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THE DEFINITIVE GUIDETO BECOMING
The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 2
Contents Introduction: Meet America’s Successful Retirees• Traveling in Retirement: Betty Robinson went without when she was working so she could retire on her very own yacht! Cynthia and Brad Bowman sold their business and retired to Spain with school-age daughters and the family dog• Retiring After Financial Missteps: Steve Schullo and Dan Robertson lost more than a million dollars right before retirement, but now have a lavish SoCal lifestyle and a Tesla Spendthrift Carolyn Bushong and saver Alan Errickson retired while she still carried $20,000 in debt, but they now share two homes Barry Maher overcame going broke in his thirties to become a self-made millionaire Judy Peters regained financial control after an expensive divorce by working with a financial advisor • Retiring with Friends:
Barbara Fletcher, Nancy Fassett, and Margaret Sugg are real-life Golden Girls! They lived and invested together before and during retirement
• Affording Early Retirement Rick Cross reveals his secret of how this ordinary worker retired comfortably at 50 Harry Coleman explains his “bucket” system that allowed him to retire at 51 and live the life he chooses Linda and Mark Majors plan to live a life of adventure abroad despite their relatively modest savings. Will they make their dream a reality?
• Conclusions
• Thanks To Those Who Helped Us Tell America’s Retirement Stories
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The content of The Retiree Next Door is provided for general information purposes only and does
not constitute investment or professional advice. You could lose money investing. Prior to making
any investment, a prospective investor should consult with his or her own investment, accounting,
legal and/or tax advisors to evaluate independently the risks, consequences and suitability of that
investment. Some names have been changed to protect privacy.
The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 3
Introduction
Have you ever spent a sleepless night
worrying about funding your retirement?
You are not alone. Nearly 74% of
Americans are anxious about having
enough money to retire, according to a
survey of 2,286 adults by The Harris Poll®
in 2014.
You might believe that reaching a
comfortable and secure retirement – let
alone your dream retirement – requires
perfect money management. If you forgot
to save, went through an expensive
divorce, lost your job, became seriously
ill, made a major financial misstep, or
just started too late, well then, retiring
comfortably is simply out of your reach.
But that is simply not true. You might
as well conclude that retirement is
impossible for mere mortals.
In reality, there is no single, perfect path
to a fulfilling and secure retirement.
Even those individuals who face serious
financial challenges can find a way to
their happy second act.
To celebrate the many retirement paths
and lifestyles available to Americans,
we partnered with a talented group of
Certified Financial Planners®, wealth
managers and finance writers in the
MoneyTips community to interview a
diverse group of financially independent,
retired and semi-retired Americans,
including:
• Betty Robinson, whose frugal lifestyle
has allowed her to live on her yacht,
sailing the world.
• Cynthia and Brad Bowman, who sold
their furniture business and moved
their young daughters to Spain… along
with the family dog!
• Career educators Steve Schullo and
Dan Robertson, who lost over one
million dollars right before Dan’s
retirement, but managed to get it all
back.
• Real-life Golden Girls Barbara Fletcher,
Nancy Fassett, and Margaret Sugg,
who bought a house together in 1975,
and found a retirement community
where they could continue living
together.
• And you will also meet aspiring retirees
Mark and Linda Majors who, despite
not having a lot of savings, are
planning to retire abroad and live a life
of adventure.
Everyone profiled in this eBook has
taken a very different path to retirement,
and they are happy with the lifestyles
they have chosen. Their candid tales of
successes and missteps provide incredible
inspiration and insights to Americans
worried about retiring, as well as common
lessons that can help anyone to reach a
secure and enjoyable retirement. We hope
you enjoy their stories and find them as
inspiring as we do.
Marc Diana
Serial Entrepreneur & CEO
MoneyTips.com
The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 4
Meet America’s
Successful Retirees
The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 5
When Betty Robinson was working as
an information technology professional,
one of her brothers criticized her frugal
lifestyle. “He said, ‘You could do so much
more – you’ve got plenty of money!’”
That frugality allowed her to retire in her
mid 50’s and live fulltime on her 48-foot
Kadey-Krogen yacht, traveling between
the Chesapeake, the Florida Keys, and the
Bahamas.
Living the dream? Not quite. Missing
her life on land, she recently purchased
a summer cottage on Bald Head Island
in North Carolina, where she now plans
to spend her summers while still calling
the boat her home each winter. And
her brother? “I got to retire many years
before he did and I have a fabulous
lifestyle that he envies, and it’s a result
of purposely living in a more restricted
financial situation when I was younger.”
Live Below Your Means - Far Below ThemNot only does Betty have great discipline,
but she has always budgeted, starting
with her very first job out of college. Back
then, when she was earning $9,600 per
year, she used envelopes to keep herself
on track and make sure she didn’t spend
her rent money on entertainment.
“I lived within my means with the idea
that I wanted to retire much earlier than
my parents did, and I wanted to have a
fun time doing it,” Betty explains. She
certainly succeeded.
EARLY SACRIFICES LEAD TO EARLY RETIREMENT
LIVING THE DREAM ON LAND AND SEA By Emily Guy Birken, author of The Five Years Before You Retire
BETTYROBINSON Now in her 60s, Betty Robinson spends most of her retirement on her yacht
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The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 6
Know Where Your Money GoesOne of the keys to living below your
means is understanding exactly how you
spend your money. Betty recommends
documenting each and every dollar that
you spend in order to live your lifestyle.
“For a lot of people, a dollar comes in and
a dollar goes out, and they have nothing
to show for it at the end of the year. So I
do believe that you need to understand
– and you need to document – how you
spend your money.”
Betty still walks the walk. Even in
retirement, she still tracks all of her
expenses, although today she uses an
Excel spreadsheet instead of envelopes.
Consult an Advisor
Budgeting and tracking expenses are an
excellent way to increase your savings
rate, but most workers need a hand
figuring out where to put those savings.
Betty recommends getting involved with
a retirement planner early.
“If you have the wherewithal to pay for
a retirement planner, you would want
to at least get some advice in your 30s
and 40s, particularly if you are planning
on retiring in your 50s, like I did. Our
lifespans are longer, so the sooner you
start to understand what your finances
need to look like to sustain yourself for
forty years of retirement, the better.”
When Betty retired just under a decade
ago, she sat down with a financial advisor
to help her map out her financial future.
She wanted a plan that would take care
of her nautical lifestyle well into her 90s,
including the care and upkeep of her
yacht. Even though Betty is no longer
earning an income, she still meets with
her financial advisor once a year, and she
built potential investments – such as her
recent summer cottage purchase – into
her post-retirement financial plan.
“Part of the planning process,” she
explains, “is figuring out how I might
finance a house when I am no longer
earning an income. I planned when I was
making money, and I planned on how I
could make investments after I stopped
making money.”
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“From my vantage point, I see a lot of younger people living for the moment, and that’s fine, but those moments won’t exist later in life.”
The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 7
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BETTY OFFERS THE FOLLOWING ADVICE FOR ACHIEVING YOUR DREAM RETIREMENT:
1. START AS EARLY AS POSSIBLE Betty was raised by savers, and she was always expected to put some
money aside. “As a teenager, I was always expected to save, and I
was expected to pay my own way as soon as I was financially able to
and got on my own,” she says. This put her in the right place to be a
diligent saver throughout her career.
2. TAKE ADVANTAGE
OF EVERY WORKPLACE SAVINGS OPPORTUNITY Any time one of Betty’s employers offered a tax-advantaged savings
program, she would immediately take them up on it. That means she
always got the maximum company matching of funds and used every
savings instrument available to her.
3. SOCK AWAY YOUR BONUSES It took a lot of discipline, but Betty made a habit of putting almost
every penny of her bonuses into her retirement savings accounts.
“My job paid funds beyond my normal salary. So doing my best to
get every bonus I could earn and putting it away in my retirement
accounts was another important way to save.”
Betty’s retirement is living proof of
the old saying, “Good things come to
those who wait.”
“From my vantage point, I see a
lot of younger people living for the
moment, and that’s fine, but those
moments won’t exist later in life,”
she says. “I did this all on my own. It
can be done with enough planning
and enough forethought.”
The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 8
CHUCKING IT ALL TO RETIRE IN EUROPE - WITH KIDS!
PROOF THAT ANYONE CAN LIVE THEIR DREAMS By Kate Holmes, CFP®
Who hasn’t dreamed of retiring to an
exotic, foreign land? As a Certified
Financial Planner, I often encourage
people to discover what truly makes them
happy and then create a plan to pursue
it, rather than doing only what they think
they can afford or have time for. Mother-
of-two Cynthia Bowman and her husband
Brad did just that. One day, they realized
that the traditional path of marriage,
children, career, and saving towards
retirement was not working for them, so
they took drastic steps to create a whole
new life they love… and get to spend
more time with their kids, to boot! The “R” WordDuring their early days together,
retirement seemed to the Bowmans like
“that distant thing that you do in your
seventies”, a concept equating simply
to a way of ending your life. “We have
got to come up with a better word for
retirement - there is such a stigma to
it,” says Cynthia emphatically. Your
aim in life should be a state of financial
independence that you reach sooner
rather than later. I have made a few bold
changes in my life, and people often
comment that I managed it because
I’m unencumbered. But as a married
couple who started a successful furniture
store while raising two young girls, the
Bowmans are living proof that anyone
can veer off the traditional path and make
courageous life changes to achieve this
independence.
CYNTHIA & BRAD BOWMAN Cynthia and Brad packed up their dog Charli when they retired to Spain
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The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 9
When Doing Everything Right Feels WrongThe couple had been running their Los
Angeles furniture business for fifteen
years, working every day and putting
in sixty or seventy hours each week,
struggling to find quality time with their
daughters. They were burnt out. Cynthia
asked herself, “If the business closed
tomorrow, what would I have to show for
all this effort over the years?”
The thought of leaving the business and
re-entering the workforce in his fifties
was scary to her husband, Brad, who had
been a professional skateboarder and
renowned hair and makeup artist. They
had to find a solution that did not involve
going from one high-pressured career to
another. It was the book How to Retire
Early and Live Well With Less Than A
Million Dollars by Gillette Edmunds that
finally opened Cynthia’s eyes five years
ago to an alternative way of living. “I used
to think, ‘I might not even live to seventy.
What happens at that point? Am I going
to have enough in retirement to live
comfortably?’” she says. The book
highlighted creative ways of retiring
without needing millions of dollars in an
IRA or 401(k).
The family had always enjoyed traveling,
but they had mostly stolen a few days
here and there added on to business
trips to interesting destinations. Cynthia’s
dream was to retire and travel properly.
Over the course of a year, the Bowmans
developed this idea, planned, and
finally pulled the trigger. They sold their
business, rented out their house, pulled
the kids out of school, packed up Charli,
the family dog, and moved to Spain!
As you can imagine, moving to another
continent was no easy task. They had to
focus on the positive to convince their
young children that the move away from
friends, schools, and the only world they
ever knew was good. “We told them we
were finally going to stop working and
be Mom and Dad for them fulltime,” says
Cynthia. “And we were going to do it in a
really cool place. What kid is not going to
be excited about that?”
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“We have got to come up with a better word for retirement – there is such a stigma to it.”
The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 10
The Big Problem with AdviceWhen the Bowmans shared their early
retirement plans with their friends and
family, they faced opposition from all
sides. “No one understood what the heck
we were talking about,” says Cynthia.
“They meant well, but they would bring
up so many concerns: What if you go
broke? What if you have a terrible tenant
and your house gets destroyed? Are the
kids going to get bullied in school?” This
pushback made the Bowmans doubt their
bold plans, but today, they are glad that
they ignored the naysaying.
Even their financial advisor was anxious
about how long the Bowmans could
afford to chase this dream. “He is very
conservative, but we appreciate that
most of the time,” Cynthia acknowledges.
Although they did not follow his advice to
stay the traditional course, the Bowmans’
longterm financial advisor still manages
their life insurance and their daughters’
college funds.
The Dream Life in RealityThe Bowmans moved to Spain with a nest
egg in the low- to mid-six figures. About
half of their roughly $3,500-a-month
living expenses are funded by rental
income from their U.S. properties. They
draw about 10% each year from the
savings from the sale of their business
and inventory. If they continue at this
rate, these savings should last for ten
years. They have also been lucky: as the
Euro has weakened, the dollar exchange
rate is now close to 1:1 or 1.1:1, making this
the ideal time to live in Europe.
Although Cynthia would prefer to hold
onto their property assets for as long as
possible, her husband enjoys investing
and would at some point like to sell the
property off and put the money into
stocks. He has been doing well in the
market and the dividends the Bowmans
collect from his stocks are another source
of income. “I keep saying that we should
leave it and see how long we can let it
grow,” Cynthia shares. “We’ve been so
lucky because we haven’t had to touch
our assets or principal.”
Cynthia feels a great responsibility for
teaching her daughters, now eight and
fourteen, to take money seriously so
that one day they can do whatever they
want and do it well. “Where we live, it
is a beautiful thing because they are
picking up so much independence,” says
Cynthia, who blogs about her new life at
JoyJournist.com. “It’s a safe area here.
They take public transportation and buses
to school and sometimes they run out
of bus fare because they forgot to tell
me. They then have to walk half an hour
home. I would have never done that to
them in the U.S. but here it is fine. They
are going to be resilient and learn what
money is about.”
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The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 11
CYNTHIA’S ADVICE FOR ACHIEVING YOUR DREAM LIFE
1. SAVE YOUR MONEY, GROW IT, AND INVEST IT IN
INCOME-PRODUCING ASSETS THAT APPRECIATE IN VALUE (like real estate or a business), rather than saving X% to reach some
magic number decades from now. The Bowmans had built up a nest
egg mostly comprising the property they owned. They now rent out
their house, which was half paid off, a condominium and a commercial
warehouse they had used for stock, which had been fully paid for.
“I’m happy to say that property is a big reason we are able to do this,”
Cynthia confides.
2. MAKE SURE YOUR EXPENSES REMAIN LESS THAN
YOUR INCOME Independence is not about how much you make or how much you
have. Someone with passive income of $3,000 per month and monthly
expenses of $2,500 has achieved financial independence that is not
reliant upon a paycheck. Compare this with someone earning $9,000
each month, but taking on credit to spend five figures.
3. FOCUS ON WHAT YOU NEED People are often happy with less, just as the Bowmans are today. They
arrived in Spain with one suitcase each to start their new life. “I regret
that it took a move for us to simplify our life,” Bowman reveals. “We
lived with so much stuff – three cars, a boat – things we never even
used. The stress of managing a cluttered house was not worth it.”
4. WRITE DOWN A SCRIPT OF THE LIFE YOU WOULD LIKE TO
LEAD AND DO NOT WORRY ABOUT WHAT THE ANSWER IS Play with your imagination and explore the details of what it would
look like - what you would do, where you would go and what your
worldview would be.
5. AVOID DEBT AT ALL COSTS AND PAY IT DOWN QUICKLY Doing what you wish when you wish requires that you don’t carry
debt within your life.
6. TAKE CALCULATED RISKS
Ask many questions and seek advice.
“I want people to understand that I don’t believe you can get rich working your
whole life, “ Cynthia emphasizes. Follow your own path to find the personal
wealth that will truly make you happy, just as the Bowmans are doing.
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The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 12
HOW TO RETIRE SUCCESSFULLY AFTER MAJOR INVESTMENT MISTAKES By Emily Guy Birken
Retirees Steve Schullo, 67, and Dan
Robertson, 73, pulled off a neat hat
trick. Despite losing more than half a
million dollars nearly overnight in March
of 2000, a mere three months before
Dan’s retirement, they are both now
happily retired with a $1.5 million nest
egg, a gorgeous home in Rancho Mirage,
California, and a 2014 Tesla in the garage.
According to conventional retirement
wisdom, Schullo and Robertson should
not be enjoying their comfortable (and
in some ways lavish) retirement. Not
only did they face a huge loss, these
two career educators made many other
missteps in their planning:
• Neither started saving until they had
reached their late thirties.
• Based on bad advice from agents and
advisors, their first investments were
in annuities that were inappropriate
for their needs.
• When they did take control of their
investments and began buying mutual
funds, they overinvested in tech
during the dotcom bubble of the
nineties. That is why they saw their
nest egg drop from over $1.5 million
to $460,000 in a matter of months.
Schullo and Robertson live primarily
off their pension and Social Security
benefits that come to about $75,000
per year and plan to maintain the
principal of their nest egg indefinitely.
STEVE SCHULLO & DAN ROBERTSON Career educators who retired in 2000 with a $1.5 million nest egg
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“We thought we were diversified,” Robertson says. “We had hundreds of tech stocks. Itdidn’t occur to us that an entire sector could be experiencing a bubble.”
The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 13
Their success story highlights that the
path to retirement does not have to be
perfect, as long as you make intelligent
decisions along the way. Here is what you
can learn from them:
Educate YourselfSchullo’s first experience with investing
for his retirement was through an
insurance agent selling annuity products
at the school where he taught. Even
though it was unclear how the agent
was compensated – which made Schullo
somewhat wary – he went ahead and
purchased an annuity from her.
But that turned out to be a mistake. The
rates promised by the insurance company
in the promotional literature did not
match the actual rates he saw. Buried
in the fine print was the caveat that the
insurance company could reset the rates
as it saw fit. When he discovered the
bait-and-switch tactics, Schullo realized
that it was foolhardy to trust others with
his retirement decisions. He needed to
understand exactly how the investment
process worked.
“You have to be involved in your own
investing,” he says. “And you do not have
to be a professional or earn an MBA to
be an educated consumer.” Upon coming
to this realization, Schullo and Robertson
decided to learn as much as they could
about their options to figure out what
would help them grow their money.
Beware of FeesSchullo and Robertson started following
the work of John C. “Jack” Bogle, founder
and retired CEO of The Vanguard Group.
Bogle focuses on common-sense
investment strategies, with a particular
emphasis on the impact of fees. Just as
your investment returns compound over
time, so do your fees compound over
time. For instance, a 2% annual fee on a
mutual fund will eat away nearly
two-thirds of your investment over a
fifty-year time frame. For this reason,
Schullo and Robertson adopted a strategy
of investing in low-cost index funds
so they could keep their compounded
interest, rather than lose it to fees. While
it is nearly impossible to avoid any annual
fees, they are not the only charges you
need to watch out for. To avoid losing
more of your hard-earned money to
additional fees, Schullo tells everybody
one simple what-not-to-do rule: “Never
pay a commission when investing.”
Don’t Lose Your HeadPossibly the most overwhelming moment
in Schullo and Robertson’s path to
retirement was the day they lost more
than half of their portfolio when the
dotcom bubble burst. “We thought we
were diversified,” Robertson says. “We
had hundreds of tech stocks. It didn’t
occur to us that an entire sector could be
experiencing a bubble.” Though they were
frozen and stunned by their loss, they
kept their money in the market — which
is exactly the right course of action for
shell-shocked investors after a market
correction. Otherwise, investors who cash
out post-correction make their losses
permanent.
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The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 14
Two things helped Schullo and Robertson
recover from this mistake. First, they
stayed levelheaded at every point in
the bubble. “Our overnight loss was on
paper,” Robertson explains. “We had not
changed our lifestyle in any way because
of how well our investments were doing,
so we didn’t lose anything tangible when
the market took a dive.”
In addition, the crash spurred them to
adjust their investment strategy. After
2000, they began to invest in the whole
market, because the whole market will
rise over time. This strategy allowed
Schullo to retire in 2008, during the next
big market correction.
THERE IS ALWAYS HOPE SCHULLO AND ROBERTSON OFFER THE FOLLOWING ADVICE FOR ANY WORKER HOPING TO RETIRE AFTER A MISSTEP OR TWO:
1. LIVE FRUGALLY AND AVOID DEBT Both men grew up in small homes and were used to making do.
That meant they saw no need to go into debt just to be able to buy
impulsively and keep up with the Joneses. Frugal living was what
allowed them to weather the bursting of the tech bubble.
2. YOU CAN INSULATE YOURSELF
FROM THE EFFECTS OF INFLATION Schullo and Robertson are committed to energy conservation — hence
the Tesla and solar panels on their house to power both. However,
their conservation is not just about helping the environment. It is
also a way to protect themselves from the inflation of energy prices.
You don’t have to put up solar panels or buy an electric car to do
this. Simply being more mindful in your spending can help you avoid
inflation’s bite.
3. YOU DON’T NECESSARILY NEED A FINANCIAL MANAGER “There is nothing mysterious about investing,” Schullo says. “Anyone
can educate him or herself. But CNBC and its ilk all try to make
finances opaque.” Schullo recommends finding a fiduciary planner
through the National Association of Personal Financial Advisors if you
really want help handling your own investments. “But you do have
to be somewhat involved,” he cautions. “Go for low-cost, diverse,
indexed mutual funds.”
Schullo and Robertson are thoroughly enjoying their retirement, despite the
ups and downs it took them to get there. Their experience has helped them to
understand that a successful retirement is within reach for anyone.
“There is hope,” Schullo says. “But you have to learn a little bit about investing.”
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The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 15
HOW A SPENDER AND A SAVER FOUND RETIREMENT BLISS
By Richard Eisenberg, Senior Web Editor, PBS Next Avenue
Carolyn Bushong, 67, and Alan Errickson,
68, don’t do things the conventional
way, including — maybe especially —
retirement. Bushong, a psychotherapist/
marriage counselor/author, and former
financial advisor Errickson have been
a committed but unmarried pair for 27
years. They didn’t follow the traditional
pattern of quitting work simultaneously
and then relocating or aging in place. In
fact, they didn’t agree on what retirement
means, or even where they should
spend it!
Errickson, a Vietnam vet with a grown
daughter in Colorado, retired full-stop
from his Wells Fargo job in Denver
in 2012. “I just kind of coincided my
retirement with the Social Security date
and said, ‘That’s when it’s going to end,’”
he says.
Bushong, by contrast, is semi-retired,
dealing with clients part-time. “I never,
ever wanted to retire,” she says. “I love
what I do.” Since 2012, they have led
the snowbirds’ life, dividing their time
between Bushong’s Morrison, Colorado,
split-level mountain home near Denver
and the Tucson, Arizona, 1½-acre home
that Errickson bought for them. (Errickson
sold his Denver townhome once he
retired.) They now spend seven months a
year in Tucson and five in Colorado. While
in Arizona, Bushong consults with clients
by phone. The first winter in Tucson was
stressful for Bushong, she says, because
she barely knew anyone there.
ALAN ERRICKSON & CAROLYN BUSHONG Snowbirds reconciled opposing money habits
Two different retirement plans
Two opposing money habits
+ + Two towns
1 HAPPY RETIREMENT=
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The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 16
“I felt very lonely,” she recalls. Over
time, she has grown much happier. They
say opposites attract, and the two have
diametrically opposed money habits.
“I guess my motto has been ‘Live for
Today’ and his has been a lot of ‘Live for
Tomorrow,’” says Bushong.
After “a pretty expensive divorce” at
age 40, Errickson realized he needed a
financial rebound, so he diligently stashed
money away to amass a retirement nest
egg. “I just practiced what I preached
between 401(k)s and a variety of other
things,” he says. “And I also had the good
fortune that a couple of firms I worked
for got bought out as I approached
retirement, so that helped a bit, too.” He
also got maniacally serious about debt.
“My mission the last five years was
to make sure there was no debt on
the homes or cars or credit cards or
anything,” Errickson says. “I was on a
debt-reduction plan for the five years
prior to retirement.” He has already paid
off the Tucson place.
Bushong jokingly describes her carefree
high-spend, high-debt attitude as: “I can
pay for it if I have a credit card to pay
for it.” Also divorced, she notes, “I had
something like $20,000 in debt before
Alan retired. So he said to me, ‘If you will
close your [Denver] business and move to
Tucson with me, I will pay all the bills and
take care of us. But I need you to get rid
of this debt before we go.’”
She did, although it wasn’t easy.
“I went to a bankruptcy attorney who
helped me figure out how to negotiate
with the credit card companies,” Bushong
says. “We threatened bankruptcy so they
would negotiate,” she recalls.
As you might suspect, the couple’s polar
pecuniary perspectives has led to some
iciness in their relationship. “Yeah, we had
fights,” says Bushong. “The day he said to
me ‘You need to pay yourself first,’ I said,
‘I do; I go to the mall.’ We’ve kept our
money completely separate until we did
the retirement thing.”
These days, however, they’re not only
making it work; they’re smashingly
successful retirees in good health. The
couple lives on about two-thirds of
their pre-retirement income, plus Social
Security and pensions. “When you retire,
a lot of your expenses go down,” says
Errickson. “I used to pay $3,000 a year in
parking.”
To fund their current lifestyle, he
estimates, “you probably need at least
$5,000 a month.” To do that, the former
financial advisor says, “If you’re going
to put it in T-bills, you probably need $5
million. But if you take a little risk and can
get four or five percent off of it, then $1 to
$2 million would do it.”
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“I regret not doing a forced savings plan and I’m lucky I’m with someone who did.”
The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 17
1. PAY YOURSELF FIRST While the maxim is trite, Errickson concedes, it works. “Be sure that
you fund your 401(k) and all that. That way, the money’s taken out of
your hands before you get it in your paycheck, so it’s kind of a forced
savings account,” he notes. Adds Bushong, who has come around to
Errickson’s view, “I regret not doing a forced savings plan and I’m
lucky I’m with someone who did.”
2. TRY TO GET DEBT-FREE AND IF YOU HAVE A DEBT
PROBLEM, COME TO GRIPS WITH IT “I never would have retired if I still had mortgages,” says Errickson.
Since Bushong became semi-retired, she switched her credit card
usage to a card with a strict $500 limit. She stopped overspending,
too. “Now that I’m semi-retired and sitting in my shorts next to the
phone, I don’t need all those things,” she says.
3. WHEN RETIRING TO A NEW AREA, IF YOU FEAR GETTING
LONELY, FORCE YOURSELF TO MEET PEOPLE AND TO
BECOME ACTIVE “I wrote out a list of ten things I needed to do to get more involved in
the community,” says Bushong. Joining women’s meetup groups paid
off the most. “I found Ladies who Lunch and Love Happy Hours and
have been a member for a couple of years. Then I joined Glitzy Girls
and Girls Over 50 Who Want to Have Fun,” says Bushong.
4. EMBRACE YOUR DIFFERENT VIEWS OF RETIREMENT “His is: ‘I just want to sit here on this beautiful property we have
and enjoy myself. I worked my ass off and I just want to relax’,” says
Bushong. “Mine is: ‘I want to do things.’ But he’s not bothered at all
with me running out and doing tons of things, so I just do.”
Adds Errickson, “I planned for this for so long and it finally happened. I
still wake up every day and feel like I need to kiss the ground.”
ERRICKSON AND BUSHONG HAVE TIPS FOR COUPLES PREPARING FOR RETIREMENT
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The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 18
BARRY MAHER Former salesperson, manager, executive, consultant and author travels the world as amotivational speaker
FROM FLAT BROKE AT 37 TO A SELF-MADE MILLIONAIRE
IT’S NOT FAILURE, IT’S EDUCATION By Jeff Rose, CFP®
I recently had the honor of interviewing a
motivational business speaker and author
who has appeared on the Today Show,
CNBC and NBC Nightly News. Through
saving and investing, a lot of hard work
and, in his words, more than a little luck,
Barry Maher went from being broke at
age 37 to being a self-made millionaire
and semi-retiree who can afford to retire
completely.
What Does Semi-Retired Really Mean?Now 67, Maher only works when he wants,
how he wants and as often as he wants.
That sounds like a pretty sweet deal to
me. But who knew this would be in the
cards for the boy who started out selling
greeting cards door-to-door?
Maher was self-employed through college
and built a successful business selling
advertising products from scratch, but
sold it so he could pursue a career writing
fiction. Unfortunately, he financed the
sale, the new owners ran the business
into the ground and he lost any chance of
being paid in full. “I only got about thirty
to forty percent of the base price and
a small pittance of what was supposed
to be royalties. What was intended to
be an annuity turned into nothing with
breathtaking speed.” Making matters
worse, his novels were not selling well and
he found himself flat broke at the age of
37.
So how did Maher turn that situation
around to become so successful?M
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The Journey from Broke to Millionaire Maher credits his becoming a millionaire
in large part to making good money in the
corporate world and as a speaker. Armed
with his experience of building a business
from nothing, Maher got a job with GTE
as a salesman. “I busted my butt because
I was absolutely broke,” he confesses. “I
worked ridiculous hours from the time
I woke up to the time I collapsed into
bed.” Maher quickly became the Fortune
500 company’s top salesman, earning a
promotion and financial security.
With money to invest, Maher dabbled in
the stock market. He admits that he does
not have the time or the expertise to pick
individual stocks, but he has bought many
index funds that have done well over the
years.
Maher also credits his frugality for helping
him to save the money he has. As he
explained, “Whenever I buy something,
I think of how hard I had to work to
make the money for it.” For example, he
imagines his Honda Accord, not just as a
car, but as whatever he had to do to earn
the $25,000 it cost him. “That mindset
always makes my Honda seem more
attractive when I start to think about
buying a Mercedes, “ Maher quips.
One day, Maher’s literary agent suggested
that instead of writing more fiction,
he should try his hand at a business
book. Although dubious at first, Maher
wrote a specialty book on Yellow Pages
advertising and was soon asked to
speak at small business events on the
topic. Maher took this opportunity to
broaden his field of expertise and he
began consulting on various sales and
management issues.
The book that really helped to establish
Maher as a sought after motivational
speaker was Filling the Glass: The
Skeptic’s Guide to Positive Thinking in
Business, which was translated into a
number of languages and was cited by
Today’s Librarian as “one of the seven
essential popular business books”.
“Whenever I buy something, I think of how hard I had to work to make themoney for it.”
The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 20
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Common Misconceptions about Millionaires Maher stressed that many millionaires
today live normal lifestyles free of
limousines and yachts. He drives an
economy car and lives in a regular house.
Because he doesn’t have a mortgage and
is frugal, he could afford to retire when
he was sixty. As he points out, a million
dollars does not have the same spending
power it once did. The writer estimates
that, excluding travel and business
expenses, it costs him significantly less
than $100,000 per year to maintain his
lifestyle.
It is easy to be intimidated by Maher’s
success and accomplishments, but
everyone has hiccups to overcome on the
road to success. Even though he might
have changed some of his past decisions,
Maher acknowledges that without his
experiences, he would not have
anything to pass on to others.
For example, Maher gave many free
presentations until he got himself
established as a speaker. His first gig as a
paid speaker was an excruciating six-hour
seminar on the Yellow Pages that he put
together himself. “I bored the paint off
the walls,” he recalls. “It was terrible! But
if I hadn’t done that wrong, I never would
have learned how to do it right.”
What Financial Freedom Really Looks Like Although he has been broke, Maher has
never been seriously in debt. “I don’t buy
it until I have the cash to pay for it,” he
says. For Maher, the biggest advantage
of avoiding debt was having the financial
freedom to try a new career if he didn’t
enjoy his job.
He built an emergency fund to know that
he would not starve if nobody hired him
for six months or a year. In the corporate
world, this financial independence earned
Maher a reputation for being brutally
honest, “because I knew I could walk
away from that job anytime I wanted.
That is the kind of freedom that kept me
working.”
“The best investment you’re ever going to
make is the investment in yourself,” says
Maher, “You can’t take charge of your life
if you’re paying money to other people.
Then the bank’s in charge of your life.
You’ve got to get out from under the
thumb of debt if you’re actually going to
succeed in the way that you would like
to.”
“You can’t take charge of your life if you’re paying money to other people. Then the bank’s in charge of your life.”
The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 21
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ADVICE TO GIVE YOUR YOUNGER SELF I ASKED MAHER WHAT HE WOULD TELL YOUNG WORKERS ABOUT HOW TO SUCCEED:
1. DO YOUR HOMEWORK Maher’s worst investment was buying a franchise for a sales business.
“I thought I’d investigated it, but I really hadn’t, and it turned out to be
a loss. I basically had to write it off.”
2. RECOGNIZE THE REAL COST OF YOUR PURCHASES You might think of frugality as being a drag, but if you don’t
acknowledge that every dollar you spend costs you time at work, then
you will never get off the work-spend-work-spend treadmill.
3. BE OPEN TO TRYING SOMETHING NEW If you have too rigid an idea of what your career or your retirement
will look like, then you will miss amazing opportunities that present
themselves.
The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 22
JUDY PETERS Entrepreneur, 67
TAKING THE RIGHT ADVICE
HOW A FINANCIAL ADVISOR TURNED A DIVORCEE’S LIFE AROUND By Katie Brewer, CFP®
After going through a divorce in her late
thirties, Judy Peters felt scared, alone
and financially out of control. ”I thought,
‘How am I going to do this? I’ve got
two kids and a huge house in a yuppie
neighborhood with an interest rate of
around 18 percent.’”
Fast-forward to the present day. Peters is
a 67-year-old millionaire. Along with her
recently retired second husband, Peters
can travel where she wants. How did she
manage such a turnaround?
Working with a Financial AdvisorBack in the eighties, Peters’ divorce
attorney referred her to a financial
advisor, Michael McNamara of McNamara
Financial Services in Marshfield,
Massachusetts. McNamara explained
financial concepts in a way that Peters
could understand, enabling her to handle
her finances confidently for the first time.
“He wasn’t using all these big words that
went in one ear and out the other,” says
Peters. “That was very reassuring to me.”
Once Peters got a handle on basic money
management, she started talking about
long-term goals with her financial advisor.
“When I first went to him, I was 38 years
old and in the office supply business,” she
recalls. “We sat down and looked at the
numbers. He said to me: ‘Well, if you ever
want to retire, you’re going to have to sell
a lot more pens and pencils than you’re
selling now.’” That was a big wake-up
call! With McNamara’s guidance, Peters
learned how to set financial goals and live
on a budget. He holds her accountable to
those goals and they have been working
as a team ever since.
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The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 23
The advisor told Peters to keep her
finances simple, make more money and
spend a lot less than she was earning.
Peters was in a sales role on variable
compensation. Every month, she just
put her income into the same account
from which she paid her bills. Her advisor
recommended that she have a separate
account for her commissions and write
a check for her monthly bills (usually
around $3,500), allowing the rest of
her income to sit and earn interest. This
enabled Peters to control exactly how
much she was spending. “It was very
helpful, because the remaining balance
was totally separate,” she says. “I didn’t
see it on a daily basis, so I didn’t spend it.”
When friends tell Peters that they are
doing their own financial planning, she
shakes her head and thinks, “Wow,
why would you try to do this on your
own?” Choosing the right advisor is
crucial, however, as Peters adds, “Trust
is everything when working with an
advisor. You need to make sure that they
understand you and that you understand
them!”
You’re Never Too Old Or Too Young to BudgetAfter being laid off from her job in the
office supply business, Peters decided
to leave the corporate world and start
her own business in 1993. With a laugh,
Peters remembers thinking, “You know
what, I’m not going to work for anybody
else anymore. Forget it.” Peters and
her second husband ran their business
together for years, selling promotional
products from their home.
Peters learned that budgeting could
help you both before retirement and in
retirement. To this day, she still uses a
budget spreadsheet to keep track of her
expenses. She pays for everything with
a credit card, and then imports all of her
expenses into the spreadsheet and pays
off the balance in full at the end of every
month. Her business expenses are kept
completely separate from her personal
spending.
Including the mortgage on their home
(currently at 2%), Peters and her husband
have approximately $65,000 a year in
expenses. The mortgage is their only
debt. Their living costs were almost
halved when they decided to move from
their house in Boston to a log cabin they
had built in Maine. “It’s been an adventure,
that’s for sure,” Peters admits.
Her personal goal was to save $1 million
and she was excited to achieve that
milestone almost four years ago. “I called
my son and said, ‘You’re not going to
believe it!’” Peters laughs, “And he went,
‘Ooh, I’ll take a check!’”
“How am I going to do this? I’ve got two kids and a huge house in a yuppie neighborhood with an interest rate of around 18 percent.”
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The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 24
Her and her husband’s current net worth
is nearly $3 million, comprising a mixture
of investments in retirement accounts,
a SEP account, trust accounts and more
liquid accounts. She describes her family
as frugal and admits that she never goes
shopping unless she has to.
Enjoying the Quiet Life NowFor Peters, retirement is about time and
quality of life. Semi-retired, she continues
to work because she enjoys what she
does. As an entrepreneur, she is not stuck
in an office; she can work from anywhere,
as long as she has online access. If you
continue to work in retirement, make sure
it is because you enjoy it and not because
you failed to plan.
Although she enjoys having her own
business, Peters is not currently taking on
any new clients. “I’m just winding down
and taking care of the clients that I’ve
been hand-holding for the last twenty
years,” Peters says. This allows her to
spend part of the week making money
and the rest of the time relaxing or
traveling with her husband.
It also allows her to see her kids and six
grandkids, who live a five-hour drive
away. “We had two of our grandkids
up here for four days over their school
vacation,” Peters says. “We took them
snowshoeing and sledding, and they had
a ball. They think it’s like camp.”
So many people think retirement is just
about the numbers, but Peters chalks up
her happy retirement to her lifestyle. She
paints an idyllic picture: “It’s pretty rural
here, which is nice. My husband putters
around the yard. We’re out in the woods,
so he’s chopping something and he loves
his snowblower. He’s making all these
little paths through the woods so the deer
can come. We have motion cameras out
there so we can see all the critters that
are out there at night.”
Peters says her retirement lifestyle with
her husband is pretty much what they
expected, thanks to the help from her
financial advisor. They are living proof
that retirement can be whatever you want
it to be as long as you plan for it and seek
the advice of a professional when needed.
Peters’ accountant told her that the best
way to get back at her ex-husband is to
become extremely successful, so she did!
When friends tell Peters that they are doing their own financial planning, she shakes her head and thinks, “Wow, why would you try to do this on your own?”
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THREE SINGLE WOMEN POOL THEIR RESOURCES TO LIVE AND RETIRE TOGETHERBy Emily Guy Birken
Like TV’s Golden Girls, Nancy Fassett,
83, Barbara Fletcher, 74, and Margaret
Sugg, 85, are three retired friends who
live together. Unlike the sitcom, however,
these three women have shared a
successful and fulfilling life together for
over forty years thanks to their decision
to buy a house together back in 1975.
“There was a time in our lives when
friends were buying houses individually.
We realized that if we pooled our money,
we could buy a much nicer, bigger house
for the same amount of money that we
might invest in a house by ourselves,”
Margaret explains.
Forty years later, the three friends were
still sharing the house they purchased
in 1975, and they decided to move
together to the Asbury Methodist Village
retirement community to continue their
living arrangement.
Sharing a home in retirement is certainly
unusual. Only 2% of retirees live with non-
family members, according to exclusive
research by MoneyTips. But the wonderful
experience that Nancy, Barbara, and
Margaret have shared makes it clear that
living with good friends can be a fulfilling
way to improve your retirement lifestyle.
NANCY FASSETT, BARBARA FLETCHER, AND MARGARET SUGG Real-Life Golden Girls
“If two people want to do it and one doesn’t, the two people prevail. If it’s a major decision, all three of us have to agree to it.”
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Here are some of the important lessons to
learn from the experiences of these self-
proclaimed Golden Girls:
Teaming Up for Major Life DecisionsAfter buying a home together, Nancy,
Barbara, and Margaret decided they
should join forces on investments, too.
Barbara explains, “We thought that
maybe real estate was a good investment
and we bought a rental property in
Georgetown in Washington, D.C.”
The women eventually owned several
houses and apartment buildings. “We did
quite well with our investments,” Nancy
says. “We didn’t get rich, but we were
able to maintain positive cash flow.” None
of that would have been possible if they
had not pooled their resources.
In addition, they help each other make
big life decisions. “We have a two-out-
of-three rule on things that are not major
decisions,” Barbara says. “If two people
want to do it and one doesn’t, the two
people prevail. If it’s a major decision, all
three of us have to agree to it.”
With this system in place, the three
women always feel like they are a team
and they have each other’s backs.
Nancy claims that their unusual living
arrangement has actually made it easier
to make big decisions — because all
three women are comfortable with each
other and respect each other. “You have
to be agreeable,” she adds, “but this has
worked out really well for us.”
The Importance of Boundaries in FriendshipNancy, Barbara, and Margaret have
always understood that they needed to
put clear boundaries in place in order
to maintain their friendship. When the
women first started living together, they
asked Nancy’s father, an attorney, to
draw up an agreement to cover what
would happen if anyone decided to leave
their shared home. “We never used it,”
Margaret says, “but it was important to
put it all in writing, just in case.”
Having such a contract did not detract
in any way from the three women’s
friendship, but it was good protection
for them in case their circumstances
changed.
In addition, the friends have an excellent
system for fairly splitting bills. “We have
a household account and credit card.
Each month, we contribute the amount
of money needed to pay the bills that
month,” Barbara explains. “We also have
a savings account for household expenses
that might pop up unexpectedly.”
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“We realized that if we pooled our money, we could buy a much nicer, bigger house for the same amount of money that we might invest in a house by ourselves.”
The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 27
By keeping the household accounts
separate from personal accounts, the
three friends have ensured that bills are
split reasonably between the three of
them. In addition, putting money aside
specifically for household surprises is
an excellent way to make sure that no
unexpected problem eats into their
regular budget.
Such boundaries provide personal
security that enables the friends to keep
any financial issues from encroaching on
their friendship. “Everybody has their own
investments,” Barbara says. “It seems like
a good balance.”
Leveraging CreditDespite living in the same home for
nearly forty years, Nancy, Barbara, and
Margaret never paid off the mortgage.
“We kept refinancing to improve the
house,” Barbara says. “We never had a
huge mortgage and had a lot of equity
in the house. We refinanced as the
rates changed or for extra money for
upgrades.”
This strategy is counter to what many
personal finance experts advise — that is,
to minimize debt and pay off a mortgage
as quickly as possible. But the three
friends managed to make it work, not only
for their primary residence, but also for
their investment properties.
“We had mortgages on all of our
properties,” Margaret says. This worked
for them because they actively manage
their finances and stay on top of all
of their bills. Carrying the mortgages
allowed them to tap that positive cash
flow — which might have been impossible
if they had been forced to save up to
purchase their investment properties in
cash.
Leveraging credit in such a way can be a
savvy move, but it requires great financial
diligence to work as well as it has for
these three friends.
I asked Nancy, Barbara, and Margaret for
advice they would give to retirees living
with spouses, friends, siblings, or adult
children:
Keep the Lines of Communication OpenManaging their combined investments
together necessitated that each of the
women talk frankly about their goals
and how to finance their ideal retirement
situation. The three friends did not know
for sure what they wanted to do after
they retired, but they did not shy away
from talking about their options. “We
talked about what we would do in the
future,” Barbara says. “We’d seen several
retirement communities, but none of them
had a location that was big enough for
the three of us, until we found our home
at Asbury Methodist Village.”
Since the three women were always
open with each other about their
preferences and concerns, they were able
to decide quickly when they found the
retirement community that fit all of their
requirements. After forty years and two
homes together, their system must be
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HOW A REGULAR WORKER RETIRED AT 50 WITH MILLION$
THE EARLY BIRD GETS MORE THAN WORMS By Alaina Tweddale, Business Writer
The twenty-something crowd might not
find it easy to wake up to the nuances
of personal finance investing, but early
bird investors benefit powerfully from
the magic of compound interest. When
coupled with regular contributions over
time, compounding carries incredible
potential for wealth generation.
Just ask Rick Cross of Winston Salem,
NC, a retired employee-turned-executive
in a large consumer goods corporation.
Cross spent his career slowly working
his way up the corporate ladder while
steadily adding to his retirement nest
egg. He started his career as a front-line
sales employee and, through methodical
resolve, was able to retire with several
million in investable assets and a
$100,000 annual spending plan after
taxes. Did we mention that he retired at
fifty? This early bird scored a lot more
than just worms!
Cross’s story of early preparation and
continual follow-through provides a
plan for those just starting out on their
retirement journey. Here is the course
he followed to reach the successful
retirement he enjoys today.
RICK CROSS Maxed out his 401(k) since his early 20s and retired at 50 with millions. Rick, 55, pictured with wife Sue.
“If you get in the habit of saving, then you’re not really feeling the impact of taking those dollars out of your pocket.”
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The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 29
Start Saving Early As soon as he could, Cross started
investing six percent of his salary in his
company retirement plan, which allowed
him to maximize his employer’s match.
At the time, the six percent represented
a sizable chunk of his income. The six
percent sacrifice was a small price to pay
to reach his goal of early retirement.
Over time, Cross slowly increased his
contribution percentage to a staggering
twenty percent. “About every one and
a half to two years, we’d reevaluate and
determine if it was the right time to
increase the percentage,” he says. He also
regularly earmarked a portion of annual
employee bonuses for his kids’ college
accounts (yes, you can retire despite
paying college tuitions!) and his after-tax
long-term accounts.
Despite several hefty salary boosts over
time, Cross says, “I don’t want to dismiss
the increases in salary as a contributor,
but every $10 I put in at age 23 had a
greater compounding effect than every
$100 I put in at age 40.” According to
Cross, starting early and having the right
mindset were really the most important
keys to creating a dream retirement.
Live Beneath Your MeansIf you start saving early, you will get used
to not having a certain percentage of
your income available to spend. Instead
of upgrading cars every few years and
buying a more lavish home, Cross and his
family worked diligently to pay off their
home, cars, and consumer debts over
time. Now, Cross owes no money.
“It’s as much about a mindset as it is
about anything else,” says Cross. “If you
get in the habit of saving, then you’re not
really feeling the impact of taking those
dollars out of your pocket.”
In short, Cross chose to focus on the
larger retirement picture, and not on the
short-term trade-offs. “It’s not how much
you make, it’s what you do with it,” says
Cross. “Because, quite frankly, I know
people who make a lot more money than I
ever did, and don’t have a lot to show for
it.”
Build Your Own Vision of RetirementToday’s retirement is different than it was
for earlier generations. “When our parents
retired,” he says, “they stopped work and
traveled or just kind of relaxed. I have
way too much mental and physical energy
to stop working.” Instead, Cross drew on
his already-existing career skills to build a
part-time consulting career.
“I wanted to move away from the six- or
seven-day work week that I experienced
in the corporate environment,” he says.
“Now my business partner and I try to
work no more than three days a week.”
While the partnership does generate
income, Cross is clear that money is not
the motivation behind the part-time work
he does today. “It was a big adjustment
for me to throttle back from 95 miles
per hour to 65,” he adds. “For so long
I was moving so fast and was involved
in so many things. Now I’m much more
comfortable with enjoying the moment.”
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Despite his retirement success story,
Cross is quick to point out that he is just
a regular guy who worked hard, lived
beneath his means, and saved as much
as he could. “There is no magic behind
what we did over time,” he says. “I took
on additional responsibility and moved up
the organization and was compensated
for that. But, we were able to do
everything we did as a result of taking a
systematic approach.”
HERE IS WHAT YOUNGER INVESTORS TODAY CAN TAKE AWAY FROM THIS EARLY BIRD:
1. THE SOONER YOU START, THE GREATER YOUR
COMPOUNDING ADVANTAGE IS Over time, the earnings you make on an investment earn their own
interest. This means the advantage of time itself can be the biggest
single asset any young retirement investor has at his or her disposal.
For example, assume an 8% annual return. Investing $3,000 per year
over a decade starting at age 25 in a tax-deferred retirement account
will grow to $472,000 by age 65. And that’s without adding another
nickel past age 35. If you wait to start saving until age 35 and then
save the same $3,000 per year but keep socking the funds away for
the remaining thirty years until age 65, your account will only grow to
$367,000. In short, save $30,000 over ten early years and end up with
$472,000 or save $90,000 over thirty later years and end up with
$367,000. That’s why an early start can be such a huge advantage.
2. THE LESS YOU SPEND, THE MORE YOU CAN SAVE It is easy to spend as much as you make (or even more!), if you don’t
keep careful watch of where your money goes. For this reason, many
professionals recommend you artificially deflate your take-home
income by paying yourself first. In other words, if you automatically
send a portion of your take-home pay to a separate account or
accounts (your 401(k) or savings account, for example), you won’t be
as inclined to spend it and your savings will grow at a faster rate over
time.
3. YOU GET TO CHOOSE HOW YOUR RETIREMENT WILL LOOK You have the power to control how you want your retirement to look.
Some want to spend their retirement years traveling or working part-
time or even starting a dream business. Knowing what you want can
give you the power to start planning to meet that goal now - while
you still have the benefit of time on your side.
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KICKING THE RETIREMENT BUCKET!
REAP REWARDS BY RETHINKING RETIREMENT By Roger Whitney, CFP®
Traditional retirement planning does not
work for most of us. It focuses too much
on things we cannot control, like the
investment markets and the economy.
It presents us with two crappy options:
settle for less now so that we can save
more, or plan to settle for less later.
Harry Coleman examined these options
and picked, “None of the Above!”
Coleman enjoyed his successful career
at a large consumer company and loved
his co-workers. But he wanted more out
of life, which he determined was divided
into three buckets: work, giving back and
goofing off. Although he loved his work,
it was too large of a bucket in his life. He
was ready for a better balance between
the three. So, at age 51, Coleman decided
to leave his successful corporate career
and “retire.”
Retirement, Semi-Retirement or Something Completely New?Coleman is a great illustration of the
growing trend of baby boomers who
are rejecting the traditional view of
retirement and charting their own course.
This new class of “retirees” is rewriting
the rules of retirement by leaving
traditional careers earlier and living a
more balanced life divided between part-
time work, serving others and enjoying
their family.
HARRY COLEMAN 57, retired from a corporate career at 51; rejects the “traditional” retirement lifestyle
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“I didn’t want to screw it up. It was worth the cost to hire an expert to help guide me.”
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How He Got There Coleman credits four things with
positioning his family to “retire” so early.
Valuing Experiences, Not Things He and his wife lived comfortably, but
modestly, over their thirty-year work life.
They never had the newest things, but
never really missed them either. Even
now, Coleman drives a 2003 minivan. This
mindset helped them focus on people
and community rather than shopping and
consumerism.
Whenever Coleman received a raise or
bonus, it went towards paying down
debt and savings. The result? A modest
lifestyle they enjoy and savings ample
enough to provide for it whether they
work or not. He won’t give a number,
but they have enough savings and
investments that they can live off about
3% of their assets per year.
Finding a Trusted Advisor Although Coleman was smart enough to
create his own plan, he was also smart
enough to get help. When I asked him
why, he said, “I didn’t want to screw it up.
It was worth the cost to hire an expert to
help guide me. It lowered the stress level
in my life and gave me assurance that I
was making good decisions.”
The plan they created did not depend
on Coleman working. This extra margin
of safety has given Coleman and his wife
more options and more discretionary
income.
Keeping Ample Cash Reserves
In 2007, Coleman and his wife started
their retirement journey heading into the
perfect financial storm. Their timing could
not have been worse. Just as the markets
were crashing, he quit his job and built a
new home — while still making payments
on his old home. He saw his portfolio lose
over 25% of its value. He says he was
able to weather this financial tsunami
because he and his financial planner had
built flexibility into his lifestyle — and
enough cash reserves to stay afloat. In
addition, he and his wife had always lived
comfortably but never extravagantly.
When the storm hit, they were able to
lower their spending until the markets
calmed down.
Retirement Doesn’t Mean You Stop Working Coleman works because he wants to.
Remember those buckets? When he
retired, he did not empty his work bucket;
he just stopped it from overflowing into
the rest of his life.
Coleman works with a number of firms
that hire contract labor for special
projects in his area of expertise, as well
as participates in general assignments
like study groups. He is able to pick and
choose his assignments as he wishes,
based on his schedule, interests and need
for cash. He credits his continued work
with more than financial security. He also
gets a great deal of mental and physical
engagement from his efforts. Although
he planned financially to have the option
of not working, he never thought he
would stop cold turkey. He always knew
exclusive leisure would not be fulfilling
enough.
Coleman, now 57, continues to enjoy
his flexible lifestyle. He works when he
wants to work. He and his wife volunteer,
regularly go on mission trips, and they
take one nice vacation a year. And his
buckets? “Currently they are allocated
about 25% work, 40% volunteering and
35% goofing off. At the end of the day,
it’s my life and I just shifted the balance a
bit.”
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READYING FOR RETIREMENT OVERSEAS
A COUPLE PLANNING TO RETIRE SHOWS US THE WAY By Cathy Curtis, CFP®
Meet Mark and Linda Majors, a San
Francisco Bay Area couple planning
to stop working in the next five years.
Despite not having employer-backed
pensions, their goal is to retire and live
a life of adventure filled with traveling
through different countries, kayaking and
scuba diving. While this is a dream many
of us share, the couple are taking steps
to make it a reality. I recently spent some
time with Mark, aged 57, and Linda, 50,
to understand their retirement goals and
how they are working to achieve them.
Both of them have worked as
independent contractors for nonprofits
and social welfare organizations over
the past fifteen years, so they have been
responsible for their own retirement
savings. They have both contributed
to regular brokerage accounts and IRA
accounts at differing rates over the
past thirty years. Occasionally, Mark
feels frustrated when he thinks of the
colleagues he worked with at Union Oil in
the eighties, knowing that their corporate
careers have secured most of them a
pension of thousands of dollars a month.
“Then I wonder: Would I want to give
up what I’ve experienced over the past
twenty years for that?” he says. “No, I
wouldn’t.”
LINDA & MARK MAJORS Aspiring Adventure Retirees, ages 50 & 57
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“We felt like in spite of what we tried to do, we hadn’t done a proper job of saving.”
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Linda adds, “I don’t think we’d trade our
jobs for that at all. We feel like we’ve
helped make the world a better place.”
The couple first started talking about
retirement plans and crunching numbers
two years ago: “We felt like in spite of
what we tried to do, we hadn’t done a
proper job of saving,” says Mark. They
had been informed that their investments
should generate 75% to 80% of their
current income each month in retirement.
“That’s true if you stay where you are,”
Mark says, “because lots of things you
spend money on now don’t go away if
you stay put. But we believe that if we
can find a way to patch together the
assets we have now, the assets we can
liquidate, and the eventual Social Security
we will collect, we hope we can be fine in
another country. It doesn’t look that hard
on paper.”
Living on $3,000 - $5,000 a monthThe couple did their homework, reading
books and taking part in conference calls
for retirees interested in living overseas.
After much research, they concluded
that their ideal adventurous lifestyle
combining their old hobbies and pursuing
new experiences would cost $3,000
to $5,000 a month, including health
insurance. “Between the Affordable Care
Act and everything else in the U.S., what
it costs to have health insurance here is
out of control until you’re on Medicare,”
says Mark.
Their main reason for exploring other
countries is simply that the cost of living
is lower. “This country is huge,” Mark
says of the States. “There are plenty of
interesting things to do here, so many
climates, geographies, dialects, and local
food. The problem is staying here and
exploring is crazy expensive.”
Another big reason for retiring abroad is
their love for learning new cultures. Mark
points out that it would solve the problem
many retirees face: having nothing to do
and becoming bored. “If you don’t know
how to order food in the restaurant, or
buy the stuff at the market,” he muses,
“all those things are challenges, but we’ll
embrace them because it will make life
interesting.”
Linda adds with a laugh, “And make sure
that our brains stay active and avoid
Alzheimer’s, we hope.”
“We’ll have a big suitcase, a small suitcase, and a backpack. That’s it,” says Linda, “We’re only buying stuff that we think we are going to need in that lifestyle.”
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For the first few years of retirement, this
couple who loves to hike is planning to
keep moving from country to country.
Their shortlist of retirement destinations
includes Mexico and Panama, but there
are many more countries in Europe and
Southeast Asia under consideration. The
generous couple’s criteria for evaluating
destinations not only include the local
infrastructure and healthcare, but also
the opportunities for giving back. As
Mark explains, “You can volunteer here or
you can volunteer somewhere else, and
maybe it’s more important somewhere
else than it is here.”
Does That Go To Panama? If Not, We’re Not Buying It Such a large change of lifestyle requires
that Mark and Linda begin making many
adjustments now, including downsizing.
“We set a goal that volumetrically two
wine boxes of stuff would leave the house
at least every week,” says Mark. Besides
donating items they won’t need to the
less fortunate, Marks admits, “I’ve been
working eBay for two or three years just
trying to make things go away!”
“We’ll have a big suitcase, a small
suitcase, and a backpack. That’s it,” says
Linda, “We’re only buying stuff that
we think we are going to need in that
lifestyle.”
Adds Mark, “Our watchword is, ‘Does that
go to Panama?’ If not, we’re not buying
it.”
In order to reach the lump sum they need
to achieve their retirement goals, Mark
and Linda are liquidating their assets,
including selling their second house and
eventually their own home. According to
Mark, the investment property they own
was a safety valve more than a retirement
destination: “We thought if we want to
stay in California and live a California
lifestyle, we can’t stay where we are
because of the property taxes – the
amount of asset that is tied up in sleeping
in the house that we already own.” They
estimate their property tax at about
$7,000 or $8,000 a year.
“If we can patch together the assets we have now, the assets we can liquidate, and the eventual Social Security we will collect, we hope we can be fine in another country. It doesn’t look that hard on paper.”
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TIPS FOR OTHERS DREAMING OF LIVING ABROAD
1. BE SURE THAT IT IS WHAT YOU REALLY WANT ”Know thyself,” are Linda’s first words of advice. “Many of these
countries that we’re talking about, where the cost of living is lower,
they are not America. The resources are different, the climate is
different, the language and the people are different. Are you ready for
that?”
Vacationing has also become a research experience for the couple.
“Usually we would go diving somewhere, go have beers, eat at a
restaurant, drink more beers, and have a good time. Who wouldn’t
like that? But usually you’re only there for a week or two, so you don’t
get bored with it,” says Mark. “We’ve tried to analyze locations since
starting the search for where we might live. We take say a Monday
morning at 11 o’clock and imagine we’re at this destination, but we’re
not on vacation. Does it suck or is it okay? We’ve got both eyes open
to the vacation effect.”
2. MAKE SURE YOUR PARTNER IS ON THE SAME PAGE ”We have to agree, otherwise it’s not going to work,” says Linda, “It’s
actually a leading cause of divorce in couples who move to other
countries - because one person is good at Spanish and the other
person isn’t, or they have different ideas about what it’s supposed to
look like.”
“If something is really not working for one of the people, the other
person in the couple has to say, presumably, ‘It’s more important that I
maintain my relationship than pursue this,’” Mark adds, “You’ve got to
make a choice.”
That would certainly not be an easy choice to make, so be sure to
discuss your retirement dreams with your partner sooner rather than
later. The couple hopes that their family and friends will visit them no
matter where they retire.
I look forward to a postcard from Mark and Linda to learn where they
wind up and see how retirement turns out for them.
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Every retiree in this book has followed a different path. Our hope is that reading through
their experiences and taking in their wise advice will help you to understand that while
there is no one way to retire, there are certain habits that lead to successful retirement.
In particular, the retirees in this book have shown the importance of the following habits:
1. Living frugally Living below your means is the only way to build wealth and plan for retirement.
2. Maintaining control of your investments
No one will care about your retirement as much as you do. Taking the time to educate
yourself on investing is one of the best “investments” you will ever make.
3. Avoiding debt
You cannot build wealth when a portion of every paycheck is owed to a creditor.
Learn to live free of debt.
4. Remaining flexible
The only constant about life is that it is always changing. Having the flexibility to
handle job changes and losses, market corrections, health scares, and other life
changes will allow you to stay focused on your long-term goals.
5. Start saving as soon as possible
Even though not all of the retirees in this eBook started saving in their twenties, they
all started as soon as they could. Now is always the best time to start saving, no matter
what has come before — which every successful retiree in this book understands.
I hope that the collective wisdom of these retirees inspires you to take the next step on
your path to retirement. The retirement of your dreams is waiting for you.
For more retirement reading free of charge, we recommend:
The Retiree Next Door: Successful Seniors’ Surprising Secrets
The #RetireeNextDoor: The 100 Best Retirement Tweets
CLOSING THOUGHTS
The DefiniTive GuiDe To BecominG ı The ReTıRee NexT DooR ı 38
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EMILY GUY BIRKEN
@EmilyGuyBirken
Finance Writer & Author, The Five Years Before You Retire
KATIE BREWER
@KatieYRL
CFP®, President, Your Richest Life
CATHY CURTIS
@cathycurtis
CFP®, Investment Advisor & Financial Planner, Curtis Financial Planning
RICHARD EISENBERG
@richeis315
Senior Web Editor, Money & Security and Work & Purpose Channels, Next Avenue
KATE HOLMES
@the_kate_holmes
CFP®, Founder & CEO, Belmore Financial, LLC
JEFF ROSE
@jjeffrose
CFP®, CEO and Founder, Alliance Wealth Management LLC
ALAINA TWEDDALE
@AlainaTweddale
Freelance Business Writer
ROGER WHITNEY
@roger_whitney
Founding Partner, WWK Wealth Advisors
THANKS TO THOSE WHO HELPED US TELL AMERICA’S RETIREMENT STORIES
www.moneytips.com
www.moneytips.com