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Rugged individualist retirement

By Barbara Whelehan ·
Friday, November 9, 2012
Posted: 12 pm ET

It's been a good news/bad news type of week for people looking forward to retirement.

The good news is that the average 401(k) balance is at an all-time high, at $75,900, according to Fidelity. Fellow retirement blogger Jennie Phipps wrote about this Thursday.

The bad news: More than half of Americans are at risk of a decline in their standard of living once they retire, according to the Center for Retirement Research at Boston College. The problem is largely attributable to the disappearing pension plan that promised guaranteed income in retirement.

What should we focus on -- the good news or the bad?

The 401(k) plan reflects America's values of rugged individualism and independence. It requires us to learn how to save and invest for our own needs and not be dependent on other entities -- neither government nor our employers -- for our retirement security.

I would be in trouble if I had to rely on a pension from an employer since my career involved three jobs with tenure just shy of 10 years. I wouldn't qualify for a pension.

My cousin Helen, on the other hand, has a pension after working 36 years as a schoolteacher at the same elementary school. But because she doesn't qualify for Social Security, she began saving early on to supplement her pension. I have no idea how much she has saved -- it could be $50,000 or $500,000, though I doubt it's a million since she has an aversion to the stock market. But she appears to be serene and untroubled about her future.

Our family history

Our maternal grandparents and their seven children emigrated to the U.S. from Poland after World War II. They were sponsored by a cotton farmer in Arkansas, who kept them as indentured field hands to pay off their voyage to the U.S. Because they were incurring more debt for living expenses than they were earning to pay off their debt at the farm, they hatched a plan to earn money elsewhere. Two of my aunts escaped one night and took a train to Chicago, where they found jobs at a Catholic hospital. They sent their earnings to my grandfather to pay off the farmer, and after about a year the family was free to move on.

Eventually my grandparents settled down with their family in Steger, Ill., where my grandfather and his sons built a home. There never was a mortgage on the house. My grandfather first built a garage where the family lived until they were able to finish building the house from materials that were purchased in increments, as they were able to afford them.

After my grandfather died in 1968, my grandmother lived on a monthly Social Security check of $480, based on her husband's earnings at a railroad parts manufacturer. Her home was comfortable -- warm in winter, cool in summer -- and modestly furnished. She planted vegetables in her garden -- carrots, cucumbers, radishes, lettuce, dill-- as well as raspberry bushes. Her lifestyle was simple, but she wasn't lacking anything. She had strong faith that saw her through all her trials and tribulations.

My grandmother died in that house in 1996. Her estate consisted of the house and property and about $14,000 which was distributed among the six surviving children.

Do Americans really need tons of money to retire? Maybe not. As for my own retirement prospects, I choose to focus on the positive. I am thankful to do my own retirement planning, saving money on a tax-deferred basis in a 401(k) plan and IRA. In retirement, I may not enjoy the same standard of living that I have now. But so what? I will have to learn to live with less money. And I will nurture my faith that everything will turn out just fine.


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November 11, 2012 at 3:04 pm

I think this is a very timely and though-provoking article. So much of what we have in modern America is unnecessary and we only believe we need it because we've come to expect "middle-class" families to possess these things.

Health care is probably the major concern for those on a fixed-income. If it weren't for that expense, I would say anyone can live on $15,000-$20,000 per year. Nobody needs a 3D TV (!!), cable hook-up, iPods and iPhones, multiple vehicles, myriad toys for too many kids. Necessities are few and not generally very expensive. It's time we stopped being the consumer-driven society the media and large corporations want us to be.

As an added incentive, plenty of research in the last several decades suggests having all this stuff doesn't make us any smarter or happier. Go minimalist and stop comparing what you have to what others have. You'll enjoy this short life a whole lot more.

Robert M. Torres
November 10, 2012 at 11:27 am

Retirement Planning: I plan to retire in about 2 1/2 years, my wife and I rent a house in MN. We also have a small cabin up north on a lake (of course)with a mortage. When we retire we would like to move there, and be "snow birds". I will have about $500,000 in a company pention and $275,000 in my 401k. My question is would it be good to use my "retirement money" to build a new house and pay for it in cash. What does the IRS say about using "retirement money" to build a new home? Are there any web sites with info like this?