Lots of good advise here, but more valuable is the experience being shared. I've done OK, but mostly by luck because when I was coming up there was no Internet and very few books were available that explained how money worked. That's not the case today, and in fact there is so much info out there it's hard to know what to believe. But here's what's worked for me.
I worked my way through college, then changed jobs to work for an employer that would pay for me to get an advanced degree. I chose both majors in areas with good job security and good salaries. I didn't always have fun at my job, but I just figured that's why they call it work.
I've always been a saver, and always lived well within my means.
I've had car loans and mortgages, but always paid them off as fast as possible to avoid losing money to interest.
Every home I've purchased was a fixer upper. The home I live in now was purchased in 2010 near the bottom of the real estate bust. But the home I sold at the time was purchased at another market low, and with the sweat equity and overall gain in the San Francisco real estate market, I still ended up selling it for twice what it cost me. I didn't plan any of this, other than the last home purchase. Took me that long to realize what was going on: buy low, sell high.
I've always lived a conservative life style, fixing instead of replacing, cooking instead of eating out, camping instead of motelling, buying used instead of new. Financial independence is far more important to me than shiny new things or traveling the world, though I have enjoyed a little bit of both.
When I was working I put enough money into the company savings plan to get 100% of their matching contribution. Anything more I could save went into an IRA. As soon as I could I rolled as much as I could out of the company 401K into an IRA because there were more investment options available.
In '08 I listened when Jim Cramer said pull any money you'll need in the next 5 years out of the stock market and reduced my stock holdings to 25% of my portfolio. I still lost money during that correction but not nearly what I would have when, blindly following the advise of an advisor working out of our credit union, I was 100% in the stock market. I read Cramer's books and learned about the fundamentals at work in the stock market, and after trying a few years to make money with individual stocks, realized that there are just too many factors at work to reliably beat the market averages. I'm still at about 25% in the market, but now it's almost all in a low fee S&P 500 index fund. The S&P 500 index is broad enough to provide a level of diversity adequate to insulate against the vagaries inherent with individual stocks. The rest is in the money market. I don't think bonds are a safe investment in a rising interest rate economy, and with government spending about to take off again, I think inflation will become more of a factor in the future. With that in mind I'll likely increase the investment in the index fund, but not by more than 15%, and then only gradually.
I retired at age 54 in 2010, downsized my home, and moved to a lower cost of living part of California. I can pay my bills with the proceeds I get from a pension, which is actually an annuity purchased by the company I retired from after 28 years. The benefit was reduced by 33% by retiring early, but I knew what my expenses were going to be in retirement with a fair amount of confidence and figured "enough was enough".
I plan to start Social Security as soon as I'm eligible. I don't trust the gummint to keep it solvent, and figure the safe bet is to get what I can for as long as I can, and that means starting withdrawals ASAP. And when I say withdrawals I mean withdrawals: That is MY money I put into the SS system over the last 35 years. It's not an entitlement because I've earned every penny of it. Besides, I want the extra income NOW while I'm still healthy enough to enjoy it.
I don't take regular draws from my savings, instead choosing to take them when the portfolio is up and I have a specific need. Just yesterday I pruned back some of the remaining individual stock holdings, taking profits and rolling them back into the S&P index fund. Next year I'll pull some of that money back out and build a shop and barn for the tractor.
The current issue of Consumer Reports magazine has a large article devoted to retirement planning, and more importantly to folks like me, how to manage money while in retirement. Most of what I've read so far makes a lot of sense, and I'm glad to see I'm already following most of the recommendations. The article also said that new laws are requiring most financial advisors to behave like fiduciaries in that they have to put the best interests of their clients first. That's not to say you shouldn't check the background of anyone you're planning to use for financial advise, but it does improve the odds you'll find someone that won't take you for a ride.
I don't claim to be any sort of financial genius, and I've had a fair amount of luck to help me along the way. But I learned early on that no one cares as much about my financial welfare as I do, and tried to learn as much as I could about financial decisions before I had to make them. That still meant a fair amount of trial and error, but by taking small steps with new directions the errors were manageable and I learned more than I lost from them. Everybody's different and what worked for me may not be right for you. But by keeping your head in the game and getting good advise from reliable sources, I think you can still come out ahead.
