CNBC make it 2024-03-29 02:00:55


I’ve been retired in Mexico for 6 years—a luxury that ‘presents a new, unexpected set of challenges’

I never really thought about retirement. Then, suddenly, it was 2018 and I was old enough to collect Social Security and stop working.

A dozen years earlier, I’d moved to Mazatlán, Mexico. Unlike some expats, I still needed to support myself. I’d been a journalist in California, so I started an English-language magazine and published it monthly for a decade.

I sold the business when I began receiving Social Security at age 62. Should I have waited longer? Perhaps. But I was ready to get out of the rat race. I needed to see who I was without the pressures of working so much. And, truth be told, I wanted an adventure.

Today, at age 68, I’m still retired. I do a little freelance writing, but without the stress of a daily job. Having my time really and truly be my own is a luxury. I’m grateful for every moment.

But being retired presents a new, unexpected set of challenges, too. Here’s what I didn’t see coming.

A lack of schedule can be empowering

At first, it was hard to let go of the feeling that I needed to be “measurably productive” every day.

My job was a big part of my identity, and I always gave 110%. As my own boss, I was basically responsible for everything from ad sales and design to editing, writing and distribution. And when your office is at home, it’s difficult to stop working at 5 o’clock or see weekends as days off.

Slowly but surely, though, my new normal developed, one that didn’t include as much stress or hectic scheduling. I still make lists — it’s just who I am — but things can often move from day to day or week to week, and that works just fine.

Do I transplant the big palm in the living room this Friday or next Wednesday? Should I do grocery shopping today or tomorrow? It really doesn’t matter, and I do such a small amount of freelance work that those deadlines are easy to meet.

I might spend all day planning and making a new recipe, or get absorbed in a book and read for hours. An especially beautiful morning might mean having a beach day instead of whatever else I’d planned.

I’m starting to look into volunteer opportunities, a first for me. And I can be spontaneous: A meal or phone call with a friend might turn into an afternoon-long get-together.

Productivity still matters for me — it just isn’t the only metric I use to judge how fulfilling my life is anymore. Funny as it sounds, I had to re-learn just how much contentment, joy and personal satisfaction matter, too.

A lack of structure can throw you off balance

Being retired means having more free time, and many of us begin to think more deeply about things. It’s easy to feel lost and wonder if what you’ve accomplished so far is all you’ll ever do with your life. At times, I feel desperate or determined to do at least some of the things I’ve always wanted to do. I rethink my bucket list frequently.

Some of that has to do with a lack of structure. You can’t spend every moment of your retirement jet-setting or living a vacation lifestyle, and most of us can’t afford that, anyway.

So, what do you do with yourself every day?

For me, it starts with cultivating a certain self-discipline and positive mindset, no matter what. That’s vitally important for counteracting those unsettling sensations of feeling unmoored without a game plan for the future.

The next step is learning that a less busy lifestyle doesn’t have to be boring. I’m finally able to take more time for self-care, for example: a daily siesta, regular yoga and stretching, and staying in touch more with family and friends.

Instead of a mad rush to get to work, my mornings are peaceful, with time to journal, meditate, make a careful cup of coffee and slowly allow the day to begin.

You need a new mindset to thrive

As I watch people struggling with problems and situations I’ve lived through and somehow (miraculously!) gotten to the other side of, I remember how those things felt when they were happening to me.

Relationships or marriage(s) gone wrong, financial anxieties, obnoxious bosses or roommates or in-laws, the challenges of child rearing? Been there, done that.

As a result, I’ve seen my heart become softer and more compassionate toward others, and kindness become more of my go-to response. I’m learning to be patient and non-judgmental with myself, too. Rather than regretting that I don’t have more material things or financial freedom, I’m trying to be grateful for the many blessings I do have in my life.

That’s important, regardless of your age when you retire: Not having to go to work is only the beginning. You can dare to be open to possibility in ways you never imagined before — including, in my case, living in another country.

Stresses and worries about any number of things do their best to haunt me. I try hard to see the glass as half full. It’s a choice to think like this, and it’s not always easy. But the alternative is not the me I want to be.

Janet Blaser is a writer who has lived in Mexico since 2006. A former journalist in California, her work now focuses on expat living. Janet’s first book, “Why We Left: An Anthology of American Women Expats” is an Amazon bestseller. Follow Janet on Instagram and Facebook.

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The income a family of 4 needs to live comfortably in 20 major U.S. cities

A family of four needs to make more than $275,000 to live comfortably in some of the most expensive U.S. cities, a recent SmartAsset analysis reveals.

“Comfortable” is defined as the income needed to cover a 50/30/20 budget for a family of two adults and two kids. This budget assumes that 50% of the monthly income can pay for necessities like housing and utility costs, 30% can cover discretionary spending and 20% can be set aside for savings or investments.

SmartAsset extrapolated the income needed for a 50/30/20 budget based on the cost of necessities, using data from the MIT Living Wage Calculator.

Here’s a look how much income a family of four needs to live comfortably in the 20 most expensive U.S. cities: 

  1. San Francisco: $339,123
  2. San Jose, California: $334,547
  3. Boston: $319,738
  4. Arlington, Virginia: $318,573
  5. New York City: $318,406
  6. Oakland, California: $316,243
  7. Urban Honolulu, Hawaii: $299,520
  8. Irvine, California: $291,450
  9. Santa Ana, California: $291,450
  10. Portland, Oregon: $289,786
  11. San Diego: $289,453
  12. Chula Vista, California: $289,453
  13. Newark, New Jersey: $285,043
  14. Jersey City, New Jersey: $285,043
  15. Seattle: $283,712
  16. Aurora, Colorado: $280,467
  17. Long Beach, California: $280,218
  18. Anaheim, California: $280,218
  19. Los Angeles: $276,557
  20. Washington, D.C.: $275,642

San Francisco is the most expensive overall, with an income of $339,123 needed for a family of four. That’s followed by other cities known for having notoriously expensive housing costs, including Boston, New York City, Honolulu and Los Angeles.

In California, homes are about twice as expensive as the typical U.S. home, according to the Legislative Analyst’s Office, a nonpartisan government agency in that state. The state also has the fourth-highest cost of living in the U.S., based on 2023 Council for Community & Economic Research survey data.

Out of all 99 cities SmartAsset examined, a family of four would need a median of $226,886 to live comfortably. In Houston, the income needed drops to $175,219 — the lowest of all cities examined. But that’s still higher than the median family income in the U.S. of $92,750, according to the most recent U.S. Census bureau data available.

While employers in these high-cost cities tend to offer higher-than-average salaries as a way to attract and retain talent, housing costs can make it difficult to maintain a 50/30/20 budget.

And in large cities, housing costs often exceed 30% of a household income, leaving little room for other necessities like utilities, food and transportation. To make ends meet, families might skip out on homeownership, owning a vehicle or discretionary purchases.

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39-year-old money coach who makes $23,000 a month: My No. 1 tip for starting a side hustle

Nobody expected Bernadette Joy to shut down her successful business. Not even Joy herself.

Joy ran Charlotte, North Carolina-based Dressed, which started as a side hustle connecting people who owned bridesmaid dresses with people who wanted to rent them. It helped her pay off her student loans, quit her full-time job, hire employees and open a storefront.

But the more momentum Dressed gained, the more time-intensive and less fulfilling it became. In 2019, after three years, she closed up shop. She’d also gotten a taste of being her own boss, and she didn’t want to go back — prompting an “existential midlife crisis,” she says.

“I spent [three months] wrapped up in my blanket on my couch thinking, ‘What am I going to do?’ because I didn’t have a business anymore,” says Joy, 39.

On that couch, she learned an important lesson, which she says is her No. 1 tip for starting a side hustle: Try to monetize what comes naturally to you, instead of selling something just because you can.

DON’T MISS: The ultimate guide to earning passive income online

In her case, that was her other side hustle: a podcast about how she and her husband were paying off more than $300,000 in debt. The show grew into a money-coaching business called Crush Your Money Goals, which helped Joy make $279,000 last year, or roughly $23,250 per month on average, according to documents reviewed by CNBC Make It.

Between coaching, freelancing and booking speaking events, she works 20 hours per week, she says.

Hard-earned lessons about passion

Joy wouldn’t have launched Dressed if she wasn’t passionate about fashion. But dealing with the complications of scaling a business didn’t feel natural to her, she says.

She felt discouraged when dresses came back damaged: After prom season in 2019, for example, many of them came back torn and stained, she says. Joy had to buy the totaled gowns from their owners.

Her interns struggled without supervision, Joy adds, meaning she had to spend more time in her storefront, a converted office space just above a dentist’s office. “I couldn’t see myself in retail working all those hours,” she says.

Attending personal finance conference FinCon that summer was the final straw. After listening to speakers, she knew she wanted to help other people feel more confident about their finances — even if she didn’t quite know how yet.

She kept recording her podcast while researching how to build a coaching business, and launched the first Crush Your Money group coaching class online in March 2020.

Monetizing what comes naturally to you

The lesson Joy learned — focus on monetizing something that comes naturally to you — is similar to billionaire Mark Cuban’s go-to career advice.

As a child, Cuban loved basketball. Even without NBA-level athletics, he still could’ve carved out a career working somewhere in the basketball industry.

But after analyzing what he was genuinely good at, instead of what he loved, he realized that he should probably pursue a career in technology, he said in a 2018 Amazon Insights for Entrepreneurs video.

“The things I ended up being really good at were the things I found myself putting effort into,” said Cuban. “When you look at where you put in your time, where you put in your effort, that tends to be the things that you are good at.”

Cuban sold his first tech startup, a software company called Microsolutions, for $6 million in 1990. His second company, an audio streaming service called Broadcast.com, sold to Yahoo for $5.7 billion nine years later.

“A lot of people talk about passion, but that’s really not what you need to focus on,” said Cuban, who’s now a co-owner of the NBA’s Dallas Mavericks. “You really need to evaluate and say, ‘OK, where am I putting in my time?’”

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I built a 296 sq. ft. tiny home in Atlanta: What to know if you want to convert a $5,000 Costco shed

In 2021, I converted a 12-by-24-foot shed into a tiny home in my backyard in Atlanta, Georgia. Since then, I’ve used this structure — formally known as an accessory dwelling unit (ADU) — as a short- and long-term rental, my own personal living space, and most recently a home for my sister, brother-in-law, and new baby nephew.

Now, as a 28-year-old real estate entrepreneur, I run marketing for Gather ADU, the startup I co-founded to help other homeowners create more housing on their existing property.

With rising home prices, a national housing shortage, and demand for creative and affordable living arrangements, it’s no wonder that companies like Amazon, Home Depot, and Costco are selling DIY shed kits and backyard guest houses.

I’m not surprised that people are attracted to the low prices. There’s a lot of buzz, for example, about the easy-to-assemble Costco shed that’s on sale in March for $5,000 and the possibility of converting it into a living space.

If you’re tempted to click “add to cart” and turn one into a tiny home, though, here’s what you should consider first:

1. You might need approvals or permits

Not all municipalities let you place or construct additional dwellings on your property. 

Your local zoning codes and classification will determine whether you can put a structure like this in your backyard in the first place, and dictate any rules that apply. For instance, some areas may have minimum lot size requirements, limits on the size or height of structures, setback regulations that tell you how close the ADU can be to property lines or other structures, and guidelines regarding utility connections.

You can find this information by searching your address online or calling your local zoning or permitting office. Try hitting Ctrl + F to look for the terms “accessory dwelling unit” or “guest house” in your zoning code.

By familiarizing yourself with these regulations up front, you can avoid potential legal hurdles such as fines and stop-work orders.

2. The structure might not be built for residential purposes

While sheds sold by companies like Amazon, Home Depot, and Costco may offer affordability and convenience, not all of these structures are suitable for long-term habitation.

Many sheds on the market are designed primarily for storage purposes. They lack the proper insulation, ventilation, and structural integrity to withstand the rigors of residential occupancy.

Before purchasing a shed for conversion into a living space, review the product specifications. Look for options explicitly marketed or certified for residential use. Reach out to the manufacturer if needed.

3. Plumbing and electricity aren’t a given

Shed options typically aren’t equipped with essential utilities like plumbing and electrical systems. 

Installing toilets, sinks, and showers requires careful planning and professional expertise. In addition to the cost of fixtures and materials, there might be expenses associated with trenching and connecting to existing sewer or septic systems.

Similarly, ensuring access to electricity involves more than simply plugging into an existing outlet. To convert a shed into a tiny home you can actually live in might require installing dedicated electrical wiring and outlets that comply with building codes and safety standards. 

Given the complexity of plumbing and electrical work, you’ll need competent contractors. I’d urge you to prioritize expertise and reliability over price here.

4. Sheds aren’t always the cheaper route

While the initial price tag may make a $5,000 Costco shed, for example, seem like a steal, the reality is that transforming such a structure into a livable space can get expensive fast. If you want a floor with that Costco shed, you’re already up to $6,000, even with the sale.

You’ll have to factor in additional expenses such as concrete foundation work, permit fees, and professional services from architects or engineers. And the interior build-out adds up with insulation, drywall, plumbing, electrical wiring, and furnishings.

In my experience, even a modest conversion will likely end up running $50,000 to $75,000 these days with all the labor and material costs. Mine cost $35,000, but I’ve seen costs rise significantly in just the past few years as I’ve helped others navigate the process.

Before committing to a shed conversion, browse various prefabricated models online and get three to five quotes from contractors for a shed buildout versus a newly constructed — or “stick-built” — dwelling. A stick-built home’s durability and long-term value may end up outweighing the initial savings.

5. Making a shed functional can take longer than you think

Many shed kits claim the structures can be assembled in one day. The reality is that achieving a functional and comfortable living space requires careful planning, coordination, and execution.

Sure, the structure can be delivered and assembled in one day. But that doesn’t account for preparing the foundation the structure will sit on or hooking it up to utilities.

In my experience, a typical tiny home build or conversion can take anywhere from three to 12 months to complete, depending on factors including permit processing times, contractor availability, and the complexity of the particular project. Mine took eight months altogether from building, electrical and plumbing permit submissions to finished home.

Plan accordingly — considering feasibility, costs, and financing options — and be prepared for unexpected delays.

Precious Price is a TEDx speaker, marketing strategist, tiny homes expert, and social entrepreneur. She is the CMO at GatherADU, the startup she co-founded to help homeowners create housing using the underutilized space of their existing property. She holds a master’s degree in management information systems from Indiana University. Follow her on InstagramTwitter and YouTube.

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How much money Americans in their 50s have in their 401(k)s

Americans in their 50s are right around the corner from reaching retirement age, but don’t have much saved up for their post-work years.

By the time you reach your 50s, you should have around six times your salary saved for retirement, according to Fidelity Investments, the largest 401(k) provider in the U.S. If you earn around $100,000 annually, you’d ideally have $600,000 saved for retirement by the time you reach your 50s.

However, many people in that age range have less than half of that in their 401(k)s.

The median 401(k) account balance for Americans in their 50s is $60,900 as of the last quarter of 2023, per Fidelity data provided to CNBC Make It. The average account balance is $199,500, but a few larger account balances can skew the average to be higher.

Here’s how much Americans have in their 401(k)s by age as of the fourth quarter of 2023, according to Fidelity.

One reason people in their 50s tend to fall short with their retirement savings is because they didn’t get to benefit from relatively recent changes to the 401(k) system, says Anne Lester, a retirement expert and author of “Your Best Financial Life: Save Smart Now for the Future You Want.”

While many younger workers have benefited from updates like auto-enrollment, which automatically enrolls you in your employer’s 401(k) plan, and auto-escalation, which automatically increases your savings rate by a given amount each year, many older workers were well into their careers by the time these changes became widely adopted, she tells CNBC Make It.

“Gen Xers had to make a decision when they were entering the workforce about whether they want to participate in their employer’s retirement plan, and participation rates were typically low back then,” Lester says. “But when people are automatically enrolled, participation rates are usually around 95% because people don’t drop out.”

The good news is that among all of the age cohorts, people in their 50s have the highest savings rate, which is the percentage of your income allocated toward retirement savings. They put around 13% of their income toward retirement, inclusive of employer matches, which is just shy of Fidelity’s recommended 15%.

How to get your retirement savings on track

If you’re in your 50s and feel behind on your savings, don’t panic. You have a few options available to you.

Retirement catch-up contributions

Americans in their 50s and beyond have the opportunity to make “catch-up” contributions, which are extra deposits you can make toward tax-advantaged retirement savings plans.

For the 2023 and 2024 tax years, anyone 50 and older can contribute up to $7,500 in additional funds to their 401(k). They can also contribute up to $1,000 extra to a traditional or Roth individual retirement account.

Delaying retirement by a few years

If you’re very far behind in your savings, it may be time to reconsider the age you plan to retire, Lester says.

“In your 50s is when you should start thinking ‘OK, let’s get real about this,’” she says. “It’s time to start planning and understanding what your post-retirement income may look like under various scenarios, such as if you stopped working at 62, at 65, at 67 or at 70.”

“Working longer is great because you can save more, but also, you actually need a lower level of savings to last because your retirement is shorter,” Lester adds.

Additionally, delaying retirement gives your savings more time to grow.

Taking Social Security benefits later

You can begin receiving your Social Security retirement benefits when you turn 62, but your payout is permanently reduced if you start receiving benefits before your full retirement age, as determined by the Social Security Administration.

“Just waiting a few years gives you a huge boost to your guaranteed inflation-adjusted income in retirement,” Lester says. “It really pays to delay.”

For every year you delay between your full retirement age and age 70, your Social Security benefit increases by 8%.

What to do if you can’t delay retirement

However, not everyone can or wants to delay their retirement.

If that’s the case, you may need to figure out how you’re going to live on less money during your post-work years, Lester says.

Once you’ve got a clear picture of how much money you’ll have to take care of yourself after you stop working, you can begin figuring out how to reduce your spending.

“It’s really constructive to get curious about where your financial line is,” Lester says. “There’s a floor you don’t want to go underneath, but there’s also a level of reduced spending you can get used to.”

If you’re planning to live on a smaller annual income during retirement, you may want to research moving to places with a lower cost of living or plan to cut certain discretionary expenses ahead of time.

“The earlier you start mentally making that shift, the less painful it will be when you start having to do it,” Lester says.

Want to make extra money outside of your day job? Sign up for CNBC’s new online course How to Earn Passive Income Online to learn about common passive income streams, tips to get started and real-life success stories. Register today and save 50% with discount code EARLYBIRD.

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