Wednesday, September 26, 2018

I Had a Blogger Friend Who Lived by the FAR* Philosophy - *Forget About Retirement

I was a stay-at-home Mom for twenty years.  During that time, I was fortunate to be able to also run a home-based business, serve as a volunteer with several non-profits (and even sat on a couple of Boards), write two books, and build a homestead.  

I didn't save any money, though, and by "save" money, what I mean is to put cash in an investment account for retirement.  I have always joked that I have five kids, and THEY are my retirement plan.  One of them will have to stay in my house and take care of me when I get old.

While that is definitely a possibility, and would be my favorite option, I know that my children may, eventually, want to move out of my house and make a home of their own.  It may well be that they have spouses who don't wish to live with the in-laws, or maybe my children will have careers that take them away from southern Maine.  

As such, the second half of my retirement plan is to tailor my life so that when (if) I reach retirement age, I won't really need a lot of money anyway.  The goal is to be, for the most part, off-grid and self-sufficient. 
In short, the goal is to plan NOW, how we can survive on a much smaller income, because we won't have millions of dollars when we retire.  We may not even have the hundreds of thousands that the experts say we should have.   Further, we may not be able to depend on Social Security.

On one of my FB groups, there is a discussion about stay-at-home parents and the fact that stay-at-home parents (mostly women) end up sacrificing their careers to be home with the kids and maintain the home.  The person who wrote the comment pointed out that it's not just the career advancement opportunities that are being forfeited by the folks who are classified as "homemakers", but they are also giving up future social security benefits by not working and paying into the system.  

As this article points out, homemakers are a particularly vulnerable demographic.  As stay-at-home parents, who are not earning an income, they are dependent on their spouses, and sometimes this ends up being a really bad deal for them.  We hear all sorts of horror stories about women (especially) who were homemakers for decades while their husbands climbed the corporate ladder, and then, after years of marriage and raising a family, the homemaker is given her pink-slip and the husband walks away, leaving her with very few options.  

The exact comment on the Facebook group was:

" ... people will say they have one spouse at home because daycare costs so much.  But, do people take into consideration the lost Social Security contributions and the loss of career momentum? Perhaps there is a mechanism for addressing these issues that I’ve missed.  I’d love to know what people think on this."

First, I don't know very many adults, even stay-at-home parents, who never worked.  So, while there is a potential loss of SS benefits, there's still the likelihood that the person will have some SS benefit.  The way social security works is to take the highest 35 years of wages, add them all together, divide by the number of months, and get an average monthly income.  The payment will be a percentage of that number.  A person only has to work for 10 years to be eligible for Social Security.  If a person works less than 35 years, but more than 10, the years between will be calculated as a zero.

I responded to the Facebook query.  My answer was that I worked from home, which put money into my social security fund, but I also stated that my ultimate goal is to tailor my life so that I don't need as much money when I retire.

The fact is, when Deus Ex Machina and I do retire, our budget will look very different than it does today.  In fact, in a few short years, it will look very different.  I think that's true of most married couples who have children.  Once the kids are grown, the way the money is spent changes drastically. 

In less than five years, all of our children will be adults, and many of the things that we are currently paying for them will no longer be our responsibility.  We will no longer be paying for their medical, dental, and orthodontic expenses.  Our phone bill will be reduced by over half.  Our grocery budget should be much lower, because we will only be feeding the two of us.  
We will no longer be paying for our children's clothes, shoes, school supplies, music lessons, dance classes, and all of the other assorted expenses that come with raising kids. 

With only two people in the house, we should be able to lower our electric bill even further.  We will use less overall water, and less HOT water, which means both our water bill AND our propane bill will decrease.

We will be driving less, because we won't need to drive our daughters to their lessons or other events.  So, we'll be saving on gasoline, and we will be saving on wear-and-tear to our vehicles, which means we will spend less on maintaining, repairing, and replacing our automobiles. 

In fact, we could probably reduce the number of vehicles to one, and Deus Ex Machina and I could share a car, which means that we would lower our bills even that much more.

I've run the numbers before, and when we take all of those expenses out of our budget, Deus Ex Machina and I could live, rather comfortably, on less than what a full-time minimum wage earner makes ... if we have made a few adjustments - like paying off our house and having no revolving debt (like loans and credit cards).  

Knowing this makes me feel really comfortable with regard to my golden years.  If social security is still a thing, and if Deus Ex Machina and I don't drastically change our spending habits after we retire, we could live on just what *I* would earn with social security.  His would be gravy.

I sensed a lot of fear in that comment, which made me kind of sad.  The reality is that we should be concerned about our future finances, sure, but it's also a fact that kids who have a full-time at-home parent benefit in so many ways, and, as a society, we should work harder to enable more families to survive on one-income, especially when they have small children.

I didn't stay at home with my kids because day care was too expensive.  I stayed home with my kids, because I wanted the opportunity to be with them, and I am so thankful that I was able to make that choice.  The fact that we saved THOUSANDS of dollars on day care expenses is just a bonus, and the loss of social security benefits and retirement income is totally worth every single second I got to be home.

We can hope for a future in which our society will do more to help stay-at-home parents as they near retirement, but in the meantime, we have millions of men and women who aren't financially secure, who are nearing retirement, and who "worked" for most of their lives caring for their families.  What about these folks?

I reference my grandma a lot, here on my blog and in my other writing.  She was a remarkable woman.  Born around the time of World War I, she survived the Great Depression, four "wars" (WWII, Korea, Vietnam, and the Gulf War), the Civil Rights Movement, and the fight to unionize the mines where she lived in southeastern Kentucky.  She raised eleven children, all of whom graduated from high school (which is pretty remarkable for the time and place where they were raised), and several who graduated from college, mostly by herself while her husband (my grandfather) worked out of state in a factory in Ohio.  

She never had a job.  She never even had a driver's license, but she worked her whole life.

When she reached that "golden age", when we all quit our jobs and settle on the couch to watch television until we die, she owned her home, she had her deceased husband's social security for income, and she had a couple of kids (my uncles) still living and working the old homestead with her.  

Hers is the idyllic situation, I think, for us homemakers.  She had lived her entire life frugally, and as a result, in her old age, she wanted for nothing.  And she died in the house that she had helped to build.

Most of us won't be that fortunate, but there are some things that we could do to help ourselves when we get old.

1.  Secure your housing.  On average, the elderly spend 23% of their income on housing.  The fact is that retired people aren't going to have the same income they had when they were working, even folks who were savvy retirement savers.  One's income will be less, and so it really just makes sense to plan for having less money by needing less money.  Eliminating a house payment, therefore, is smart.  I happen to live in one of the top five states for home ownership in the US.  Over 70% of Mainers own their homes.  Owning a house is a big deal for us Mainers, but I think that should be true for everyone.  Buying a house and paying it off before retirement will ensure that when we retire, we, at least, have a place to live.   

2.  Capitalize on your assets.  Even beyond just having a place to live, if we own our homes, and we stay in our homes, there are things we can do to help us fund our retirement.  That is, owning a house carries benefits beyond having a free place to live.

The design and layout of my house lends itself perfectly to the possibility that I could rent a portion of my house to a young couple or perhaps some college students.  I could live in the one half of the house and have a couple of rooms to myself, my tenants could have a private suite on the other side of the house, and the kitchen, living room and dining room could be shared living space.   My tenant's rent payment would pay my living expenses.

It's possible, however, that I don't really want any strangers moving into my house.  Luckily, for me, I have alternatives.  

3.  Bank on your skills.  As a stay-at-home Mom, I spent years learning homemaking and homesteading skills.  In retirement, with less need for a larger income, I could easily turn those skills into income.  I can sew, and I have a stash of old fabrics that would make quilters swoon.  Making baby quilts is fast and easy and could provide me with a nice income.  Because I can sew, I could also offer my services to people who are looking for costumes or custom-made clothes.

With my garden, I could sell excess produce.  In addition, Maine permits cottage industries, like baking and canning, and I could spend the summer harvesting berries for assorted jams and cucumbers for pickles, and spend the fall picking apples for applesauce.  Then, I could sell these goods at the local farmer's market along with loaves of home-made bread.  

I could reopen my home-based office service and offer typing or graphic design (like making posters and signs, which I'm pretty good at).

I can teach classes on everything from writing to making strawberry jam.

I can tan rabbit hides and make hats to sell.

In a pinch, I suppose I could cook meals (maybe even for other retired folks) and offer a home-made meal delivery service.

I've been very fortunate over the last 20 years to learn and cultivate dozens of marketable skills.

And I don't think my story is unique.  I think there are a lot of homemakers who've learned some great skills they can use to improve their incomes, before and after they retire.  We, stay-at-home parents, just need to reframe how we think about what we do, and understand that if we have full-time outside-the-home employment, we're often paying someone else to do many of things homemakers do, which means that someone would be willing to pay us to do them, when we no longer need to be doing them full-time for our families.

For me, the key to a secure and comfortable retirement is not to have a huge savings, but rather to reduce my expenses and pay off debt, and then the rest of it will be easier to manage.

1 comment:

  1. I love your positive, can-do perspective that shines from many of your posts that I've read, here and on your old Thrivalist blog. That point of view, and the similarity of my SAHM experience, mostly a couple of decades earlier :-) , make it easy to get lost reading whatever you write. Thank you for taking the time to share so much encouraging stuff.