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Characteristics of Successful Retirees

Lists always make me stop and look.  I like lists.  Lists offer conciseness; they yield orderliness; and, at their end, they convey a sense of completeness.  Thus, I use lists a lot.  Recently I have been thinking about the differences displayed by those I know who appear to be enjoying very successful retirements from those who appear to be struggling.  Viola, another list began to take shape.

What I tried to do was to pinpoint those characteristics that financially secure retirees share.  I am not referring to the mega-rich.  Their lifestyles have no meaningful lessons for me.  Nor am I referring to those who have inherited their money.  Warren Buffet refers to those folks as members of the "Lucky Sperm" club, and it matters not what characteristics they may have; they offer no lessons for the vast majority.  I am referring to those that Thomas Stanley and William Danko discussed in their book, The Millionaire Next Door. They are the folks who have lived what could be termed ordinary lives but yet arrived at retirement with sufficient assets to enjoy it.  Granted, the definition of "enjoyment" varies widely.  For one couple it may dictate that their nest-egg needs to be three or four million dollars while another couple could enjoy their retirement with less than $300,000 in the kitty.  Much about "enjoyment" is subjective.  Nevertheless, the characteristics in the list below refer to those who have reached retirement with sufficient assets so that they do not expend too much energy worrying that they will outlive their money.  Of course I realize that someone may display all of the traits below for their entire life, and the ill winds of fate can still blow up a catastrophe.  Such is the nature of our lives.  With this list I am speaking in generalities, and that is always a bit dangerous.

Thus, with the above proviso in place, these are some of the things that these fortunate folks have in common:

  1. They learned early in their adult lives to live on less than their income.  This is a prerequisite for saving and a prerequisite for a successful retirement.  If at any time they could save only a small portion of their income, they saved what they could; but they saved something.
  2. are thrifty.  Please note that being thrifty does not mean be miserly.  Ben Franklin, one of our country's Founding Fathers, was an early promoter of thriftiness.  Franklin noted that the thrifty "work productively, consume wisely, and save proportionately."  Thrift can be defined as the ethic and practice of the best use of all that we have: our time, our money, our health, all of our resources.  Franklin believed, as do I, that being thrifty allows us to be more generous.  There is much about being thrifty that recommends it.
  3. They had a plan.  It probably was not an elaborate plan.  In fact, simple plans are easier to follow.  Their plan may have been as simple as contributing religiously to a 401k.  It may have involved a financial advisor, insurance salesman, or a CPA.  It may not have been a plan that I would consider optimum, but almost any plan is better than no plan.
  4. They gained an education about and an understanding of basic financial topics early in their savings program.  They may have turned to professional help or they may have taken the time to read and educate themselves, but they acquired some basic knowlege in some fashion.  This not only helped them choose appropriate savings products, but it also made it less likely that they would overpay for something or fall for some charlartan's pitch.
  5. If married, they stayed married.  Divorce reeks havoc on retirement plans unless there is considerable money there prior to the divorce, because, however much it is, it is definitely about to be divided when the couple begins talking divorce talk!
  6. They have avoided self-destructive behavior.  They haven't eaten too much, drunk too much, or smoked too much.  Not only do these types of behaviors lead to physical problems that steal the joy from retirement, they lead to medical bills that can destroy retirement savings. 
  7. They accurately assess their financial situation during retirement.  They do not want too much.  There are two ways to be "rich."  You can either have more money or want less things.  I watched my parents enjoy a wonderful retirement with a small nest egg, but they did not want too many things.  They were aware of what they could, and could not afford during their retirement years.
  8. Finally, for lack of a better word, it does seem that luck plays a part.  Now I do believe the old saw that says "the harder I work, the luckier I get," but often it seems that something else is in play.  Some folks can go frolicking through the mine fields of life for years with nary a scratch while others, working as hard as they can, hit all of the trip wires.  Others just seem to always be in the right place at the right time.  Call it luck, fate, or whatever, it cannot always be easily explained.  The lesson I get from this observation is that we need to work hard and plan well, and then be ready to roll with life's punches.  We need to try to control those things which we can, and not worry too much about those things which we cannot.  As my Dad would say about doing our best, "That's all a mule can do!"

The definition of a successful retirement varies widely.  Some intend to never fully retire in the traditional sense.  I will probably go crazy and drag all of those around me with me if I ever truly retire in the traditional sense.  But most of us are looking forward to the day when we pursue those other things we have been dreaming and scheming about for so long as we fly airplanes, pursue the next sale, or head to the office or school room each day.  That is what I was contemplating as I compiled this list.  What characteristics should we strive to have in order to reach the point where we can pursue some of our other dreams.  Someone said that to be successful all one need do is observe those who are already successful and then do what they did.  Sounds logical to me.


Fly/Drive Safely


4 August 2009

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    Nice Site, Keep up the excellent work. Thanks a ton.

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