PeerFinance101 is about helping each other out with personal finances. From peer lending to sharing stories about managing debt, investing and anything related to meeting your financial goals.
Every week, I am going to post the story of one of our readers. Read the PeerStories and you’ll see that your own personal finance challenges are not so unique but you might just find some unique ways of dealing with them.
Our PeerStory this week is from Travis, a reader from Michigan that has been through a lot over the last five years. His story is one so many people experienced during the financial recession and one that many are still trying to get through six years after.
Below is his story of how he put his retirement goals back on track after a rocky start.
In 2006 I was wrapping up a 35-year career in newspaper publishing, first in Minneapolis then just outside of Detroit. It wasn’t a huge success story but I started, literally, at the bottom floor in information services and rose to become an editor. I had saved what I could and was ready to retire modestly when I turned 63 in 2008.
You might imagine what comes next. I have never been a big risk-taker. I divorced at 48 and never remarried. The divorce set me back in retirement savings so I set a pretty steady and stable course to be able to retire a little early in 2008. By 2006 I was tired of hearing my friends talk about how they were buying vacation homes and boosting their retirement plans on the money they were making in real estate or the stock market.
I had never been much for real estate so thought I could at least put some more of my retirement savings in stocks. It had been years since the whole internet bubble and Ben Bernanke had just taken over as chairman of the Federal Reserve. The called him “Helicopter Ben” because he would be ready to throw money out of a helicopter to keep the economy going. With a guy like that in charge of the economy, how could things go wrong? I had most of my savings in government and corporate bonds, about 10% in some real estate funds and 20% in stocks.
By the end of the year, I had sold off a lot of my bonds and had 70% in stocks along with the 10% in real estate funds.
And then…well, you know what comes next.
All through 2008 I kept hearing people talk about how it was just going to be a quick drop and then back up again for the markets. The subprime market was such a small part that it really didn’t matter much to the overall economy. I sat up some nights not knowing what to do but I stuck it out and went to work every morning. If the market came back up then I could still retire, maybe next year.
By November, my retirement savings were down by 35% and I couldn’t take it anymore. I sat down with a financial advisor, not asking where he thought the market would be in a year or what stocks looked like but how much should a 64 year-old man have in stocks, bonds and other assets.
I put my money back in bonds with a small portion in stocks and real estate funds, almost exactly the percentages I had before. In hindsight, I don’t regret missing out on the rebound in stocks since 2009. Even if you had told me that stocks would rebound soon after I sold mine, I don’t think I would have cared. I just wanted out and back to the stability I knew.
I can thank God that I still had my job and only lost 35% of my savings. I know a lot of people that lost their job and were forced to take crap jobs because no one would hire someone over 60 years old.
At this point, it was going to be tough to retire even by 67 so I started looking for ways to make a little extra money. I had always enjoyed writing, even though I didn’t do as much anymore as an editor, so I started to look online for freelance writing jobs. It’s been a mixed bag but there are some good sites out there like problogger that post legitimate writing jobs that pay more than pennies.
I retired in 2012 at 67, still not quite back to where I wanted to be but happy with what I could have in retirement. I still write a little and I hope I can do so to supplement my savings for as long as possible. The best thing I can say to others is to keep realistic goals on your investments, especially closing in on retirement, and find something that you can enjoy doing even part-time that makes you happy and makes a little extra money.
I want to thank Travis for his PeerStory. It’s not easy to drag yourself up after falling down the hill but he did it and I congratulate him. I think there is more to learn from his story than he realizes.
- As he says, keep your retirement investments realistic given your age and how long until you’ll need to start withdrawing. It is extremely enticing to say, “I’ll take a little extra risk just for a year or two and be able to retire in style,” but you never know what is going to happen in that time. Even if you make it through the year without problems it becomes tough to pull back on the risk in your portfolio and you eventually get burned by having too much in a risky asset like stocks.
- I love it when readers say they were able to turn a hobby into a side job. Whether through necessity or just wanting to make a little extra cash, there is nothing better than doing what you love and making money doing it. It may take a couple of years to build the expertise in your hobby and find a way to make money from it but it will be worth it. I highlighted 8 real ways for making extra money in a prior post.
- Travis could have given up in 2008 but he made a difficult decision and determined to get back on track. He didn’t feel sorry for himself or blame others for what happened. He just got back on his feet and did what needed to be done. It’s the kind of heart that a lot of people don’t have but maybe should.
If you have a story about your financial challenges or successes, please share it in our weekly PeerStory. Contact me through the form below or at email@example.com