to see a lot more landlords.) Only 20% follow a retirement budget and only 18% downsized their homes in retirement.
How did we get here? No surprises– 35% were employed at a large company (or else that’s how the companies got to be large) and only 14% worked at a small company. 20% were in the public sector and only 14% were self-employed. Over half of us stuck to a budget, and 30% of us considered ourselves to be frugal. 67% also reported that we “spent enough to live comfortably”. Most of us didn’t even think about retirement until after our 30s, and over a third never even bothered to calculate how much we’d have to save to get there.
Here’s some more encouraging (shocking) news for young adults: over half of the retirees didn’t even start saving until they were in their 40s. However, if you expect to retire before age 65 then you’re going to have to start early or save a much higher percentage of your income. Of those who were saving in their 20s, 30s, and 40s the most popular number was 10%. However, a substantial minority saved more, and a few saved a lot more.
Surprisingly, some of us did a bad job of investing for retirement:
- 23% made regrettable investment decisions.
- 14% made regrettable real estate or mortgage decisions.
- 10% waited too long to start saving.
- 10% lost money in their own businesses.
- 7% spent too much and 6% didn’t save enough.
6% followed bad advice or paid high fees.
The “good” news is that we retirees made plenty of saving & investing mistakes (me included) and yet still managed to retire comfortably. Diversify your investments among low-expense passively-managed index funds, but don’t beat yourself up over a few mistakes— and don’t repeat them!
Want to learn more? Download the eBook.
MoneyTips.com is another way to learn a lot more for free. You post a question anonymously on their site, and one of their credentialed volunteer members posts an answer. You can take the info and run with it, or you can request a callback from their experts. You can also search their directory to find a professional in a particular field or in your local area.
This is a fantastic way to get credible answers to your questions, and it’s far better than your average Internet forum of anonymous posters. It’s also a great way to anonymously test-drive a financial professional to see whether you’d like to sign on with them.
How is MoneyTips at answering military financial question? Hmm. They don’t get many of those, although they discuss the basics of VA loans and student loans. Only one of the professionals listed on their site even mentions military service, although more of them may have served. I’m going to talk with MoneyTips at FinCon about military questions and helping servicemembers. I know a few CFPs who are military veterans and might be happy to help.
How Many Years Does It Take To Reach Financial Independence?
Questions On The 4% Safe Withdrawal Rate
Where are all the retirees? How do we ask for their advice?
The biggest obstacles confronting all retirees
How Should I Invest During Retirement?