Sorry for the depressing title to the article. But seriously, I was disappointed recently when I saw a commercial for a major US brokerage firm. There sat a stately looking, white haired gentleman who looked like he could be the poster child for AARP. He was talking about his experiences with some other brokers who discussed things like enjoying a vineyard in retirement. As the picture fades, the tag line to the commercial is, “A vineyard? Get real.”
OK. At some level that makes sense. Based on the hard economic realities imposed by the markets and real estate values the past three years, many of us may not be able to afford all the things we’d hoped for in retirement. In fact, the USA Today recently ran an article on the front page of the Money Section talking about just how much less the Baby Boomer retiree has saved for retirement.
Both the article and brokerage commercial ask the tough question, “Will my retirement savings be enough?” This of course is a very valid concern. But the tag line to the TV commercial “Get real,” just seems so glib. As if trashing 50 years of hopes and dreams is simply like tossing out yesterday’s newspaper. How very sad indeed if millions of Boomers headed into retirement are thinking this way.
But there is good news for folks open-minded to see and hear it. There are simply some strong, wonderful alternatives to throwing away your lifelong dreams.
My daughter and I were talking one morning recently and the subject of pushing a rope came up. I told her that something I was working on felt like “pushing a rope” and that you just cant do that. I explained that ropes have to be pulled along, just like some problems, or in many cases managing people. Without missing a beat, however, she looks up at me and says that she can push a rope. I must admit, I raised a skeptical eyebrow but went on to say, “OK. Show me.”
Not having a rope handy, she reaches up and unclasps her necklace. She proceeds to lay her necklace on the table in a straight line. She then puts her finger in the middle of it and pushes it towards me. “See Daddy. I pushed a rope.”
I just sat there for a second and realized how short sighted I had been. Here was an outside-the-box solution. She clearly saw an innovative way to “push a rope” and rolled with it. In fact, there are almost always multiple solutions that we don’t easily see when it relates to our lives. This is especially true in highly emotionally charged issues like when we are faced with less income and savings than we had planned for in retirement.
When faced with seemingly impossible situations, for instance, not having enough saved for retirement, we can imagine the worst and become paralyzed with fear. We may feel like our backs are against the wall and that there’s no hope. We may despair our choices, or lack of choices, because we don’t have enough saved. In the brokerage commercial we get to hear the man talking to himself about being responsible and having enough money for retirement. He expressed the concerns that I guess most of us have, “Do I really have enough for retirement?” “How can I make it last? “ “What are my sensible choices?”
These are in fact great questions to be asking. Taking responsibility is the hallmark of excellent character. And if we keep our thoughts “inside the box” our choices are in fact very limited. Ernst and Young made a study back in 2008 and it showed that retirees will have to cut back on average by about 25% to avoid outliving their assets.
http://www.ecidevelopment.com/blog/baby-boomers/ernst-young-state-of-retirees/ This is a hard economic reality. But does it have to equate to suffering?
But just like you really can push a rope (and yes wetting it and freezing it is another way) there are multiple ways to face the reality of your financial situation and still enjoy many of your hopes and dreams being fulfilled in spectacular ways. Certainly one of my suggestions is to look overseas for a retirement location.
Living internationally is an outside-the-box solution that more and more folks are considering. The paradox is startling. You can live overseas for a third to a half less and have a higher quality of life. That’s quite something isn’t it?
The reason many folks don’t initially think of leaving North America is that it simply lies too far outside their radar screen and comfort zone. How you feel, fortunately, is something you can change.
For many people now the option of moving overseas is very real and taking on greater importance every day. If you are reading this then you probably already know that you know it is possible to have an ocean front, beach condo for less than $200,000, a home on a golf course for less than $150,000, and yes, even a vineyard estate for about 10% of what you’d pay in Napa Valley.
On the flip side, however, people do sometimes send me a critical note saying that prices of real estate in Latin America are now the same, or in some cases even more than in the US. This is especially true in the hardest hit areas like South Florida, Phoenix, and Las Vegas. While this is true and the acquisition cost may be the same, or in some cases lower, if you look at the ownership costs over 20 years, a different story emerges.
Just HOA/COA fees, insurance, and taxes can be hundreds of thousands of dollars more costly in the US over a 10-year period. Most of imagine living for 20 years or more after retirement I’d guess. The difference then becomes staggering. That is saying nothing about the quality of life. Imagine having a maid and domestic help for just a couple hundred dollars a month. Imagine… no more chores. What a nice thought, and certainly a luxury at first, but maybe more of a necessity in the future. As we age, having help around the house we can afford will save us tens of thousands of additional dollars we might spend in assisted living as well.
The bottom line is that there are no perfect answers. Life always consists of trade offs. Are you really going to be able to have the best of both worlds, everything from North America just a 2 hour flight south in Latin America? No of course not. Trade offs are a reality of life, just as having a smaller nest egg is an unfortunate reality for most of us today.
The real bottom line is that if we are open to new ideas like living south of the border, we don’t have to just write off and toss aside 50 years of dreams and hopes with a glib “Get real.” These dreams are part of who we are and trashing them is tantamount to killing part of ourselves. We can still have these dreams if they are important to us. They may just come packaged with a short culture shock.
So, I’m sorry Mr. Stockbroker. I don’t buy it. If I want a vineyard, there are still ways to have it within the fiscal constraints of my new reality. The mind of a child is a wonderful thing. Seeing a simple outside-the-box solution to “You can’t push a rope” was as natural to my daughter as many folks now seeing an outside-the-box solution to, “How do I still realize my hopes, dreams, and ambitions on the limited resources I have for retirement?” A fantastic outside-the-box solution is here, right now, and waiting to be discovered and created in your mind. Free yourself from the limits of thinking in only North American terms and see just how big the worlds of opportunities are for you.