Detroit Free Press Susan Tompor column [Detroit Free Press]

Sept. 19--For retirement planning, Dallas L. Salisbury, president of the Washington-based Employee Benefits Research Institute, offers two words of advice that no one wants to hear.

But the words are compelling, so I throw them out there: "no debt."

Salisbury talks tough about controlling what you buy and how much you borrow. I heard him rattle a few cages this summer at a National Press Foundation seminar for journalists on retirement issues, which is why I asked him to join a Web chat that the Free Press held last week during our three-day series on the retirement crisis many people are facing.

He did not disappoint.

Salisbury said his own goal was no debt -- including mortgage debt -- by the time he was 50.

"Debt is all about loss of flexibility," Salisbury told our readers during the chat. "You put your future in someone else's hands and lose flexibility. Flexibility to go back to school, survive a job loss, etc."

Personal freedom, he continued, starts with no debt and setting aside enough money in savings to cover one year of bills.

Ideally, Salisbury said, people who want to retire should aim to build up enough savings to amount to about 20 times what they'd want to spend in their first year of not working.

So if you want to be able to spend $20,000 the first year you retire, on top of any Social Security checks or pension checks coming in, you'd need at least $400,000 in savings. To spend $50,000 a year, you'd need $1 million.

And you would need way more money if you retired at a young age, say before 67, or if you retire with debt, Salisbury warned.

How do you save all that money? Ah, there's where Salisbury can sound a little too much like my dear old Dad, who was correct by the way.

Bottom line: Don't buy a lot of stuff.

Salisbury, 61, told journalists he's never bought an iPod. He goes to the library to read books. He shops discount stores and sales -- including the Salvation Army and Goodwill. His family bought what they could afford and made sure that they still could save money. He buys everything he can in bulk and on sale.

His current car is a 1999; before that a 1985; before that a 1972.

His strategy is to drive and use everything until it just stops working.

He has no debt.

Saving for retirement needs to start with the first paycheck. Salisbury said young people need to put aside 15% of pay at an early age.

If you never spend beyond your means, you find it far easier to save.

Too many boomers waited too long to save money. Many saved way too little. Some saved 7% or 9% of pay each year and assumed that housing prices and stock prices would always rise quickly.

On top of that, many boomers borrowed for their homes, their children's college education and their home renovations.

That's left them with little savings and lots of debt -- "a bad combination," Salisbury said.

As a result, some boomers might need to be saving 25% or so of their income each year -- and still plan on working longer.

He calls his strategy a tough-love approach to saving money.

"Saving is not for sissies," Salisbury said.

The two words -- no debt -- ring even truer after the financial fallout. Everyone who owned a home was hit when the housing bubble burst. Ditto for stocks. But people who didn't go deep into debt to buy homes -- or stocks -- are still better off than those who gambled and lost using borrowed money.

No doubt, of course, "no debt" still does not sound as inviting as "no money down." But remember Salisbury's other words: "Saving is not for sissies."

Contact SUSAN TOMPOR: 313-222-8876 or

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