We can learn from retirees’ financial lives
This week, we feature the comment of retirees and those soon-to-be about their retirement experiences.
This is the first in the realistic retirement review series, once a month on the third Saturday of the month.
Today, we get into real individual personal experiences and questions from The Royal Gazette readers about retirement: the initial contemplation, the transition and the aftermath. We need more of these to share. Please write to me, I will respond.
I treasure these stories. Readers have entrusted me to share carefully, and always anonymously, some of their astute comments on their financial situations.
Some are (or have made) a happy voluntary decision to enter life’s next challenging phase. Others are very reluctantly facing (or have been forced into) retirement due to myriad factors: redundancy, cost-efficiency downsizing, physical debilities, skill level intolerance, structural business evolution, and regretfully, a business’s collapse.
These reader retirement stories are both unique and common in context.
• Soon-to-be retirees are very concerned with whether they have enough money for a satisfactory post-retirement lifestyle.
• They are unsure how long their money will last, still finding retirement calculators confusing.
• They loved their jobs and expressed real sadness at being forced to retire, feeling “cast out” to pasture.
• Retirees previously employed in Bermuda retail/service industries have smaller retirement pensions, because generally, most of their working career was prior to the implementation of The National Pension Scheme (Occupational Pensions) Act 1998 for employers and employees. Consequently, in some circumstances, they are solely reliant upon the Bermuda Government Old Age Contributory Pension.
• Single responders, widowed or divorced, are finding it harder to manage, verifying the age-old expression that “two can live cheaper than one”.
• Some readers noted after the sparkle wore off the retirement picture, working became a financial necessity. Keeping a post-retirement job, however, is a continual challenge.
• A number of queries focused on relocation and planning for a pondstraddler passage outward. The questions ran the gamut, from new country personal taxation, protecting income-generating assets, estate planning, pension distributions and the like.
• Comments continued regarding healthcare cost increases with a few stating they, or people they know, can no longer afford the premiums and have decided to go without, an ominous situation for the government social services budget!
Here are some of our true readers’ contributions, thoughts, worries, and advice. The financial facts are true, but the stories have been “scrubbed” to remove any identifying information.
Story 1: At age 82, I’m totally reliant upon a very small annuity that is not inflation-adjusted, the Government Old Age Pension, and a savings reserve for “nursing home care”. I was somewhat fortunate in being able to work intermittently after 65, but those sources have diminished dramatically. Currently, my lifestyle can be described as minimal. Could I have put aside more money? Unfortunately, an early divorce meant being the sole support for my two children. With longevity in the family, I am afraid that I will outlive my remaining assets.
Story 2: My story is a bit involved. I’m in my 50s, from a large Bermuda family, and as you know, Bermudians form collective financial unions to help other family members. Thus, my brother and I helped support an elderly cousin until he passed. For the past ten years, also, we have both made ongoing contributions to our mother’s nursing home care with an additional sum each month for her medications. She is 95, still going strong! She took care of us, now it is our turn.
To further complicate matters, one of our sisters returned home after a disastrous divorce, emotionally a wreck, and needing financial assistance to get back on track. Your recent article contained well-grounded advice. With the ten years in the workforce that I have left, there is still time to put a good savings plan in place, along with implementing new learning skills. This will provide me with alternative resources to continue to work, and earn income well into my retirement years.
Story 3: The retiree needs to augment her small monthly pensions. The fully-paid for home has a rundown garage that could be converted into a studio apartment. She refuses to apply for an equity line, or heavens, another mortgage, after seeing a friend lose his home. He had been made redundant and could no longer make the monthly mortgage payments. The reader inquired to Moneywise — if there is any organisation in Bermuda founded on construction “sweat equity” where volunteers can help each other renovate, rebuild such a project?
Story 4: And some words of advice (we’ll address complaints next time, send in yours!) from two very sage Bermudian octogenarians.
• Start planning for your retirement 20 years before — or now if you are in your 40s, early 50s. Yes, I know. This seems way too early for most people, but the next piece of advice will be reinforcement.
• During those years, take a good chunk of time, even a year, and practise living a really, truly, absolutely minimal lifestyle. Cut back on everything in your budget. No extras. No fun. None at all. And save every cent.
Your friends will think you are crazy; so, tell them it is an experiment in human aesthetics. Then, go back to resume normal living, but take a real assessment of how you felt during that “deprived” time.
Great? Highly doubt that.
Good? No way.
OK? Not at all?
Seriously, how many would be totally depressed being so financially stifled for years and years, for ever, in retirement? And reliance upon other people?
Fact. Some elderly retirees are going through just such similar circumstances.
Those who undergo the minimal lifestyle experience — the upshot of your “deprivation” year? Why, just look at that tidy sum you have put away!
Nothing like going without, to truly appreciate what you do have.
Live for today, plan for tomorrow.
My thanks to each and every one of you who took serious time to write to me. Please keep it up. The more we share our financial issues, the more aware we all become in planning to help manage our future.
• Martha Harris Myron, CPA, JSM: Masters of Law in International Tax and Financial Services. Dual citizen: Bermudian/US. Pondstraddler Life™, financial perspectives for Bermuda islanders and their globally mobile connections on the Great Atlantic Pond. The Bermuda Realistic Retirement Reviewer™, personal financial columnist for The Royal Gazette. Contact: email@example.com