Retirement: Don’t Overdo It

A few weeks ago, Doug did an online search for “top retirement issues.” The results were not surprising and rising to the top of every list was financial issues. In essence, make sure that you have enough to retire on comfortably.

stacks of money all over the picture.

He took away from those articles a plan to expect the unexpected, as many surprises can occur in our 60s and beyond. The following is a quick snapshot of actual numbers for a person retiring.

  • Let’s say that Sally is about to retire and currently earns $100,000 a year
  • Assume Sally does not have any kind of pension
  • The rule of thumb says Sally will need 80% of her pre-retirement income
  • So, how does Sally get to $80,000 a year in retirement income?
  • Let’s assume her Social Security is $3,000 a month or $36,000 a year
  • That leaves a shortfall of $44,000
  • If Sally has $1,000,000 in stocks, she will need a 55% return annually or $50,000
  • This equation stipulates that Sally does not touch the principle
  • This would provide Sally with $86,000 a year

Here are the significant variables that could influence the above scenario:

  • Sally will need to receive a 5% return annually. More is better, however, if the market tanks. Sally will have to dig into her principle probably. That means Sally will have to rebuild that principle soon.
  • Sally’s most significant variable is her health, as her insurance and Medicaid do not cover 100% of her bills. A couple of unexpected hospital or doctor visits can quickly cause Sally to dig into her principle.
  • Children, siblings, parents, and grandchildren can also easily add to Sally’s financial obligations, as family issues can come out of nowhere and cause significant short-term and long-term financial constraints.
  • Managing debt can also be a silent killer for many. Piling up credit card debt, in particular, is more common than most of us think. Plus, the costs associated with purchasing a new home or car can also increase debt dramatically.
  • Gifts. It is pretty standard for grandparents to want to support their children and grandchildren. This could be money for a house down payment, a car, college tuition, and more. Plus, many people like supporting their church, alma mater, civic organization, etc.

In essence, most retirees live on a fixed income. There are no more overtime hours to count on, quarterly or annual bonuses, pay raises and promotions, etc. And while inheritances from parents or other relatives can happen, it is wise not to count too much on them for unexpected expenses can severely curtail your possible windfall.

Over the years, Doug has seen some retired people forced to make tough decisions regarding their finances. He guesses that they did not invest enough time and effort into laying out their expected and unexpected costs – aka budget. The results ran the gamut of selling their Dream Home and downsizing, moving back home, and getting back in the job market.

You’ve worked hard for 30-40 years, building up a nest egg so that you can retire comfortably. One last variable that can affect your financial stability is managing your ego.

yellow expensive car on left, white boat on right on the water speeding

Let’s fast forward to your retirement day, and you have $3.5M with a stockbroker, half a million in your savings, and your $475,000 is paid off. You’re rich, rich beyond your wildest dreams, and it’s time to pound your chest a little bit and let the world know so that you can go on a bit of a spending spree. Sure, you may only spend $40,000 (or more) on a new car, boat, jewelry, artwork, or a trip around the world. But for the most part, that was an expense that is either gone or probably severely devalued the minute you laid down your American Express Platinum Card.

We’ve seen professional athletes for decades sign multi-million-dollar contracts only to find out years later that they have nothing left. Be careful not to allow your ego to ruin your retirement because it can and will. Don’t become a statistic of poor judgment.

When we look back at the slide of 2008/2009, many people said that their retirement planning was sound and they were safe from unknown variables. Let those who suffered so mightily be our guiding lights to live a long and prosperous future! If you’re ready to sit down and find your dream retirement home here on the beautiful coast of North Carolina, we’re here for you.

Hidden Aspects of a Gated Community

If Doug were to ask you why a developer installs a gate at the entrance to their community, what would be your answer? Go ahead and think about it, as he is 100% confident your answer will not be correct.

Need a little more time??

When a large community is getting off the ground, you drive through and see just two homes, usually a trailer, and head out the gate. You will not have had an on-site agent share with you the community’s vision – which in actuality, could be perfect for you if you are retiring in 1-2 years. Therefore, the developer puts in a gate to direct you to the on-site sales team.

As a by-product, the community has a gate and what appears to be a safer environment. But is it? Doug lived in a gated community for 17 years, and if someone wanted to bypass the gate, easy peasy. But it does keep out Sunday drivers and perhaps unwanted influences.

Are there any negatives to a gated community? Possibly, everyone who owns a house anywhere in America will pay real estate taxes on their home. Part of those taxes is diverted to the city or county road department to maintain the roads, which includes fixing potholes, resurfacing every 10-12 years, and possibly coating the streets with tar from time to time to preserve the blacktop. So, where is the negative?

When you place a gate in front of a community in our area (not 100% sure about other regions), the community residents are 100% responsible for maintaining the roads. County and town road repair people simply drive by the gates of those communities and that you for paying your taxes. However, don’t forget that while you are paying your local government to maintain your roads, you are also paying your Property Owners Association (POA) an additional fee to maintain your roads. Money is escrowed periodically, and budgets are formed on how much the road will cost the residents to maintain. So yes, in essence, you are paying taxes to keep your streets repaired by your Property Owners Association (POA).

As for the cost of maintaining a gate, years back, our community was paying a local security company over $100,000 a year to have someone operating the gate 24/7 a year. Eventually, we realized that we did not need to have someone at the entrance from dusk till dawn (as Chuck and Will usually slept anyways!), so we added electronics to our gates and gave everyone key fobs. Voila, $50,000 was saved each year!

When developers sell out a community, 100% of the costs to maintain the gate is turned over to the residents, but if they do, are the roads still private? If you are ready to find your dream retirement home located in Brunswick County, give us a call today! One of our agents would be more than willing to help you with your search for your home!

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