Finance

Ladies First

Fourteen women gathered recently at my office to attend a eomen’s circle focused on the topic of retirement. Women’s circles are different from seminars. Circles focus on sharing …

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Fourteen women gathered recently at my office to attend a eomen’s circle focused on the topic of retirement. Women’s circles are different from seminars. Circles focus on sharing experiences. Everyone is encouraged (but not required) to speak. Contributions are valued because they present different ways of looking at the same issue from real life perspectives. At the same time, participants can see that the concerns they struggle with are shared by other women, even though their lives may have taken very different routes.

Most of the women came to the circle with similar questions: “How can I tie up loose ends and retire as soon as possible?” “When can I retire and have a decent standard of living?” “How do I get on the right path to retirement?” ‘When’ and ‘how’ were the most common questions, but their views on retirement varied.

For some, retirement was continuing what they do today with modest changes. “I want to keep doing parts of the job I like and cut back on the onerous parts.” Or, “I want more flexibility with time and how many hours I work.”

Others liked the pace of working, but wanted to substitute different activities into their daily lives. “Retirement should look like a full time job. I get more stuff done if I have other stuff to do.” “I will need structure for my volunteer work, my physical work and time with my family.” Not everyone was clinging to an image of a retirement tied closely to how they lived their lives today. “I want every day to be Saturday,” offered one woman who was counting the days until retirement was possible.

Money worries surfaced often during the discussion. The biggest concern was how big the nest egg needed to be. It’s a question that is specific to each person and involves a process of measuring what you have, how much you are saving, how you are invested and how much you need to spend. Spending levels are the key. If your retirement lifestyle can be more humble than how you live today, retiring earlier or saving less can become viable options. But how do you know if you can really be happy living a simpler lifestyle? The attendees really liked one woman’s response. She plans to retire in 18 months. When she retires, she wants to have completed some necessary work on her house. Those renovations need to come out of cash flow, so she is practicing her retirement lifestyle today. “It isn’t onerous,” she said. But clearly she has carefully planned what she is willing to sacrifice. She never drives over 60 miles an hour, saving on gas money. She doesn’t go grocery shopping until her refrigerator is bare, cutting way back on waste. She rarely looks for new work clothes and always travels with a companion to share expenses. A little savings here and there not only provides money for the house but also assures that her retirement lifestyle can be comfortable.

Practicing retirement today usually means giving up something now for later. The trick is not to forsake too much in the present to the point where resentment steps in. Like aggressive dieting, it will never work. But there are prudent choices you can make today that will increase your flexibility.

The discussion switched to mortgages. Is it a good idea to pay off mortgages by the beginning of retirement? More tradeoffs. Prepayments can come out of income (less spending now) or out of savings (smaller nest egg but lower budgetary need). If out of income, mortgage prepayments become one more way of practicing retirement today.

One woman is preparing to sell her home. Instead of plowing money into her current property now and downsizing later, she is thinking of selling in the near future and moving to a less expensive home today. But she is struggling with this option. The home, for everyone, is an emotion-laden possession, often inspiring deep attachment or complications that make this type of decision hard.

Another woman plans to take Social Security benefits at full retirement age while she continues to work and to save her benefits for something she needs or wants in retirement. This could be for travel, health care needs or an extra emergency reserve. The unexpected – especially health care costs – looms large for a number of women. Having an extra untouchable bucket can offer peace of mind.

The ideas flowed throughout the evening. Women were: “Eager but apprehensive;” “Excited but afraid;” “Anxious but hopeful.” As the evening came to a close, the women reflected on the gathering and share something they learned that they can practice today, bringing them closer to answering, “When can I retire?”