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AMERICANS THINK they need an average $1.9 million to retire, according to a survey of 401(k) plan participants by Charles Schwab. Years ago, a finding like that would have terrified me.
I worked really hard in my younger years and socked away money diligently. But between paying off the mortgage, saving for the kids’ education and being hit by an unexpected divorce, there’s no way I could ever have amassed $1.9 million.
Still, I’ve learned to live well in retirement. How? By emulating my favorite movie, Scent of a Woman, starring Al Pacino. The lessons it taught led me to write my first book, Victory Lap Retirement.
In the movie, Pacino plays retired Army Lieutenant Colonel Frank Slade, a blind and bitter alcoholic. He survives on a disability pension, living in a converted garage behind his niece’s house.
Once an aide to President Lyndon Johnson, Slade knew the high life. But now he spends the bulk of his time alone, slumped in an armchair, feeling miserable and sorry for himself. He knows his best days are behind him.
Slade comes up with a plan to go out with a bang (pun intended). The movie is filled with a series of last-chance adventures that are deeply pleasurable to Pacino’s character.
He uses money saved from his disability payments to travel by limo to New York City and check into the Waldorf Astoria Hotel. He gets to dance a tango with a beautiful woman, drive a Ferrari and flirt with a seamstress as she fits him for an expensive suit—the last one he will ever own.
It’s his last hurrah. To end his trip, he plans to don his Army uniform and then shoot himself with his service pistol at the Waldorf. But, of course, it doesn’t turn out that way.
Like Pacino’s movie character, there are many folks who don’t have enough for a comfortable retirement. Fully 45% of U.S. baby boomers have no retirement savings, according to a report by the Insured Retirement Institute.
Retirees with no savings can try to get by on Social Security, but it’s no fun. It’s a constant struggle to pay the rent or property taxes, and for food, utilities and health care. I know plenty of retirees who never eat out, never go to a show, never take a trip. They can end up angry and bitter, just like Pacino’s character.
I never wanted to live that way, which is why I’ve been frugal all my life. I scrimped, saved and made sacrifices, so I could provide financial security for my family. I know what it’s like to take the kids on vacation—and yet feel like I couldn’t afford all the fun things we wanted to do.
Now, the kids are grown, I’ve achieved financial independence and I want to do all those fun things that I didn’t do back then—while I’m still healthy enough to enjoy them.
My basic living expenses are covered by pension income and savings. I withdraw from my savings at a sustainable rate. I pay for my peak experiences with the fun money I earn from part-time work.
Now that I know I won’t run out of money, I don’t worry how much dinner will cost at a nice restaurant. My goal is to live better than I did before retirement by enjoying as many peak experiences as possible. I want to do what Slade did—except for the suicide part—and make it last for as long as I can.
I feel like I’ve won the game and I want to take a victory lap in retirement. I have my freedom back. I’m happy to work part of the time—but only on my terms and only doing things I love.
Mike Drak is a 38-year veteran of the financial services industry. He’s the author of Retirement Heaven or Hell, published in 2021, as well as an earlier book, Victory Lap Retirement. Mike works with his wife, an investment advisor, to help clients design a fulfilling retirement. For more on Mike, head to BoomingEncore.com. Check out his earlier articles.
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If you don’t have LTC insurance you may not be fully prepared. My LTC policy has increased in premium by less 3% per year since I bought it at age 56.
For me, working in retirement provides some fun money but my work teaching financial wellness also provides purpose and allows me to help others. I’m not built for 100% leisure; I need purpose and a reason to continue to learn and grow.
I think Mike is spot on. The extra money is great but meaningful work provides many more benefits beyond the money.
So the secret of winning retirement is to continue working at a part-time job.
It all comes down to what type of retiree you are and what will make you happy. Working makes me happy and helping others through my work makes me really happy. Maybe I’m weird?
Why not? That might not be the right answer for everyone. But for a lot of retirees — assuming they can get beyond the silliness that supposedly “you aren’t retired if you’re still earning money” — a part-time job can provide not only a little financial relief, but also a sense of purpose, something we all need in retirement.
I never realized how much money Social Security will pay us in retirement. We won’t draw for another 4 years but the estimated amount my wife and I will receive will be over $71,000 in 2021 dollars. We have saved and invested far more than we’ll ever need since we made the assumption to not rely on the government for any of our income. However we’ll gladly take it and pass down most of our money to our kids.
My wife and I both waited until 70 to start SS. Our combined benefit is $83,652 which will soon increase to $88,586. As you noted, this benefit allows us to help our children and grandchildren as well and provides us considerable peace of mind.
Hi steveark and thanks for posting. I’m impressed, based on the 4% rule the $71,000 combined you will receive is equivalent to $1,775,000 in retirement savings.
Thank you!