This summer the New York Times ran an article called ‘For Would-Be Retirees, A Million-Dollar Illusion.’ The gist of the article was that increasing inflation and low returns on bonds can create a situation for retirees where they could run through a $ 1 million dollar nest egg before they die. A million ain’t what it once was! I’m not near retirement and I don’t have a nest egg that size, but I found the end of the article to be very thought-provoking:
“When you are in your 50s… you can try to save as much as you can and try not to get accustomed to a lifestyle that you won’t be able to afford later on”
If a retiree is drawing conservatively from a $1 million portfolio and taking Social Security, that might look like $61,000 per year. Nice, sure, but not the kind of cash that will have Robin Leach calling you to be on “Lifestyles of the Rich and Famous”. Cranking up the “lifestyle” too high during your working years and you might find retirement to be a rude awakening. If you are used to saving, and living a comfortable yet not opulent lifestyle, your retirement income might feel a whole lot like what you have been used to.
It seems one of the big barriers to creating wealth (aside from debt) is what goes on in our own heads. Or, as the article implies, what lifestyle we think we deserve to be living. It might sound like: Someone with my income wouldn’t drive a used car… I have a full-time job, so if I want Starbucks, I am darn well going to have it…. My family doesn’t ‘do’ leftovers… All my neighbors have a cleaning service… I think that we already live a fairly modest lifestyle, with the exception of vacations. This summer, though, a number of bloggers have opened my eyes to some areas where I have been unaware of my own lifestyle beliefs. If you haven’t met them yet, check out Creative Savv and The Prudent Homemaker. They are both showing me ways to create a healthy, frugal and less wasteful lifestyle … and I’m tuning out my inner brat who demands “Champagne wishes and Caviar Dreams.” Now I am off to pick (more) zucchini for dinner tonight, inspired to save a little more towards the things that really matter to me.
Have you ever given yourself a lifestyle adjustment?