On the Simple Dollar a reader Jim posted the following question:
I am 62 years old looking at retiring at 85 based on my status and what others say you need. Scared to death and running out of time. I am a teacher(11 years) as is my wife. I have a little savings less than 50K in IRA’s, myself a pension from the school system and penitence from a former employer, wife has a 401 with the private company she works for. Money is tight, we live check to check. Seems like we spend our money trying to still raise our children and not any additional money for savings let alone gas for our vehicles. 150 year old house we live requires maint Lawyers for a custody battle of grandson and bills from our son as he had a bad accident and getting himself established. We need to buy another car soon for my wife as hers has like 200K miles on it.
I didn’t plan earlier and I don’t really have a clear plan now. Late 30′s I had a little money, and some starting about 11 years ago. I was busy chasing carrots and didn’t catch any. I am thinking I will need to work past 66 a few years and file for SS to try help save a little more. Thinking I need to find a business but really fishing for ideas. I have some trade skills as a hearing aid specialist that could lead to some employment on the side. I am hoping to sell this house in about 7-10 years for bit of profit and downsize. We are tied to this area for awhile until our grandson gets older(15 more years)
I really go from positive to negative about my situation. I feel grateful for what I do have and where I am, but feel so frustrated that I didn’t do things different with regard to my career decisions but can’t go back so I have to work with where I am and what I have.”
I responded to his post but got stuck in moderation (seemingly forever), so I’m reposting my suggestion here:
You can’t change the past, but you can change what you do from today forward.
>I didn’t plan earlier and I don’t really have a clear plan now.
You can change that by making a plan today. Here is what I would do – evaluate the situation realistically. It may be scary but facing reality today will be easier than putting it off longer. You mention a pension and some savings- that is at least a start. I would calculate what I would have to live on retiring at different ages.
The social security website http://www.ssa.gov/estimator/ estimates your SS payments and should be fairly accurate given your age. Call the manager for your pension and find out concrete benefit information. Total up your current savings- project your total savings using how much you are currently contributing. Get some quotes on how much income you could get from a single premium immediate annuity with that savings starting at different ages. This wouldn’t be a perfect calculation of your income at retirement but it should be a good first pass. If that number is bleak you have a few options- reduce expenses so that the amount is workable, save more to bring the income up, or work longer. Most likely some combination of all three will be your best answer.
>Seems like we spend our money trying to still raise our children
Maybe that is the key of your problem, how much of a difference would that money make to your retirement? Your children and grandchildren will eventually have to fend for themselves as you won’t be around forever. It sounds like you are giving to them at the expense of your retirement savings. Wouldn’t it be better for them to start taking care of their own finances sooner rather than later? Wouldn’t it also be better for them if you ease them into independence by decreasing the amount you give them over the next year instead of an abrupt adjustment when you are no longer able to help them out? Talk to your kids and tell them about your fears for your future, I suspect they will be willing to pull more of their own weight after they are aware of your situation.