Now For Some Serious Stuff: How to Survive Retirement

You frequently see articles online with eerily similar catchy headlines. “My wife and I are 62 and have $37.59 in a 401k and $72,367 in credit card debt. Can we retire?” Sure! You can retire. In the year 2156. Or, “How much savings do you really need to retire comfortably!” For me it is $1billion, that’s comfortable! Or my favorite, someone does simple math which is obviously more difficult for people than I thought. “How much do you need to generate $40,000/year retirement income?” That’s very simple: $40,000 at 100% interest annually. There is an infinite number of ways to answer that stupid question! (PS. For those bad at finance and simple math, 100% interest is somewhat unlikely, seek professional help.)

So how about a real world example?

How is someone actually Surviving Retirement?

Retirement financial planning is the cornerstone of a happy verses crappy retirement. If anything will make you grumpy it is lack of money, particularly in retirement! However, I am not about to furnish you with financial advice. How I survive retirement may not work for you. The last thing I need is someone in a pissy mood explaining how they are eating dry cat food and pencil shavings because they listened to my financial advice.

So I won’t tell you “The 5 Things to do Before You Retire” Which are always the same: Save … Reduce Debt … Review Financial Plan … Downsize … Start Crying. Damn it! If your finances suck that much, you should have Reduced Debt & Downsized 10 years ago! Too late now you clown!

My financial plan had good years and painful years over my lifetime. Seems like more bad years than good, you always remember the bad years, but somehow I’m not broke and I am retired. Save, save, save. Yeah whatever. If you are around my age, and haven’t saved yet, it is too damn late! Without a nest egg or good pension, you are relying on Social Security for retirement income. That usually isn’t enough to live on, and if it is, it leaves little money for a fun lifestyle! Of course you can always live with your kids … unless they already live with you.

Survive Retirement Step One: Die Just Before You Run Out of Money.

Outliving your money is a bad day! Retirement starts with champagne and caviar and the next thing you know it is McDonald’s and free cups of water. It is like walking a tightrope between not having enough money on one hand and having too much and leaving it to your family. Neither are good options! There are all sorts of models that will tell you if you are financially set for retirement or not. Unfortunately models and the real world don’t play nice all the time. Ask Tom Brady.

I was cautious the first year of my retirement. I needed to see things were holding up as planned, even with $6 eggs and 10% inflation (2022). At this point I haven’t missed any meals and my drinking regimen is still intact. The story you are about to hear of my financial plan is true. Only the names and numbers have been changed to protect the innocent.

Stocks Down! Inflation Up!

My primary goal to survive retirement was not to necessitate tapping my core retirement savings for as long as possible. This quickly became important as the day I retired in 2022 corresponds with the day the stock market started dropping. Nothing better than no paycheck and savings evaporating all at once! Without the need to use my IRAs and 401ks, I can permit this money sit and hopefully recover and grow … or drop to $0. In a few years we shall see how that plan went.

My favorite Stock Market Indicator

Our mortgage was paid off some years ago. I want the security and satisfaction of no mortgage payment in retirement. That means no monthly “rent” other than real estate taxes. You do what you want, but I would be even more grumpy in retirement if I had a mortgage. This equation can change depending on interest rates, but for me, paying off the mortgage was a critical part of my financial well being. It didn’t hurt my fragile mental state either.

“You do what you want, but I would be even more grumpy in retirement if I had a mortgage.”

The Grumpy Retiree

Surviving Retirement or How to Survive Paycheck Withdrawal

When I retired I kept looking for my paycheck, but companies are funny like that, they don’t want to pay you after you leave. Bastards. For the first year of retirement I kept wondering if all those models whispering in my ear were right. Financial models that is. Do I really have enough savings? Will it hold up over the long term? When testing new vehicles they use crash test dummies for a reason. Now I felt like the dummy testing my financial model in real life.

Everyone tells you to have 3-6 months living expenses in a safe savings account, CDs or similar for emergencies. I looked at my monthly budget well before my retirement, and after I got over the “Holy Crap! We spend what a month?!” moment, I got to work. I wanted to cover my full living expenses for 2-3 years with income and safe investments.

Survive Retirement: My Goals

• Hold off claiming my Social Security as long as possible. Age 68-70.
• Don’t touch core savings. Best case let it grow, worst case no need to take out money at market lows.
• Live comfortably off safe savings for 2-3 years, supplemented by wife’s Social Security.

I chose 2-3 years as I am trying to hold off that long or longer before I claim Social Security to bolster my monthly Social Security check. I prefer to hold off to age 70 for Social Security, so I will tap into 401ks etc. if absolutely needed. It is very important to do your homework regarding Social Security, especially if you are a couple. My monthly Social Security will always be greater than my wife’s by a reasonable amount. If I croak, or my wife kills me, she can claim my higher check or her check. I’m not sure about the killing part, check into that before acting. It makes sense in our case to maximize my larger check for the surviving spouse. Bored yet? I’ll show you bored: Official Social Security Website.

At the start of my plan, CD’s and savings accounts were not paying much interest, but I need this money to stay safe if the plan is to work. Someone will tell you these investments lose money relative to inflation, which was high at the start of my retirement, but stocks were losing more, so a safe bet was more important. A full year or more before I retired I added to my emergency savings account at Ally Financials. Ally’s rates are more competitive than local banks and works well for me. It is efficient and I can connect to Zelle and other financial accounts. I also used Bonds and eventually CDs as rates increased to over 5%. Online savings accounts and CD options abound, so research what works best for your personal situation.

Time for some Simple Math

How did I figure things out? OK, I am Mr. Spreadsheet. I love a good spreadsheet just like the next person, but who doesn’t? It really is simple.

The first year of my retirement my wife still worked. I always say the best retirement plan is a working spouse! I only needed to supplement her salary the 1^st year to help survive retirement. In the second year she retires. Therefore in years 2 & 3 I need to cover all our expenses, less my wife’s Social Security that she will claim.

“The best retirement plan is a working spouse!”

The Grumpy Retiree

Note: I didn’t mention a pension. If you are one of the lucky ones that have a good pension you probably don’t give a crap about this. This is for the poor slobs like me that rely on their savings and Social Security. Since I don’t know when I am going to croak (my wife may), I have to make sure our savings lasts until the end. If you have a good pension, Social Security and savings, this is a lot easier to do! I need to make sure my savings last as long as my wife and I combined. The goal is to spend my last dollar on a cheap bottle of wine, get drunk, tip over, hit my head and die. In reality I won’t be so lucky.

Here is an example which excludes taxes/inflation for simplicity. The numbers are just an example.

Holy Crap Batman! That’s a lot of money to save in a short time! That is why you want to start your pre-retirement plan as early as possible.

Important things to remember!

• You can take some of your retirement nest egg and put it into safe savings investment! It all doesn’t need to be new savings! Some of that nest egg should be in safe investment already!
• You don’t want to find this out 2 days before you retire! You should work on this well before retirement, the sooner the better.
• You need some money to be safe for this plan to work.

In a perfect world, I would have sold a bunch of stocks near the peak in 2021 and put that money into safe accounts then pile in at stock market lows! But I live in the real world, unfortunately. Timing is everything and timing the market is full of problems. If you are so good at telling the future, what in hell’s name are you doing reading this?

What Did I Do? What Happened? Is it working?

In the end I conservatively set aside about 2 ½ years of cash to supplement expected income. I started doing this well before my retirement. I planned to dip into core savings for 1-3 years after that period, to maximize my Social Security check. Shortly after I retired I found a fun part time job in Maine, which was income I didn’t anticipate. This income affords my cash stash to last longer before I tap into retirement savings. Most likely I will wait until 69 or 70 before I collect my Social Security.

If needed I can always tap into my core savings to supplement my living expenses. Thanks to this plan, those withdrawals should be very small. More likely I would just divert some stock dividends to living expenses instead of re-investment.

Surviving Retirement Update 2023

Now both my wife and I work part time during our summer in Maine. We don’t have to work, but it is a fun job at a winery and the money supplements my wife’s Social Security. It also allowed us to buy our summer tiny house in Maine and defray unanticipated costs prior to retirement. I don’t want to be forced to work in retirement, but we enjoy it.

After 1 year of retirement I do not expect to touch core savings until 2026 or 4 years after I initially retired. By that time I am past my Social Security full retirement age and getting darn close to 70. If all goes well my core retirement savings will have grown … I hope.

I still have at least 2 years of supplemental living expenses, mostly in high yield laddered CDs as rates turned higher in 2023. This savings should last quite a bit longer when I include our part time work. I have not tapped my core savings, which have recovered (for now) from the 2022 lows. I adjust as needed between savings and core retirement money as opportunity and needs arise.

Retirement is not just about the financials, but you cannot survive retirement without paying attention to the financials. Is this plan for you? I don’t care. But it’s working for me and it is not a bunch of the same theoretical BS regurgitated over and over on the internet. This is fresh BS.