I am really grateful for the examples of other people in their retirement planning. I have watched some folks retire with ease early in life and saw them enjoy doing whatever they want. I have also learned from horrible examples of what not to do that totally derailed all the best plans toward retirement.
It is the second group that we will discuss and see what happened to high earners after starting with great plans and saving that totally ruined their retirement plans or delayed them much longer than anticipated. We have talked about retirement misery already and how hard it is to get back into planning at an advanced age.
Retirement Planning Curve Ball
My two most recent bosses have had great and prolific careers in the health industry. They added on great titles and worked in high management positions for a long time. They have saved for retirement for more than 30 years but instead of retiring early, they both made major purchases that have set them back. Now they are working to pay off those purchases and have some major regrets about making them in the first place.
Major Purchases Later in Life
Boss number one decided to buy a house in the mountains. The not second house, but their main house. They also decided to add on a new trailer and truck so they could easily go camping. At the age of 59, they added on a mortgage of $450,000 and another $60,000 with the trailer and truck.
Boss number two bought a big $80,000 motor home in their 60s to travel around the state and also to take regular camping trips on the west coast. Boss number two is 3 years away from retirement.
I Want To Enjoy Life Now
The reasoning was both bosses said they wanted to enjoy life now before they retired. They said it is much harder to move around and do things as they both get older. I find it ironic how much both bosses have talked about their personal finances. I actually think it was first to justify their actions/feelings about it and second of all to also warn me of their decisions.
Why Did I Buy That at My Age? Spending Regrets
Both bosses have recently come to regret all their purchases and are now trying to get out of them. Boss number one has been in the house for a few years now. Boss number one recently met with financial planners to start getting things ready for retirement. Boss number one has saved and saved and has well over a million in retirement accounts which seems like a lot but not when you still have over $300,000 in mortgage payments left.
The financial planner told boss number one that if they hadn’t purchased that home they could have retired several years ago. They showed the numbers and said they could quickly pay off the house but that the retirement account would take a hit and they would have to build it back up at their current spending rate or they need to change their plans in retirement and spend less.
Boss number one and their spouse are starting to have health issues and can’t go camping as much and realize it wasn’t the best idea to buy all new camping equipment because it is not so easy to get out and around as much as it did a few decades ago. So those will be sold as well
Boss number two is already planning to sell the motor home. They want to wait until spring next year to clean it up and sell it while the market is still building. Selling in the fall and winter is not ideal because people aren’t going camping as much in our area.
Boss two ran the numbers and said for $80,000 they could travel to multiple spots during retirement without having to worry about the vehicle and maintenance and getting 6-8 miles a gallon. That would have been good to plan out before the purchase.
Enjoying Life Now or Retire Early
Many times we want to enjoy life’s journey which is totally fine, but don’t let the journey mess up the plans for the rest of your life. A major purchase can delay retirement by many years if not indefinitely. How much more could you enjoy your life by working hard and saving and ending work early?
My parents will both be retired at the end of this year (my father has been retired 8 years already) and they have major plans right away because they know they won’t be young and able to do what they want forever. They have major trips around the world planned, but it was built into their plan.
Retirement Planning from Early to Late
A few of us save and save early in life, but do you have a plan for retirement as well? Do you understand when your house will be paid off or what you want to do during retirement and how much that may cost as well? I think many times we save but we don’t actually sit down and figure out the costs of our plans until much later in life.
Most of the time we start to meet with a financial planner in our 60s to see how things are going and to start to transfer accounts and then they show us something that could have been changed earlier on to help us be further ahead or that could have helped us early on. Without a plan, we are hoping things work out.
Buying a second house in your late 40s or 50s that isn’t an income property can delay or hit big on your retirement. Plus many times what seems really great at the moment can turn out to be a huge regret. Yes, you have the second house but do you want to be confined to just one space, or instead of spending all that money would you rather travel to many different locations and just rent? These are questions to ask ahead of time and put into your plan. Plus if you don’t make the purchase of the second home could you retire much earlier?
Retirement Starts the Day You Start Working
When you retire depends upon the day you start to plan for it. The earlier you start the more likely you will end up retiring early. If you start planning from the day you first get your career job then you are ahead of the game. Just like avoiding debt the earlier, you start the better you will be.
Avoid retirement misery. Make a plan today, you can modify it along the way. Avoid major purchases that add to your debt load later in life. You have worked so hard up to this point so don’t destroy all that planning and dedication to retirement by making a big mistake later in life.
