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How to Retire the Cheapskate Way

by Cindy on December 2, 2013 · 7 comments

in retirement, retirement saving

What if you could retire better, earlier, happier — now or in just a few years?

     Jeff Yeager says you can.

Yeager, a self-appointed “very cheap guy,” is focusing on just this idea in How to Retire the Cheapskate Way: The Ultimate Cheapskate’s Guide to A…well, you know.

“If you’re looking for a book about retirement investing –particularly magical ways to hatch an ostrich-size retirement egg overnight without working or planning for it — this isn’t that book,” Yeager warns.  “…while this book offers lots of practical advice on how it’s possible to free up money you didn’t think you could…this is a book about what I believe is the more important side of personal finance and retirement planning: the spending side.”

WHAT DO YOU REALLY, REALLY WANT?

     He begins with a question that changed his life. A friend asked him one day, while sitting on a park bench:

     “So tell me, what do you want? What you really, really want in life…Once you’ve figured that out, figuring out the money stuff really isn’t that hard.” 

Yeager argues that the average person does not need a hefty retirement account — generally beginning at a million dollars, and heading up from there, according to many investment advisors — for several reasons:

*Many people can and do plan on working at least part-time after ‘retiring.’ A recent study cited that 54 percent of the people polled wanted to continue working, because they enjoyed it.

*Other studies suggest that spending goes down as you age. Most advisors’ plans, Yeager says, insist on annual increases, instead. (The major exception to this is health care costs.)

*Pay off your personal debt first– including a home mortgage. Then think about retiring. Being debt-free gives you the freedom to take advantage of sudden opportunities, and lets you live on a smaller amount. Your money is covering you — not someone else, by paying interest.

*It’s no use basing an official plan on a cheapskate’s full income – because they’ve never lived on 100% of their income, to begin with. “Instead, to retire the cheapskate way, you must crunch the actual expense numbers yourself and then determine the size of the nest egg you need to hatch,”  Yeager says.

*Does your fixed income cover your fixed expenses? This means categories like housing, food, transportation and insurance premiums. If so, then you’re doing well. Now, all you have to do is increase your variable income (like getting extra work, or working part-time) to cover your variable expenses. Once those are covered, then you can seriously consider retiring.

*Always spend less than you make. This is the Golden Rule of the cheapskate…and the happy mean of plenty of other financial bloggers, yours truly included. If this means cutting your expenses, there are plenty of creative ways to do it. Yeager’s got a bushel basket of ideas, including renting a car for long trips, creative ways to stretch your housing (downsize, or keep your original house and “add people”), and how to cut your phone costs (“Piggyback on your employer’s plan”).

How to Retire the Cheapskate Way has full discussions on some of retirement’s opportunities — as well as our fears. Reverse mortgages; medical insurance (“surviving the medical maelstrom;” and must be carefully dealt with); great places to live (and not pay taxes); the merits of starting your own business (“selfish employment”);  care facilities and in-home care are the important issues here, as well as the Great Question: “Will Social Security still be around when I retire?” (Yeager thinks yes…but it probably will be less benefits.)

     Instead of just relying on his opinion, or that of ‘experts,’ he adds extended visits with a variety of retirees — including some who stepped out in their thirties and forties, and are still going strong. Their innovative ways to cover their expenses while doing unusual things, especially travel and volunteering, are one of this book’s great strengths.

Do some of these options require sacrifice? Yeager is the first to point out that cutting back now gives you opportunities later. Learn not only how to live less within your current income, but how to plan so you can continue doing just that decades from now. Want to quit your job and ‘retire’ now? There are ways, Yeager says. All you have to do to start is ask yourself:

      “What do I really, really want?” 

 * * * * * * * * *

Jeff Yeager has written other helpful books, including The Cheapskate Next Door

 and the e-book Don’t Throw That Away!

Both are worth adding to your frugal living library.

 

{ 6 comments… read them below or add one }

Moneycone December 2, 2013 at 7:53 am

Thought-provoking tips! Thanks for the detailed review!

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maria@moneyprinciple December 2, 2013 at 1:20 pm

Interesting; I will certainly have a look at the book – my interest in pensions and retirement has peaked.

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Justin @ RootofGood December 2, 2013 at 3:30 pm

I remember chatting with Jeff on a discussion forum years ago. He said to make sure to check out his book from the library instead of buying it. :) What an Ultimate Cheapskate!

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Cindy Brick December 2, 2013 at 9:47 pm

Ironically, Justin — that’s just how I read it!

Thanks, all of you, for writing and commenting.

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Jon @MoneySmartGuides December 18, 2013 at 6:21 am

I think most people have no clue what they want out of life or even in retirement. That is why so many go into debt – they are trying to buy happiness. Unfortunately, it can’t be bought. But they don’t know this so they just keeping buying more things hoping that sooner or later they will find happiness.

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Wallet Engineer#1 January 28, 2014 at 1:25 pm

I agree completely! The less you spend, the more you can save AND the less capital you need to save to retire like a cheapskate!

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