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Prove It

So if it’s likely that our lifestyles might be somewhat, let’s just say, reduced during our retirement years, why not try to absorb some of the shock by voluntarily reducing our circumstances now?

What if we earned $80,000 per year right now, and managed to spend each and every cent—and then some? We could, with a bit of gritting our teeth, turn our lifestyle on its ear and end up not only happier in the here-and-now (a girl can dream, right?), but also in better shape in the future.

What if we got even with the world (read: no debt, except maybe a house, in which we’re building equity fast because of a low interest rate and a short term) and then began saving and investing like there’s more than one tomorrow? And then, after successfully relieving ourselves of debt, what if we took the 10% or so of our income we were spending on debt repayment and, additionally, found a way to cut our regular annual expenses by another 10%?

I don’t know about you, but I could make tremendous financial headway with $16,000/year. I’d have a dandy emergency fund, a beefed-up car replacement fund, a thrilling travel fund, plus a fair amount going into pre-tax retirement accounts.

Not only would I be guaranteeing more adequate provision for our later years, I’d be making the kind of almost imperceptible shifts in our current lifestyle that will make “living on less” during retirement feel like living on not quite so much less.

A lot of folks say they know they’ll be able to live on much less during retirement. Like maybe half as much as they live on now. If I believed that, the best thing I could do is start proving it to myself by making the kind of adjustments today that I’d supposedly have no trouble making in the future.

If I’ve got something to prove, I might as well prove it to myself right here, right now.

Posted by Katy on 05/20/08}
in Personal FinanceRetirement

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