It may sound like a joke, but it is not. I imagine I am not the only one in this situation. I guess.

Here is what I have going on. I am a "one man show" self employed carpenter. It took many years to find out how much I need to make to actually save money and collect a profit. Sad but true, before that, living paycheck to paycheck. I have been able to just over the past 2 years, kinda, start saving. IRS took most of my savings the past 2 years, since I did not know how much to pay into estimated tax payments, (including many years before) it took years just to not having to finance a portion of the late taxes. There is a lot more to it than that. Bottom line, I am counting on this year everything will be paid up properly since last year I jumped a tax bracket, and that surprised me, since I thought.... "I got it this year". I did have some savings left over after that fortunately. The year before wiped it out, but both past 2 years it was paid off with out having to finance any, a MAJOR milestone for me.

Back on track, I don't think an IRA will fit what I am needing, I haven't got an emergency fund yet, about a 1/4 of the way there, but getting there slowly. Credit cards are all paid off except for about $1000 on one for health care. One auto payment $260 monthly, besides a small mortgage (27 years to go on a 30 yr) on our home that has a lot of equity (500K??). My plan, as it is now, is to contribute into a 1 year CD, as in, move the emergency fund, or my account that I am letting the profits accumulate, set that into the CD since the money market account that the emergency fund is in is only earning .3%??? and a CD will get 3.45 if I get enough into it, 2.45 if I don't or something like that, never the less 10 times more interest just by placing it in the right place.

Is this the right idea? Of course I may be doing to little too late and should just move to Mexico and live off my Social Security which I am told my wife and can live VERY well on just that.

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    You can get 2.4% APR in a regular liquid account (search for "High Yield Savings Account") without locking money for a year in a CD in a rising interest environment
    – littleadv
    Nov 3, 2022 at 3:54
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    27 years left, or 3 years left? Nice job building up 500K equity in 3 years if it's as you phrased it :) Nov 3, 2022 at 17:22
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    "self employed carpenter" - Knowing nothing about your current rates, I practically guarantee you that you can raise your rates (probably significantly) and still be able to book clients. Carpenters I know are booked months out right now and even if they doubled their rates, they'd still be able to find enough clients to fill out their schedule.
    – Brave
    Nov 3, 2022 at 17:49
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    Home has special bankruptcy protection. Think carefully about how to handle that asset. Why is this brought up, at your age, and perhaps wife's age, unforeseen medical costs. Not sure if you only have basic medicare. May want to look into Medicaid Asset Protection Trust, as your wife probability of outliving you is high.
    – paulj
    Nov 3, 2022 at 19:30
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    @KevinArlin, 27 years left. Yes found a turn key foreclosure, that sat for 2 years 3000sq ft 3 acres, built a barn on it, upgraded the shop a bit, tore out carpet added more matching 3/4" bamboo T&G flooring sold it for 493.5K, bought for 271K. Bought our house we have now for 431K financed 270K paid down to 258K I think, with prices still high for now in this area, this house should go for at least 700K+. That may not add up top 500K, still a lot of equity. Houses are still going for more than market price in this area.
    – Jack
    Nov 4, 2022 at 3:26

2 Answers 2


You can live comfortably on Social Security alone (my mother does it), but maybe not with a mortgage and a car payment, and maybe not in the area that you currently live. You might need to downsize both your car and your house into something that you can buy with cash or pay off very quickly.

Just moving your emergency fund to a higher-yield savings account does not solve the problem. Even if you have $10k saved up, a 3% account will only net you $300 per year, or $25 per month. I'd bet you can find ten times that in cost savings just by changing your lifestyle. Or use it to pay off the car and save that interest rate immediately.

I also don't think moving to Mexico is necessary. There are lots of places in the US that are very affordable (in my area you can buy a decent 2-bedroom home for $150k) without having to emigrate. Again, we're not talking about the lap of luxury, but if you truly want to "retire" that may be the best option.

If I were your financial advisor, I would not worry too much about tax-advantaged accounts yet. Taxes are not your problem. I would first look at your current budget: income, bills, etc. and see where you could cut to the bone. See how much you're spending on discretionary things like restaurants, vacations, etc. Sell the car and buy a beater. See how much equity you have in your home and whether it's feasible to downsize. Start saving like mad so that you can retire more comfortably on more than just social security.

Next I would look at your business and see where you can improve profitability. Are you not charging enough? Do you have expenses that could be reduced? Do you need to try and find more work, maybe even hire an employee to double the bottom line?

I do want to be encouraging - your situation is not bleak. You do have $500k in home equity and a very valuable skill that hopefully you can still utilize for enough time to live comfortable in retirement. It may just take difficult decisions or lifestyle changes, but that's something you and your wife will need to discuss to see what your retirement goals are, and what you can do to achieve them.

  • You hit on all the points I need to address. Yes I do need to bring in still more income, what I am charging now allows for vacation (in time, haven't had one in 7 years and working 11 hours a day to get this far). Also getting the wife on board with the spending will be the biggest task. I see tons of places to downsize, she does not. The place we have is meant to be an investment, as was the last home. Buy, fix up, sell for more equity. This place here that we have can be sold and get a new place with no mortgage if we play our cards right.
    – Jack
    Nov 3, 2022 at 14:05
  • Is moving the emergency fund into a high yield savings a step in the right direction? Nope not looking to live extravagantly, just comfortable so if I want to do volunteer work I can afford to. My business operating costs are next to nothing, not enough work to keep an extra guy on, that's a story on its own... I am currently working as a sub for a business going through a massive expansion, been there for 5 years, recently realized I need to earn more than what they are paying by the hour, but will not give me an increase. I need 30% more than what I get now. Have gotten in the past maxed out
    – Jack
    Nov 3, 2022 at 14:16
  • Well it doesn't hurt to have higher savings rates but honestly it's not going to change anything by itself. If I handed you $300 today would that change your retirement outlook?
    – D Stanley
    Nov 3, 2022 at 14:22
  • I understand that, but if I am going to have money sitting somewhere, it might as well be in someplace that gives more back. There are, I feel, or better yet, I hope, places where or things I can do with what I am earning to place funds. You have listed many other things I still need to do. I am try to follow Dave Ramsey's guidelines. My wife and I took his course years ago.
    – Jack
    Nov 3, 2022 at 14:31
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    @user253751, the economy and the potential decline of home sales does have me concerned for stepping away from the place I have been working at as a subcontractor for the past 5 years. Building is still going crazy out here, but that is because all the building permits that were issued, creates a delay in the slow down. New homes may slow down, but remodeling is still out there.
    – Jack
    Nov 4, 2022 at 3:49

One important item that seems to be missing from your analysis is your actual monthly cashflows. Maybe you are already performing monthly budgets, but based on the fact that your tax obligations have been a surprise year-over-year, I suspect that you may not be reviewing your monthly ins and outs at all.

How you will prepare for retirement is dependent on what your monthly expenses will be in the future. What your monthly expenses will be in the future, is largely a function of what your monthly expenses are today, adjusted by the actual lifestyle changes you are planning to make. If you aren't in the habit of doing a monthly budget based on what you are currently spending, it will likely be very difficult for you to anticipate what your future expenses will actually be.

After you have made a reasonable attempt at budgeting your future monthly expenses, you need to look at what sources of income you will have in retirement. How much in Social Security will you receive monthly? Do you or your wife have any private pension plans or other forms of guaranteed income? How much do you expect to make from whatever level of work you are planning to continue [such as low-volume woodworking] to supplement that income? And finally - how much extra retirement savings do you expect to earn between now and retirement?

With these numbers in front of you, you will need to be very honest with yourself about what lifestyle you will be able to afford. $500k in equity on a house is a massive potential asset - but only if you plan to use it productively. If you stay in that house forever, the equity will never put food on your table. To access it for actual cashflow, you basically have 3 options: (1) downsize immediately and invest the remaining funds for further growth; (2) use a 'reverse mortgage' style of financial arrangement which basically gives you cash now with a promise of giving up your house in the future [again - cash now would need to be invested]; or (3) take on a renter if your situation allows for it. Simply planning to flip your house and buy a bigger one in the future will not provide cash for you in retirement.

Beyond the above, yes - once you have a handle on what your needs will be in the future, you will need to look at what will make sense for how to invest any funds between now and retirement. As pointed out elsewhere, this is not the biggest concern on the table.

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    Been watching the flow of money in and out of the house for years now. I am the only one working, making it tough. I see loads of places to trim expenses, but my wife does not. Not a good spot to be in. The plan is to sell this house and hopefully purchase the last home without a mortgage using the equity. The plan as it stands right now is to, Lord willin' work until 70 or longer, draw SS because I will be required to at that time. Hopefully with downsizing and cutting back on spending and working out of my shop be able to add to the SS. I still have good health so for now that is feasible.
    – Jack
    Nov 4, 2022 at 3:42
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    @Jack Trying to maintain a budget without buy-in from your partner will be difficult and impossible. Perhaps it may help if you are more concrete about writing down explicitly what you expect to spend in all categories over the course of a month - and sit down together to compare results every month to see the discrepancy. Formal budgeting (together!) could really help. There are many methods; one of the simplest you can find by googling "You Need A Budget", or by searching the 'budget' tag on this site. Good luck! Nov 4, 2022 at 13:08
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    I know that is what needs to be done, I wish it was simple as that. It may sound simple and it may be simple for some, but it is not for us, (or me?). We have issues we need to work through.
    – Jack
    Nov 4, 2022 at 13:21
  • But it must be done so somehow, Lord willing we can do this...
    – Jack
    Nov 4, 2022 at 13:30
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    @Jack Yes sorry for maybe sounding trite, I know the steps are brief but they are not easy. Nov 4, 2022 at 13:36

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