The Boulevard to Financial Independence

By Randy

I hear it from clients all the time, “My house is my best investment for retirement.” Unfortunately your “investment” is also the place you live and therefore is not really an investment. Don’t get me wrong, there are a lot of smart financial reasons to own a home, but don’t fool yourself into thinking that your home will also provide for your retirement. It’s a great feeling to have equity in your house but unless you have a hankering to live on the street, it will be much harder to utilize that equity in retirement than you think.Borrowing against the equity is not really an option. For example, assume you’re 65, and you live in a house you paid $50,000 for many years ago that is now worth $1 million. Let’s further assume that you only have a $100,000 mortgage so your actual equity in the house is a whopping $900,000. It’s tempting to think of that $900,000 as your retirement nest egg, the problem is you need to get access to that equity in order to be able to spend it. Sure you can borrow but since you’re retired you’ll need to make payments on the loan from the proceeds you borrowed. A $500,000 loan at 6% (if you could even get it) would require payments in excess of $36,000 every year. If you only spent half the $500,000 for retirement and set the other half aside to make your loan payments, your reserve to make loan payments would be gone in less than 7 years, leaving you with another 23 years of payments to make.

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By Mariette

This past year was a real eye opener for me. I never used to be concerned about health insurance; I was healthy, took good care of myself and never bothered with it unless I happened to have a job where it was part of the benefits. I had lived in Europe for many years and was not used to having to worry about it myself, and resented that I had to pay inflated premiums out-of-pocket for care I wasn’t using, particularly as I tended to use complementary or alternative medicine which isn’t usually covered by insurance anyway.

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By Mariette

I don’t have a million dollars, nor will I anytime in the near future. That’s okay, it isn’t one of my goals. Yes, I want to have some money saved for retirement so that at the very least I only have to work part-time in the last part of my life, but I’m not obsessed about it the way many people seem to be. Partly that’s because I never felt that having a lot of money equaled happiness, this belief was reinforced by some of the rich people around me growing up, who seemed to be some of the most miserable people I knew. Certainly we need our basic necessities met in order to be happy: clothing, food, shelter, but beyond that happiness has far more to do with your state of mind and how you approach your life than how much money you have in the bank.

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By Mariette

I’ve been looking at a lot of blogs and websites recently that talk about ways to save money or to be frugal, so I thought I would share some of my suggestions and some good links to add to the mix. One of the first things you realise when you start delving into all the different resources that suggest ways to save money is that there are many different ways to do it, not all of which will work for every person or lifestyle. Trent at The Simple Dollar had a good post on this where he suggested that people try out different tips for one week to see if they work for you, then incorporate the ones that do and then try some more.

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The latest from Randy:

As we watch the stock market zip up and down it’s really hard to bring yourself to invest. When is the right time to invest? Should I invest all at once or a little bit at a time? Will the market go lower? Should I sell what I have in the market now?

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By Mariette

We are moving out of an age where we can assume we will be taken care of in our retirement by pensions and social security. With that movement comes a need to rethink not only our own need to save for retirement but also how we educate our children in retirement planning. Unfortunately not everyone is aware that they themselves must take charge of their own retirement much less teach their children to do so. According to the Wall Street Journal on Saturday 1/3 of people with employer-backed 401k or other defined-contribution plans are not enrolling. Clearly there is a gap in educating people about retirement options in this country.

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