My Retirement Dreams…? Get Real
by Mike
Cobb, 26.
Sep, 2011 Sorry for the depressing
title to the article. But seriously, I was disappointed recently when I saw a
commercial for a major US
brokerage firm. There sat a stately looking, white haired gentleman who looked
like he could be the poster child for AARP. He was talking about his
experiences with some other brokers who discussed things like enjoying a vineyard
in retirement. As the picture fades, the tag line to the commercial is, “A
vineyard? Get real.”
OK. At some level that
makes sense. Based on the hard economic realities imposed by the markets and
real estate values the past three years, many of us may not be able to afford
all the things we’d hoped for in retirement. In fact, the USA Today recently
ran an article on the front page of the Money Section talking about just how
much less the Baby Boomer retiree has saved for retirement.
Both the article and
brokerage commercial ask the tough question, “Will my retirement savings be
enough?” This of course is a very valid concern. But the tag line to the TV
commercial “Get real,” just seems so glib. As if trashing 50 years of hopes and
dreams is simply like tossing out yesterday’s newspaper. How very sad indeed if
millions of Boomers headed into retirement are thinking this way.
But there is good news
for folks open-minded to see and hear it. There are simply some strong,
wonderful alternatives to throwing away your lifelong dreams.
Think
Outside-the-Box.
My daughter and I were
talking one morning recently and the subject of pushing a rope came up. I told
her that something I was working on felt like “pushing a rope” and that you
just can't do that. I explained that ropes have to be pulled along, just like
some problems, or in many cases managing people. Without missing a beat,
however, she looks up at me and says that she can push a rope. I must admit, I
raised a skeptical eyebrow but went on to say, “OK. Show me.”
Not having a rope handy,
she reaches up and unclasps her necklace. She proceeds to lay her necklace on
the table in a straight line. She then puts her finger in the middle of it and
pushes it towards me. “See Daddy. I pushed a rope.”
I just sat there for a
second and realized how short sighted I had been. Here was an outside-the-box
solution. She clearly saw an innovative way to “push a rope” and rolled with
it. In fact, there are almost always multiple solutions that we don’t easily
see when it relates to our lives. This is especially true in highly emotionally
charged issues like when we are faced with less income and savings than we had
planned for in retirement.
When faced with
seemingly impossible situations, for instance, not having enough saved for
retirement, we can imagine the worst and become paralyzed with fear. We may
feel like our backs are against the wall and that there’s no hope. We may
despair our choices, or lack of choices, because we don’t have enough saved. In
the brokerage commercial we get to hear the man talking to himself about being
responsible and having enough money for retirement. He expressed the concerns
that I guess most of us have, “Do I really have enough for retirement?” “How
can I make it last? “ “What are my sensible choices?”
These are in fact great
questions to be asking. Taking responsibility is the hallmark of excellent
character. And if we keep our thoughts “inside the box” our choices are in fact
very limited. Ernst and Young made a study back in 2008 and it showed that
retirees will have to cut back on average by about 25% to avoid outliving their assets.
This is a hard economic
reality. But does it have to equate to suffering?
But just like you really
can push a rope (and yes wetting it and freezing it is another way) there are
multiple ways to face the reality of your financial situation and still enjoy
many of your hopes and dreams being fulfilled in spectacular ways. Certainly
one of my suggestions is to look overseas for a retirement location.
Living internationally
is an outside-the-box solution that more and more folks are considering. The
paradox is startling. You can live overseas for a third to a half less and have
a higher quality of life. That’s quite something isn’t it?
The reason many folks
don’t initially think of leaving North America
is that it simply lies too far outside their radar screen and comfort zone. How
you feel, fortunately, is something you can change.
For many people now the
option of moving overseas is very real and taking on greater importance every
day. If you are reading this then you probably already know that you know it is
possible to have an ocean front, beach condo for less than $200,000, a home on
a golf course for less than $150,000, and yes, even a vineyard estate for about
10% of what you’d pay in Napa Valley.
On the flip side,
however, people do sometimes send me a critical note saying that prices of real
estate in Latin America are now the same, or in some cases even more than in
the US.
This is especially true in the hardest hit areas like South Florida, Phoenix, and Las
Vegas. While this is true and the acquisition cost may
be the same, or in some cases lower, if you look at the ownership costs over 20
years, a different story emerges.
Just HOA/COA fees,
insurance, and taxes can be hundreds of thousands of dollars more costly in the
US
over a 10-year period. Most of imagine living for 20 years or more after
retirement I’d guess. The difference then becomes staggering. That is saying
nothing about the quality of life. Imagine having a maid and domestic help for
just a couple hundred dollars a month. Imagine… no more chores. What a nice
thought, and certainly a luxury at first, but maybe more of a necessity in the
future. As we age, having help around the house we can afford will save us tens
of thousands of additional dollars we might spend in assisted living as well.
The bottom line is that
there are no perfect answers. Life always consists of trade offs. Are you
really going to be able to have the best of both worlds, everything from North
America just a 2 hour flight south in Latin America?
No of course not. Trade offs are a reality of life, just as having a smaller
nest egg is an unfortunate reality for most of us today.
The real bottom line is
that if we are open to new ideas like living south of the border, we don’t have
to just write off and toss aside 50 years of dreams and hopes with a glib “Get
real.” These dreams are part of who we are and trashing them is tantamount to
killing part of ourselves. We can still have these dreams if they are important
to us. They may just come packaged with a short culture shock.
So, I’m sorry Mr.
Stockbroker. I don’t buy it. If I want a vineyard, there are still ways to have
it within the fiscal constraints of my new reality. The mind of a child is a
wonderful thing. Seeing a simple outside-the-box solution to “You can’t push a
rope” was as natural to my daughter as many folks now seeing an outside-the-box
solution to, “How do I still realize my hopes, dreams, and ambitions on the
limited resources I have for retirement?” A fantastic outside-the-box solution is
here, right now, and waiting to be discovered and created in your mind. Free
yourself from the limits of thinking in only North American terms and see just
how big the worlds of opportunities are for you.
Source: http://www.ecidevelopment.com/blog/baby-boomers/my-retirement-dreams%e2%80%a6-get-real/