How to Do A Last Minute Retirement
2 September 2006Is it even possible? Walter Updegrave at Money Magazine thinks it is, although he admits he might be hopelessly optimistic. He writes an article in response to a couple, 62 and 60 years old, who rent their house, have little savings, and make $120,000 a year gross. I’m a little more pessimistic about whether they can actually achieve a reasonable retirement savings even by age 68, when he recommends they extend their working lives to – but I’ve also never seen better advice on how to try. The important ones you might not have seen elsewhere?
Invest aggressively, but don’t go crazy. To boost the odds that your retirement stash will last 30 years or more and retain its purchasing power, you need to invest a sizeable portion of your assets in stocks.
He’s got some good commentary on how you can still be able to keep some of your money in stocks well into your eighties. The more important part of the advice, however, is not to go nuts trying to make up for lost time. Reading through personal finance articles about fraud, you’ll frequently see people getting swindled out of their retirement savings. Often, it’s as they’re nearing retirement. I always got the sense that people are vulnerable to scams when they hit that age because they feel desparate. Some older people I know getting into that age range seem willing to entertain get-rich-quick schemes that I thought were good ideas when I was 13. The reality is that you’re not going to find something that’s going to return 25% on your money to you, short of starting your own business. If someone can make that much on their money, they’ll do it themselves – and they won’t bother letting you in on the idea.
He also advises you to work part time and consider moving to another state. I’d add this – only move AFTER you’re both done with your jobs. You’re not going to find new ones of the same quality at that age, and you’ll need the money for the last few years when you try to save as much as possible. This blog has also been looking at retiring abroad, which isn’t for everyone, but which I would take a look at if I found myself forced to try to retire on a few hundred thousand.
Finally, the best advice is not to let yourself get into that mess in the first place. If you’re over 18 and you’re working full time, you should be saving for retirement – period. If you’ve been delaying it, look at how hard it is for this couple to meet their goals. Do you really want to hit 60 and be staring at retirement in 5 years, with no money in your pocket?
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