Money, Money, Money

“Money, money, money
Must be funny
In the rich man’s world
Money, money, money
Always sunny
In the rich man’s world…”   Abba song lyrics

“Money, get away
Get a good job with more pay and you’re O.K.
Money, it’s a gas
Grab that cash with both hands and make a stash…”  Pink Floyd song lyrics

Many friends, especially younger ones, have asked me how I am able to do it, that is, retire at my age.   I suppose that many people plan it out – set a goal for how much they will save per week, month, year, and know exactly how much money they will need to retire.   I was not one of those people!

I have to admit that I am not very good with money – that I have never fully understood the world of investments and Wall Street, that I vastly prefer to spend money than save it, and that I had no idea how much I needed to save in order to retire comfortably.   I will give myself credit, however, for contributing to my company’s 401K starting in my twenties, and I remember my sister-in-law Sara teasing me about it at the time; she thought I was being quite precocious.   I hope that everyone reading this who has a job that offers a 401K is taking advantage of it – it is by far the easiest way to sock away money as it is taken automatically out of your paycheck, it is tax-free until you withdraw it, and your company matches a certain percentage of what you contribute.   I know, as God is my witness, that I would never have saved the money that I have without the 401K way, so I thank whatever Congress or government agency first implemented the program.   Even if you don’t have a 401K offered through your employer, there are other IRA options like Roth IRAs.

I won’t dissemble here – my husband and I worked really hard throughout our lives, and we always lived below our means.   I took off a few years to stay home with my kids when they were young, (I have never regretted that decision) and we were able to live on one income because we saved more than we spent.   It also helped that I worked in sales and that enabled me to make bonus money in addition to my salary, and I saved rather than spent most of my bonuses.

But my husband was the real genius with money and with making the right decisions about money – he bought a business, worked hard for 20 plus years, and when the time was right, sold it for a nice profit.   Those decisions allowed us to pay off our mortgage and gave us another nest egg in addition to the IRAs.   Finally, my dear sweet aunt passed away in 2009 and left me with a very generous inheritance, which has been the icing on the cake.  So all those circumstances came together so that when my financial advisors told me that I was in the position where I could retire at any time,  I was ready to do it.

So here’s my advice for those of you who are interested:

  • Use a 401K or IRA to start saving whatever you can now.   It’s never too late.
  • If you can, put money away that you can invest that is NOT in an IRA, and find someone you can trust to manage it for you.   IRAs are great in that you don’t pay taxes on that money until you start to take it out (presumably at a lower tax rate), but many people forget that they still have to pay the taxman when they withdraw.
  • Make wise choices about how you spend your money.   Life is short so don’t skip the vacation to Disney World with your kids, but find the less important things you can count out like that $4.00 cup of coffee.   I never felt like we deprived ourselves of anything, but we never bought the McMansion either because it wasn’t a priority for how we wanted to live our lives.  As one of my favorite textbook authors has written, it’s all about making wise choices.

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