On The Fly: When Less Is More In Retirement

In the past few years, the country has re-examined how it sees college educations. The call today is to view college more as an investment than an automatic assumption. While no one disputes the value of an educated populace, the logic follows that it makes no sense to pay $200,000 or saddled yourself and your children with loans that will take them decades to repay -- all for a degree that can't land them a decent-paying job. The revolution in our thinking has us pushing our kids toward two-year community colleges instead of expensive private four-year ones, and it also calls on us to fund our own retirements first, ahead of the kids' college. (That, or become a burden to your loan-strapped adult children.)

In the same vein of challenging the old ways of seeing certain cultural institutions, I foresee a a change afoot in how much money we think we need to retire. The Old Thinking was that since a lot of our big-ticket items (housing, insurance, car expenses) are fixed expenses, in retirement you would pretty much need to replicate your paycheck, minus a few nips and tucks best accomplished by fewer vacations and some smart coupon-clipping.

But I predict we'll be changing that thinking for one simple reason: Nobody has enough money to retire the old way and not the tallest stack of coupons in the world is going to bridge the gap between what we have and what we spend.

The Employee Benefit Research Institute says that 57 percent of U.S. workers have less than $25,000 in total household savings and investments, excluding their homes. In 2008, that percentage was 49. Scarier still is that only 66 percent report having any retirement savings at all, compared to 75 percent of workers in 2009.

And this leads to the New Thinking. The New Thinking holds that instead of scrambling and fretting about our personal shortfalls, we just need to teach ourselves to live with less. Lower the bar on our spending, discern our needs from our wants, and teach ourselves to value what we have instead of mourn the loss of what we can no longer afford. That last part? I suspect it's going to be a real kick in the ass for many.

Yes, this is about an attitude of gratitude for what you have instead of lusting after what you you used to have. But it's more than just eating in instead of out, staying with friends instead of in fancy hotels, and replacing Amazon and Netflix with the free public library. Living frugally will absolutely be the New Order. But for it to work, we have to change what we value. Those among us who will be the happiest won't be those who merely can figure out ways to live on less, but rather figure out ways to be happy about it.

Learning to be content with what you have is the hard part. Think I'm dreaming, do you? Well, I'm not dreaming alone.

Dave Ramsey, a money-makeover radio guy and author, offers this challenge: In order to have everything you want, try simply wanting less.

We were never a generation of savers to start with, and most people didn't think about fully funding their 401ks until way too late in the game. Home values are recovering, but are off their peak; stock losses hit many in the keister, and pension plans -- who can keep track of whether they are still funded or not and which federal prison the last fund manager currently calls home?

None of that is going to matter if we can just accept that living well looks different to different people. The trick is not to just downsize our homes but our expectations as well. And there's no better time to start practicing going simpler than now. Take a staycation, line up a home swap, tell your friends that from now on, dinners at your place will be potlucks. Consider whether you really need the second car and its high insurance payments; would car-sharing with the family next door work?

Behind it all is this message: You are going to wind up living smaller when you retire. Whether you are happy about it is the only real choice in the matter.

Earlier on Huff/Post50: