Retirement Planning 101

Ever since Miss MoneyPenny moved into the retirement stage of life, a number of people have asked me how I did it.  Where do you start and how do you plan for it - that kind of thing.  I am certainly not an expert on other people's money life, but I'm always happy and very willing to give advice, so here are some steps that I took to get ready.

I started the process when it occurred to me that I was just plain worn out from working and it was getting in the way and I really hated that 5:30 alarm.  That was about five years ago when I was 58.  I had to mull that over for a while and consider just what retirement would look like for me, or was I such a lame brained spender that I would have to work until I dropped in my tracks.  This took some time and soul searching, because I had some really bad habits, money wise.

When I decided for sure that I was going to retire, I didn't set a firm date because I wasn't sure what needed to be done and how long it would take.  I knew that I would have the state pension because of my years at the library and Social Security because I have been paying into it since 1964.  And since my favorite ex-husband is deceased and we never remarried, I could claim his.  I also have a little part time job, doing the bookkeeping for my son's plumbing business. 

And I had very little in the way of savings and a nasty credit card habit.

I started reading everything that I could get my hands on about managing money and came to realize that a budget is a beautiful thing.  Then I realized that I also needed to have money set aside for things like new tires, vet bills and home maintenance.  These aren't "emergencies" like I had always thought - just life happening.  And I started paying myself first to build up my savings.  This process also took some time as a budget is a living breathing creature and things change.  I discovered that I didn't need so much money in my grocery category, but with the price of gas going up, I needed more in that one, and so on.  This will set you free.  I promise!!

Then I decreased my work hours to 32 per week and started living on that, all the while working the budget, getting rid of the debt and started changing my spending habits.  This is when I developed a real interest in sales and coupons and being choosy about what I paid full price for.

When I was 61, I started paying attention to my Social Security statement and hanging out at the state retirement site, working the numbers.  I made several phone calls and asked a lot of questions.  And I talked to people who were retired to find out how they did it.  They all assured me that it could be done and the sooner, the better.

The next year I used my tax refund to pay for eight sessions with a life coach to help me set my goals.  This was money well spent because we got down to what I really value in life.  I then set my retirement date for June 1, 2012 when I would be 63 1/2. 

This brought up the issue of health insurance until Medicare kicks in, so I talked with my insurance lady and she suggested COBRAing my current plan until then.  This is not cheap, but I put it in my budget and figured around it until the numbers worked.  When Medicare happens, I will still have to pay for a supplemental plan but it should be at least half what I'm paying now.  One can only hope.

I hope that laying out my retirement planning process helps you get started.  Of course, everyone will have different issues and plans, but just getting started is the biggest hurdle.  Trust me.

As far as my retirement?  My planned beach trip got cancelled, the state stiffed me on the June check, it has been so rainy and cold that I have mold in my deck pots and the guy from Seattle and I are going through a rough patch.  It can only go up from here.