So, I posted the other day that a traditional retirement plan based on maximizing IRA contributions into things like mutual funds isn’t going to cut it moving forward. If that’s true, then we must seek alternatives. I don’t mind working well into my later years. In fact, I think it’s a really good choice, since it keeps us in touch with the community around us. But, that doesn’t mean that when I’m 75 I want to still be just as dependent on my current level of income. I think the goal with retirement shouldn’t be to live high on the hog and never work another day in your life. No, the goal should be to reduce your income dependency to a level that allows you to live comfortably, without constant financial worry, all while enabling you to do the things that are hard to do now, like ministry work and hobbies.
I’m going to take a page from Jack Spirko here and list the three things that worry us most in life: putting food on the table, keeping a roof over our heads, and clothing ourselves. Food, shelter, clothing. Those are the three staples that, if taken care of ahead of time, will help us to have a comfortable “retirement.” In order to do that, we need to focus on these things:
- Paying off our homes and turning our homes into producers.
- Increasing our food production and designing our life to be more simple.
- Storing up money in an inflation resistant way.
- Expanding our knowledge/skills to be less dependent on external systems.
The first thing we need to do is focus on getting out of debt and paying off our homes as quickly as possible. The myth that your home will forever increase in value has been exposed. It’s a lie. In reality, it takes constant in-flows of money to keep our homes in good shape, and the market can destroy your home’s value as easily as it increased it. We need to jettison that huge albatross of a mortgage from around our necks. Once you get rid of that $1200 per month mortgage, you have eliminated item of worry number one: shelter. And you’ve given yourself a $14,000 per year raise to boot. Yay!
Next, we need to focus on ramping up our own food production and learn to live more simply. Think about it: if you invest $75 in a bundle of 5 pear trees that will, in turn, produce a harvest of pears every year for decades afterwards, that’s a huge return on your investment. And if you take the time to learn the art of grafting/cloning, you can replicate new pear trees yourself and have a perpetual supply of pears for the rest of your life. Investing $500 in apple, pear, peach, plum, cherry, lemon trees will produce thousands of dollars worth of savings for the rest of your life, and probably on into your children’s lives as well.
The same is true for gardening in general. If you can begin to produce 10-20% of your own food supply, you’ve turned your home into a producer instead of being a constant money pit. You can spend $2 on a packet of heirloom tomato seeds and be able to save enough seeds each year that you will never have to buy tomatos again. These are real investments that pay back huge returns. Instead of dropping $50 into a mutual fund, spend that $50 on the necessary equipment to get started canning and preserving your harvest. Learning these things aren’t just quaint throwbacks to the past. They are real ways to live your life that save money and reduce your dependence on others. Next time you need some yeast, don’t just run down to the store and buy instant yeast. Try your hand at growing your own. It’s these little things that preserve the knowledge of the past that will give you the most freedom.
We, of course, also need to save money. But, if we just shove cash under the mattress it’s not going to do us much good. Those dollars will be losing value at a 3-4% clip every year due to inflation. In that case, we should put our money in the form of things that hedge against inflation. Silver is a fantastic inflation hedge. Let’s use another Jack Spirko example. In 1970 the average cost of a new car was $4000. At $1.64 per ounce(silver price in 1970), that’s 2,439 ounces of silver to buy a new car. Well, today, silver is currently running at about $16 per ounce, but let’s make it $12 per ounce to be really conservative since that’s what it was trading at back at the first of the year. That means that the same 2,439 ounces of silver it took to buy a new car in 1970 is worth $29,268 today. That would still buy you a really nice brand new car. That’s what it means to be a hedge against inflation. The same amount then buys the same amount now.
Jack recommends roughly 10-15% of your long-term savings in gold/silver. I’d say that’s a little low. I’d personally feel better in the 20-25% range, but that’s a personal decision that each person has to make for themselves. The point is, it’s a bad idea to dump all of your money into one thing. Even if it’s something stable like silver. There are other inflation hedges such as commodity indexes and such that are worth investing in. Even local businesses that you believe in. Just do some research and be creative. I showed in the last post how volatile the stock market is. It’s not the panacea it’s been made out to be.
You may think that what I’ve just outlined is strange, but this is the way our great-grandfather’s generation lived. They lived simpler lives and depended on the land more. Everyone loves to wax nostalgic for the simpler times of their grandparents, but nobody seems to want to actually live that way. But, I really think that in the future we won’t have any choice but to go back to that way of living. The good times of the boom cycle are over, and if we don’t want to work ourselves all the way to age 90 in the same ol’ high stress rat race, we’ll have to take these types of steps to do it.
*I mentioned Jack Spirko a couple of times in this post. Many of these ideas are directly influenced by him. Check out his podcast at The Survival Podcast.