Make Your Retirement Dream Happen

Retirement in our parents’ time sure seemed a lot simpler. If they had the resources they may have traveled, learned a language, maybe taken some cooking classes. But would they have thought to market a new product, establish a charity, or move to a different country the way some retirees now do? With better health and longevity in our corner, some of us are dreaming big about retirement, planning for a life that’s more stimulating and productive than our parents ever had.

Explore Antarctica? Start a school in the inner city? Open an animal rescue center? Perhaps retirement dreams like those have been percolating for decades in your mind. But do those reveries include a cold, hard calculation of costs?

Calling all dreamers: What’s your fantasy for your later years? how much will it cost? If you’d like to have us help you with an appraisal, write us at askourmoneyexperts@cro.consumer.org.

“Having a hazy feeling that you sort of maybe might want to do something really doesn’t cut it,” says Michael Garry, a managing member of Yardley Wealth Management, a financial-planning company in Newtown, Pa., who hears the fantasies of lots of retirees and pre-retirees. “If you are going to invest a lot of money or start something that involves a lot of your retirement capital, then you really need to start planning as soon as you have your dream nailed down,” he says. Arriving at a price involves thinking through and researching all the little details that are easy to overlook.

Here, a couple of readers tell us something they’d like to accomplish in retirement, then we help them price it out. Our calculations might not take every single detail into account because factors change over time. But we wager that our estimates will get our dreamers a lot closer to understanding what’s involved in bringing their plans to fruition. With them in hand, they will be better able to determine what they need to do to make the dream happen. If the dream is far off, they’ll need to consider the impact of inflation. But they’ll also have more time to earn, save, and invest for it.

Trent Kaufmann’s job as director of golf at a country club might itself be the dream of many a desk jockey. But when the Malta, N.Y., resident thinks ahead to retirement, his fantasy happens on blacktop, not greens. The 47-year-old wants to spend almost 10 months traveling the entire NASCAR Sprint Cup circuit in a recreational vehicle, from mid-February to the week before Thanksgiving. He estimates it’s a total of 36,927 miles. His dream is to start his journey at the beginning of his retirement, 10 to 15 years from now. It will be a solo adventure; Kaufmann says his wife, Kira, is not a big NASCAR fan.

“I get to about three races a year now,” he says. “I’d like to get to all of them.”

Kaufmann’s supercharged road trip starts with the purchase or lease of a used Coachmen Santara RV, which he found on Campingworld.com for about $43,000 with tax, licenses, and registration. Kaufmann says the size—about 30 feet long—makes for cozy but not cramped quarters. That model has side kick-outs that expand the interior by a few feet; he can add a satellite dish if he likes. Gasoline, which averaged $3.39 per gallon earlier this winter, would cost him about $12,500 based on estimated gas mileage of 10 miles per gallon. (The Automobile Association of America’s Fuel Cost Calculator figures fuel costs on a given route based on the auto model and current regional gas costs, though it had no information for Coachmen vehicles.) Auto insurance for the year would be $550 to $600, his agent tells him. Unforeseen auto mishaps could cost thousands of dollars or just hundreds; we estimated $2,000.

Calling all dreamers: What’s your fantasy for your later years? how much will it cost? If you’d like to have us help you with an appraisal, write us at askourmoneyexperts@cro.consumer.org.

Tickets for the races are another major cost. Kaufmann estimates they would run about $150 per week, for a total of $5,700. (He plans to buy from resellers, who often unload tickets on race days at a discount.)

Many NASCAR tracks allow fans to camp on their grounds for a minimal amount. If that doesn’t work out for Kaufmann, he can probably find campgrounds for about $100 a week, including electrical outlets and access to water. He intends to keep his current cell-phone service, which has an unlimited talk, text, and data plan.

Food and laundry would come to another $200 per week, Kaufmann estimates. He might need to buy some new clothing and footwear along the way; for those items, we added $400. “Then, of course,” he says, “you have to add in your Budweisers and Miller Lites for the weekends.” Estimate? $760.

Kaufmann will depend on his wife to look after their house. To keep the peace, though, he might want to pay for yard work, about $1,000 a season.

Road trip saving strategy

In all, Kaufmann’s trip would cost an estimated $77,360 in today’s dollars. In 10 years, that sum would rise to $103,965, given an average inflation rate of 3 percent. But that time horizon also gives him the opportunity to save and invest. Assuming a long-term historical average of a 10 percent return on stocks and a 15-percent tax rate, he could reach his goal by setting aside $541 per month in a broad stock index fund. If he’s willing to wait until he’s 62, he would need to save only $251 per month. He could put that investment in a Roth IRA, where he would never owe taxes on it again. Or he could take a less conventional approach. “I have time,” he quips, “and plenty of lotteries to play in-between.”

What it will cost

Trent Kaufmann is planning at least a decade in advance for his dream RV trip. The expenses below are estimates in today’s dollars, but we also factor in inflation to show what they might cost in 2024.

Been there, done that

Leslie Ware, an editor at Consumer Reports, towed an Airstream trailer across the U.S. for four months in 2011 with her husband, the writer Phil Caputo. She recommends that Trent Kaufmann set up electronic billing and fill up with gas wherever prices are especially low (a site like GasBuddy can help). Budget for breakdowns, she adds. When the vintage camper’s toilet sprung a leak, the couple waited several days at a campground for parts to arrive and repairs to be done.

Most days you can find Beth Deitrick in her kitchen whipping up big batches of cookies—chocolate chip, oatmeal raisin, fudge roll-ups—and something she calls a pecan tasty, a sort of mini-pecan pie. The 55-year-old restaurant chef has been selling them at local farmers markets, and for weddings and other events. The rave reviews have led her to think seriously about opening a home-based cookie business. “There’s nothing I enjoy more than baking,” she says.

Deitrick and her sister Chris, 56, who both live in western New York, also plan to move south, to Reston, Va., for its climate and lower taxes, among other reasons. Their dream is to relocate in about five years, when they’re 60 and 61, and share a three-bedroom, single-family home or condo. Beth will continue baking and Chris will continue working as a nurse. Beth doesn’t want the business to grow too much, just big enough to provide some supplemental income. “I want to have fun in retirement,” she says, “not work 80 hours a week.”

On Trulia, a real-estate website, we found Deitrick a three-bedroom, two-bath condo in a low-rise complex for $199,000, just under her $200,000 target purchase price. She says she doesn’t need any special ovens or fridges for her endeavor; more important is having a kitchen with enough counter space. She and her sister plan to sell their homes to buy the new one. Most people would need a mover, but they plan to sell their furniture or sell their current homes furnished, a strategy that could save them thousands in moving costs and leave them enough money to buy all new stuff. They still might want to rent a moving truck for clothes, dishes, and other items, at an estimated cost of $450. And they should budget at least $300 for utility security deposits and connection fees, new window treatments, filling up the fridge, household supplies, and fees for auto tags and driver’s licenses.

Calling all dreamers: What’s your fantasy for your later years? how much will it cost? If you’d like to have us help you with an appraisal, write us at askourmoneyexperts@cro.consumer.org.

One-time costs

Deitrick says that she already owns plenty of baking equipment, including sheet trays, cooling racks, and mixers. And lucky for her, she won’t have to devote dough toward some start-up costs. For example, she can attend a free course provided by Fairfax County in Virginia that explains the requirements of starting an enterprise there to small-business owners. Smart Markets Inc., a manager of weekly farmers markets in the Reston area, also offers a free orientation for its participants.

But other costs are inevitable, including a booth to set up at a farmers market ($425, used, on Craigslist.org), a display table ($59 at ClassroomEssentials), and a custom-made advertising banner ($55 at Staples). A logo design could be costly, but Deitrick might be able to find a talented art student to create one for a few hundred dollars.

To familiarize herself with the market in her area—and with the issues that vendors face—Deitrick should join a local vendors’ association. We found one with a membership fee of $25 a year. Joining will make her eligible for specialized liability insurance for farmers-market vendors; annual premiums start at $275. Registering each year to participate in farmers markets through Smart Markets costs $100. In lieu of a booth fee, Smart Markets says it collects 4 percent of gross revenues from each participant.

Since Deitrick wants to keep her business small, she probably doesn’t need to spend money to incorporate because the tax advantages aren’t significant. But she might want to do so anyway, to limit her liability; Virginia’s one-time, online filing fee for a limited-liability corporation is $100; a yearly renewal fee is $50. With expected annual revenues of less than $10,000, she pays no fee for a business license in Fairfax County. Inspections by the state health department, conducted every other year, are optional for her type of business, but cost about $40. Deitrick is lucky to have a brother who is a certified public accountant; he will do her taxes and assist with bookkeeping. He can help figure out the portion of certain costs—say, for water, heat, electricity, gas, air conditioning, phone and Internet service, and insurance—that is business-related.

Deitrick will need to print new business cards and flyers she can hand to shoppers. To promote her business further, she could build a website. GoDaddy, a Web-service company, was recently offering a special for $4.99 per month, which includes a domain name and Web hosting, access to free website templates, and credits toward promotional ads on Facebook, Bing, and Google. If she decided to pay someone to design a website for her, it could cost upward of $500.

Supply costs add up

Paperwork’s done. Now, what about the product? Flour, butter, eggs, sugar, nuts, chocolate, and other goodies will cost about $200 a month, Deitrick estimates. Then she’ll have to package and label the cookies and other treats. Cellophane bags start at about 3 cents per bag at CelloBags.com; custom-printed labels can cost as little as 20 cents each at staples.com.

Deitrick’s dream is still a few years off. But she has been planning her new life for a while. “I’ve been thinking about doing this,” she says, “ever since I was 20.”

What it will cost

Beth Deitrick plans to save money on overhead by keeping her business small. Relatives will provide freeaccounting services, business cards, and brochures. The expenses below are estimates in today’s dollars.

One-time expenses:

Annualized expenses:

Been there, done that

Geoff Melkonian, owner of Breadwinner, an Atlanta cafe and bakery that also sells its goods online, says that Beth Deitrick can find well-priced supplies at warehouse stores such as Costco and wholesalers such as RestaurantDepot. Melkonian, who with his wife and sister began Breadwinner in 2005 in his kitchen, says staying small has its benefits. “The profit margin was very high then, though our volume was low,” he says. If Deitrick decides to expand, she can rent space in a commercial kitchen. Breadwinner’s first such space was in a church kitchen, at $20 an hour.

This article also appeared in the March 2013 issue of Consumer Reports Money Adviser.

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