My grandma's been retired comfortably for 22 years thanks to a simple rule she lived by

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  • My grandmother, Ellen Young, has been comfortably retired for 22 years. She retired with a pension, but she also saved throughout her life to enjoy her golden years.
  • My grandma's No. 1 rule for retirement saving: Factor your retirement into every single financial decision you make.
  • She and my grandfather lived frugally throughout their lives and made sure their mortgage was paid off long before they retired.
  • Use Blooom to analyze your 401(k) today and see how you can grow your retirement savings »

Born in 1988, I came of age during the Great Recession. I watched as the systems my parents and grandparents relied on — like job security and pension plans — morphed into mythology. I've always understood Social Security and Medicare as forms of political currency, not long-term solutions I can count on in old age. I'm a card-carrying member of the gig economy, more comfortable working for now, not for later. The very idea of "retirement" terrifies me.

But like all millennials, I'm aging. My back twinges after an afternoon spent working in the yard, fine lines are forming around my eyes, and the inevitable truth is upon me: Working until I die is not a viable option. 

Like many people, one of the reasons retirement has felt so impossible for me is my lack of a roadmap. My grandparents had pensions, which is something I won't have. But as I look at their financially secure and abundant retirement years, I realize pensions can't possibly tell the whole story.

My grandpa was a warehouse worker and my grandma was a nurse. They must have done something to prepare for retirement to wind up as comfortable as they did, and maybe it's something I can emulate. 

The first principle of my grandparents' retirement

My grandpa passed away in 2006 and my grandma, Ellen Young, is now 84. I recently sat down with her to ask, "How in the world have you managed to live off your retirement savings for over 22 years?"

Her answer was both scarier and more accessible than a simple pension plan. According to my grandma, the key is to factor your retirement into every single financial decision you make. This is daunting, but she assures me, "It all adds up."

For her and my grandpa, this kind of thinking began in their first year of marriage. As my grandma remembers it, my 30-year-old grandpa "would have retired right then if he could have." 

My grandma married my grandpa at the age of 24; she had already been working as an RN for three years. She didn't choose nursing for the retirement benefits, but my grandpa certainly chose his job as a factory worker based on the promise of being able to retire early. 

This is an example of how important it is to factor your retirement into all your decisions. While few companies offer pensions these days, most salaried positions offer retirement packages. A far-off future may not seem nearly as significant as immediate job satisfaction, but while your career is a large portion of your life, if you're lucky, your retirement years will be as well.

Selecting a job with a clear-cut retirement plan isn't the only choice my grandparents made with retirement in mind, however. They factored their golden years into every choice they made, big or small. "I've always been frugal, only shopping sale items, and saving every spare cent." For my grandma, the single most effective savings come from avoiding interest-bearing loans all together. 

They paid off their mortgage early

My grandparents bought their first home in 1962. And while they purchased an older home sitting on 40 acres for the jaw-dropping low price of $5,500, it cost them every penny they had. Always thrifty, my grandma refused to pay a penny more to drill a well or build her dream house until they had saved enough to qualify for a small mortgage with a low interest rate. It took three years, and even when they were ready to build a brand new house on their property, my grandma, with her eye always on retirement, kept her vision modest.

Understanding that this was the most important purchase she would ever make, my grandma's financial strategizing didn't end there. Over the years, she made as many extra payments on the mortgage as she could to pay down the principal. There were two layers to this retirement strategy: First, by paying down the principal as quickly as possible, she saved thousands of dollars on interest. And second, by eliminating debt, she alleviated her future retired self from making sizeable monthly payments.

Saving for retirement, as my grandma pointed out, doesn't mean just putting money in the bank, it also means keeping it there by minimizing your financial obligations.  

Investing with the help of a local broker

It also means making that money self-propagate. When my grandpa's company offered him stock purchases, they began investing $5 at a time, increasing the amount as they could afford to. When their investments paid off, they took the money out and brought it to an investment broker who lived locally. In my grandma's view, trusting your broker is the single most important aspect of investing in stock, and for her, this meant working with someone who she could meet face-to-face.

Over the years, she stuck with relatively safe investments of her own choosing, but she credits her broker with this crisis-averting advice she was eager to pass on: diversify your portfolio.

"I was always careful with my money. I did my research and made sure I only invested in financially sound companies," she told me. But living in a motor town like St. Louis, and with a son-in-law who worked for Ford, she was comfortable putting all of her money in Ford stock. "But when I tried to put all my money in Ford, my broker said he couldn't let me do that. Years later, after I retired, all those motor companies crashed and I couldn't believe how much I would have lost if I hadn't followed his advice."

IRAs played an important role in my grandparents' retirement plans as well. Taking any money out of your paycheck for a later date may seem impossible, but "later," my grandma told me "you'll be glad you did."

She's enjoying her golden years

As we spoke of retirement, we did the math. My grandma began her nursing career in 1957 and she retired in 1998. Her life as a "working girl," as she calls it, lasted 41 years. She has been retired for 22 years, over half the amount of time she worked. She thinks of her retirement so far as the kind of golden years we all hope to enjoy: trips to Egypt and Germany, holding court with members of her Rose Society, scrapbooking with friends, and cooking large family dinners. 

When I asked her what she would tell someone hoping to retire as securely as she has, she responded simply, "You can't work forever. You have to retire, so you need to plan for it."

Our conversation was made up almost entirely of insane numbers like $5,500 for a hilltop property with a house and $5 as a semi-decent retirement contribution, but I realized the advice she gave me still works.

Even if $5 in 2020 will barely cover a medium latte, even if my used car is three times the cost of 40 acres in 1962, even if I don't have a pension, I can pay down the principal on my home loan, I can put a little more towards my IRA each month, and I can delay major purchases until I can pay for them in cash.

Things change, prices go up, social safety nets come and go, but some truths are immovable. I can't work forever, so I better start planning.

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