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Ins and Outs of Retirement

Retirement. What is it and how does one go about doing it?

First off, retirement is, with respect to the vast pantheon of human history, a relatively new phenomenon.

Back in the good old days, before the Federal Reserve Act (1913), ratification of the 16th amendment (also 1913) and Social Security Act (1935), the Current Tax Payment Act of 1943 (withholding) and the subsequent amendments to the Social Security Act in 1965, which established Medicare and Medicaid people would take care of each other. Churches aided the poor. Families took care of grandparents too old to work much. In colonial, frontier, and pre-industrial America, people generally worked until they couldn't, and even then, elders took care of the more mundane tasks like minding the kids, cooking, sewing, cleaning, leaving the hard work to the able-bodied men and women.

If you're looking for the reasons why you can't get ahead, can't save, and probably can't retire in comfort, look no further than above, at the laws and provisions enacted by the government. Every one of them robs some money from your paycheck, your bank account, your standard of living. Instead of the government trusting you to do what's best for you, they take their cut up front to do what's best for them and tell you it's for your own good. It's mostly a scam, theft, and unconscionable, but, we've been conditioned to live with it.

That's why government is so grotesquely large and your savings account so pathetically small.

Check out this little piece of propaganda from your friends at Disney promoting payroll deductions and taxation:

The neatest trick the government pulled on its people was likely the Social Security Act. Social Security taxes were first collected in January 1937, with workers and employers each paying one percent of the first $3,000 in wages and salary. Subsequent amendments raised the contribution limits and percentages, and made other adjustments, such as taxing benefits and raising the full retirement age (both Reagan, 1983).

What makes Social Security such a nefarious set of laws and regulations that it has now entrapped entire generations. According to their own research, in 2023, roughly 67 million Americans will receive a Social Security benefit, totaling over $1.4 trillion over the course of the year, with $1,837 the average monthly benefit.

In addition to many people needing Social Security income badly, the benefits paid out are the largest single item in the federal government's expense account.

With the contribution percentage set at 6.2% for the employee and the employer, the net wealth-stripping effect is 12.4%. Self-employed people pay both sides of that. Any wonder why people are reluctant to start up their own businesses? You've got a 12% partner right off the bat.

So, the government has made it difficult to save (20 years of interest rates near zero certainly aided that cause), and more and more difficult to "retire," meaning, not working and not worrying about money.

In an article from April 11, 2023, Forbes' columnist Erik Carter offers advice on the 10 Things To Do If You Want To Retire Soon But Have No Savings.

In it, he offers the usual list of planning items one would expect, like paying off debt, adding to employer-matched retirement accounts, cutting expenses, and so on, but really goes off track when he starts talking about tapping into home equity, selling life insurance policies (like anybody with no savings actually has life insurance), renting out a room (very bad idea as will be explained later), or moving out of the country (time-consuming, expensive, may not be a viable alternative).

Like most of the other articles describing how to retire without any savings, he almost completely misses the point that many people are pretty much broke, others are simply tired of working just to pay bills, and still more have given up on the idea of retirement altogether.

But, it has to go further than that. Many people are facing their elder years with a combination of job insecurity, lowered standards of living, possibly poor health, and a host of other sideline issues that add up to a big problem. The social safety net isn't all that secure, so what happens if (when) everything breaks down for literally millions of people in America?

There will still be social security in one form or another. Considering the political leadership in America, that's what they're aiming for: everybody on the dole, beholden to Big Mother. Like it or not, lots of people are not going to be able to make do without some help. Almost everybody will get a monthly Social Security check simply because it's nearly impossible to live to 55 or 62 without having worked for a significant part of one's life.

One important caveat: Retirement can get very boring, very fast, and, for some, depressing. Losing touch with co-workers, not having a set purpose every day, and adjusting to a very foreign lifestyle of leisure isn't easy and most people are completely unaware of the changes retirement brings.

There is only so much housework and cleaning one can do before life can become dreary, so it's good to have something to do, and, if it brings in some extra cash, all the better. Lots of retirees are working part-time just to break up the daily boredom.

Those who rely on government as little as possible will do most of the following:

  • Get out of debt, either by paying it down or defaulting
  • Start learning new skills like carpentry, gardening, auto repair, yard work, general handyman skills
  • Make a budget that's based on essentials and stick to it
  • Find or create new revenue streams (part-time work, contract employment, work from home, etc)
  • Develop strategies to reduce expenses, especially homestead costs
  • Become very frugal
  • Invest wisely
  • Avoid government and taxes

Breaking it all down, a person with no savings can easily find a way to at least semi-retire and do so somewhat confidently. Let's consider a single person who gets $1,000 a month in Social Security. It may not sound like much, but it should be more than enough for survival, and, if properly managed, eventual prosperity. Remember, you're not driving to work every day, not buying new clothes, not eating out as much, not stressed. Plan on being around home most of the time. If you've set up your household to a reasonable standard, it should be enjoyable.

First, and most importantly, having a place to live is absolutely essential. Owning a home or at least a trailer on your own property is far better than paying rent. Those who have to pay rent in retirement are pretty much screwed. They'll never be happy. The most important thing to do for yourself if you're planning to retire soon is to secure a homestead, either buy buying it outright or with a small mortgage (if possible) or working out a barter trade like maid service or lawn and garden work in exchange for rent, partial or in whole.

So, if you're renting, forget about retirement. You're behind the eight ball and you need to find your own place to live. There's no way around it.

Now that the #1 biggest expense is out of the way, there's still going to be upkeep on a home. Water, utilities, insurance, and maintenance need to be put into a budget along with food, gas, auto upkeep, car insurance, phone, internet, and any other regular monthly items.

Here's a sample of monthly expenses which will vary from city to town and state to state.

Food $250
Utilities $100
Insurance $50
Home maintenance $80
Gas $50
Auto ins. $50
Phone $40
Internet $50
Auto upkeep $60
Misc. $100
Total: $830

There you go, with $170 to spare. Bear in mind that Home Maintenance ($80) and Auto Upkeep ($60) are like mini savings accounts. You need to put that $140 away so when issues pop up - and they will - you'll have the money to pay for them. It also helps quite a bit if you can do either home or auto maintenance yourself.

So, with a $1,000 Social Security check, you can have all your bills covered, $170 left over and another $140 in reserve, which you can invest or just sit on as an ultimate safety net. If you're not yet retirement age, but have a nice nest egg of say $100,000, you could probably quit your regular job by the time you're in your mid 50s with few worries. There are many people who've saved much more than that, so a good cohort of Americans aren't going to be in dire straits unless they're idiots.

Now, with the basics taken care of, you are free to do whatever you like in terms of making extra money. The world is your oyster. Getting out of the daily grind and having the ability to do what you really want to do or like to do carries benefits that money cannot buy, like peace of mind, self-worth, contentment, even a sense of purpose.

During the pandemic of 2020-21, many people found freedom in working from home and a sense of well-being from family and a less-stressful environment. Some found themselves starting up small businesses, developing new skills, enjoying life more. Many have not gone back to work and are doing just fine. Retirees, having the luxury of a lifetime of living and learning, often do even better financially than when they were working the grind. There's a lot to be said for being on your own clock, setting your own schedule and having financial freedom. It starts with an understanding of essentials and being resourceful.

The financial advisors and people like Suze Orman who says you need $5 million to retire are just plain crazy or delusional.

Those of you who have $5 million, raise your hands.

Uh, huh, I thought so.

Fearless Rick hasn't worked full time (and rarely part time) since 1999, when he was 46. He made a conscious decision to escape from government and corporate controls. Now 70, he's in the best physical, mental, and financial condition of his life.



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