Live Well on Less Money

Tight times are hitting older Americans directly in their wallets. With the nation’s jobless rate spiking at 8.1 percent and likely to continue rising, nearly 5.6 percent of workers 55 and older are unemployed, and many are struggling to find jobs. Those on fixed incomes have seen their retirement savings shrink by 30 to 40 percent in the market meltdown. No wonder the country is in a belt-tightening mood, with consumer spending down to the lowest levels in decades.

But people like Sky Yardley and his wife, Jane Dwinell, aren’t panicking about today’s tough economic times—they learned long ago to live well on less. A few years ago, the Montpelier, Vt., couple saved enough to quit their jobs, volunteer on projects that interest them, and cruise the canals of France on their 28-foot houseboat for several months each year.

To achieve this lifestyle, the couple followed the nine-step program outlined in Your Money or Your Life: Transforming Your Relationship With Money and Achieving Financial Independence, a New York Times bestseller written by Vicki Robin and Joe Dominguez in 1992 and updated in 2008.

Dominguez, who died in 1997, left his Wall Street job as a technical analyst in 1969, when he was 31, and began living off the investment income from a $70,000 nest egg—about $6,000 to $9,000 a year. He and Robin devoted their lives to teaching people how to change the relationship they have with money and live well on less. Many of those who followed the program saw their spending go down 20 to 25 percent in six months, says Robin, while some “super-savers” cut expenses 60 to 80 percent.

Your Money or Your Life became the bible of the so-called voluntary simplicity movement, which had started in the 1960s and has roots in frugality, environmentalism, social justice and spirituality. Today an estimated 10 percent of American adults follow some aspect of simple living.

Voluntary simplicity is not about deprivation or sacrifice but about discovering what is enough—money, stuff and time—for things that matter, says Carol Holst of Glendale, Calif., the co-director of the advocacy group Simple Living America.

“Each person has to decide how to find the satisfaction of enough,” she says. “Everybody does it differently.”

Spending in Seattle

Helen Gabel, 58, and her husband, Phil Notermann, 59, still live like graduate students. The couple and three housemates rent a rambling eight-bedroom, three-bath 1920s bungalow in Seattle and share grocery shopping and cooking. “It cuts down on rent, utilities and meals,” says Gabel, a part-time nurse-midwife. “Plus you never get lonely.”

Home-sharing arrangements are on the rise, including family members rooming together or groups of people organizing in so-called intentional communities, says Charles Durrett, an architect in Northern California who designs senior co-housing that combines private areas with common spaces. “We estimate you can save from $1,000 to $3,000 a month on housing, food, utilities and transportation in co-housing communities,” he says.

An AARP Bulletin survey found that 32 percent of people over age 50 are living with their parents, their adult children or both. Another 15 percent say it’s “likely” that they’ll begin living with parents or children in the next year.