Stop Saving for Retirement – What?

We are not going to tell you to stop saving for retirement but we will give you some ideas you may not have thought of. We are not financial advisors so please don’t make major financial decisions without professional advice. That said, lets look at some commonly held ideas, strategies, and motivations. Common sense ideas don’t always come from traditional advisors and many things have changed since your grandparents retired.

See our video about when you can Stop Saving for Retirement

 

 

Why people are saving to retire

1. You should be saving to retire and this is wise especially since pensions have become less common and Social Security will not be sufficient for many people.
2. Health care costs have increased and you may spend much more than expected in this area.
3. People are living longer and are active much longer. With some savings your retirement can be an enjoyable time that includes travel, time with family, hobbies and other activities that can consume some money.
4. Conventional wisdom will tell you you can draw out 3 to 5% of your savings each year and not deplete your nest egg over long periods of time. Example you have saved $200,000 and should be able to invest it and draw around $8,000 to 10,000 per year from this invested savings.
5. If you need a larger income of say $40,000 per year in addition to other retirement income like Social Security, you need $1,000,000 saved. To get to a $1 million retirement savings most will never be able to stop saving

People are trying to save a huge nest egg and the primary reason is to have some sustainable income. Yet, if you had need of $5,000 per month and had a guaranteed $10,000 per month, would you still be saving?

Why do people retire and Stop Saving?

1. Not happy with their job – People become board, dislike their boss, or just become tired of the stress of demanding jobs.
2. They can – If they have health care covered, have a pension and/or Social Security income coming, have saved enough or have reduced their expenses enough many feel that is the time to take it easy. Nothing wrong with that!
3. They may have reached a solid level of financial independence and no longer need to work to earn money. Generally this is about predictable and sufficient income. A big nest egg can solve that and so can some predictable income.
4. They just can’t or don’t want to continue physically or emotionally doing a job they don’t enjoy.

Can you stop saving, enjoy retirement, and be financially secure?

1. Consider the average, monthly Social Security check according to BankRate is $1,705.79 per month. You may be qualified for more or less than that. You may also have a spouse who can also collect. For many this is not enough!
2. You may have a pension that you can draw that will cover some or all of your expenses.
3. You may have been good savers and live comfortably on a draw of 3 to 6% per year from your investments.
4. Perhaps you own rental property or a small business that produces an income for you, Bravo!
5. What are your expenses, do you still have a mortgage?

Many should not stop saving for retirement.

The reasons are many. They include still having a good size mortgage to pay, didn’t save enough or long enough, low expected Social Security payments, still supporting dependents. Many, many people are just concerned they will run out of money later when they are much older or have health problem. These are real and very common concerns, you can add concerns about inflation and medical expenses to the list. According to the US Bureau of Labor Statistics over 26% of people aged 65 to 74 are working. Some work for socialization, some to keep active, and some because, financially they really need to.

How does a big retirement nest egg really help you?

Security – Emergency money – cars and roofs wear out, emergencies happen.

Income – Depending on who you listen to, you can take distributions of 3 to 5% of your savings to live on. Great but if you don’t have a large nest egg this may not be all that reassuring. Nerd Wallet shows the average 55 to 64 year old has $185,000 saved for retirement. 4% of $200,000 is an $ 8,000 annual income. If this, your Social Security income and other income sources isn’t enough, what do you do?

Dividends – Many have built a nice retirement income that may even grow by purchasing high quality dividend paying stocks.

Long Term hedge against inflation – Some investments can help you you keep pace with inflation over time. A common example of an inflation hedge is Real Estate as it tends to keep pace with inflation over time.

With a large enough nest egg you can stop saving for retirement but its not easy to accumulate enough.

What of instead of scrimping and saving for retirement you develop some additional income.

At at 5% return you need $200,000 of savings for every $10,000 per year you want in income. Want or need $50,000 per year, you need a million dollars save and well invested. Yet the median (Most) shows Americans age 55 to 65 have less than $200,000 saved for retirement. Your saving might not get you the income you need or want in retirement. The question becomes, can you save enough?

Create some retirement income

Here are some other possible ways to develop some additional retirement income without saving yourself into the poor house while you are still young enough to enjoy good health and free time. We are talking here to the pre-retiree of 55-60 years old up to people in their early 70’s however some people choose to do some type of work much longer.

• Start a simple retirement side hustle, preferably 2 to 5 years before you retire so you can prove it out as a steady source of income.
• Start a small hobby business. Two home based business that we like are Starting a Backyard Plant Nursery or a Firewood business but there are so many others.
• Divert some retirement savings, upgrade your car and drive for Uber or Lyft as these can be an easy way to some retirement income.
• Check some of our other suggested Retirement Side Hustles, something might appeal to you.
• Be realistic about how long you can and will want to work.

Start a business to create income

We suggest you start a business before you retire We suggest you can scale a plant nursery business up in 2 to 3 years and later scale it down. Imagine you can make money with plants, and retire to a new lifestyle of working for yourself. We think running a nursery is nearly a dream business.

A Plant Nursery can provide you with

1. A nest egg of growing plants.
2. Annual dividends/income paid each Spring and Fall when you are selling plants.
3. A hedge against inflation – as plants go up in price you can raise your prices.

A 5-10 year delay in not drawing from your Savings is a big plus

Your savings can grow for many bonus years while you make a little money with a side hustle like a plant nursery. Taking a look below shows an example of starting a nursery 2-3 years before retiring and drawing a modest income from the nursery. This provides you more time for your nest egg to grow – in this case 10 extra years. The income you make will actually be more than if you start drawing from you nest egg early. Finally once you stop your nest egg will have grown to a point that it gives you a larger long term income.

 

As you can also see in year 11, you have built your savings by $81,629 and you had an additional $58,344 to spend over 7 of your retirement years. Your new income in year 11 is also considerably larger at $17,908 vs $13,623 per year. That is a 24% increase in income and the amount of your savings! Wow

Should You Stop Saving for Retirement?

Well you might continue to save but you should turn your focus to your income and of course expenses in retirement. Having a small business, like a nursery for 5-10 years can make a dramatic difference in both your income and your savings balance. We encourage you to think out of the box.

More pages about Plant Nursery Finances and Investment
Retirement Investment
How to Make Money with Plants
Plant Nursery Retirement Business
Start a Business Before You Retire
Plant Nursery Side Hustle