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10 Smart Downsizing Measures For Retirement Print E-mail
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Personal Finance - Retirement
Written by the frugal nomad   
Thursday, 06 May 2010 03:17
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The Great Recession has thrown many lives off balance and for those who have experienced drastic declines in their wealth or a major drop in household income - now might be the time to contemplate a simpler leaner retirement life-style.

Dump The CarThe old formula was that retired individuals were immediately obliged to adjust to a forty percent drop in their income. The recession, the erosion of so much paper wealth and the absence of defined pension plans will see many seniors retire on much less. Economist expect that half of the retiring baby boomers will be left with nothing more than a social security check and whatever little they’ve managed to squirrel away. And if you look at the stats, they’re not very encouraging. If some projections are right, half of the Baby Boomers will be retiring with less than a $50,000 net worth. If you're retiring with anything less than $300,000, here are some ideas on how you can drastically cut your expenditures in retirement.

1. Move to an Ultra Low Cost Destination

Don’t just sell the house and buy a condo - pick up and move to a low cost destination. Because of the de-industrialization of America and the bursting of the housing bubble, there are a lot places to live that have fallen on hard times. Florida and Las Vegas are obvious destinations as is Arizona. The three destinations were always considered attractive for retirees and if you’re retired on a fixed income, they should be even more attractive now. On the East Coast you have areas in the Carolinas that have moderate temperatures but have been decimated by manufacturing moving overseas. Your goal is to buy a place free and clear of a mortgage. With 50-70% of the houses underwater in these places, there are some great deals to be had.

If that doesn't work for you, you might need to travel a bit further out to get cheaper accomodations. Thailand, Vietnam, Mexico, Egypt, Costa Rica and other places come to mind. Think about buying a nice place in some of these areas for $40,000 to $50,000. If your American Dream didn't work out as planned, you still can live like a prince on that small Social Security check - you'll just have to do it in another country. The toughest part will be the distance from the kids and grandkids. With the money you save, you can probably chip in for their airline tickets or make the trek home once a year for the holidays. One bit of advice, try to relocate to a destination with an American consulate.

Renting is not a bad option with some cities offering excellent value on subsidized housing for seniors. In most cases, the rent is pro-rated to your income and you’d be surprised at the facilities that are offered and some of the prime areas where senior housing is located. Here’s a hint - locate senior housing in suburbs as opposed to the inner city. You’re more likely to find quality accommodation in progressive states like Washington.

2. Get a Job....As a Landlord

Another alternative is to check out cities that have fallen on hard times but still have something going for them - like good universities. Instead of buying a house, buy a duplex or a triplex in a good neighborhood near a university town and furnish the spare units to make it an attractive rental for graduate students. Find out what the student’s major in before you sign the lease. A student going for a doctorate in nuclear physics is probably less of a social animal than a law student. My preference is for people doing graduate work in Latin or mid-evil French Literature - they’re quite and polite and spend a lot of time reading plus they usually take six to seven years to finish their degrees. Your quarters will be smaller, but you'll be cash flow positive and you'll have plenty of time on your hands to fix things.

3. Lose the Car

Try doing without a car or getting by with a beater that’s in great mechanical condition. You won’t just save on car expenses - you’ll cut down on your insurance. If you have two cars - get rid of one and try public transportation, bicycling and walking. If you live in cities like San Francisco, Portland or New York - there are no compelling reasons to have a car unless you need it for work. Try to locate yourself near an urban center on a transit line. If you need to go some place, rent a car or use a service like Zipcar.

4. Bye Bye Expensive Vacation - Hello National Parks

National Parks are virtually free for seniors. Pay $10 and you get entrance for the rest of your life (and everyone that comes with you in the car). The U.S. and Canada are blessed with some of the most spectacular scenery on the planet. Buy yourself a tent and a good mattress pad and for an average of $10 a night you'll be sleeping under the stars. If you really want to save on housing, get yourself an RV where you won't pay any property taxes and you can move with the seasons.



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Sleuth  - Retirement and downsizing. |2010-05-07 05:26:10
I retired in 2004 but did some planning beforehand. I sold my 12 room house on 5 acres with a pond in 2000. I rented a condo for three years closer to my work. I later purchased this same condo in 2003. Finally I retired in 2004. This year in April sold my car I figure
that I saved $1200 a year plus the price I sold my car for. I have a local volunteer agency drive me to all my medical appointments at no cost to me. For people retired I do agree that it is important to be staying around the children in the family. Happiness comes from within not some exotic port.And yes there is senior housing wherever you decide to settle down.
John605  - I think you got it wrong |2010-05-06 13:56:49
I like these. When I retire I plan to sell the house and cars and travel to every low cost country. Clipping coupons? That's the part I don't like. Vegas. Arizona and Florida are way too stinking hot but the point is good and those locales work for some.
frugal nomad  - we can't agree more |2010-05-06 10:30:12
A little background is in order. This article was originally titled "ten radical downsizing measures for retirees." It wasn't meant for the faint of heart but for those facing the dilemma of retirement with little to show for a lifetime of toiling in the workforce. Our editor, God bless him, chose to take out the senior housing option that was in the original article. So we've added it back in thanks to your letter. We've also added a few other items that I think you would agree were more practical.

Bonnie christensen |2010-05-06 08:35:27
I found your seven ideas impractical and not at all helpful. Using the libraries was the only one that made any senses. I am 72 years old, divorced and have a wonderful life not doing any of those crazy things you suggest Moving away from your family would be a very poor choice. Life is short and being away from family and friends at a time when you need them most. There is senior housing every where that you can take advantage of.
 
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