Many recent retirees (and soon-to-be retirees) are wondering if maybe this isn't the best time to retire after all. Call me crazy, but I think retiring in a bad economy is actually easier than retiring during boom times.
Imagine your New Year's resolution is to shed a few pounds. You decide you're going to carefully watch what you eat and incorporate extreme exercise into your daily routine.
Now, imagine that all your friends are too skinny. Their doctors have told them to gain weight, so they have to eat as much as possible. They refuse your invitations to go for a hike or a bike ride, and instead ask if you would like to join them for ice cream sundaes. Are you really going to want to go out to dinner with these people? Wouldn't it be better of ALL your friends were on a diet, too?
About a year ago, when I had just been retired for a few weeks, my husband and I attended a charity dinner. I was telling my dining companions about a friend we have who recently sold his company for millions of dollars. I was explaining how much I admired his attitude about money.
Although he had come into significant wealth, he didn't embark on a life of conspicuous consumption. When he took up biking, he bought a used bike. In stark contrast to the BMW's and Mercedes dominating the parking lot at this event, he drove a Prius. Rather than spend money on the accumulation of possessions, he preferred using his money for shared experiences with friends and family.
"Sounds like white guilt to me," one of our dining companions said.
Another followed that sentiment, "I like driving a BMW and spending excessive quantities of money on stuff." Everybody laughed.
I was dining with people that were not on the same diet I was on.
Fast forward to January 2009. Everyone I know talks about saving money, spending less, and the deal they just got on whatever it was that convinced them to part with their hard-earned cash. It's hip to be frugal now; everyone is doing it.
Some of my friends have lost their jobs, others fear losing them. One found a new job, but for significantly less pay. A retired friend is considering re-entering the workforce, and another whose job is very secure is contemplating some budgetary cuts due to the hit he's taken on his investments. Everyone I know is feeling the pinch. It's not just my friends, it's the national conversation right now.
Say we had retired in the dot-com heyday. It would have been much harder to keep control of our pocketbook. A booming economy and stock market would have lulled us into thinking we also had money to burn. If we were joining our friends at lavish restaurants and drinking expensive wines, we would have busted our retirement budget at the seams.
The reality is, in order to retire, most of us have to be on a strict fiscal diet. It's just much easier to cut calories when everyone around you is on a diet too.