Here’s their formula to living — and living well — at 73 and 86 years old
It’s quite comical, actually.
The two people in the world who probably know (and care) the least about the stock market bucking the trend of old ass people living in relative squalor because they didn’t effectively position themselves for retirement.
As I look to bolster my case for banishing the broken framework of traditional retirement from our personal finance lexicon, I realized my parents provide the best illustration and most convincing anecdote.
With a couple important caveats and exceptions, my parents embody the strategies I advocate around managing your money in a way that renders formal retirement with a million bucks in the bank irrelevant and unnecessary.
In this article, we outline their approach and address the somewhat outdated aspects that helped so much fall in line for my parents. We present alternatives to the things that aided their work and post-work lives that you likely will not have access to today.
Mom’s 73 years old.
She worked part-time, here and there, in a restaurant or two when I was a kid, but spent most of her life “staying at home” to take care of me.
Dad’s 86 years old.
He worked full-time, part-time, and side hustled. When I was a kid, he was usually out of the house by five in the morning, often not returning until it was dark. During his years of working really hard, he was probably home for dinner roughly 50-to-60 percent of the time. He busted his ass to ensure we had what we needed — and more — in the present and as he and Mom grew old.
This said it’s not this prototypical American dream family and the conservative mantra of work ethic and bootstrap tugging that tells their story. Lots of people work hard and have nothing to show for it, particularly in retirement. Without the hard work, my Dad certainly would not have seen the financial success he wanted and needed; however a mix of smart choices, financial anxiety, discipline, circumstance (place), and luck deserve an equal share of the credit.
Benefits tied to workYou can’t overstate what might be one of America’s biggest inequalities.We tie so many of the things that make life more comfortable now and into the future to work.This is why my parents have healthcare for the duration with very little to pay out of pocket. They have had fleeting (thankfully), though relatively major health issues that cost them virtually nothing to take care of financially.Equally as important, my Dad collects two pensions. One small one from a carbon plant he took a forced early retirement from and another larger one from the local housing authority, where he retired by choice. Yes, I do realize this represents an indirect investment in stocks. While these pensions do not represent a huge amount of income, they’re a nice supplement to Social Security.And, of course, they receive their maximum Social Security benefit, because my Dad worked past 70 years old.Taken together, alongside whatever cash savings they amassed over the years, these factors have put my parents in a relatively comfortable financial position. They don’t have to worry about money. They’re cash secure. They can pay for things, such as house repairs, when they come up. They can buy things they want but do not need on the regular.From here, the practical meets the intangible to round out a somewhat traditional retirement that developed and exists with absolutely zero direct stock market investing.
Working hard
There’s no question my Dad worked hard.When you work hard, you tend to open up opportunity. When my Dad left the plant, it didn’t take long for him to get a new job with the housing authority. This has a lot to do with his side hustle.
Side hustles before we called them side hustlesMy Dad had three side hustles when I was a kid. One that lasted into my adult years, long after I moved from home.The first is kind of funny. My Dad took “action” for a sports bookie. This means he had a handful of people calling him on the weekends placing bets on college and pro football. As a teenager, I helped my Dad with this side hustle, answering the phone and helping him do some of the paperwork.Gotta love the underground economy, baby.For several years, my Dad worked nights here and there at a liquor store one of our close family friends owns. Again, a nice source of extra income on the side.The third was the biggest and sustained throughout his full-time work life and beyond. My Dad painted houses inside and out. He had a couple of guys who worked for him, particularly when he had a lot of jobs, which was much of the time.This ties back to hard work creating opportunity.
Of course, he received word of mouth painting business.Maybe more importantly, he was out in the community, making a name for himself. When he needed work, there was somebody there who he knew and who knew him, ready and willing to recommend him for the housing authority job.My Dad worked side hustles before we called them side hustles.He probably could have worked solely for himself, replacing the pensions he collects with a higher level of cash savings. In fact, I know he could have. He could have had a relatively big painting business in and around our hometown, but he came up during a time when the perceived security of full-time work — and benefits such as pensions and healthcare — pulled strong.
Being afraid of debtAs much as his work ethic, I remember my Dad being afraid of debt.
He bought two houses during his life. My parents still live in the second one. They paid off their 30-year mortgage in roughly 15 years.
My Dad used to call me and discuss his plans to “pay the house off” as soon as he possibly could. He didn’t want to even have the thought of dying and leaving my Mother with a mortgage. He takes a similar approach to buying cars. My parents never carry credit card balances.
We’re not going to replicate things like this (I haven’t), but it’s certainly a nice guide to living and living well without the overhang of uncertainty and anxiety the stock market causes for some people. Something I’ve been writing about a lot recently, leading to the present article.
An insanely low cost of livingMy parents would not be in the situation they’re in without an insanely low cost of living.
As noted, they do not have a mortgage payment. They never took out a home equity loan. They don’t have car payments. Sometimes I rack my brain trying to figure out what they actually spend money on.
This comes back to the thesis I’ve been trying to drive home over the last week or so. That you can place cash and cash security above stock market investing if you maintain a low cost of living. You can eschew the stock market altogether, meet your expenses, and do things such as travel — to a frequent and significant extent — if you aren’t tied to this massive monthly overhead that dogs so many people.
To reiterate, consider this from one of my recent Making of a Millionaire articles: If you make the decision to get out of the stock market, it should have very little, if anything, to do with making or losing money.It should have everything to do with a realization that you can meet your needs — and then some — with consistent cash flow and a focus on using money to essentially love yourself and love the ones you’re with…Money should not drive us.Sadly, we’re living through times where too many people engage in this dysfunctional relationship with the stuff.The things we want from life. They should drive — and inspire — us.With this perspective, you take what you need and a little more, leaving the rest for everybody else to fight over.
We speak in abstract, idealistic, and theoretical contexts all of the time about minimalism (which I do not subscribe to), being frugal (I’m not necessarily all about this either), experiences over things, and having low expenses. However, we tend to come up short on practical ways to make this happen.This is what I — and a growing number of authors — love to write about. Actionable alternatives. Meaningful anecdotes. The types of things you can consume, comprehend, and adapt to your own personal financial situation.You’re not going to do it the way my parents did and are doing. I haven’t. I won’t. We probably can’t. However, you can create your own sources of cash to sustain your life today and into the future.I write about pots of money, cash flow, and income allocation all of the time.The more I think about it, I’m modeling my money strategies off of how I have seen things transpire for my parents.The big differences— I’m doing most of it on my own. I’m taking the do-it-yourself route, replacing things I’m never going to see (e.g., pensions) with my somewhat methodical, multiple savings accounts for multiple purposes approach.If you enjoyed this article, consider subscribing to Medium through my profile.
This article is for informational and entertainment purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.
