11/08/2013

Retirement: Happiness is $100,000









 
Sometimes I question the amount of research journalists do both online and in the quickly dying print media.  For example, Yahoo Finance had an article on retirement that stated, quite plainly, if you did not make at least $100K while you were working, chances are you will not be happy.  The author cited a report that further stated if you "only" made about $75K, chances are you are unhappy now..  Unhappy retirees also have homes that valued about $275K, with the happy retirees homes valued at about $50K more.  They also made the astounding observation that retirees with a mortgage are not happy (Geez, Louise, who is happy with a mortgage?).

Now the author did state that retirees that socked away 20% of their income, into savings, came away with a smile on their face on the last day of their employment career.  I happen to agree with that completely.  In fact, investing about 20% of your income in your retirement plan is a wise course of action.  Of course, when you take into consideration  that you pay about 30% in taxes, that means you have to live on half of your income the majority of your working years.  That's tough to do, especially with kids and a mortgage to pay.  The article also emphasized that you pay off whatever credit cards you have prior to retirement.  That is a terrific piece of advice.  Credit cards are nothing more than a means to live beyond your financial capability.  It's a black hole that millions throw themselves down each year.  The article does have some valid points as I've mentioned.  I encourage you to take a couple of minutes to read it (linked above).

I do question the premise that you have to make at least $100K to be truly retirement happy someday.  The majority of the working class don't make six-figure salaries.  However, there are thousands upon thousands of people who retire each year.  Most of them are happy in their retirement years. Most of them never sniffed a six-figure salary.  That's a fact.  Would I be happier if I had made $100K and saved 20%?  Most definitely, yes, I would have.  But, I saved 10-15% and made about $50K a year.  Yes, I do have a mortgage.  But, that is easily being handled right now.  In short, you have to prepare for retirement just as a coach and his team prepares for a football game on Saturday.  Preparation is key when making your retirement plans. I've said this countless times in all the posts on this blog about retirement.  Figure out what your expenses will be, and then deduct them from the income you will derive from all sources in your retirement.  It should be simple.  But, you would be amazed how few people understand this concept.  This article (again, linked above) doesn't speak to this line of thinking enough.  If you prepared for retirement, properly, then there is no reason you can't be retirement happy at half of that $100K salary as I am right now.


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