My plan is to finish strong. And that means crossing the finish line with no regrets.
The longer we run the race called life, the greater the potential for regrets. In this article, and the next several Mondays, I want to help you kill the regrets looming on the horizon.
One of the biggest potential regrets for Baby Boomers is in the area of finances.
Starting out in life on your own is tough. Do you remember those days? The paycheck was often small and expenses high. At the end of the week it seemed a major victory if expenses didn’t exceed income. But if they did, not to worry. Everyone has a couple of credit cards. And so it begins.
Each of us can look back and realize how foolish we were with our money. We missed investment opportunities. If only we had been wiser with our money.
It’s tough to finish strong when you are struggling financially.
The Money Trap
Do you remember the first time you ever purchased using a charge card? I do. I lusted over the color TV in the Montgomery Wards department store. But how could I afford it? I couldn’t. Why let lack of money stop me from getting the desire of my heart? So, for the first time, I got a charge card and went into debt.
My love affair with credit cards lasted for decades. Only after awakening under a mountain of debt did I realize I had been trapped. Not until I entered my fifties did I get rid of all credit card debt and cards
Why are we so slow in figuring out the importance of handling our money with great care? It’s because we drank the kool-aid.
We believed the voice of our culture which demanded we purchase bigger and better. And, as much of a cliché as it is, we tried to keep up with our neighbors. Our houses and garages became full and our bank accounts empty. And as we increased our credit debt our bank accounts went into the red.
When our kids were at home we had increased expenses. Food, medical bills, clothing, and transportation costs were all much higher. Who had the time and money to worry about retirement?
So we kept on going. During the years of raising a family many Boomers lived paycheck to paycheck. When it came to finances the goal focused on survival.
Before we knew it, the day came when the kids left home. We entered the empty nest syndrome. The sadness of the empty nest turned into a magical moment when we realized we had more money! It felt like getting a pay raise. Now we had the opportunity to invest for retirement. But most of us didn’t. We used our magical pay raise to buy things we couldn’t afford when raising a family. Boats, campers, motorcycles, and classic cars lined the driveway. At last the big boys and girls could afford big toys.
But then, if you are like me, you woke up one day and saw the specter of retirement grinning back at you in the mirror. And the smile taunted us with a frightening reality. We weren’t prepared for retirement and unable to finish strong.
If you are staring retirement in the face but are financially unprepared you are not alone. I’ve read articles from financial experts answering this question: “Will a savings of $1,000,000 will be enough at retirement?” If you want to feel your blood turn cold imagine reading that headline and being in debt with no savings.
In those moments, the regrets about finances start to form. Years ago it seemed better to take a loan out for the dream motorcycle instead of investing in retirement. Besides, you told yourself, who knows if I’ll even live long enough to see retirement?
Well, here you are. And the truth is you should’ve:
- invested more.
- spent less.
- worked two jobs.
- made the kids pay for their own college education.
- saved more.
But you didn’t. You believed the lie which said above all else you needed to buy stuff instead of save for the future.
Regrets. I’ve had a few. And this is one of them.
This regret hits hard.
This is a tough one. By failing to prepare financially for retirement you’ve created a potential crisis. Some things are not worth worrying about. But this is not an area where we can say “don’t sweat the small stuff…and it’s all small stuff.” This is not small stuff. If you are going to stay awake at night worrying about something this would be the thing. You’ve got to be able to pay the bills! And the problem is compounded by the reality of a diminished income during retirement.
This regret is a major one for me. I’d saved little for the retirement years. In my mid-fifties I had a load of consumer debt. And my company retirement promised $10 a month for every year of service. Do the math. I had 30 years so my monthly company pension would be $300 a month. My car payment was more than that. How high do you think my level of regret in this area ought to be? Right. Off the charts.
What about you? Is this an area of regret and concern for you? Maybe your area of financial expertise exceeds mine but you are still concerned. The retirement years don’t appear to be so golden but rather a cheap yellow resembling the color of the McDonald’s arches.
So what will you do? With a pay cut and ongoing expenses how will you survive?
You can choose to allow regret to eat away at your psyche. Go ahead, lay awake at night and worry about money. Or, you can become proactive and crucify the regret until it dies. It’s the only way you can finish strong.
It’s time to face the music.
To crucify this regret you need to do an honest financial assessment. Do you even know how far you are in debt? Have you been burying your head in the sand? Stop. Now is the time to quit lying to yourself and face the music.
You might need the help of an accountant. But many readers can handle this themselves. Take a blank sheet of paper and list every debt: credit cards, car, motorcycle, boat, the personal loan from Uncle Billy. Make two columns: one showing the monthly payment and the other the total amount of the debt. Add the columns up. How much is your total debt? How big is the monthly payment of all debt?
Here’s the gut check question:
At retirement how will you manage your debt and pay all your other bills?
It’s starting to appear as though a million bucks in the bank would have been a good idea after all!
Coming to terms with this regret might be one of the hardest things you will ever do but it must be done. Do not allow this regret to eat you up. Don’t panic.
Here are three strategies to help you put this regret to rest so you can finish strong:
1. Do Whatever It Takes To Pay Off Existing Debt
There is no more important sentence in this article than the one you just read. Retirement will be a sad journey if you start out with debt.
Maybe you could afford those extra payments when working full-time. But it’s going to be different when you retire. Don’t ignore what I’m saying. This is critical. Begin NOW to deal with your debt.
In my mid-fifties I had my wake up call. I owed way more on my car than the value. My motorcycle had a loan on it. I even made a monthly payment to the bank for my bicycle! We owed significant amounts on three credit cards. And we were living paycheck to paycheck. At 55 years of age I realized there were only ten more years to retirement. I had to do something.
Find a plan to deal with your debt. There are good financial planners waiting to help you. Take a course or read a book.
Can this make a difference? Yes. It’s what turned my finances around. It’s beyond the scope of this article to provide financial planning. But I highly recommend Dave Ramsey’s Financial Peace material. His system to get out of debt WORKS. His classes are taught nationwide. If you cannot find one in your area I highly encourage you to buy The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness.
Within three years of facing the financial music and tackling the issue, we were debt free except for our mortgage. It’s a difficult road to take but it is not near as difficult as trying to manage all your debt in retirement.
Before reading any further stop and figure out your level of debt and how you are going to get rid of it. Start now.
2. Begin the Process of Downsizing
You are entering into a new phase of life. It’s a life where the kids are not at home. This new phase is where you realize possessions and a big house don’t mean as much as it did in those early years. And it’s a life where every dollar must be spent with care.
To finish strong you must downsize. Think about it. Sooner or later ALL your stuff will be gathered together and fought over by your kids. The less you leave behind, the less reason they have to squabble with each other! You may as well down size now.
Downsize your house. As you age do you really want to climb the stairs and clean 4 bedrooms? Are you sure you want to mow your big and beautiful two acre yard? Find a smaller place all on one level with little grass to mow and plan to keep it until the end.
Think of what you can save. Depending on the sale of your current large home you might be able to use the equity and pay cash for a smaller place. Utility costs will be less. Insurance will be cheaper. If you really want to be inspired calculate your current total monthly housing costs. Then do the same with a smaller house which is paid off. If you take the time to do this you will see the wisdom in down sizing your home.
Downsize your stuff. Now is the time to get rid of the mess you’ve accumulated. Some people have accumulated so much stuff they can’t even park a car in the garage. Closets are full. Now is the time to start getting rid of those things you never use.
If you downsize your home you will need to reduce the amount of stuff you own. We moved from a 4 bedroom three bath house into a 2 bedroom condo. Lots of stuff had to go. Then we moved from the condo into a tiny retirement house. Even in making that move we still had to get rid of stuff.
Sell those unwanted items and use the cash to immediately pay down part of your indebtedness. Your garage sale could raise thousands of dollars to apply on your mortgage. If you’ve never had a garage sale enlist an experienced friend who will add items to your sale.
Downsize your expectations. Retirement, even on a small budget, can be a wonderful time of life. But if you’ve not saved for retirement you will need to down size your expectations.
Some of my friends are entering into retirement armed with a 401K and large pensions. I’m happy for them. They will be able to realize a dream retirement of traveling the world.
Not me. My reality is much different. But that’s okay. My retirement is going to be spectacular. In order to have a terrific retirement on a budget, I need to realize it will be different for me. The dream of sitting around the pool in Tahiti while sipping iced tea is not reality.
As you head into retirement on a budget with the desire to finish strong, you must embrace the reality of downsizing.
3. Find a Way To Make Money When You Retire
Previous generations saw retirement as the time to sit around and live off retirement funds. Few people expected to work past 65. But wait a moment! As of this writing you cannot receive full Social Security benefits until sometime after 65. The retirement financial landscape is changing.
This is not bad news. I’ve heard of too many new retirees who sit on the couch watching reruns of Cheers and fall over dead due to inactivity. Maybe being forced to keep on making money after 65 is a blessing in disguise.
For many retirees to keep working may seem like discouraging news. But wait a minute! Who said you had to keep working the job you’ve hated for the last 20 years? If you are going to finish strong now is your time to find a way to make income which excites you.
My strategy is to keep working as long as possible. But I’m not doing the same thing I did for the last 30 years. Instead I’m using those same skills to do a similar job but allows me to move every year to a different location in the United States. I meet new people and see the country. In many ways it is a dream come true job.
How did I land this dream job? Here’s what I did and so can you.
First, ask yourself “What am I passionate about? What skills do I have? If I could do any job what would it be?” Start with passion. It is critical. Decades ago I felt God calling me into full time Christian ministry. A seasoned minister advised me to do anything else unless I knew for sure my calling was in that field. Why? Because he knew only a passion for the calling could carry me through the difficult times.
So what are you passionate about? Maybe you went into sales but always felt more passion to write. Or you had dreams of working with dogs. Instead of pouring 30 years of your life into factory work you wished you had become a hunting guide. Now is the time to dream about making your passion a source of income.
Next, I made a list of enjoyable skills in my areas of proficiency. What are you good at doing? Think of the last time someone said, “Wow, you are really good at that.” Do you have a hobby which, with a few tweaks, could generate at least a part-time income?
Would you like to:
- Start an online business?
- Sell collectibles on eBay or Etsy?
- Start a small home based business?
- Drive cars for a new car lot?
- Become a dog walker and sitter?
- House sit homes for people while they are on vacation?
Remind yourself, you do not need to make as much money as you did in the earlier days. The kids are gone. You’ve downsized your home and possessions. You have a more realistic idea of what retirement looks like.
It’s time to do something different. If you are looking for a good resource to further explore this area I recommend Dan Miller’s book 48 Days to the Work You Love: Preparing for the New Normal. His website has a ton of free information to get you started.
Find a way to make money which will inspire you to get out of bed in the morning.
To Finish Strong You Must Get To Work
To get some traction in crucifying this regret pick three things which will help you the most in the area of finances. Prioritize them. Review each one and record one major goal for each item on your list. Make sure your goals are SMART:
- Time Sensitive
If you start now, this will be one less regret to process as you cross the finish line.
What’s the first thing you are going to do to help finish strong in the area of finances?
Randy – Great article! Thanks for sharing your experience and wisdom. I am inspired by your message and hope others are as well.
To Others – Randy’s story is real. I witnessed Randy’s Financial Peace journey and and his step of faith into the current chapter in his life. I continue to be inspired as Randy shares his experiences.
FYI – I recently learned a new version for setting SMART goals that I like and supports your message of aligning what you do with your passion. The main difference is the “M”.
Thanks Rick for your comments and endorsement of my story! I like your version of the SMART goals. Take care.
What a great post! It’s very scary to be older and realize your current holdings are limited and your options for bringing in more money are limited even more. Yipes! We really should be teaching financial management and retirement prep to students of all ages. You were smart to recognize what was coming, read up on your options, and take action. So many people get caught up short who wouldn’t have to! It’s heartbreaking. I can’t say as I got totally caught off guard, but I’m runnin’ scared nonetheless! Frugal folks are my new role models.
I only wish I had come to my senses 10 years earlier! Thanks for your comments. We are of like mind!
Very timely for me…Thanks, Randy!
Glad you found it helpful!
An absolutely wonderful post Randy! Spot on. So challenging, but so necessary.
In the mid 90s I had a car payment, school loans and credit cards. Then tack on my wife’s debt!!! We were in deep. Got with Consumer Credit Counseling Service and at the same time I learned of Dave Ramsey’s FPU. It took us just over 2 years to get debt free but we did. During that time I facilitated his courses at my church.
It’s a major paradigm shift.
Today, in spite of a divorce, raising my kids, and other life-changing issues, I’m still totally debt free. NO credit cards (had to draw the line in the sand), car payment (never again), school loans (ball and chain), nada! Now, I’m still working on the income side. My savings lack, I drive a 2000 Caddy. No mortgage, but I rent. Look, It’s not all pretty but it’s definitely worth it. There’s no way I could be existing as I have if I still had–or so easily had more of–this debt. I’ve downsized so much, but I’m most grateful for downsizing that debt.
Thanks for sharing your story. Becoming debt free is possible. Not easy. But so worth the effort.
Good stuff! Thanks, Randy!