“It’s not so bad,” says Clara Hill, a retired hotel manager who recently ended a 22-year marriage with her husband, Tom.
“My husband and I just grew apart, but we’re still wonderful friends and have dinner together at least a few times a week. It’s just hard paying the bills when you’re no longer splitting everything 50/50.”
Clara and Tom still live in the same community. Clara kept the house, and Tom moved into an apartment nearby.
Both retired just a few years ago with retirement packages from their old jobs. Combined with Social Security, they still live well. But Clara and Tom both worry that it won’t be enough…
“Gas, food, electricity. Even my water bill is higher than it used to be. But right now, it’s not so bad. I still have a roof over my head and I love black beans and rice,” she laughs.
Certainly, while Clara’s mood is positive, she is right to be concerned about the future. Although she is well-insured right now, without a steady paycheck, it is unlikely her retirement will be enough to cover her if things really get bad.
For now, she can make ends meet. But “making ends meet” isn’t going to cut it in a few years, when inflation rears its ugly head.
And sadly, Clara and Tom are not alone.
If you’re currently retired, or one day plan to retire with a few bucks in your pocket, here are a few things to consider…
Don’t Get Sick
Some of the biggest expenses retirees face today are those related to health care.
Between doctors’ visits, expensive testing procedures, and a pill for nearly every ailment and malady under the sun, it’s no wonder so many folks go broke shortly after retirement.
In 2010, retirees coughed up nearly $93 billion on prescription drugs. A large majority of these drugs were used to treat or control conditions that, in most cases, can be treated or controlled without medication. These include, but are not limited to, heart disease, high blood pressure, and type 2 diabetes.
Bottom line: If you suffer from these health issues and you can treat them without drugs, you’d be a fool not to.
Just look at diabetes: According to the American Diabetes Association, people diagnosed with diabetes spend about $14,000 a year in medical costs. And that doesn’t take into account indirect costs, including things like reduced productivity and the inability to work.
But just focus on that $14,000 for a moment…
Clara is still paying off the mortgage on the home she and her husband bought about twenty years ago. Her mortgage payment is roughly $780 a month (pretty cheap, considering what most of us spend these days).
Now, Clara was diagnosed with type 2 diabetes last year. Two months ago, her doctor told her that a change in her dietary habits allowed him to take her off her diabetes medication. Essentially, she kicked the unhealthy, processed foods and sugary snacks to the curb and she now maintains a healthy diet.
But imagine if Clara didn’t take the initiative to improve her diet. Not only would her health have deteriorated over time (causing her to spend even more money on health care), but she would’ve been paying the equivalent of 18 mortgage payments every year to cover her health care costs.
The truth is some of the best retirement advice anyone could give is simply to not get sick. And the best way to do that, or come close to it, is to do what every doctor tells you: Eat healthy and exercise.
It ain’t rocket science, and I have no idea why anyone would prefer to spend $14,000 a year on drugs instead of eating healthy food and making an effort to get some physical activity each day.
$15,000 in Credit Card Debt
You know, I spend a lot of time speaking to folks about investing. And I’m often amazed as to how many folks sitting on $20,000, $40,000, even $50,000 in credit card debt want to invest in the stock market.
There’s no better way to ensure miserable, poverty-stricken golden years than to retire with a mountain of credit card debt.
Clara and Tom are smart. They use credit cards, but they pay off the balances every month. They have no long-term credit card debt.
Sadly, the same can’t be said for a lot of other people in this country. The truth is the average credit card debt for a U.S. household consumer is $15,263. That ain’t chump change, folks!
And while Americans’ debt burdens have decreased since last year, in total, American consumers still owe $11.15 trillion in debt. $853.6 billion is from credit card debt, and $994 billion is from student loans. The latter has actually increased since 2012.
So how do you think all of this will play out as inflation hits us with all the subtlety of a brick to the face? How do you think this will play out as the price of gas, food, and health care skyrocket?
For those who worry about the future, there’s good reason.
Provide for Yourself
Let’s revisit Clara and Tom. Both are in pretty good shape, health-wise. They have no credit card debt, and they live well within their means. And yet, they’re still at risk of not making ends meet further along in their retirement.
Now imagine how millions of other folks — both retired and soon-to-be-retired — are going to survive in the coming years…
More than half of the United States population carries enormous credit card debt, has little to no savings, and is living beyond their means. These people won’t ever even be able to retire. They’ll drop dead working hard and making someone else rich.
I don’t know about you, but that’s no way to go out. I’d much rather spend my golden years sipping Mai Tais on the beach and tending to my garden.
We all dream about what retirement should be like. The question is, Will you live that dream?
If you take the appropriate steps, it shouldn’t be a problem. So, what are the appropriate steps?
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Eat well and exercise
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Don’t live like a Saudi prince if you live on less than $1 million a year
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Eliminate your debt
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Invest wisely in long-term growth opportunities
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Learn how to take care of yourself in your golden years, because the government’s not going to do it
The last point is a serious one.
No matter how you slice it, if you’re still a good ten to fifteen years away from retirement, you’re going to be severely disappointed if you think Social Security will keep you housed, clothed, and fed. It ain’t going to happen.
No, those who truly want to live the good life in retirement must be self-reliant. You must be able to provide for yourself when all those very generous government support systems we’ve relied on for so many decades go gently into that good night.
And if you haven’t started preparing yet, there’s no time like the present.
To a new way of life and a new generation of wealth…
Jeff Siegel
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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.
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