I read an article this morning about a
potential bank “bail-in.” The gist is that if the economy starts
to really take a tumble and one of the big four banks (JP Morgan,
Citigroup, Bank of America, and Wells Fargo) goes down, the
likelihood that the government will start drawing money out of
personal, individual accounts is … well, likely. Again according
to the article, FDIC bankers talked openly about a bail-in as a
strategic option. As the article points out, it's happened, or
almost happened, elsewhere (Greece, Portugal, and Cyprus), and it
could happen here. Anything can
happen, right?
Chances are pretty
good that the banks won't take all of the money we've entrusted in
their care, but they could take a portion of it, to which they are
not entitled, via a government tax.
I have been a
stay-at-home mom with a part-time income for over two decades. As
such, I haven't had an employer-based retirement fund, nor have I
started my own retirement fund. Frankly, until recently, I always
thought I still had time. Then, my youngest child reached adulthood,
and suddenly, I am keenly aware that I am not getting any younger.
Oops!
Last year sometime,
I started looking at my options for a retirement fund. At my age,
there is not much of a chance that I will be able to save enough
money to keep me anywhere close to my current level of spending,
which means I can either keep working until I die, or I can find ways
to not need so much money.
At that time, Deus
Ex Machina and I set up a spreadsheet so that we could look at some
numbers. If we invested 6% of my income in an IRA at current
interest rates, I would have about a year's worth of salary saved
when I reached retirement age. I might be to pay cash for a used car
… or if costs keep going they way they are, a dozen eggs.
If I
waited another ten years to start withdrawing the money, and I only
took out enough each month to cover my (current) property tax, it
would only last 8 years after I started withdrawing money. Looking
at those numbers is incredibly depressing. Money sure doesn't grow
as fast as it spends.
Like me there is a disturbing number of
individuals who don't have any personal savings. Almost one-fifth of
our senior population depends solely on the federal social security
system for financial support. It's usually not enough, and many
seniors, these days, are taking low-wage jobs just to make ends meet.
Experts are full of great advice on how
and how much we should be saving toward retirement. According to the
second article, if one earns an annual salary of $74,000, one would
need to have saved $1.3 million for retirement, which works out to
over $900/month or $11,000 per year in savings, starting very young.
At my age, $900/month wouldn't be anywhere near a million dollars.
For us, putting that kind of money into a savings account and still
keeping a roof over our heads and food in our mouths has just never
been possible.
Experts advise us to start saving for
retirement earlier rather than later.
Yeah … well, that ship sailed without
us.
The fact is that it becomes even more
difficult to START saving the older one gets, and when one is my age,
if one doesn't already have some savings, whatever one is able to
save from this point forward isn't going to go very far anyway.
Sometimes any little bit doesn't really help. What's that saying,
rob Peter to pay Paul? That's how starting to save at my age can
feel.
Instead of putting $900 a month into an
account, where the money may not be secure, I could, right now, be
investing in my future in very real ways that will make my future
more secure and more comfortable.
Here are five ways Preppers (or anyone)
could be investing that don't involve putting our hard-earned dollars
into a savings account.
1. Pay off mortgage
In her provocative tome, Possum
Living, Dolly Freed describes the low-income lifestyle she and
her father enjoyed when she was a teenager, which they called “possum
living.” In 1975, the poverty threshold for a non-farm family of
four was $5,500. Dolly and her father lived on a paltry $700 per
year. I read her book. It doesn't sound like they were suffering.
At very least the up-beat tone of the book belies any notion that
their lack of income was detrimental to their physical or
psychological health. In fact, Dolly and her father were both, if
the book is to be believed, physically fit and very happy.
In the first chapter, Dolly admits that
the only reason she and her father were able to cultivate and
maintain their lifestyle was that they owned their home. They didn't
rent, and they didn't have a mortgage.
Based on that book, alone, the best
thing one can do, if hoping to live well in retirement, is to make
sure that one has a cost-free place to live.
Numerous articles discuss the issues
with senior poverty. Social security is less than what a person can
make working a full-time minimum wage job. If that's true, a senior
citizen who only has social security will be subsisting on about
$1200 per month. If one has to pay rent or a mortgage out of that
amount of money, it might not actually be possible to subsist on only
that. As such, paying off the house and living rent/mortgage free
would be a huge step in the right direction.
I may have to still pay property taxes,
but at the moment, the property tax on my house is one-fifth of my
mortgage payment. Renting a comparable property would cost fifteen
times what my property tax is. Renting a one-bedroom condo (with no
yard) would be six times the cost of my property tax.
In short, I am much better off owning
my home, and the extra bonus is that if I find myself short of cash,
I have enough house that I could get a roommate to help defray the
costs.
I could invest in a retirement savings,
or I could pay off my house. The latter is, in my opinion, a much
better choice.
The best thing I can do for Old Wendy
is to make sure that she has a place to live that doesn't cost her an
arm and a leg.
2.
Reduce the cost of utilities/invest in an alt energy system
Going hand-in-hand
with paying off the mortgage is reducing/eliminating one's other
bills.
Here at Chez
Brown, we are already doing without cable television. The fact is
that the library has all of the video entertainment I could possibly
want, including a streaming service, and it's FREE!
We have worked for
years to reduce out electricity usage, and at one point, had our bill
down to around $50/month, half of which was the “delivery fee”
for CMP to maintain the lines that brought electricity to our house.
Unfortunately, over the past three or so years, our usage and cost
per watt has increased quite a lot, and we're looking at
alternatives.
What we have to
ask ourselves is, what do we really need electricity for? As I'm
writing this, the electricity is out due to a huge windstorm. I have
a laptop, that's running on battery power right now, and when I get
ready to upload this article to the internet, I will use my cellphone
hot spot. The amount of electricity I need to power my lap top and
my phone could be easily generated by a single solar panel. Our
(hopefully very near future) alternative energy equipment will be
sized according to what we absolutely need, appliance-wise.
We can also
control how much water we use, and while the water company has been
increasing our rates for a lot of years, there are things we can do.
In the spring (after the thaw), summer, and fall, we can use our rain
barrels for watering the gardens and the animals. And there are
dozens of ways to use less water, like taking faster showers and
turning off the faucet.
Reducing our
overall footprint with regard to electricity usage and water usage
will be valuable to Old Wendy. The less one has to pay for those
basic things, the less money one needs to live comfortably.
So, instead of
spending $100/month on a retirement account, one could put those
funds toward setting up an alternative energy system, and then, live
without paying an electric bill for the rest of one's natural life.
It would take half as much time to save up the cash to pay for an
alternative energy system as it would to save enough to pay off my
taxes for eight years after I retire.
3. Learn to grow food/forage
One of the biggest
problems that I hear for the elderly is having enough food, and
that's especially true
with today's sky-rocketing food prices. I
read an article in which the author recommended that the elderly
utilize food pantries. I don't disagree, exactly. The service the
food pantries provide is invaluable to a lot of people. The problem
is that relying on a food pantry for all of one's dietary needs is
foolhardy. Food pantries aren't designed to be an alternative to the
grocery store. The function of a food pantry is to provide a
supplemental food source for low-income individuals AND to keep
edible food out of the garbage. It isn't meant to be a substitute
for grocery shopping or other sources
of food acquisition.
What can be a much
better supplemental food source, though, is a garden. There is a
misconception that one needs a large piece of land, and that simply
is not true. In fact, there are plenty of examples of people growing
food in very small spaces.
Having a garden is
a hedge against bad times, and I'm finally figuring a few things out.
Potatoes grow really well in bags. Actual seed potatoes are much
better than trying to reuse those grocery store potatoes that grow
long and spindly in the cabinets. Diatomaceous Earth is awesome. I
never plant enough garlic. Raised beds, straw bale gardens and
container gardening are the best methods for my small space, and I
should stop trying all of the other techniques I've tried and failed
at.
Which actually
works to my point. Those methods of growing are easier and yield
more for me, but they are also easier for older people. Raised beds
and straw bale gardens don't require all of the bending, stooping,
and tending that a traditional garden with rows requires.
But also, having a
garden is a very cheap way to supplement one's food supply. When I
was volunteering at the pantry, we had a couple of elderly clients
who also had a plot at our local community garden. We didn't see
those patrons for most of the summer, because they were able to grow
what they needed to supplement their diets. With a slightly bigger
plot and the ability to preserve some of their harvest, those patrons
might not have needed to use the pantry at all.
One 4'x4' garden
bed can feed one adult two vegetables per day for the growing season.
That's the statistic I've heard over and over again. I have much
more space than just two 4'x4' garden beds, which means that,
depending on the crops I choose, I could grow enough vegetables to
feed Deus Ex Machina and myself for three-quarters of the year. If
we keep raising chickens and rabbits and it's just the two of us, I
could raise enough protein (between meat and eggs) for the whole
year. If we forage the wild apples and berries we find and add them
to the grapes, apples, blueberries, and raspberries we have growing
on our property, we have plenty of fruit. If we include maple syrup,
we have completely rounded out our diet and the only thing we aren't
raising is dairy and grains.
The only reason we
aren't more food self-sufficient right now is that there isn't enough
time to properly grow and tend the garden, because we work, but since
we already have the infrastructure in place and the knowledge, when
we do retire and have more time to spend in the garden, we could be
supplying nearly everything we need to have a calorie-rich, healthy,
organic diet.
4. Cultivate self-sufficiency
skills
Deus Ex Machina is
fond of saying one either has time or money, but rarely both. Money
allows us to pay someone else to do the things we would/could do for
ourselves, if we had the time. In retirement, the one thing most
people have is time, but it's best to begin learning those skills
before they become a necessity.
Skills like:
cooking from scratch, canning/preserving, butchering animals, darning
socks, mending/making clothes, changing a bicycle tire (and riding a
bicycle, if that's not something one learned as a child), sharpening
a knife, cutting one's hair, cooking without electricity or gas,
building a fire, turning tree sap into syrup, making soap, tincturing
herbs for medicine, fermenting vegetables (for preservation and
healthier food), making cheese and yogurt from milk (to prevent
spoilage and waste), and doing small home repairs (like painting the
house, changing filters, repairing a faucet, patching a
hole in the
wall).
None of the above
skills require great physical strength or are particularly difficult
to do, but knowing how to do them, and more importantly, doing them,
could save a great deal of money.
For instance, we
all know that cooking at home costs far less than eating out, but
cooking from whole ingredients rather than buying the prepared foods
from the freezer section, also saves a ton of money. If it's just
the two of us, and I still cook like I do now, one day of cooking
will give us three or four meals. The leftovers can be packaged and
put into the freezer or, depending on the food, put into jars and
pressure canned for meals at some much later date. Get stocked up
enough, and we wouldn't even have to go to the grocery store, except
for the odd item here or there. Retailers count on consumers
spending more than they intended at the store. It's built into the
store design for everything from the lighting, music, and
temperature, to the way the food is displayed. They want you to
impulsively purchase that package of cookies or potato chips. Not
going to the store saves money just from eliminating impulse buys.
I've already discovered that from using online grocery services like
Misfits and Boxed.com.
5. Stay Physically Fit
A few years ago I was having a
conversation with a friend. I said, “If my house is paid for and I
don't have any debt, and I am growing my own food and making my own
electricity, what do I need money for?” She said, without
hesitation, medical expenses.
As someone who hasn't had very many
medical issues, I wouldn't have thought of that one, but the general
notion in our culture seems to be that age is equal to poor health.
In fact, an estimated 75% of people in my age bracket are taking
prescription medications. I guess I'm in the minority among
half-centenarians. But I approach health differently, I guess.
A while ago, I went to the doctor for
my annual physical, which included a blood test, nothing in the
results worried him, except my iron levels. He recommended a stool
test, and I asked him why. Low iron, he said, might indicate
internal bleeding. I scoffed. I have had low iron/anemia since …
well, since I can remember. It's not new. If it's caused by
bleeding, then, I've been suffering from internal hemorrhaging my
whole life. Seems like there would have been other symptoms, if that
were the case. I declined the stool test.
The two things that did worry me, at
that time, but didn't phase my doctor were my blood sugar levels,
which looked high to me, and my weight, which was a bit more than I
had thought. I was surprised by how much I had gained. I knew that
I was getting heavier, but since I don't own a scale, I pretended not
to notice that my pants were a bit snugger than they had been and
that my aching knees were my age catching up with me.
When I got those results, the first
thing I did was to reduce the amount of sugar I ate. I didn't cut
back on food. I didn't count calories or go on a diet. I just,
simply, reduced the amount sugar. No soft drinks (we bought a soda
stream for seltzer water). No sweetened tea. No iced coffee with a
sugar sludge at the bottom.
The second thing I did was to start
getting more exercise. It started with walking in the mornings.
Just around the neighborhood with Deus Ex Machina and our dogs.
Then, Deus Ex Machina and I started doing 10 minutes of Yoga five
days a week. In nice weather, we have a number of regular
activities: walking (with the dogs, but our old pupper can only
handle about two miles); biking; kayaking; and hiking. Deus Ex
Machina likes mountains that are at least 1000 ft of elevation gain.
He likes to go higher. I like less elevation gain, but a longer
trail. I like to walk. We also take dance classes and Qi Gong.
When we added these activities to our lifestyle, I lost 10 lbs and
two pants sizes.
None of the above is medical advice.
It is simply what I did when I was confronted with medical issues. I
could have done nothing, continued to gain weight, continued to enjoy
sugary drinks and snacks, tested positive for diabetes and been
prescribed a diabetes medication. Maybe none of my changes will stop
me from developing diabetes, but if it does, I've saved future Wendy
thousands of dollars in medication expenses. Not spending my social
security money on medication is cash in my pocket, and not needing
medications, means that I can survive on less cash.
All of the above ways of preparing for
retirement are cumulative, like interest ... only better. Once .one starts doing them, the
savings start to pile up, both the savings in actual dollars, but
also the savings in stress and worry from not having an adequate bank
account.
