According to the Survey of Consumer Sciences, almost half of all households in 2022 had no retirement savings. None. Of those with a retirement account, only 26% had more than $100,000 saved. We are a country of people who have good intentions, but more often than not, life just gets in the way.
The choices we made
While Gene and I do have a retirement account, it is not what it should be for us to be confident in our retirement. Gene stayed home and raised our children for sixteen years, playing in a band as his primary means of income for that time period. Like all couples who choose to have a stay-at-home parent, that was a financial choice that has followed us ever since. His earning power when he re-entered the workforce was a fraction of what it would have been had he chosen a career in his early twenties and worked his way up of that decade and a half.
Even knowing the financial ramifications, we would not have chosen a different path for raising our kids. But because of that choice, we spent a lot of years making a lot less money than our dual-income neighbors, friends, and family.
You don’t have to be defined by your choices
Thanks to the magic of the internet, I know that we are not alone in being under-prepared for retirement, in the pension/401K sense. There’s a good chance that some of you reading this are in the same boat. Side note for the young people in the audience: if you happen to be under 30 years old (looking at you, older daughters), start investing now, even if it is $100 per paycheck. Find a compound interest calculator online and let it forecast your retirement balance for you. You’ll be amazed.
For the rest of us, we need to get creative. As I mentioned, Gene and I have a laughable 401K balance for people our age. And we will still fully retire at age 65 with enough money to live on for a few decades and beyond while traveling the world and experiencing the food and culture of some amazing locales. It just required thinking outside the box.
Leverage the nest
As people in our 50s, nearing the “empty nest” stage of life, our house is our most flexible asset.
My (Steph’s) parents told us years ago to buy as much house as we could afford. Compared to our friends, our housing dollars didn’t go very far, but we bought what we could, fixed them up, and sold them for a profit (except for one where we took a big loss – but we never should have bought that house in the first place). But we never stayed anywhere long enough to build up any serious equity. Sweat equity will only get you so far, unless you’ve bought in a booming market (we did that once).
We moved around A LOT before we got to Missouri (we’ll do another blog post on the importance of roots). But we’ve been in this house for almost 15 years. We never did a cash out refinance and last year when interest rates were crazy low, we refinanced to a 15-year mortgage at 2.25% (which was how many years we had on the old mortgage anyway, but now we’re paying a lot less interest and more goes to principal each month).
The sale of our house will not fund our nomading lifestyle, but it will provide us the beginning of a safety net to lean on while we travel. Things will go wrong, one of us may get sick or injured, we may need to change our travel plans and fly back to the United States to handle issues that come up here. That safety net will help us absorb some of those moments without having to change our lifestyle.
Minimize your life, then minimize some more
We outlined in the Finances of Nomading post that without debt or housing maintenance, we will be able to put a significant amount of our money into our savings each year (yes, we will be talking to a financial advisor to discuss the best ways to store and manage this savings over time).
If you read our nomading budget post, you may have noticed that is very light on any category that could be described as “stuff.” We will have storage unit in Kansas City to house a car we will use in the states as well as a few boxes of winter clothes and heirloom items our kids are not yet in a position to inherit. But that storage unit will not be stuffed to the brim with possessions, and it is not going to be a place where we stockpile mementos from our travels. We are embracing minimalism in all its forms.
This minimalistic lifestyle will allow us to live on a little over half of our annual income (see full breakdown here). Over the next ten years, this is where we will grow the significant portion of our nest egg. With very conservative rates of returns we will be able to comfortably retire at 65. If the market odds fall in our favor even a little bit, we can shave several years off that number.
This post is not geared towards the people who have an income and asset ratio that fully supports buying big toys (cars, boats, RVs, etc.) while still fully funding your 401k. We’re talking to those of you who lie awake at 2am wondering how they will ever retire. It’s not too late to start. Read books on minimalism (I recommend Your Money or Your Life), watch YouTube videos on minimalism. Find out how much equity you have in your house and make a plan to maximize that between now and retirement. Think outside the box and make a plan that both works for your situation and makes you excited for the future.
Finances are like a money diet
I’ve tried a bunch of different diets with the same result every time. I start strong, excited and full of hope, only to fall off when the new-ness wears off and we get into the day-to-day slog.
They say spouses should begin a new diet or workout routine together to have a support system and accountability partner. I will say the same for a financial plan. Your spouse (if you have one of those) needs to be all-in on the plan with you. Gene and I talk over our plan every morning over coffee. We also remind each other of our plans when the “buying bug” hits. We’ve said to each other more than once, “Do you want to have to sell that [insert shiny new toy here] in 2 years?” That stops most purchase considerations in their tracks. When we get on the road, the question will morph into “Do you have room for that in your suitcase?” The answer will pretty much always be no.
Your goal also has to be exciting enough to sustain you through the hard and boring times. When we are elbow deep in sanding woodwork to get this house ready to put on the market, we talk about spending weekends on the beach in a few years and that carries us through.
Find a goal for your future that can sustain you through the hard stuff. Maybe you want to visit every national forest or buy a tiny house on some land and unplug from the world. There is no wrong answer. It’s your dream!
It takes a village
In the end, it takes letting people in on your dreams to make them a reality. We’ve let the world watch as we work to realize our dreams. We have opened our finances and step by step planning to the world, so we can’t fall flat on our face! This blog helps us stay focused and accountable. While we hope that we can also inspire others to think creatively for their future, we also want to say thank you for keeping us on track to achieve our goals.
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