Income

Living to 100! ….what an amazing journey!!!

No matter what age you are, or what generation group you belong to, one thing is sure, you are going to need a steady and regular source of income if you want to reach the almost mystical age of 100.   In these next few paragraphs we will review some saving tactics, pros and cons of when to retire and how to start planning for the future.

Start Saving today!!!

Focus on starting as early as possible no matter if you are in your 20’s, 30’s or more!! Begin your saving process today. Especially if you have just begun to put money away for a project, for a house, for your retirement fund, start saving and investing as much as you can and let compound interests (the ability of your assets to generate earnings, which are reinvested to generate their own earnings) have an opportunity to work in your favour. Because of the power of compounding every euro saved before you are 40 counts for 2 or 3 times every euro saved thereafter. Even tiny amounts add up if you can save regularly. For example, saving just 3€ a day adds up to 1,095€ over a year, which over 10 years is a substantial amount of money saved. 

Start saving as soon as possible…

Let’s say you start investing at age 30 at a rate of 1,000 € per year for 10 years. Your friend starts at age 45 and invests the same amount each year for 20 years. Even though your friend invested double the amount you did, because you started sooner you could have over twice as much money when it comes time to retire thanks to the power of compounding interest 

Try to save at least 10% of your income annually to your retirement plan in order to have enough income during retirement.

There are many ways to save at least 3€ a day, you could skip breakfast alltogether and save daily 3 to 5€. Almost 2 years ago I started with intermittent fasting and skipping breakfast. Its easy, healthy and in the long run can save you a ton of money. 

In the beginning, it is important to make savings a habit. The amount is not very important as once you have acquired this habit you will be able to apply this principle into any of your expenses.

If you don’t trust yourself to save on a daily basis, you could set up a standing order to pay money into your savings account or retirement fund each month and your fund will soon start to grow. If you set aside savings straight after you are paid, you are less likely to miss the money. Wait until the end of the month and the cash is much more likely to disappear in everyday expenses.

Where could you be starting to save?


1-Automated Payments

You could start with all your automated payments, you can save hundreds per month with just a few phone calls and some negociation in the following areas.

  • Car insurance
  • Cell phone plan
  • Gym membership
  • Cable
  • Credit card

All you need to do is call them, ask them to consider lowering your rates, membership, or fees and tell them that because of simple money issues you might have to leave them for another company …see how they react.

Of course, you’re going to want to adjust this formula for whatever company you’re calling. 

saving money
A few phone calls could save you all this money…

2-Be selfish!!

 If you are in your 40, 50 , or 60’s Don’t skimp on retirement savings to send your children to college. Your kids have more options and opportunities than you do. Your kids can take out student loans. You can’t take out a “retirement loan.” Your kids have their entire lives ahead of them. Time is on their side. Time is less on your side. Your kids can start saving for retirement in their 20’s and 30’s. In fact the best gift you can give your kids is your own financial security in order to live a happy, healthy and fulfilling life until you reach 100!!

3-Pay Down Debt

Pay off remaining debts as fast as possible and don’t acquire any new debt if at all possible. Debt is expensive and paying the interest on the debt could be money that’s saved instead. You are unlikely to earn more interest on your savings than you pay on your borrowings, so aim to pay off expensive debts like credit cards, store cards, car loans and overdrafts before you start to save.
 If at all possible weigh up whether or not you should make extra payments on your mortgage. If you’re in the early stage of your mortgage and many of your payments are being applied towards interest, it might make more sense to make extra mortgage payments.
If, however, you’re in the final years of your mortgage and your payments are primarily being applied to the principal, you may be better off investing that money.

4) Downsize housing .

Regardless if you are owning or renting, the smaller the housing bill the further your savings will go . With the Baby Boomers becoming empty nesters, downsizing is officially trending. Big properties and big homes were perfect for your growing family but now that the kids are off out in the world living independent lives, there is no need to keep the big house.  Small homes don’t just mean a smaller price tag but also spending less money on upkeep, repairs, decor, utilities, property taxes and landscaping. That means you have more money to make your smaller home your dream home. Before you buy a smaller house, take stock of what you have, what can go and what absolutely cannot go. If you’ve been in your home for 20, 30 or even 40 years, there are a lot of things you need to take care of before you can think about selling. For one, you have rooms filled with furniture, memories and miscellaneous stuff that you need to sort through. Plus, your home probably has features that are outdated and may need a face lift in order to maximize your selling price. What you don’t want to do is throw everything into a storage unit to figure out later because you’re in a rush to sell. You’re only putting off the inevitable, adding to your expenses and increasing your workload in the future. Instead, start early so that you can relax in retirement and focus on activities you’d rather be doing than cleaning out a storage unit.

Dream home
This could be your smaller dream home

The key thing to remember, yes, downsizing does mean some sacrificing square footage but in the end the pay-offs could be enjoying more time, less work and better location.  So what are the positives this change will bring:

– With a smaller home, you’ll spend less time cleaning and more time living. Having fewer rooms to keep tidy and not as many square feet to scrub can be liberating. Many people also find that they can keep their smaller homes cleaner because it takes less effort.

-Living in a smaller home limits the amount of stuff you can accumulate, but that’s a good thing as it will stop you hoarding things you may never use. Downsizing doesn’t necessarily mean you have to get rid of everything you own; it gives you the opportunity to find out what truly makes you happy. My daughter says that when you look at an item and you are wondering whether to keep it or not, one must ask one question.. “Does this give me joy”? If the answer is no.. then out it goes !!

Utility bills increase in direct proportion to square footage. The smaller the home the less it will take to heat and cool. New homes also consume less energy than most existing older homes because they are constructed to be more efficient. Less square footage decreases the amount of energy expended which ultimately is good for the environment.

Increased cash flow: If you’re spending less on your mortgage payment, you are likely to have money left over every month to allocate for other needs or desires. Or perhaps you could pay cash for a smaller home from the proceeds of your existing home.


Minimized stress: Less responsibility, smaller workload, increased cash flow, and greater flexibility – added together, they all reduce stress. Homeowners who have successfully downsized sometimes appear happier when they’re no longer overwhelmed by the demands of a larger home.


New and better Location! Downsizing might give you the opportunity to move to a better location as the price of your new home will be cheaper. Determining where to live requires multiple considerations. Do you want to be close to family? Do you prefer a warmer or cooler climate? Do you prefer out in nature or in town? An important consideration when thinking about locations is taxes. Does it make sense for you live in a state with higher property and income taxes or should you move somewhere with low or no state taxes?

5-Do you really need a  car!!

Buying and running a car is a major expense – for many people second only to the cost of their home. So before deciding to buy one, spend a little time thinking about if you really need it and alternative ways of getting around.

People living in rural areas with poor public transport often have little or no alternative to using a car.

But for some of us, it might be more to do with the convenience or habit of jumping into the car however short the journey. Here are a few ideas that you might take into  consideration.

Alternatives to using a car

Cycle

Cycling in town
Cycling through town is quick, easy, healthy and will reduce costs…

According to recent studies in the Uk, four out of 10 short car journeys are under two miles – an easily cycled distance.  So why not invest in a bicycle and start cycling around.

Cycling is also one of the easiest ways to fit exercise into your daily routine, plus it saves you money and is environmentally friendly. If you’re put off by steep hills on your route, why not test-ride an electric bike? Starting at around £500, most have a range of 20–25 miles and all of them offer you both speed and fitness benefits.  Or if you don’t have the space to store your bike at home or at work, try a foldable bike. They are so practical, light and easy to fold, so you can combine cycling with public transport as well.

Car share

If commuting to work is your main reason for owning a car, it might be worth looking at sharing your journey with a colleague.

Many large employers run car share schemes.

If you normally drive your children to school and it’s unsafe for them to walk, you could arrange to share the school run with other parents. This can also help with parking problems near schools.

Car clubs

These are in effect pay-as-you-go cars you can rent by the hour or day.You have the convenience of a car when you need it without having to pay for car tax (commonly known as road tax), servicing and car insurance.

Public transport

Public transport is likely to be cheaper than a car for commuting or short local journeys.

When comparing costs, remember with a car you need to allow for running costs over the year as well as fuel. So it’s well worth considering buying a weekly or monthly season ticket for bus, train, tube or tram instead. For longer distances by train or bus, you can make big savings by booking saver tickets in advance.

Motorbike

Motorbikes and scooters cost considerably less to run than a car. For example, 125cc bikes and scooters will do more than 100 miles per gallon, which means a 20-mile daily work commute could cost as little as £5 a week in petrol. Electric scooters are particularly cheap to run – as little as 1p a day. However, their range is limited to 40 miles or less.

Walking

If your journey is only a mile or two, why not walk instead? Not only does it cost you nothing but it also cuts down on pollution and congestion. A walk of just one mile can also burn off 100 calories and is exceptionally good for your heart and lungs !!

walking to work
When the weather permits, start walking to the office.


Work from home

Many companies now offer flexible working, so it might be worth speaking to your employer to find out whether it’s possible – even if for just one day a week.

Second hand car versus New car!!

New cars depreciate faster than used vehicles. … To put it simply, if you buy a brand new car without a down payment, or if your monthly loan payment isn’t high enough to compensate for depreciation, you could end up owing more than the vehicle is worth

“Cars are parked 95% of the time”

Yes…you read it right, according to some studies in the uk, cars are parked  a shocking 95% of the time. The RAC says around three million cars in the UK are used less than once a week and a third of these cars are virtually new, a year or two old at most.

So all these barely used cars are a huge strain on storage and parking in cities. The shift away  from mass car ownership would result in making cities more livable and would save so much parking space. In fact it is more than saving space, it’s about reducing the number of cars and the effect they have on our environment. Sharing vehicles, either through existing services like Zipcar or Uber, or, eventually, through automated vehicles that could be summoned as needed, would lead to significantly lower overall spending on cars.

So with all this in mind examine your budget to determine how much you can save.

1) Retiring early versus staying active as  long as possible!!!

Some people say retiring is boring...and others feel like they have a new lease of life! 

Times have changed, and the standard model of working in one job all your life and then retiring at the age of 60, is no longer applicable to our modern times. The idea that retirement promotes health and prolongs life isn’t obvious for all individuals.  After all, work provides you with an income, health insurance, a purpose, social interaction, and physical activity in some cases, all helpful for maintenance of well being.

Social isolation is linked to cognitive decline and even death in some extreme cases.  So under the premises of “use it or lose it” people who delay retirement have less risk of developing Alzheimer’s disease or other types of dementia.  “For each additional year of work, the risk of getting dementia is reduced by 3.2%,” said Carole Dufouil, a scientist at INSERM, the French government’s health research agency. Find here the publication.

France mandates retirement in various jobs — civil servants must retire by 65. The new study suggests “people should work as long as they want” because it may have health benefits.

So it seems fairly clear and evident that remaining active in a work sense for as long as you want will maintain mental and physical health in good shape. Nowadays people consider working a little longer a reasonable price to pay for living longer, compared to prior generations.

Retiring is boring
Social isolation is not conducive to a happy retirement.

For those that no longer enjoy their work, feel they have had enough and have generated enough income to sustain them in retirement, well then, it seems fair to retire.  However it is of the upmost importance that they remain active, physically, mentally, socially and spiritually. (See 9 longevity hacks). 

Many retirees choose to volunteer. Volunteering can reduce dementia risk in seniors, study finds Seniors now have a greater incentive than ever for doing volunteer work in their retirement years, and can be of immense benefits to you , especially if you are passionate about the cause. A new study by a team of Harvard School of Public Health researchers finds that if you feel you have a higher sense of purpose in life or ” Ikigai “,  defined as having meaning, a sense of direction and goals — you are more likely to remain healthy and physically strong as you grow older. For many people, the basic retirement trade-off could come down to a choice between income and freedom.  It’s easy to see why many people want to retire when they still have the health to enjoy life even if that means living on less money.

Is retirement boring?

Well this is an interesting subject!!  Retirement may seem like the light at the end of the tunnel for many adults, but for others it means they are old !! Retirement may be more of a  disappointment than a delight.

In a recent survey more than a 1000 British retirees described their retirement as “boring,” “ lonely” and “ quiet”. Some of the major drawbacks were not having enough money, boredom, lack of social interaction and that everyday felt the same since retiring. So what’s the point in retiring early if you are going to be moneyless, bored and on your own???

2. Retiring late may be better for you.

The Dutch found out recently that when they encouraged people to work longer, they lived longer. The mortality rate, just between ages 62 and 65, plunged by a stunning 32% among those men that stayed in work. In the U.S., there’s actually a ripple of deaths each year among those who retire at 62.

You won’t spend decades being bored crazy. Chances are you’re going to live a long time. More than a quarter of those who live to 50 will live into their 90s, says the Center for Disease Control. That’s around 15,000 free, empty days. So the key question is what will you do with all this free time?  Buy a yacht and sail the med, go travelling, learn a new skill, start an online business from home to supplement your income or will you spend your remaining days watching daytime TV. 

-You won’t drive your family nuts, either. Once they fly the nest, your kids will be busy with their lives, they will be hanging out with you less and less. Soon enough, sons and daughters, and indeed sons and daughters in law, will not be too impressed with you hanging round too much. So if you are still busy working you will create some healthy space between you and your children and let them grow in their own environment.

You’ll have more time to prepare for this big change!! Along with getting married, moving house and having your first child, retiring can be a very stressful time of life.  Giving up your work, finding a new purpose, building new social networks and a certain loss of identity are amongst the psychological and emotional challenges you will have to face. So retiring later will not only postpone this moment but also give you more time to prepare for it.  It might be a good idea to seek professional advice for this transition time.

You will have more time!! Time to change the assumption that constantly busy means achieving anything. One of the most precious things about retirement is the opportunity to work out genuine priorities and to be true to yourself. This may involve taking a second look at what we value when being paid is out of the equation. It may involve an exploration of the spiritual side of life and find a new meaning to your days, and your life.

You can be more proactive! It’s a big mistake to see work as the only way to stay mentally and physically sharp. You have to be proactive and one of the biggest secret is to stimulate your curiosity and /or to cultivate your passion. One of the biggest myths about retirement is that it’s a passive stage of life. It’s actually quite the opposite but with no one else to goad you into action, it’s entirely up to you to make stuff happen. That’s not a problem if you’re curious and keep stretching your boundaries, both physically and mentally. Meanwhile, short bursts of boredom are a natural part of the transition and they can be surprisingly fruitful if they spur people into action. One retired man currently in the post-honeymoon phase says this: “When people ask my advice about retirement I say get used to being bored sometimes. Because it won’t be long before something new and interesting happens.”

Several studies here and in the US show that retirement actually improves marriages. But the same studies show that, in the short term, the transition from work to a home-based daily rubbing along together can be a source of conflict. 

If it’s managed carefully, even a turbulent period of adjustment can be productive. Retirement prompts the kind of shake-up that many long-term relationships need. By forcing couples to hammer out their differences and talk about their expectations it keeps the relationship developing, moving forward and very much alive.

be proactive in your retirement.
Be proactive, healthy and busy in retirement.

Downshifting strategy

One possible strategy that can help you successfully balance all these trade-offs is to try a downshifting strategy, in which you work fewer hours but still enough to cover your basic living expenses. This will free up more time to enjoy life, while allowing your Social Security income and retirement savings to grow until the age when you fully retire.

Others decide to learn a new skill, retrain or start an online business to supplement their income.

You will preserve your Retirement fund for longer! The longer you stay employed either full time or part time the longer your retirement savings will remain untouched. However when you decide to use these funds experts advise to Stick to the 4% rule, by which you withdraw no more than 4% of your total retirement fund.

Plan of action !

1- Make saving a habit and start saving; we have seen above a list of possible areas where you might be able to make some cutbacks, which invested properly will mount up to substancial amounts.

2- Aim at saving at least 10% of your monthly income.

3- Invest properly. Properly means that you have the appropriate asset mix depending on your anticipated retirement date. It also means the lowest possible cost of investing your retirement savings. How you save can be as important as how much you save. Inflation and the type of investments you make play important roles in how much you’ll have saved at retirement. Know how your savings or pension plan is invested. Learn about your plan’s investment options and ask questions. Put your savings in different types of investments. By diversifying this way, you are more likely to reduce risk and improve return. Your investment mix may change over time depending on a number of factors such as your age, goals and financial circumstances. Financial security and knowledge go hand in hand.

 4-Calculate how much money you need to retire If you haven’t already, run a calculation to figure out how much money you need to retire, do it now and again and again. Your idea of a comfortable retirement may evolve over the years, so taking stock every so often and accounting for new or expected expenses is crucial.

5-Educate yourself on the Medical health options.  Medical bills could be one of your biggest expenses so check out all the various health insurances available in your country and be prepared. Medicare, for example, doesn’t kick in until age 65, so early retirees have to find coverage elsewhere.

6- Figure out if and when to downsize. As seen before, downsizing comes with some advantages and drawbacks, so this is not for everyone.

7- Check out your private and public pension. In many European countries the state pensions are struggling and are on the decline but it is still a sizable amount to be checked. This will also give you a good idea of how much money you need from your private pension to reach your monthly expenses estimates.

8- Don’t touch your retirement savings. If you withdraw your retirement savings now you’ll lose principal and interest and you may lose tax benefits or have to pay withdrawal penalties. If you change jobs, leave your savings invested in your current retirement plan.

Enjoy life.
Enjoy life!!!

IN CONCLUSION

The general tendency is for adults to live longer and longer so reaching 100 does not seem so alien,

Yet the link with old age remains an offputting distraction that’s hard to shake. But aging is inevitable so let’s change our mindset and embrace this new step in life as if we were reborn again. If you are in your 60’s think of the changes you have experienced so far… and imagine those that lie ahead of us in the next 40/50 years!!!

So of course how much money you have, or plan to have, is important but let’s not fixate on it! Instead we ought to look after our health, constantly adapt our mindset to the changing times ahead and above all wake up every single morning with love and enthusiasm for  experiencing yet another day on this beautiful planet…