January 21, 2010

I’m having a bag lady day in my mind.

It’s mostly about money, I’m thinking. Though my friend Sharon says my bag lady is a state of mind, that I’m actually carrying baggage from my past that causes my logical thinking to freeze up from time to time.

My mind’s bag lady wakes up when I have a conversation about finances with retired friends. I’ve tracked every item in our budget for years, so I know where we can cut costs without affecting our lifestyle. For example, I’ve had a triple tall mocha espresso nearly every morning for ten years. At $3.50 a day, that’s an item that can be replaced by a coffeemaker on our kitchen sink. And if we find we don’t use the local gym once we’ve stopped working, we can cancel our membership. As it is now, we keep that membership active because you never know when we might be in the mood to go to the gym. I can pare down our expenses, line item by line item. On the other hand, I buy most of my clothes from Chico’s and LLBean. I know I won’t need as many when I’m no longer working, but I don’t want to switch to shopping at WalMart and Value Village. Embarrassing, but true.

Another piece of my bag lady’s thoughts is my age. At 61, even if I want to return to the work world, I might not be able to find a job - either in my field or elsewhere. Or maybe the only thing I’ll be able to find is work as a receptionist in a hair salon - my nightmare of the worst job in the world.

What if I give up a job I know well, with its attendant good salary and benefits, then find I should have stayed there for another three-plus years until I’m 65 and eligible for full pension benefits and Medicare? It would be safer, for sure. My husband Art and I have decided to live for the next three years on his three pensions and a small percentage of our investments. We haven’t ever lived under these circumstances, or on this amount of money. And I have never been financially dependent on him. What will that look like, and how will it feel?

“The experts” differ on how much of our pre-retirement income we’ll need after we stop working. Estimates I’ve read vary between 70 and 120 percent. I’m hoping it’s closer to 70.