Financial Planning for Retirement – Be Conservative, Responsible, Realistic, and be Successful

Not long ago I had the good fortune to gain insight with respect to one family’s financial planning that was centered around retirement. This had been a young couple with children, with both the husband and wife having lived through the Great Depression and bleak economic times surrounding World War II. Talk about a life lesson in stretching a dollar!

What struck me as unusual was the constant focus, from the very beginning, on retirement and taking care of their children. It was unusual in a very good way. This couple knew that the future was coming. They knew that they had to take care of themselves. They knew that their children were their own obligation. How very different from many attitudes today. How very refreshing to learn of this and their approach to successful personal finance and comfortable retirement.

How very depressing to think that this level of personal responsibility and integrity is on the endangered species list today.

So, what were the keys to success for this retired couple? There were several that I could spot. I’ll share them with you.

  • Frugality in everything they did.
  • Never having any consumer debt – ever!
  • Taking the long view of work and family life – being financially prepared to live a comfortable retirement – all the while dealing with immediate and pressing matters like feeding the family and changing diapers.
  • Living a good life that was created through effort and know-how and determination, rather than simply purchasing it.
  • Insurance poor – having sufficient coverage to make certain that unforeseen circumstances didn’t consume income or erode accumulated wealth.
  • Steady savings and conservative investments.
  • Constantly working towards paying off the mortgage – in advance of retirement.
  • Having a personal pension, but never counting on it as a source of income for retirement – instead, creating a separate retirement savings account.
  • Preparing for the family’s financial future through life insurance and savings.

To the average Joe, this could sound like a goofy and challenging way to live. It doesn’t sound that way to me. It sounds like a conservative approach to personal finance and a formula for successful retirement.

Think about it. You’re either getting a financial foothold, or you really don’t have much of a grip to speak of. And, that “grip” is important. Money doesn’t buy love, respect, satisfaction or happiness, but it can and does buy just about everything else. So, it’s clear that good money management is essential for comfort, security and peace of mind – just what you’ll be looking for as you head into retirement.

I am reminded of an old gent back in California who was from “the old country.” He used to drive around in a beat up International pickup truck. An associate of mine said, “I don’t know why he drives around in that clunker. He’s a millionaire. He owns a lot of property in town. You should see the nice house he lives in.” Pointing to the man’s old pickup truck, I said, “That’s one of the reasons the guy is a millionaire.”

Photo by Frizzychick

Clair Schwan believes that we need to get serious about our financial condition, and one of the ways to do it is to create our own definition of retirement. That gives us something to shoot for – something that we define. Now, all we have to do is get serious and hit what we’re aiming at.

About Clair Schwan

7 Responses to “Financial Planning for Retirement – Be Conservative, Responsible, Realistic, and be Successful”

Read below or add a comment...

  1. Couldn’t agree with this post more… it is compeltly depressing that personal responsibility and integrity isn’t more common than it is.

    Thinking about this always make me wonder if we aren’t becoming a product of our own success. For example, when you have a child born to lower-income parents, this child tends to end up with a life that is a step above what his parents had, due to his frugal habits and not being given everything he wanted as a child.

    But when this child grows up and has children of his own, he gives his children everything that he wished he had when he was a child, making his kids spoiled and leaving them with a sense of entitlement.

    I wonder if our country as a whole isn’t living out this situation?

  2. Clair Schwan says:

    Ross, I think you’re on the right track. We can lose sight of the mechanisms associated with teaching the principles of success — assuming we ever knew them to begin with. I think it’s a matter of how well we’ve been taught, for that allows us to be better teachers of “soft” technology like personal responsibility, integrity, preparedness, etc. You’ve probably noticed “hard” technology like cars and computers and aircraft have improved tremendously in our lifetime, but we still have divorce, bankruptcy, suicide, addictions, criminal activity and lots of very poor decision-making going on every day. The trick is to get the proven-effective “soft” technology to stick, and that is a matter of how well we’ve been trained to be good trainers of others.

  3. This couple is almost a forgotten life strategy in play. They lived a life of conserving–food, stuff, money–you name it. Today we consume. In fact it’s said that we define ourselves by how and what we consume. If we could reorient ourselves toward one concept–savings–we could accomplish two important shifts, saving money and consuming less (because more money into savings means less for consumption).

    I think most people of that generation lived on something like that simple approach. Today we think that everything needs to be complicated to be effective. Not so!

    • Clair Schwan says:

      Kevin, you make a good point about simplicity. Anything simple is easier to manage and be successful with. Many of us are determined to complicate and clutter things up. Thoreau suggested we keep our business under our thumbnail.

      And, your comments about consumption remind me of the whine that we often hear regarding the widening gap between the rich and poor. It’s clear to me that the gap isn’t just about income and wealth, it’s also about a cultural gap that influences goals, strategy, and tactics, or a lack thereof. We’d like to explain the gap in terms of a stacked deck, but we need to remember that there are many ways the cards can be played. Some simply refuse to be wise and conservative players, no matter how the cards are dealt. In the case of this couple, they couldn’t have had the deck more stacked against them if they had their worst enemy write the script. Yet, they pulled themselves out of the financial dust of the Great Depression and World War II to enjoy a wonderful life, complete with financial freedom and financial security.

  4. Great lessons and teachings here for individuals considering retirement. My parents are slowly approaching retirement but still have a sizable amount of debt.

  5. Clair Schwan says:

    Marvin, without being critical, I’d suggest if your parents have a sizable amount of debt, then they aren’t approaching retirement in a realistic manner. With (what usually amounts to) reduced income during retirement, it will be quite challenging to service any amount of debt and still live comfortably. This is especially true during times when they’ll have much more time on their hands and WANT to spend more money enjoying life, and when they’ll NEED to spend more money to replace a car, a roof, or meet other expenses that will certainly crop up during what might be three decades beyond their working years.

    Luckily, they’re approaching retirement “slowly” so they’ll have time to prepare. 😉 As an acquaintance of mine told me once, “I’m slowly going bankrupt.” My response was, “That’s the best way to do it, as you have plenty of time to turn things around.”

Leave a Comment...

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.