No matter what your age, most people occasionally talk about retirement. A big concern is whether Social Security will be available when you finally qualify. Even more troublesome is when the conversation leans toward savings accounts, or the lack of them, among Baby Boomers. Of primary concern are the many people in middle age and beyond who are not financially prepared for getting older. Only a handful will have the luxury of never giving money a thought. What is seldom discussed is that there is something that most people can do right now to prepare for a more carefree and secure retirement. That something is the decision to rightsize their life.
First let’s talk about why this matters. According to the Center For American Progress, “A large number of American’s are not saving anything for retirement.” Studies done by the Center show that in 2013, approximately 23% of U.S. citizens aged 45-59, and 15.4% of those aged 60 and older, had $-0- in savings or are eligible for a pension. In other words, about one in five near-retirement households have zip for savings. Making matters even worse, the median retirement account for all households ages 55-64 was only $14,500. The National Retirement Risk Index (NRRI) believes that 52% of us are “significantly less well prepared for retirement.” That’s a technical way of saying a lot of us are in big trouble. And it is only getting worse.
So what is the solution? Current estimates show that most of us will need 70 to 80% of our current income to live comfortably in retirement. Unfortunately, even if we could save up that much money, what happens is an emphasis on maintaining a consumptive lifestyle that was problematic when you were working but nearly impossible in retirement. Instead of attempting to hang on to what you had while young or working, taking the time to simplify and rightsize could be your best alternative.
What is rightsizing? Rightsizing is the conscious choice to create a lifestyle that fully aligns with your values, goals and genuine needs at any age. From the outside, rightsizing might look like the more commonly known act of downsizing. But rightsizing is never a sacrifice. Instead, rightsizing asks us to get clear and focused on what is important and then let go of the superficial or inconsequential. A big part of that action is usually a trend toward personal authenticity, self-awareness and simplification.
How does it look? As I explain in my newly released book, Rightsizing * A SMART Living 365 Guide To Reinventing Retirement, rightsizing looks different for everyone. As people who have been self employed our entire lives, my husband Thom and I never qualified for a pension or had any kind of company retirement plan. We also do not have children that we can count on to bail us out should the need arise as we age. For that reason, about six years we decided to get very serious about our future plans. Rightsizing not only helps us save money, it also added to our lives in ways we never expected. How did it help our finances? Here are five big advantages rightsizing can help others in a similar position.
- Rightsizing insists that we carefully analyze the amount of space and amenities that we can both easily afford and desire in our homes. Then, instead of trying to keep up with the mythical “Jones,” we let go of living anywhere or in any type of home to impress or live up to other’s expectations. Some of us rent, some of us buy, some go urban, and others pick the country. Regardless, our home should fit us financially and personality-wise as much as possible.
- Rightsizing invites us to jump off the train of a consumer-driven lifestyle. Instead of attempting to make ourselves happy and content by purchasing items to feel good about ourselves, we focus instead on the feelings and needs we authentically crave deep inside. When we stop buying things we don’t need, with money we don’t have, to impress people we don’t even like that much—we often find we have more than enough resources to live a happy life.
- Rightsizing asks us to budget our expenses so that we do not spend more than we comfortably make. Even better, rightsizing asks us to live below our means and reach for the possibility of going entirely debt-free. Every step we take in this direction gives us more freedom to do the things that bring us pure joy and allows us to escape the hamster wheel of endless debt.
- Rightsizing gives us the freedom to find a job or creative expression that brings us purpose and meaning. Instead of trying to get ahead according to the standards of others, or sell our souls in order to conform to other people’s rules, we find work that fulfills us and adds to our lives. Instead of dreading work, we love what we do and want to continue it as long as we are able.
- Rightsizing beckons us to pick experiences and quality relationships above buying stuff or purchases every single time. By recognizing the high value of connection, meaning and peace of mind, rightsizing allows us to cut back on expenses and spend our money only on those things that are life-enhancing.
Once a person or family begins to rightsize his or her life it is much easier to eliminate unnecessary expenses and activities and to start saving. As I explained in my book, just by moving from one home to another nearly six years ago, my husband Thom and I saved over $31,000 per year or nearly $150,000. And although we could comfortably afford to continue in our previous house, we made the choice to sell it, reprioritize and rightsize. While we used some of that savings doing enjoyable things we’d always wanted to do (like our recent trip to Egypt), we invested most of it and now have a more comfortable savings for retirement. Best of all, our new home in our rightsized neighborhood offers us many more benefits than our former home did at a higher cost.
Another side benefit to rightsizing is that when you begin investigating the elements that bring you the most happiness in your life, you can often start cutting expenses for things that are only marginally beneficial. For example, even though it is fun, easy and convenient to go out and meet friends for happy hour or dinner, Thom and I discovered that we preferred hosting people at our house even more. Just consciously choosing to entertain at home saves a tremendous amount of money.
In the long run, rightsizing isn’t a complicated or extraordinary measure to save money. Instead, it is the most natural and logical step most of us can take to arrive at a lifestyle that is purposeful, meaningful and content no matter what our age. Whether you are starting to think seriously about retirement, or only just wondering how you want to live your life in the future, it might be SMART to begin to rightsize starting today.
Good stuff! As much as we know it, we need to be reminded to focus on what’s important. Thanks for sharing.
Hi Lois! Welcome to SMART Living and thank you for letting me know this helped to remind you of what you already know. If you’re anything like me you can’t hear it too many times. ~Kathy
So agree with this post. I especially liked your statement, “rightsizing is never a sacrifice. Instead, rightsizing asks us to get clear and focused on what is important”. It’s not downsizing, it’s focusing on what’s important. Experiences and relationships are; possessions are not. If rightsizing allows one to save for the future, that’s even better. Your future self will thank you.
Hi Max! Thank you for stopping by SMART Living and letting me know you know about the benefits of rightsizing. I’m convinced that the more of us that talk about it, write about it and remind each other about it, the more it will encourage others to jump on the bandwagon. As you say, “your future self will thank you.” ~Kathy
I could benefit from paying more attention to my finances–spending, savings, retirement. Thanks for the nudge.
Hi Karen! No matter where we are financially I think we can all benefit from being reminded that money and buying stuff isn’t the key to a happy future. Thanks for stopping by! ~Kathy
Your book was a real eye-opener for me, Kathy! And I just love, love, love the exercises to help get a handle on finances. Truly helpful!
The good news for me is that I spent so many years as a literal starving artist, and even though I haven’t been one for a long time, I never really upped my lifestyle. It was a relief to see that I already did a lot of your prescriptions!
Hi Susan! Thank you for bringing up something that is so very important–and that is the fact that most of our spending and “lifestyle” is a habit. Like you said, when you spent your life so long as a “starving artist” you just got in the habit of making the most of what you had and not spending what you didn’t. If we can make that habit then even when we have the money we don’t over-spend it. On the flip side, I know people who had money for a while and spent money like crazy. When their income dropped they just kept spending and using credit to maintain a lifestyle that was unsustainable. It is sometimes hard, but we can change, right? Good for you for being ahead of the game. ~Kathy
I loved this Kathy! Before we started over we didn’t have a lot of bills, but we had no retirement at all. Not even life insurance! Going almost debt-free, moving, and cutting the fat off of our budget we’ve been able to purchase adequate life insurance and begin saving for our older years. I don’t want to be caught in my 70’s out of money and eating cat food. I also don’t want my daughter to be stuck in the situation that I am dealing with and it is my responsibility to make sure she won’t. That’s what a parent SHOULD do. I wish you lived on this side of the country we could have some fabulous conversations!
Hi Rena! So glad that you are taking things into your own hands and making changes NOW rather than later. I think your situation (having to take care of your mom with Alzheimers) puts you in a position to know how difficult and challenging it can be. Even if you have wonderful children (like yourself) who are stepping up to the plate for your parents, is that what you want to put your children through if or when the time comes? I mentioned this to a friend one day over lunch and she confidently said, “Well my mom did it for her mom, I’m doing it for mine, so why wouldn’t I expect the same from my kids?” I couldn’t answer her for sure but right now her mother still lives on her own at 92 years old, lives back east somewhere, is still financially solvent and has other family members filling in when necessary. The burden in that case seems mild. But as you know, far too often that isn’t the case. In your situation you are a 24 hour caregiver to your parent and that is no easy thing. Hopefully your mom has her own financial resources, but again, that isn’t always the case. Let’s not wait until we are in our 80s and 90s to start thinking about this! By putting things in place early I really feel that we can design a much better future for ourselves through rightsizing. ~Kathy
Rightsizing is excellent. I’m just at the beginning but once you start it, you can’t stop it. Hopefully!
Hi Kathy! Just finished your new book. Your book is a delight to read. Right now I am working on my list, uhm… not the bucket list … the other list hahaha. Loved reading it.
Hi Gosina! Rightsizing is indeed habit forming so be careful! And I’m so glad you enjoyed the book. If you have the time I would really, really appreciate a review on Amazon. It doesn’t have to be a long one, just completely honest. I want others to know what they can expect if they buy it too. Meanwhile, keep making your “list”! ~Kathy
Done! Hope you can see it soon. Btw, yesterday I downloaded the audio book you mentionend in your guide, “The Tao of Abundance” and enjoying it right now. Thanks for this wonderful tip.
Hi Gosina! Thank you SO much for the review of the new book. I think it helps the book get more exposure so it is ALWAYS appreciated. I owe you a cup of coffee (or a glass of wine) if we ever get to Germany for a visit.) And I hope you enjoy the Tao of Abundance. That book is filled with LOTS of great ideas and some really important concepts about abundance. ~Kathy
Sounds enticing, Kathy! Thumbs up and thank you.
this is all so true Kathy – we live on a very modest income and still have money to spare. I think it’s a mindset – you need to stop worrying about what the world says you need, and start seriously looking at what is a comfortable life (minus a few bells and whistles). Retirement is a lot less scary when you have your life “right-sized” in advance!
Hi Leanne! I could tell from following your blog that you live a rightsized life already. It is indeed a “mindset” that has you focusing on what’s important and it sounds like you’ve already learned that. Now all we have to do is share with others all the benefits! ~Kathy
Rightsizing is excellent. Once you start it, you can’t stop it.
Hi Kathy! Just finished your new book. Your book is a delight to read. I think I’ll read it again.
Right now I am working on my list, uhm… not the bucket list … the other list hahaha. Loved reading it.
Here’s my short success story of de-clutter: As a die-hard Elvis fan for almost 40 years, my collection was tremendous. I collected every shred of paper, music records , memorabilia I could find. Yep, I got rid of almost everything, except of a few things. That wasn’t easy-peasy but it was worth it. They are right when they say „holding on to stuff just imprisons us; letting go is freeing.“
The first time I was thinking about de-clutter and rightsizing was after my grandparents passed away. My mom and I had to get rid of a house full of possessions. It’s quite painful when you have no idea what to keep, donate or toss out. Unfortunately, my mom couldn’t let go of many things, and now it’s stored in her attic and basement. I think it’s important to downsize/rightsize/clear out before we retire and before we die. That’s definitely on my bucket list. 2016 will be the end of stuff for me!
As a side note, I’ve just downloaded the book you mentioned in your book. “The Tao of Abundance”. I’m always happy to get a new book recommendation.
Hi Gosina! I just found this comment tucked away in my spam folder and it was so good I had to pull it out and include it. Good for you for thinking through your “collection” and deciding that even though it had been important at one time, in the long run it “imprisoned” you! And yes, my sister still has a bunch of our mom’s things packed away in her garage. Who knows if she’ll ever be able to get rid of it or it will eventually be thrown out when she herself passes on? Thanks for adding this to the conversation. ~Kathy
Always excellent advice! On the home and thinking of downsizing, the bigger the home the more costly repairs and sooner or later all homes will need some repairs or updates.
Hi Haralee! Glad you appreciate the info. I realize that people get attached to where they live and no one really LIKES to move, but moving when we can still do it fairly easily and to a place where we can live far into the future just makes so much sense to me. My older sister now lives in a 2,500 sq. ft house (it’s just her and her husband) and are paying utilities, taxes, maintenance and mortgage on such a big house that just occasionally gets used when the entire family comes to visit. Yet she is struggling to get rid of some of the stuff she has stored there during the last six years they have lived there. And guess what? Some of that stored stuff is still in boxes that she hasn’t touched since moving there SIX YEARS AGO!!! Still it’s hard for her. Far better to have someone cart those boxes away than even wonder what’s in there! Letting go to focus on what is important TODAY is a huge aspect to rightsizing! ~Kathy