Retirement Blog

High oil and gasoline prices, are causing price inflation across many sectors of the economy, negatively affecting the incomes of retirees. From food to fuel and everything in between, retirees and everyone else are paying more, while incomes from salaries and retirement savings remain stagnant. This situation may be about to change. Recent developments suggest that the Federal Reserve, may be forced voluntarily or involuntarily, to raise interest rates in an effort (once again) to save the economy.

Last August during the sub-prime mortgage meltdown, even though rising inflation due to higher oil prices could be seen affecting the economy, the Federal Reserve was forced to abandon standard monetary policy and lower interest rates, in an effort to prevent the collapse of the banking industry and with it the economy. This necessary action caused the dollar to drop even further, the price of oil to rise even higher, and inflation to get worse. The actions of the Fed affected not only our economy, but also the world-wide economic situation, causing food riots and work stoppages across the globe.

At the time, China, the Arabs, and the European Central Banks, stepped in and injected hundreds of billions of dollars into our stock and bond markets. None of them could afford the collapse of the world’s largest economy, if the U.S. economy had collapsed last August, the result would have been a world-wide economic depression not seen since the 1930’s. This infusion of foreign capital was made and continues to be made, to not only keep the world-wide economy going, but also to buy time for the U.S to reform and repair it’s economic situation.

The patience and money of all three of these players, to keep our mis-managed and corrupt economy going, may be coming to an end. Our creditors, China, the Arabs, and the European Union, who combined hold trillions of dollars of our debt, are growing steadily unhappy with our in-ability to get our economic house in order.

In the past few weeks, China has lectured the U.S. on how to manage our economy, the European Central Bank has threatened to raise interest rates, and Saudi Arabia held a conference blaming speculators for the high price of oil. If any or all, of these three players decide to pressure the U.S. Government into reforming it’s economy, by reducing their purchases of U.S. Treasuries (or if the European Central Bank dramatically raises their rates), then the Federal Reserve will be forced to raise interest rates.

The Federal Reserve may be forced into raising interest rates even before the world’s patience runs out. We have yet to feel the effects of $140 per barrel oil, their is a lag between the price of oil and product prices, which means inflation is going to get worse. Translating into more transportation and other industry layoffs, lower corporate profits, and even lower consumer confidence.

Their are three reasons why the Federal Reserve may be set to raise interest rates.

1) When the Federal Reserve follows standard economic policy, their reaction to higher inflation, is to raise interest rates. At some point, the Federal Reserve needs to return to standard economic policy, or risk causing even greater damage to the economy.

2) As I mentioned earlier, the Fed abandoned this policy, in an effort to save investment banks from going under due to the sub-prime housing bubble. Unfortunately, many of the same investment banks who were responsible for the housing bubble, through their hedge funds, are responsible for the ever growing oil speculation bubble. The Federal Reserve may not want to wait for another bubble to burst, and this time around, it may seek to instill some market discipline.

3) The Federal Reserve has the power to lower the price of oil. It can do this by strengthening the dollar, oil is priced in dollars, and raising interest rates will increase the value of the dollar. Lowering the price of oil will reduce inflation.

So far, the Federal Reserve has acted to protect the interests of the investment banks and Wall Street, at the expense of the overall economy. The investment banks have had nine months to clean up their balance sheets, the credit crisis is largely over, and so the federal reserve may soon decide to return to their normal policy of fighting inflation and recession.

If the Federal Reserve does decide to begin raising interest rates, as they should, then retirees will be the main beneficiaries of higher incomes and lower inflation. If they don’t, then the economy could enter into a long period of stagflation, which means no growth and high inflation. Let us see how the Fed responds. However, their are signs of hope for the millions of retired Americans who have suffered over the past year, that voluntarily or involuntarily, the Federal Reserve will begin taking the right actions and bring relief to Americans and their retirements.

If you will be retiring in a few years, and you plan to move to a new location upon retirement, you should be taking retirement vacations. You probably already have an idea of the “type” of place you want to retire to, the beach, city, mountains, lake, or overseas. Here are some strategies to help you make one of your biggest retirement decisions - where to live when I retire?

Start Taking Retirement Vacations

A few years before your retirement date, pick 2 or 3 locations according to the type of place you would like to retire to, and go there for vacation. Visit each location and narrow your selection to one retirement location. Then begin taking future vacations, during different seasons, to your selected location.

Tourist Destination Traps

People planning their retirements are naturally attracted to tourist destinations. They are, after all, where most people take their vacations. Spending one blissful week relaxing on a beach, after spending 11 months in a cubicle under artificial light, can induce euphoria and cause a person to wish to never return. However, tourist destinations may not, make the best retirement locations.

One week of heat at the beach may be enjoyable, but can you withstand 52 weeks of heat, if you retire to the beach? Will the lake resort be so much fun, after all the shops and restaurants have closed, for the 9 month low season? The mountains may be beautiful in the summer time, but will you enjoy them as much, when you are shoveling snow in December? It is very important to visit your tourist retirement destination in the off season, to see if you will you enjoy the location year round, not just during the tourist season. Another thing to keep in mind, tourist destinations tend to be all around more expensive, than non-tourist locations.

Talk To Retirees Not Real Estate Agents

A common mistake many people make, when visiting and investigating a potential retirement location, is to talk to real estate agents to learn more about the community. Real estate agents have one objective - sell you property. They will tell you all the wonderful things about the community, and neglect to tell you, about the negative aspects of the community. The information you will receive from real estate agents is naturally biased.

Instead you should seek out retirees in the community, and ask them, how they enjoy being retired in that particular location. They have nothing to sell you, and you will receive a much better picture of the community, as well as the positive and negative aspects of that particular location. And, as another bonus, you may be starting friendships that will be waiting for you if decide to retire there.

Do Not Buy Property

Do not buy property in a retirement location before you retire to that location. In fact, do not buy property, before you have lived in your retirement location for one year. After living and renting in your retirement location for a year, you may discover that your opinion of that location has changed, and you would rather be living somewhere else. Also, after living in the community for a year, you will have a much better idea, of where in the community you would like to live and where the best real estate deals are located. You really can’t make a wise real estate decision from only 2 or 3 one week vacations.

Read The Local Paper

After you have selected your retirement location, subscribe to the local paper, or read it online. The local paper is a great guide to what is going on in the community. A vacation gives you a surface view of the community, the local paper will detail, what is happening below the surface. You will learn a lot by reading the local paper. The local politics, the challenges facing the community, the crime situation, and much more.

Can a person retire on just their Social Security payments? Yes!

For whatever reason, if you have reached the age when you can collect Social Security, and have not been able to save for retirement you don’t need to delay your retirement. You can retire on only your Social Security payments.

If you and your spouse, collect a combined Social Security payment of $1750 per month, that is your retirement budget. Think you can’t retire on $1750 per month? Think again. I wrote in a previous post, how author Joe Bageant manages to live on less than $500 per month, of course he lives outside the U.S. in Belize. When I lived in Costa Rica, my wife and I had an ocean view home (the view is the photo at the top of the blog), for only $250 per month.

Does that mean that you have to retire overseas? Not at all. Using apartments.com, I did a quick search of apartments, in the United States. I found several apartments in Florida and South Carolina for under $400. Complete with swimming pools, fitness rooms, community centers etc. An apartment in Florence South Carolina, near Myrtle Beach, costs only $325 per month.

Which means that you would be spending less than 20% of your retirement income on housing, leaving you $1425 per month to spend on food, health, travel, entertainment etc. While not an extravagant amount of money, it is still a sufficient amount of money, to allow you to enjoy a comfortable retirement.

Many Americans are afraid that they don’t have enough savings to retire, and that Social Security alone, won’t be sufficient to allow them to retire. As you can see from the preceding example, you can retire on just your Social Security benefits, and you don’t need to leave the country to be able to afford retirement.

I write this not to discourage you from saving for retirement, only to try and reassure you that even if you have not been successful at saving for retirement, you actually and realistically can retire on Social Security. And you can ignore the fear mongering coming from traditional retirement planners, and the numerous articles in the press, that are scaring people into delaying their retirements.

This is the Retirement Blog. Visit the Green Retirement Planning Website to discover how you can retire with less savings, years earlier, and help save the planet.

Want to know if you can retire now? Try our new free retirement calculator. It will not only show you if you can retire right now, but if you can’t yet retire, it will show you the additional amount of retirement savings you will need.

Americans are delaying their retirements, because they don’t believe they have enough savings, this new calculator will show you if you have enough savings to retire now. Traditional retirement calculators, and retirement planners use the consumption assumption method, which over estimates the amount of savings you need for retirement.

Retirement calculators, even green retirement calculators, do not replace retirement planning. A Green Retirement Plan is more accurate than a calculator. However, this new calculator will give a very good, general estimate on if you can retire now.

There are three other Retirement Planning calculators, available on the Green Retirement Website, click on the following link to go directly to the Free Retirement Calculators.

In 2008, 47 percent of American workers, will try to calculate the amount of savings they will need for retirement (source). That means nearly 70 million Americans every year, incorrectly calculate the amount of money, they will need for retirement. Why are so many Americans incorrectly calculating the amount of money they need for retirement?

Traditional retirement planning calculators use the “Consumption Assumption” to guess the amount of money you will need for retirement. The “Consumption Assumption” is a guess that you will spend between 70% - 80% of your current earnings in retirement.

There is now available, a much more accurate retirement calculator, the Green Retirement Calculator. This new retirement calculator, calculates the amount of money you will need for retirement, based on how much you will spend in retirement. How much you spend, not how much you earn, is the critical factor in calculating the correct amount of savings for retirement.

The good news, besides the fact that there is now an accurate retirement calculator, is that people will discover that they need far less savings for retirement. Traditional retirement calculators over estimate the amount of money needed for retirement, sometimes by hundreds of thousands of dollars, creating unachievable savings goals and causing people to work longer than needed.

So, if you are one of the millions of Americans who is searching for a retirement calculator, try the Green Retirement Calculator, and prepare to be amazed. I suggest you try it sitting down.

Who’s Not Coming To Your Retirement Party?

The retirement industry does not want you to retire. The government does not want you to retire. Neither does big business want you to retire. Surprised? You shouldn’t be. All of them lose money when you retire, it’s in their best interest, to keep you working.

Retirement Industry

The retirement industry, the mutual funds, 401k administrators, investment banks, money managers, do not want you to retire. When you retire, you stop contributing money, and begin withdrawing money from their accounts. They earn less fees and commissions when you retire. That is why, their focus is on your investments, it’s where they earn their income! They’re not interested in your actual retirement. In fact, they attempt to keep you working, by overstating the amount of money you need for retirement.

Government

Your government does not want you to retire. As soon as you retire, you stop contributing to Social Security, stop paying a myriad number of taxes, and begin taking money from the government. The government discourages you from retiring, by increasing the retirement age, and imposing penalties on early withdrawals from your retirement accounts. The government also tries to keep you working longer, by enticing you with higher Social Security payments, if you delay your retirement. It’s the government’s hope that you will retire at 72 and die at 73.

Big Business

You would think, that big business would want you to retire, so that they could give your job to a younger and cheaper worker. On the contrary, big business wants to use the threat of a younger and cheaper worker, to keep your wage low. When you retire you will open up a job for a younger worker. But because there is now one less worker in the pool, big business is going to have to pay that younger worker more, than they normally would have. Your retirement will cause wages to go up, increase per-capita income for fellow Americans, and lower big business profits.

Let’s Cut the Cake

The truth is that your retirement is good for the economy, the environment, and yourself. However the retirement industry, government, and big business, are only interested in their profits, taxes, and low wages, not your retirement.

This is the Retirement Blog. Visit the Green Retirement Planning Website to discover how to retire with less savings, retire early, and help save the planet.

Want to spend less for gas? Retire. When you retire your work commute ends. You automatically use less gas. How much can you save? If you have a 20 gallon tank, and fill up once a week at $3.75 a gallon, you are spending $300 a month or $3600 per year. If you are a working couple, the two of you are spending, over $7,000 a year at the pump!

Want to save even more? Retire and get rid of your cars. How much can you save? If you are a couple, and each spend $600 a month on gas, payments, insurance, maintenance, you could save $1200 a month or almost $15,000 a year by retiring! When you retire, you can move to a location that doesn’t require a car, saving you a lot of money each year. If you need a car, for a trip or vacation, you can always rent a car. If you can’t yet retire, you can still spend less on gas, by using public transportation or by joining a carpool.

This is a great example of how Green Retirement Planning works. By choosing a green lifestyle, you can retire with less savings, allowing you to retire early.

By retiring, and retiring your cars, you are also helping the environment and the economy. Your work commute, is causing global warming, and creating demand for foreign oil. Your retirement will help the environment, reduce the price of gas, and increase our energy independence.

This is the Retirement Blog. Visit the Green Retirement Planning Website to learn how you can save hundreds of thousands of dollars, retire early, and help save the planet

If you are thinking about retiring abroad, you really need to do your research, and I have found a website that you may find helpful. It is a blog directory for expatriates. This website has links to expatriate blogs, people who live in and write about their foreign country experiences, from all over the world.

From Malta to Malaysia, people are writing about their experiences, living in a foreign land. They are written from a foreigners perspective, and are usually written by people, who have recently arrived and are learning how to live in their new country. This can be a great resource for people who are considering retiring in a foreign country. You can learn about the joys, the hassles, the surprises, from usually non-biased people.

Also, because these are blogs, you can ask questions in the blog comment sections. People who write blogs, love comments, and answering questions. The Expat Blog Directory has hundreds of blogs listed, from all over the world, so if you are considering an overseas retirement it is definitely worth a look.

This is the Retirement Blog. Visit the Green Retirement Planning Website to learn how you can retire with less savings, retire early, and help save the planet.

Dear Class of 2008:

Today you graduate, leaving your college or university lives behind, and enter the world of wage slavery. Too be sure, some of you will have fulfilling and rewarding careers, that will bring you personal satisfaction and happiness. Careers that will help others, help your family, help save the planet. However, the fact is most of you won’t be so lucky, many of you will find yourselves stuck in jobs or careers that truly suck.

It doesn’t have to be that way, working to pay the bills, spending your life in a soul killing job. There is an alternative, an escape from wage slavery, it is called retirement. If you want to, and if you follow my advice, you can graduate and retire by 35. At the age of 35, you can say goodbye to your mind numbing career, your monotonous repetitive routine. And spend more than half your life in financial freedom. How? Don’t change, continue living your college lifestyle, even after you graduate and find a job.

If you continue your frugal college habits, and avoid the temptations of consumption, you can easily save enough money to be able to retire at the age of 35. If your monthly salary is $5,000, and you save 25% percent of your salary or $1,250 per month, you will have $400,000 at the age of 35. Enough to retire. If you happen to find Mr. or Mrs. right, and he or she follows the same advice, the two of you will have $800,000 by the age of 35. If you and your spouse-to-be want to retire with a million dollars, work one extra year, and each save an extra $250 per month.

However, if like most of your college classmates, you become seduced by the pursuit of materialistic happiness, you will find yourself working until you are 65. And you probably won’t be any better off financially, spending your earnings, and saving very little towards retirement. You will be forced to work into old age to support your big house, big cars, big t.v.’s, big lifestyle.

I know that you are anxiously waiting for me to shut up, so that you can get to the graduation party, or start your post graduation trip. But I hope that in a couple of years time, if you find yourself in a cubicle and are asking yourselves the questions, “What the hell am I doing here?” And, “How the hell do I get out?” You will remember today’s commencement speech, and with a little bit of time and savings, you can escape a lifetime of wage slavery. Good Luck Class of 2008!

No matter which country you live in, or which currency you use, Green Retirement Planning will work - It is universal. It does not matter if you live in Canada, England, Australia, France, Germany, Japan, or Sweden. It works in, dollars, euros, pounds, yens and dinars. Green Retirement Planning is a universal, principle, method, and mathematical formula.

Principal

How much you spend in retirement determines how much savings you need for retirement. You control your spending, therefore, you control how much savings you will need for retirement. By practicing conservation, and spending less, you can retire with less savings.

Method

Since, how much you spend in retirement determines how much savings you will need for retirement, you need to create a retirement spending budget. Your retirement spending budget determines how much savings you will need to pay for your retirement. You can adjust your retirement budget to allow yourself to retire with less savings and retire early.

Mathematical Formula

Green Retirement Planning is more than just an idea, or a method, it is a mathematical formula. Traditional retirement planning guesses, how much savings you will need for retirement, based on your current earnings. Green Retirement Planning calculates, how much savings you will need for retirement, based on how much you will spend in retirement. The Green Retirement Planning formula is accurate, simple, and very flexible. Giving you much more control over your retirement. The mathematical formula is:

Retirement = Spending / 3%

Where: Retirement = Your Savings, Spending = Your annual retirement budget, 3% = The amount you can safely withdraw each year from your retirement savings.

The safe withdrawal percentage ranges between 3% - 4.75%, depending on your age at retirement, the older you are the higher the percentage. I used 3% as the world-wide average. The safe withdrawal percentages are based on an asset allocation of 75% S&P 500 Index and 25% U.S Treasury Bonds. The percentages are calculated using the last 50 years of stock, bond, and inflation data, for the United States. They take into account the worst 30 year economic period, in the United States, insuring you don’t run out of money in retirement.

The United States economy, the last 50 years, has out-performed the rest of the world. That is why I use the lower 3% - to be safe. However, your country’s economy may out-perform the United States for the next 50 years, enabling you to have a higher safe withdrawal percentage.

You can also use the retirement calculator, on the Green Retirement Planning Website, to calculate how much retirement savings you will need. Simply ignore the dollar sign and enter your currency values. Instead of Social Security, enter the value of your country’s retirement program payments, and pensions if applicable. Voila, you have just discovered how much retirement savings you need, no matter which country in the world you live.

I live in the United States, and so the retirement website and blog, is written from the American perspective. However, you don’t need to be a U.S. Citizen, to take advantage of Green Retirement Planning. The principal, method, and mathematical formula behind Green Retirement Planning is universal.

This is the Retirement Blog. Learn more about Green Retirement Planning.