FREE NEWSLETTER
WHAT DO WE MEAN BY an “enjoyable” retirement?
I suspect there are as many answers as there are retirees. But one thing remains a constant: the need for an adequate income. Given a choice, I don’t think many people would choose to live a frugal, barely financially sufficient retirement.
My father retired at age 66. I say “retired,” but the reality is one day the owner called him into the office and said he was no longer needed. My father loved his job selling cars and had done it for decades. The next day, the owner called my father, literally crying over what he’d done, but he didn’t change his decision.
To say my parents weren’t prepared for retirement is an understatement. There was no pension or retirement plan. They had $30,000 in a checking account, plus some shares worth $2,625. Their sole income was Social Security. They survived financially because my sister and her family lived with them and shared expenses, including the mortgage.
Did they enjoy retirement? They never complained. But they also did next to nothing—no travel, no entertainment except playing cards every Saturday night with my aunt and uncle. My father died at age 78 from emphysema and heart disease, the result of years of heavy smoking. My mother died 17 years later, at age 87, her body riddled with cancer that she never mentioned to anyone, including a doctor, until we forcibly took her for treatment when she could no longer stand the pain. Despite my request, a doctor told her she had cancer. She died the next day.
During my career, I spent many years helping retired employees with their retiree benefits. I also received hundreds of letters from retirees begging for a cost-of-living adjustment to their pension. Those letters had an impact on me.
My views on saving and retirement income are clearly influenced by my parents and by my experiences.
In the years immediately before I retired, I had no target retirement date and certainly no notion of retiring before age 65. I didn’t plan to travel or relocate or even downsize. But I did think about income. Frankly, based on the stories I’d heard from our company’s retirees and the unions who represented them, I think I was afraid of not having sufficient income for the rest of my and Connie’s life. That may have been illogical, given that I have a pension which—when combined with our Social Security—is equal to my job’s base salary. But it doesn’t seem illogical to me, not even today after 14 years in retirement.
I didn’t want anything to change after I retired, and I certainly didn’t want our financial situation to force me to make changes. I often read that, upon retirement, living expenses decline because there’s no longer a mortgage, commuting costs or any need to save for retirement. But while that’s clearly the situation with others, it wasn’t our situation: We were already used to living without a mortgage payment and I had no commuting costs because I had a company car.
What about saving for retirement? Because I knew I’d have a pension, there was no need to save huge sums every year for retirement. I saved 10% of my pay in the 401(k), though the percentage was lower during the 10 years we were paying our four children’s college costs.
There’s no doubt that, absent my pension, our lifestyle before and after retirement would have been very different. That makes it hard for me to understand how others manage to retire in their 50s on savings alone. Because of my pension, we never had to save like that, so we were used to living on a bigger percentage of my salary.
Moreover, the 10% going into the 401(k) was easily offset with our retirement’s increased discretionary spending, mostly on travel. In retirement, our annual health insurance premiums have also increased many times over, so today they cost the two of us $16,515 a year. Meanwhile, inflation has eroded the buying power of my pension. Indeed, inflation alone makes me wonder about the long-term viability of a very early retirement.
I was recently told I need such a high retirement income because I had to maintain our “sumptuously rich,” “luxurious” lifestyle. I acknowledge nearly everything about me isn’t typical for my age, including income, net worth and my views on many things. But we don’t live lavishly. In New Jersey, where we live, many teachers have a six-figure income.
I do want to maintain the lifestyle from my working years. I don’t want to be in the position of cutting back out of necessity. I make no apology for having the resources and desire to help my children when they hit a financial bump, temporary or otherwise.
Some people are super-savers during their working years, including many HumbleDollar readers. That makes a lower income in retirement less of a shock, but it’s hardly typical of the broader population. As of 2023, the U.S. personal savings rate was 4.5%.
I can’t buy into the ability to save 30% to 50% of income. Retiring in your 50s is outside my reality. Even with a pension, retiring before I did at age 67 wasn’t possible for me—not with four children to raise, put through college and pay for their weddings.
According to the Bureau of Labor Statistics, as reported by Yahoo Finance, the average income of someone 65 and older in 2021 was $55,335, while average expenses were $52,141. To me, this suggests little financial flexibility during retirement, especially for those without a mortgage-free home. In fact, I find it a bit scary.
Everyone has different priorities. For some people, maybe spending will decrease in retirement, there will be no major financial emergencies, inflation will be modest, the quiet life is just right, and being able to retire early is worth the sacrifices involved.
I’m just not that person.
Richard Quinn blogs at QuinnsCommentary.net. Before retiring in 2010, Dick was a compensation and benefits executive. Follow him on X @QuinnsComments and check out his earlier articles.
Want to receive our weekly newsletter? Sign up now. How about our daily alert about the site's latest posts? Join the list.
Maybe a good question to ask people what they their income was 20 or 30 years ago. Then ask if they could live on that today. It’s basically (except for social security inflation increases) what they could face 20 or 30 years into retirement.
What make personal finance so difficult (and interesting) is that every single person or couple has a unique situation. Would that a cookie cuter formula worked for most people.
Good point
Thanks for this interesting article Richard.
My mom and dad divorced when I was 5. I only mention that because it will explain why I refer to two dads and two moms.
Both of my fathers were military career soldiers. My father retired in 1974 after 30 years, and died in 1980, at age 53. My step-father retired after 24 years in the Army and 16 years as a Capitol Police Officer, in DC. He passed away at age 93. My stepmother received my father’s military retirement and his small social security benefits and when she passed in 2010, my 2 sisters and I inherited @$285K, including her home. She lived a relatively comfortable life after my dad’s death.
My step mother never worked outside the home, while my mother did work from time to time, overs the years she and my step dad were married, her income was never such that they counted on it for living expenses. In her second marriage, they had no children.
I celebrated my 50th Wedding anniversary this past weekend, on June 23rd. During our 50 years of married my wife worked a total of 15 years, (according to her Social Security Records) of which 6 years were full-time and the remainder basically “Kelley Girl” situations of a few weeks at a time, primarily in the years our children were in grade school. Her income was never used for normal expenses. Taylor whenever she wanted something that wasn’t in the current budget, she would get a Kelley Girl job, earn enough for whatever it was, and come back home.
I retired I January of this year, after 54 years in the workforce, including my 2 years in the US Army, from 1968-1970. I waited until 70 to file for my social security, maxing out my benefits, primarily to assure my spouse of a higher than average benefit if I predeceased her. My first job out of the military was with Ford Motor Company and had a pension. A later employer, Mitsubishi Motors Corporation of America also had a pension. At age 55, both companies offered me “buyouts” and I took those funds and converted them to Self Directed IRAs.
When I retired in January, I took my 403b Balances and rolled them over to self directed IRAs as well…one traditional and one Roth. Presently these funds, along with my self directed IRAs from my two pensions are invested with Vanguard and I am not taking withdrawals from them.
Our Social Security benefits provide @111% of our standard living expenses. (including 10% annually in charitable giving) and we have additional funds growing inside of Fixed Indexed Annuities, with Income Riders. It is my current plan to let them grow for the next 76-7 years before “turning them on.”
Bottomline…we will enjoy a retirement income of @$100K plus inflation annually for the foreseeable future, for which I am grateful and for which I worked my butt off, for 54 years. My highest earning years were my last 15 years and those years helped secure our retirement as I was debt free for 14 of those 15 years and saved a consider percentage of my income.
Our first 2-4 years will include travel, and like you, my wife wants to visit all 50 states. With the state of flying these days, we will be driving a lot of the time, but I do have over 500k miles on both Delta and American, so we might do some flying as well, especially when we go to the Western US. Otherwise, absent doing something stupid, we should enjoy a comfortable retirement.
Both of my children are college grads and they graduated without student loans. Unfortunately, neither of them has blessed us with grandchildren, and at their current ages, it is highly doubtful that they ever will. I only had one daughter and one wedding to help with, so I was also blessed there.
Thanks again for another interesting article. It gave me the opportunity to remember how grateful I am to be where we are and in a position to continue helping our children and others.
I enjoyed your life story much of it similar to mine. I was in the army in 68-69 as well.
One significant difference which has a strong influence on spending is we have 11 grandchildren and 2 step grandchildren. Except in winter I figure we spend fifty to sixty dollars a month on gas and tolls just going to games, plays and concerts, etc. Add various gifts to that and 🤑
I wish we had those grandchildren, but I am beginning to suspect that my children got together and decided if they didn’t give us grandchildren, we would spend all our money on them! HA!
The idea that we’re going to spend less in retirement than now makes no sense. Of course we’re going to spend a lot more. My commuting cost is $250/mo. My wife’s is about $200/mo. That’s the only cost that’s going to go away. Everything else will be constant or increase. Travel, eating out, having to buy our own computers. Posttax health insurance. And with grandkids expected soon…
Take it from experience with grand kids, you are right.
There are a surprisingly large number of well-off retirees, who seem to avoid mention in the press. I recently read that to be in the top 5% of the 65-74 crowd, you need $5.7 million in assets or more. I suppose most of them live in modest houses and drive old cars, that’s why nobody knows about them.
Very true. I know many of them, but you wouldn’t know them if you saw them.
Thank you Sir Richard! Your story opens many thoughts for me.
I’ve been incredibly blessed in my financial life by learning and doing things that would make retirement funds as large as possible.
“Time and Consistency” was burned into my brain and of course, starting early in life and continuing as long as I wanted was huge!
I started an IRA early, when I had a bonus or payout from my work it went into that. I moved that account 3 times to different investment firms and each time got a bonus to put the funds with them. Doing this built it quite a bit.
I worked for 2 companies that offered defined benefit pensions. The first job was with a company known for a good retirement and I’ve had that pension for 23 years and counting. The last job had the amount payed out tied to time worked and earnings, which I maximized.
My Social Security also is at the top pay I could receive. My final statement has 52 years of earnings reported.
I actually have quite a bit more money in retirement from following this plan. Taxes and IRMAA do take their portion, but I’m in good shape still.
Anyway, I say all this only to show a different kind of retirement planing that people can follow, but learn and DO with discipline is the key.
But, I try to tell some 30’s and 40’s folk about this and they have doubts…. Sad I think.
Yes, indeed, time, consistency and patience are the key.
“absent my pension, our lifestyle before and after retirement would have been very different. That makes it hard for me to understand how others manage to retire in their 50s on savings alone”
in our case, the formula was two college degrees, two professional careers, saving and investing, and zero kids.
That I can understand. In my generation there was one job, multiple children and I was first in my family to obtain a degree after starting my first job as the lowest paid person out of 10,000 employees. Few people retired before age 65.
Enjoyed the comments about your Dad–I suspect he was as productive on his last month as he was a year earlier. My parents lived much like yours and traveled nowhere but with large gardens, lawns, and flower beds were perfectly happy. Of course if you are a machinist not many repair folks showed up at our house.
They had money as they went through the Depression, like your parents, and lived a frugal life. We all live differently but planning early in life to save and invest for retirement can allow for choices.
Would you please provide a breakdown or other explanation for why your post-retirement, Medicare-eligible costs are so high? My wife’s and my costs come to about $5,820 or less (not counting deductibles). This is for Medicare A, plus a high-deductible Medigap F or G policy. (Our Medicare D now runs something like 50¢ per month each, for some reason.)
Regards,
(($; -)}™
Gozo
It’s just a combination of Medicare A, B and D, IRMAA premiums and the cost of standard Medigap G. We were forced into Medigap by my former employer in our 70s and we are paying age adjusted premiums of about $275 each just for plan G premium.
Thanks for sharing this info. We keep our eye on the ever-present threat of IRMAA. Even at the number you cited above, boy! My wife and I were paying something like $24,000 per year, with high-deductible, pre-ACA plans, for a long time. You mention “former employer,” which makes me mildly curious about how you’d calculate any employer-provided coverage. (I say “mildly curious” because we never had that employer-subsidized benefit, and so can’t compare.) We went 40-plus years knowing how much more even high-deductible coverage costs. Most job-holding Americans have no real idea of how out of whack, economically, our healthcare system is. Again: thanks.
(($; -)}™
I don’t think IRMAA is too bad. If you are retired and have an income over $200K, yes, you have to pay IRMAA. Would you rather have an income of $50K and pay no IRMAA and no income tax? Not me!
The day I retired my premium for both of us was $197 per month as a Medicare supplement and a separate Rx plan.
Of course IRMAA can have a big impact, but that Plan G premium seems high. My Plan F premium is $195. Maybe another result of living in a HCOL? (And be thankful your employer didn’t force you into Medicare Advantage.)
It’s because we didn’t enroll until we were 76 and 81 when my former employer dropped our coverage. Medigap is able to set premiums based on age at enrollment because coverage is guaranteed.
Depends. A majority of plans are attained age, but not all. A few are issue age, and AARP/UH has community-rated plans in my state.
Sorry I misread your comment
“being able to retire early is worth the sacrifices involved” As I have written here before I retired at 53, and there were no sacrifices involved. That was in 2000, with a pension and retiree medical. I took my own Social Security at 70, but my pension, Social Security and RMDs are not close to my final salary, adjusted for inflation. Now I am living in a very comfortable CCRC I am starting to draw on my portfolio for the first time. Of course, choosing to have four children would have changed the equation.
The realization that my pension would have no COLA is why I saved considerably more than 10% of my salary. I also lived below my income, but I still had a comfortable life style. As with RMDs, just because the money is there doesn’t mean you have to spend it.
But Kathy, is your story an apples to apples comparison with the ability of others to do something similar?
Back in your first HD article you explained some of the life choices you made. Didn’t they have a big impact on your saving, travel and spending?
I couldn’t have done it without a pension, but back in 2000 I was hardly alone in having a pension. Didn’t your life choices have a big impact on your saving etc.?
I think the difference between you and many is how much you helped your children and it didn’t impact your retirement. Many can’t afford to do so. Having said all this, I believe my wife and I feel similar to you. Travel won’t be that big of a deal if we go or don’t. We’re in our fifties and can’t stand a flight longer than 5 hours. As long as we don’t have to take a lifestyle cut, anything more is gravy. Lucky, I believe this is more than possible for us based on our saving and future pensions like you.
I dislike flying these days too, but we substituted road trips. Three times around the country so far and have been in every state at least once.
Interesting story and personal point of view.
You mentioned “During my career, I spent many years helping retired employees with their retiree benefits.” Could you please elaborate what that entailed? Did it always turn out to be beneficial for the retiree?
I managed employee benefits for a large company for several decades. We conducted monthly educational seminars at various locations, we held large gatherings where we brought in SS speakers and financial and insurance experts. We provided weekly educational communications about health benefits, pensions, 401k, etc. I attended retired employee clubs around the Country to explain changes and answer questions.
Did it always turn out to be beneficial? I like to hope so, but i doubt it. Like employees, many paid no attention or simple never participated in anything.
By the way, all the things I did were done away with shortly after i retired. Employees and retirees are way down the list of important priorities these days.
Thanks for your response! Cost cutting is always an ongoing issue. Many times, those in charge of meeting that goal end up losing their own job. My company went through retirement plan changes also. It’s never a better benefit for the employee, but is sold to believe that it is.
Dick, thanks for sharing your family experience and basis for your financial thinking. It made me think of a couple of things. First, believe you have written than Connie did not work out of the house. Many couple’s today feature two professionals making comparable salaries. What would your savings rate have been if Connie earned a salary equal to yours?
Clearly your financial planning was influenced by having a generous pension. I understand that thinking. My company stopped enrolling any new employees in the pension in 2006. When my division of Lockheed was sold in 2010 and it seemed likely our pensions would freeze, the employees were apoplectic. They managed to keep it going for a few more years before it was frozen. The anger in the workforce was amazing. I figure the final years I missed cost me over a $1,000 a month. But I received very little sympathy from all my fiends and family who had no pension to count on. I’m grateful I get what i get.
The last thing I noticed was you routinely refer to your “base salary”. You’ve previously written about having 2 pensions (one qualified and one non I assume), and bonuses as you reached the C-suite. For the vast majority of the engineers I managed and worked with, base salary = salary. There were occasional awards or bonuses, but they were not a significant part of their compensation. Their retirement was based on a 401K, maybe some pension, and SS. That’s the reality for many, and they live with those resources.
Yes, Rick i suspect if Connie was employed we would have saved virtually all her net income.
From the month our first child was born our lifestyle and nearly all spending was based only on my salary alone. With the exception of a major remodeling, all my bonuses and non cash compensation was invested. By the way, people at manager level also received bonuses and many stock options too. All that started after i had been working 30 years or so.
My two pensions are only because of IRS limits on what can come from a qualified plan nothing extra above what the basic pension provided.
I closed the company pension plan to new hires in 1995 under pressure to cut costs, but replaced it with a cash balance plan ( there was an immediate vested 401(k) as well. A couple of years after i retired the old pension plan was changed to lower future benefit accruals.
My pension based on nearly 50 years of service had everything to do with our retirement saving and lifestyle.
My harping on the need for a steady income stream comes from knowing how valuable that is.
Although my grandparents lived much longer than your parents, Dick, their quiet retirement lifestyle reminded me of my grandparents who had a small but prosperous dairy farm in upstate NY. After raising five children and all the physical labor of growing crops to feed the herd and their family, I had the impression that by their 60’s, they were tired and ready to just relax at home, though my grandfather continued to help his one farmer son with the morning chores for some years. I don’t know what income they had besides Social Security, but they seemed to live comfortably. I think retirement expectations in the 1950’s were also different – it mainly meant more time to spend “Vis’tin” with nearby family and friends, as they would say.
I think you are right. Retirement in the 50s was simple and shorter and “early” retirement was not popular. It’s a bit ironic that as people live longer many also want to retire in their early 60s or even 50s
We were still paying college bills when i was in my 50s followed by four weddings.
My views of spending in retirement have been colored by my parents’ experience. My self-employed professional Dad always lived below his means- well, but below his means, He did not take on any fixed expense he could not afford, even at the height of his career. I learnt also from his foolish indulgences- adding my sibling’s name to his financial accounts. When PSP(a rarer form of Parkinsons) struck, my sibling refused to sign any checks. Dad’s signature did not match. I ended up taking care of both parents. They literally could not withdraw a Rupee(India) from their own savings accounts. Lesson: Keep your money close to your chest. Take care of each other(spouses). The children can wait for your funds until both of you are gone.
My folks set a great example for me with their deliberate approach to saving and spending.
Having a bountiful retirement usually requires some forethought. During the final 10 or so years prior to calling it quits Chris and I had no debt and were able to save about a third of our income. Now between SS and a 3% withdrawal rate we have nearly matched our pre-retirement income. Now with no need to save any longer we are feeling pretty good about our finances. Of course old habits die hard; nearly all of the 3% IRA distribution is going into the brokerage a count.
Great article! I believe that if people can tune out both the media and social media blather designed to entice them to spend, the path is much easier. If you dissect it, most media today is designed to part us from our money. A lot of times it’s hard to even tell you’re being marketed to. Slow and steady wins the race which becomes easier if you ignore most outside influences.
Writing about the influences of our parents is a repeating theme. Congrats on doing what you knew needed to be done for your family. Hopefully we’ve all made the right choices based on our needs and backgrounds.
Nice story, Dick. I admire your work ethic, and your father’s. We are blessed that financial education and opportunities are accessible to more people. Would that more people would avail themselves of it.
I approached retirement savings as the first expense after tithing and necessities. With necessities kept very low, and living in a low-cost area, saving 30% plus was possible. But I was so driven to save enough that I would have taken other measures to save the figure I thought I needed to save, such as other work or moving residences. It was mostly fear of lack that kept me going, but also a strong desire to work. Recently, as the realization that the money has indeed materialized, my work ethic keeps me working. But some of the other emotions, whether lingering fear or the traits passed from my parents, are still part of the mix.
So true Richard. Many of our decisions in life, not only financial ones, are shaped by our grandparents and parents. Not just by what they teach us or don’t teach us but by their actions and life events. I am a grandson of strong, devout people who were caught up in the Armenian Genocide. They lost everything: their land, their homes, their livelihood and, for one and a half million, their lives. The stories of loss and displacement deeply affected their son, my father. He worked so hard to provide for his family. He was a prodigious saver, but never an investor. He was afraid of “losing it all”. Nonetheless they lived simply and we never did without. With their modest income they donated money and time to many causes. They were exemplary role models. Their stories and actions rubbed off on me and I hopefully passed on their work ethic, savings habits and charitable interests to my own children and grandchildren. Thank you for sharing your dad’s story.