I’M NOT A RULE breaker. In the nearly 40 years I’ve had a driver’s license, I’ve received just one traffic citation. I follow all the laboratory safety rules when I’m at work. When I fly, I’m the person who removes the card from the seatback pocket and follows along with the flight attendants as they do their safety briefing.
But when it comes to finances, I don’t always follow the rules laid down by accountants, financial planners and other money experts. While I respect their suggestions for improving my financial life, I sometimes choose not to abide by the guidance they offer.
Rule No. 1: Don’t buy a house unless you plan to stay put for at least five to seven years.
I took this one to heart when I got divorced almost a decade ago. I didn’t know what my future held so I opted to rent a small, one-bedroom apartment rather than purchase a home. But when I decided to remarry three years ago, owning a home became a necessity. My husband-to-be and I had four dogs and finding a landlord who would rent to us was impossible.
Because of our retirement plans, I doubted we’d live in any home for the recommended five-to-seven-year timeframe, so I was hesitant to take the plunge. I worried being a short-term homeowner would mean not accumulating enough equity to cover the cost of real-estate agent fees and other closing costs when we sold.
Over the past year, I’ve become much more comfortable with our decision. Real estate values in our area have soared to record heights. The average home stays on the market for just five days and often sells for more than the asking price. Of course, I’m also aware of the housing market’s fickleness and know values could decline by the time we’re ready to move. Still, for the time being, I feel confident we’ll walk away with a substantial profit when we sell.
Rule No. 2: Save at least 10 times your salary before retiring.
I’m not retired—yet. If I continue to work until my full retirement age, it’s possible I might reach the goal of amassing savings equal to 10 times my annual salary. At age 54, I have just over $455,000 in my various retirement accounts. I also have a small pension that, if I chose, would pay me a lump sum benefit of $55,000 in a couple of years. Those figures put my savings at seven times my salary. That’s about where I should be at age 55—but I doubt I’ll hit the goal of 10 times salary before I leave fulltime work behind.
The fact is, my husband is already retired. Three years ago, he left his decades-long career in law enforcement. I’m looking forward to spending more time with him and together enjoying the various activities we participate in.
To be sure, if the stock market continues to grow at a reasonable rate over the next decade, it’s possible I’ll reach my mid-60s with 10 times my final salary sitting in my retirement accounts. But it’s also possible a stock market crash could leave me with significantly less retirement savings than recommended. But either way, I’m not going to let the “10 times salary” rule determine when I retire.
Rule No. 3: Delay taking Social Security for as long as possible.
I’m still eight years away from being eligible for Social Security benefits. But if my retirement plan goes as I think it might, I’ll likely claim benefits well before age 70. My own work record should provide me with approximately $1,300 a month if I take the benefit starting at age 62. My husband, whose work record is both longer than mine and with a much higher average salary, is planning to delay taking his own Social Security until age 70. I’ll receive his benefit as a survivor benefit, assuming he predeceases me, at which point the size of my benefit will no longer matter.
My hope: By taking my own Social Security benefit early, I’ll be able to let my 403(b), annuity and pension accounts continue to grow for several years before tapping them for income. And who knows? Maybe my investment accounts will end up at 10 times my salary—but it’ll likely be some years after I quit the workforce.
Kristine Hayes is a departmental manager at a small, liberal arts college. She enjoys competitive pistol shooting and hanging out with her husband and their dogs.