Mid-year Check Point – Dollars & Sense

First, a picture of the best Ile Flottante in Paris, from Restaurant Georgette:

ile flottante

We travelled to Paris in the off-season, and before we left I checked Trip Advisor for the best Ile Flottante because that is Mrs. Nosurprisesretirement’s favorite French dessert. Ile Flottante is basically a delicious soft meringue (the ile or island) floating (French flotte – to float) on an even more delicious custard.

The overwhelming sentiment on Trip Advisor was for Georgette and they were right.  Take a walk from the Left Bank Sorbonne area across the Jardin du Luxembourg and you’re there.

Check Point One – Budgeting (Dollars)

Thinking back to our budgeting post,  ‘Oops, or New Year Fiscal Fitness’, we discussed using a spreadsheet for budgeting and tracking.  We ended up trying the ‘Personal Budget Planner – Extended’ and have been satisfied, especially because I did not have to develop the spreadsheet myself.

-we have been tracking a very high percentage of expenditures, so the ‘actual’ portion of the budget v. actual tracking is accurate
-the budgeting experience was enlightening (a polite word for occasionally opposing and sometimes loud opinions) as we determined what to include and at what amount
-actual v. budget tracking is available for any given month.

-the comparison feature does not support a year to date comparison of spending to budget
-the available rows for budgeting may cause you to combine budget items on a single row (likely not a problem for most people, but I wanted a lot of individual tracking).

The tracking has been going well and I would recommend this spreadsheet.  In areas where we go over budget, we often learn we under-allocated at the budget level. Surprisingly, since we track ‘everything’, the ‘pocket money’ budget line is always almost 100% under budget!

So far it seems like our retirement budget could be appropriate and achievable, barring any bad surprises.

And now a picture of the finest Indian Taco in Phoenix from The Fry Bread House:

Indian taco

The Fry Bread house is a small but popular establishment in central Phoenix.  We can definitely recommend any of their fry-bread tacos (or ‘fry-bread sweets’ desserts!) and the rich and spicy green chile stew.

Check Point Two – Fitness (Sense)

In the ‘What Was I Thinking’ post I talked about exercise and flexibility.  On the plus side, I have been relatively active, especially with walking in the neighborhood since the weather got nicer.  I document my activity on a free phone app called Microsoft OneNote, so I actually know where I stand v. my goals.   On the minus side, I have not met my goal of 30 minutes 4 times per week as much as I wanted.

Here is ‘The Drummer’, (1989-90), B. Flanagan (Wales); Hirschhorn Sculpture Garden, Washington, DC:

The Drummer

Note – not a great sun angle on the photo, because we were there in the off-season!  No crowds, so it was like a private sculpture garden on the Mall!  Also, it seems like all the museums in DC are free – excellent deal!


Funtirement is my daughter’s name for when I take a Friday off for my own three-day weekend.  This week for Funtirement, I used the firm’s preventive care benefit and went to the clinic for a science experiment. It turned out well and it looks like I only need the ‘experiment’ every five years now.

Actions you can take include:

-Do your own mid-year checkpoint.  What’s going well and what could you improve? Remember, perfect is the enemy of the good.

And if you have not seen the “Why you should read this blog…WIIFY” post, it’s here.

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.


Carp time! (a play on Carpe Diem)

Well golly, we had a couple of bad retirement surprises this week.  One was that a father of some of the kid’s high school classmates passed away at a young age, only 66.  The other, less bad, was finding out that a relative would need surgery at a much younger age that we thought.

If you’ve followed No Surprises Retirement for a while, you know that we focus on avoiding bad retirement surprises.  No one can avoid every bad surprise (but you should be trying!), so remember to enjoy some carp time.  Carp time would be fishing for those who enjoy it, but others can carpe diem (seize the day) and enjoy their favorite activities.

There is a balance

One could completely abandon planning and work and instead seize enjoyment until the money runs out, then live like a pauper.  On the other hand, one could work like a dog, scrimp and save, plan, buy annuities, wait until FRA or 70 ½ for Social Security and then not live to enjoy it.  There is a happy median of enjoying what you have while judiciously planning for the future.

Savor what you have

Those of us who are not retired usually have to go to work.  Since it’s a requirement, what are you doing to savor and enjoy it?  Without going all Zen on you, I can tell you that in my job, I look for the good parts to savor in several areas:
-colleagues – their banter, their admirable traits which include technical skill and adaptability, their quirks which can be irritating and endearing at the same time
-customers – their ability to collaborate, their humor, their gratitude when we deliver for them
-routine – the gift of routine which provides a sense of stability
-change – the excitement of something new, like a new project (admittedly, not all changes have been fun over the past thirty some odd years…)
-coffee – our cafeteria makes a perfect Starbucks Pike Place and I REALLY savor that with half and half daily.

If you’re already retired, you likely have established some routine that meets your needs and, hopefully, provides opportunity for savoring.

I’d like to hear from you in the comments or by email to nosurprisesretirement@gmail.com on what you do to ‘carp time’ (or carpe diem) in your usual life.

A reader wrote in!

A couple of weeks ago a reader wrote in and shared Barry Ritholz’ ‘Retirement Pyramid 2.0’.  Thanks, reader, for sharing.  Barry’s pyramid focuses a little differently than mine, more toward financial behaviors, but it is excellent and I recommend that you click on the link and review it.  Barry and his team usually give very sound advice – I follow a number of them on the Twitter.


Funtirement is my daughter’s name for when I take a Friday off for my own three-day weekend.  This week, the three days of Funtirement found us waking up about the same time as a work day, enjoying lunch at a British pub style restaurant, and cleaning up some paper work at home.  We also got our license plates updated, watched two episodes of Live PD, and had a pizza from the pizza place in the old neighborhood.  I read the latest issue of The Economist, economically sourced from my local library, an article on Faroe Islands food in The New Yorker, also from the library, and a retirement study from Aegon. (The Faroe article used the words ‘rank’ and ‘fermented lamb tallow’ in relation to the food – not going there soon ever.) Finally, we enjoyed a Father’s Day ice cream sundae gathering at my daughter and son-in-law’s house.  All the kids and wonderful grandchildren were there.

Next week’s Funtirement will be scientific!  I’ll be headed over to the clinic for some routine maintenance.  For those of you old enough to remember, it will be a replay of Fantastic Voyage…

Actions you can take include:

-Pause, reflect, and see what you can find to savor in life.

And if you have not seen the “Why you should read this blog…WIIFY” post, it’s here.

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.

Risky retirement talk

Remember that the goal of No Surprises Retirement is to help you minimize or eliminate surprises that can damage your retirement.  A risk is defined as “exposing something valued to…loss”.  We’ll discuss a couple of risks today, both involving healthcare; inflation and coverage.  The goal here is preparation and risk mitigation or avoidance, not fear and depression.  We will review a change in the Federal government direction on pre-existing conditions that may affect your retirement date.  On the inflation side, we will look at the healthcare inflation trend and see what that does to your retirement lifestyle.  Let’s start with the pre-existing conditions situation.

Pre-65 retirement risk – pre-existing conditions coverage is unstable

If you are planning on retiring before Medicare (pre-65) and don’t have retiree medical care from your employer, this might be a good time to consider continuing to enjoy your work colleagues and workplace a little longer, until a potentially expensive change to individual health insurance is more settled.

The Patient Protection and Affordable Care Act, sometimes called PPACA or nicknamed Obamacare, mandated that insurance companies take all applicants regardless of any pre-existing conditions and charge them on a community-rated basis.  Since the general audience of No Surprises Retirement is likely in the retirement age range, a lot of us likely have pre-existing conditions.  Examples here could include a diagnosed knee condition, heart problem, cancer treatment in the past, or abnormal liver test results.  Basically, under PPACA, pre-existing conditions were not a problem for anyone.

But, there’s a change!

It’s kind of a long, involved story, but there are a number of states who are suing in Federal court to have the PPACA declared unconstitutional. Winning was not a slam dunk, but if they won, all of the PPACA could go away, including the coverage of pre-existing conditions part. Risk level – moderate.

Just this week, the Federal Government’s Department of Justice decided to not defend the PPACA against the state lawsuit. This makes it much more likely that the PPACA will go away.  Risk level – high.

If the PPACA goes away, pre-existing conditions would then come back in to individual health insurance underwriting.  People (think pre-65 retirees here) applying for individual health insurance could be rejected or have exclusions for their pre-existing conditions.

What can I do, you ask?

Remember that without health insurance or with insurance with limitations on pre-existing conditions, you could be liable for some very large medical bills if you have a serious illness or accident.  I had a knee infection that cost about $25,000 (and is now a pre-existing condition!).  If you incur a large medical bill without coverage because of a pre-existing condition, that money would likely have to come from your retirement savings and potentially lower your retirement income for the remainder of your retirement, a bad retirement surprise

In my case, I am very concerned about what will happen to coverage for pre-existing conditions.  I have decided to avoid the risk of a change to the way pre-existing conditions are insured and now plan to do my best to stay employed and covered under my employer’s plan until we are eligible for Medicare. If, for some reason, the risk for pre-existing conditions coverage improves, I can always re-plan.

What does FRED say about healthcare inflation?

Remember that inflation is “a general increase in prices and fall in the purchasing value of money”.  You’re paying more for the same thing.

FRED is Federal Reserve Economic Data.  The St. Louis Fed, using FRED data, states, “…Going back as far as the series are available, since 1948, the price of medical care has grown at an average annual rate of 5.3% while the entire basket, headline CPI, has grown at an average annual rate of 3.5%. In the past 20 years, in the regime of stable inflation, headline CPI has grown at an average annual rate of 2.2%, whereas the price level of medical care has grown at an average annual rate of 3.6%—about 70% faster.”

What does that translate to?

Let’s be optimistic and assume that healthcare inflation will stay toward the lower side at 4%.  That means that healthcare costs will double approximately every 18 years, or once or twice over the span of a typical retirement.  Inflation is reverse compound interest working against you.  If you retire at 62, by the time you’re 80, your insurance premiums and out of pocket costs will likely have doubled; they increase a little each year.

The question here is what will have happened to your income in the same time period?  While Social Security is inflation adjusted, that inflation adjustment may not keep up with healthcare inflation.  US Government and Military pensions are inflation adjusted, but most defined benefit plans are not inflation adjusted. Depending on your investments, IRA investment returns can offset some inflation.  In any case, you will likely need to plan to spend more on healthcare and less in other areas.

What can I do, you ask?

Use less healthcare by getting in and staying in the best shape you can.  Proper exercise, diet, and sleep.

Monitor your personal healthcare prices and shop around for the best non-emergency prices.

Learn about healthcare prices and different approaches.  When you find one that you like, register and vote for political representatives who will represent your position in state legislatures and the U.S. Congress.  As an example, some people want Medicare to negotiate prescription drug prices while others want Medicare to stay away from negotiating.  Whatever your position, if you don’t vote, you are letting others decide your health insurance inflation fate.

Actions you can take include:

-Plan your risk strategy around pre-existing conditions and health insurance.

-Spend some time on healthcare inflation and potential solutions, then register and vote.

If you have not seen the “Why you should read this blog…WIIFY” post, it’s here.

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.

Interesting question – take two

Last post we took a detour to discuss travel.  Travel is the most cited ‘want to do’ activity in retirement.  This week we’ll really spend time on the interesting question.

The interesting question

I was reading a practicing financial advisor’s article in a financial planning magazine and ran across an interesting question; “Is your goal to be the richest person in the graveyard?”

If you’re like me, the first place you went with the question was money, particularly a legacy to heirs of money.  Your legacy is important and financial planning around a monetary legacy is critical if it might be large. However, let me suggest that while money is a consideration, perhaps money should be the lesser part of your legacy.  You have already built a part of your legacy, cash and non-monetary, over the course of your life.  You now have the chance to add to your legacy in your pre-retirement and retirement years.  Let’s consider legacies.

What’s in your legacy?

In my case, my family members left me the values of honesty, hard work, perseverance, adaptability, and continuous learning.  I hope and believe that we passed these on to our children and that they will pass them on to the grandchildren. I have some friends that are retired teachers.  They are childless, but I hear stories of how even today former students will stop them in stores and remind them of the values and lessons they learned in their classes.  The legacies of some of my coworkers (many still living) to me included exemplary work ethics, technical excellence, generosity, sharing, caring about, and humor.


You have already left a value legacy.  You can build on it by making it explicit; consider writing an autobiography and pointing out the values you were trying to pass on.  One of my most treasured possessions is a copy of a typed transcription of my great-great-grandfather’s diary from several months in the 1860’s.  Your autobiography could connect multiple generations with your values legacy.  Don’t worry about the grammar and spelling, they will treasure your history and memories.


A number of our friends continue to create their legacy in pre-retirement and retirement by contributing to the community.  Some are committed to environmental causes; one keeps an entire mile of street free of litter as part of an adopt-a-highway program.  Another group helps with youth development by volunteering for Scouting.  Some friends do genealogy to document their family lineage. Still another set helps with anti-poverty and disaster relief through religious institutions and non-profits. Others help maintain our democracy by volunteering with their political parties.

I have attended a number of funerals where “the dash” was read.  Think about your ‘dash’ and consider how you might engage in the community.  Here’s a link to Volunteer Match which can help you find opportunities to meet your interest and abilities.

Back to the money

“Is your goal to be the richest person in the graveyard?”  The financial advisor indicated that he strongly encourages clients to definitely not be the richest person in the graveyard.  A different way of saying this is, ‘die broke’.

Why not be the richest person in the graveyard? A few reasons come to mind:

-quality of life

-estate tax

-smaller gifts instead of a large inheritance.

Hopefully your RIP is set up to provide you with a lifetime retirement income, regardless of how long you live.  If you spend too frugally, you could end up with a lower quality of life than you could afford, leaving a larger estate that was necessary.  Consider the balance in your retirement spending between quality of life and monetary legacy.

Even though the Federal estate tax limit has been raised, that does not mean your state’s estate tax has followed.  Dying with a large estate and no estate tax plan can cost a literal fortune.  I know of one middle-class family that wrote a $40,000 estate tax check because of poor planning.  With minor planning and gifting they would have had no estate tax due – ouch.  Charitable donations and gifting are a couple of techniques for avoiding any estate taxes.  If you will have retirement income outside of Social Security and/or a defined benefit pension, a checkup with an attorney specializing in estate planning will likely be well worth your time.

If you are fortunate enough to have some financial assets that you think might pass on to your heirs, consider multiple smaller gifts while you are living.  One advantage here is that you will get to see the next generation enjoying the gift, which may have been used for a home, car, or vacation.  One key rationale for smaller gifts is that they are less likely than a large inheritance to enable sloth or other moral hazards of wealth without work.

Consider what legacy strategies fit best for you, including dying broke.

Actions you can take include:

-Consider how you might answer the question, “Is your goal to be the richest person in the graveyard?”

-Consult an estate planning attorney to see what, if any, estate plan you might need.

And if you have not seen the “Why you should read this blog…WIIFY” post, it’s here

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.

Interesting question.

The question will come a little further down, let’s think about Memorial Day first.

Memorial Day

It’s Memorial Day weekend in the US, commencing with Civil War remembrances of those who served and died for our country.  Many have served and died for our freedom and values since.  Take a moment and reflect and respect their sacrifice.  Many died in combat, many others as a result of combat; wounds visible and invisible.

We ask much of our defenders and they deliver.  We should first demand that our leadership use force only as a last resort, as the human cost is incalculable.

Off-season travel

Last month we were able to take an off-season trip to the Netherlands (note the link is an official Netherlands site in English; how polite and kind), Belgium, and France.  We were a little later this year than usual, early to mid-April, so the weather was warmer and there were more people.  I said more people but we did not really see crowds, except for the amazingly long line (1km?) to a ‘Fallout Boy’ concert at the Amsterdam ArenA on the way to our hotel.

Since we were a little more towards Spring than Winter, the hotel prices were a somewhat higher, but still within our retirement travel budget.  Restaurants were open and uncrowded.  The best part was that most of the museums and parks were like having private viewings.

We have been fortunate to travel to Europe a few times and have already seen the more popular tourist spots.  The ‘few times’ comes from a discussion we had some years back on how peoples’ motivation and ability to travel declines over time.  We made a conscious decision to make the most of our ‘now’ and attenuate our spending in other areas in favor of travel.  We try to mitigate the cost of travel by going off-season, shopping for the best air travel price, and using public transportation.  Typically, we’ll have breakfast in the hotel room, have a nice lunch at a restaurant, and sandwiches and desserts from a local supermarket in the room for dinner (usually an Albert Hein in NL and BE, Carrefour and Marks & Spencer in FR, Waitrose, Pret a Manger, and Marks & Spencer in GB). Bob and Sarah from the Success story! post gave us that tasty and money saving hint.

Many museums and attractions are free or can be discounted with city cards (Paris Pass, London Pass, Antwerp City Card).

The smaller museums we enjoyed this time included:
-Museum Our Lord in the Attic – Amsterdam
-Jewish Historical Museum – Amsterdam
-Rembrandt House – Amsterdam
-Maidens House Museum – Antwerp
-Museum de Reede – Antwerp
-Museum Eugeen Van Mieghem – Antwerp
-Ruebens House – Antwerp
-Cognacq-Jay Museum of 18th Century Art – Paris
-Zadkine Museum – Paris
-Andre Jacquemart – Paris

Every museum was uncrowded and in some we had the exhibits completely to ourselves. My personal favorite this time was the Zadkine.  I had never heard of Ossip Zadkine before, but in my opinion he was an amazing and gifted sculptor.  I definitely recommend the Zadkine a part of any visit you make to Paris.  The museum is run by the City of Paris and entry is free.  The Zadkine is also very time friendly as it is compact – 45 minutes would be a very long visit.

Here are a couple of my Zadkine favorites. First, one I don’t have the title for:

zadkine lyre

La Foret Humaine (1957-58):

la foret

We also got lucky and were able to get an Antwerp harbor tour.  They opened a week early because of the excellent weather and we just made the 2:00 boat.  Great harbor tour.

We navigated a construction zone to get there:

on the way to the boat

The tour was great – plenty of giant industrial stuff:

on the boat

And the way back had its challenges:

finding our way back

The interesting question

I was reading a practicing financial advisor’s article in a financial planning magazine and ran across an interesting question; “Is your goal to be the richest person in the graveyard?”

Minor surprise here – I ran out of space, so we will (re)visit the interesting question in the next post.  In the meantime, see the actions you can take, below.

Actions you can take include:

-Consider how you might answer the question, “Is your goal to be the richest person in the graveyard?”

And if you have not seen the “Why you should read this blog…WIIFY” post, it’s here 

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.

Wow, that’s a surprise!

I was surprised, shocked even, by what I learned in a continuing ed class on Social Security last week.  A large insurance company sponsored a Social Security study; we learned about it in the class and the survey results were a wake up!  This post will cover some of the key things you really need to know about Social Security. That company? Think whistling quarterback.

Let’s try a few questions to see if you can ‘test out’:

  1. How many years of earnings are counted in your benefit calculation?
  2. True or False – There are different claiming rules if you were born before January 2, 1954.
  3. What is your full retirement age (FRA)?

Answers later.

Pig legs!

More precisely, prosciutto on the hoof, so to speak, at an grocery store in Florence, Italy.  Enjoy!

pig legs-cropped

How important is it?

My first surprise, and I believe the insurance company’s also, was that approximately 25% of people think Social Security on its own will be enough for a comfortable retirement.

To avoid a bad retirement surprise, please consider that Social Security as your only retirement income source is too low for a comfortable retirement.  The official Federal poverty level for 2 is $16,460.  Per Business Insider, the average Social Security benefit is $1410/month. A couple who both receive the average benefit (total of $33,840) would be at approximately 200% of the poverty level.

A valuable, extremely underestimated, benefit

52% of respondents did not know that Social Security guarantees income for life.  Good news, it pays for life, and the life of your surviving spouse, if you’re married.

60% (I’m crying here) did not know that Social Security is protected against inflation. Social Security does have COLAS! (The cost of living adjustment kind, not the pop.) The inflation protection is my favorite part!

Honestly, life income with a COLA is a good retirement fact, or surprise if you did not know about it before.

How much per month?

The survey noted that 55% of people say Social Security will be their primary source of retirement income and they over estimate their Social Security benefit – per the survey, future retirees expect $1,628/month, while current retirees actually average $1,257/month. That’s about a $4,400/year difference and that is an amount that can change your lifestyle.

Avoid a bad retirement surprise and head over to my Social Security, order a benefits statement, and use their website tool to estimate your benefit.  Also, figure out how to remember the complex password they require you to have. (My ‘my Social Security password requires both hands, my left little toe, and a llama to input. Not really, but it’s challenging.)

When will I collect?

The survey found that future retirees think they will collect Social Security four years later than the age at which retirees actually commenced their benefits. Collecting later = more money per month, collecting earlier = less money per month.

Avoid a bad surprise and plan when you will collect to achieve the best retirement income you can for your situation.  Many financial advisers have software tools to help you (and spouse if you have one) maximize your benefits.  I found one online that I was comfortable with, but if you’re not really into financial planning, you may want a pro to help you.

The answers

  1. How many years of earnings are counted in your benefit calculation?

The highest 35 years, and if you don’t have 35, they average in zeros for the missing years.

  1. There are different claiming rules if you were born before January 2, 1954.

True – if you were born before 1/2/54, you can take advantage of ‘file and suspend’.  Born after 1/1/54, no ‘file and suspend’ for you, as there was a bipartisan law change in late 2016 that eliminated this planning strategy.

Note – the law change did not change some claiming rules for people who are divorced but were married over 10 years to the former spouse.  The divorce claiming rules can be advantageous with planning.  If you are in this situation, you definitely need to learn about them and incorporate them in your Social Security planning.

  1. What is your full retirement age (FRA)?

It depends! If you were born on or after 1943, it’s at least 66 and if you were born in 1960 or later it is 67.  You can find your FRA on the chart here.

Actions you can take include:

-Register on www.ssa.gov.

-Order your Social Security statement on www.ssa.gov.

-Go to www.ssa.gov and get a benefit estimate for when you believe you will retire.  Use it in your RIP.

-Consider how you will do your Social Security income planning and develop a plan that works best for your situation and constraints. Talk to your trusted financial advisor; the insurance companies they work with have Social Security software available for them to use for you.  Alternatively, check online for Social Security planning software you might like.

And if you have not seen the “Why you should read this blog…WIIFY” post, it’s here.

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.

The ‘when’ question.

I was at a gathering last week when a friend came up and asked, “When can I retire?”.  That question gets at the heart of this blog and I would re-phrase it as, “When can I retire with bad retirement surprises minimized?”  Only you can answer the ‘when’ question for you.

Last week I saw a picture of Stephen Hawking which made me think about deriving a complex formula which would tell us when we can retire.  Good news-bad news here – I did not find a formula, but I did work out a checklist that can help you know your readiness to set a retirement ‘when’ date.  Even with the checklist, the only person who can answer the ‘when’ question is you (and your spouse/partner if you have one).

Maybe when do you retire you’ll start cooking Dutch baby pancakes in cast iron!

dutch baby cropped

The ‘When’ Checklist

Walk through the checklist with me, please:

____Financial – I have a realistic retirement budget (spending plan) and know my expenses (needs v. wants).  I have a retirement income plan in place that will support my budget and, ideally, is resilient to stock market, bond market, and inflation changes. I am comfortable with my retirement savings and my emergency fund. (Running out of money would be a really bad retirement surprise.)

____Medical – I have a retirement medical expense plan that takes into account pre-65 and Medicare (65 and on) medical expenses, including insurance premiums, copays, deductibles, and prescription costs.  My medical expense plan is realistic based on my current health and my personal assessment of my health over the next 5-10 years.

____Housing – I have a plan for housing for early retirement, for when I slow down, and for when I need assistance. I have enough certainty in my (our, if with spouse/partner) housing that I know I won’t worry about my home.

____Family – My spouse/partner and family are supportive of my retirement decisions.  (Many people are fortunate enough to have family and having their support for retirement will make it easier and more pleasant. Conversely, if your spouse/partner or family does not approve, your retirement happiness will be at risk, a potential bad surprise.)

____Work – I have considered my work, my colleagues and customers, and my workplace and have decided that I can retire. I will miss my usual work, colleagues, workplace, and customers, but it is time.

____Motivation – I have considered the freedoms and constraints of retirement and weighed them against the benefits and constraints of staying in the workforce.  I am motivated positively toward retirement.  Even a long vacation would not remove my motivation to retire and leave my job.

____Social – I have a plan for retirement social connections which will replace enough of my workplace interactions that I will be socially fulfilled in retirement as I was in my work.

____Mental/Physical – I have a retirement activity plan that will keep me mentally and physically stimulated to the degree I desire.

Not everyone gets to choose.

Plansponsor notes, “a study from Prudential finds 51% of retirees retired earlier than planned. Among those, only 23% retired earlier than planned because they either had enough money to retire, wanted to retire, or were tired of working. Forty-six percent of those who retired earlier than expected did so due to health problems, 30% were laid off from their jobs or offered an early retirement incentive package, and 11% left work to take care of a loved one.”  The study found that half of the ‘earlier than planned’ retirees retired five or more years before they thought they would.

Using the checklist above and having your planning tools, the RIP, RAP, and budget, completed will leave you in the best position you can be if the choice of your ‘when’ is dictated by an external event.

Actions you can take include:

-Complete the ‘when’ check list (with your spouse/partner if you have one). Think about when your ‘when’ date might be.

-If you find you’re not ready to seriously consider ‘when’ dates yet, make note of why.  If the items that need more preparedness are plannable, like the RIP or RAP, work on planning.  Some items, like readiness to leave work and colleagues/customers may just require more time.

And if you have not seen the “Why you should read this blog…WIIFY” post, it’s here

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.

Success story!

Good news!  I bring you a success story from an actual pre-65 retiree.  It is possible.

A favorite retired colleague (I wanted to avoid using the word ‘old’ there…) stopped by my office the other day for lunch and we got to discuss how retirement is going for he and his wife.  They are doing very well and so I asked him how he was able to have a successful early retirement.

What about Bob?

My colleague (I will call him ‘Bob’ here) and his wife (let’s call her ‘Sarah’) have always been moderately active and do enjoy a couple of nice vacations every year. They have, however, also been fairly conservative in their spending and thoughtful in their savings.  From my perspective, their lifestyle has always been well within their income.

Bob worked for the same firm for over 20 years, but was then outsourced.  He worked at the outsourcing firm for a few years, then we got to work together at our new firm for a few years, until he ‘bailed’ early.

The outsourcing was a complicating factor, as it halted the growth of his defined benefit plan and eliminated the possibility of any company assisted pre-65 retiree medical.

Components of retirement success

Savings – Bob and Sarah always saved and, for the first years of their employment, increased their 401(k) savings with each raise, eventually maxing out the 401(k) contribution.  The 401(k) grew over the years to the point where it could support income for an early retirement.  Bob said, “Best advice I got for saving for retirement was when you get an annual increase, add one percent to your retirement savings.  Makes savings close to painless.  I don’t recall the source but it’s something I started my early years and I don’t regret it.”

Spending – Sarah and Bob always lived well within their income.  While they had a home built to their design, it is not overly large or ornate. Their cars were comfortable, middle of the road, and not replaced too often.

Luck – Some aspects of success are dictated by chance.  Bob and Sarah have been in mostly good health, with the exception of some recent back problems.  Staying healthy during their working years helped them avoid periods of income loss.  Likewise, Bob’s outsourcing did not cause a period of unemployment, even though it hurt his pension.

Planning – Bob’s initial retirement income plan was ‘save a lot of money’.  As he approached retirement, he researched using his 401(k) for income before age 59 ½.  As it happens, you can withdraw funds from a company 401(k) without the 10% penalty after age 55 if you ‘separate from service’ (retire!).  Note – if you roll the funds over to an IRA, you’re back to age 59 ½ to withdraw penalty free.  Either way you remain liable for income tax.

Bob and Sarah put together a retirement income plan that used their 401(k) early, then, in later years, the 401(k), Social Security, and the small pension.

Sarah and Bob have been using Affordable Care Act (ACA, sometimes referred to as ‘Obamacare’) for insurance and have been happy with it.  Bob did have to use the insurance last year for back surgery, but he has recovered nicely.  They did learn to manage their taxable income so that they can use the premium subsidies that are part of the ACA to keep their costs down.  I’m not sure what Sarah does for exercise, but I know that Bob walks daily and he’s still tall and relatively lean.

What does Bob say?

I asked Bob what he thought of retirement and he said they love it.  Objectively, I have worked on and off with the man for over 30 years and he looks more relaxed and happy than ever.

Bob says, “This might be off track for retirement but when I was getting ready to retire I set up a document according to Simple Dollar’s Preparing your Information for Disaster.  It has information that Sarah can go to if I get hit by a bus.  I handle finances and other things in retirement that Sarah could care less about but if she has to, she has a go-to document if I’m out of commission.”

Bob and Sarah have a success story that I wish for us all.


Everyone’s retirement will be different.  Bob’s is working out great and I am happy for he and Sarah.  You will have different circumstances and constraints that may have you retiring much differently than Bob and Sarah.  Do the best you can pre-retirement to plan and minimize surprises so that you get the best out of your retirement.

Actions you can take include:

-It’s never too late to review your savings and budget.

-Bob had a RIP (retirement income plan) and you should too.  If you have not yet read about a RIP, go here.

And if you have not seen the “Why you should read this blog…WIIFY” post, it’s here.

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.

How are you doing?

Really, how are you doing in retirement or retirement preparedness?  This post may help you understand where you are, by sharing some insights on the overall baby boomer (these are people in the 54-72 age group) retirement scene.

Since one of my interests is retirement planning, I end up reading quite a few articles and studies on retirement.  I just read the latest Boomer Expectations for Retirement 2018 study from the Insured Retirement Institute (IRI). As you can imagine, the report was riveting and gave me quite a wake up!

This post will share some of the survey results. Those insights many motivate you to examine your personal situation, and, if necessary, make a course change.  I am not criticizing any of your retirement planning/saving actions or non-actions, just trying to help you avoid bad retirement surprises.

True or false?

First, a little true or false for you. We’ll give you the answers in the sections below.

True or false – 25% of Boomers think they will have enough money to last their full retirement.

True or false – 45% of Boomers have less than $1,000 in an emergency fund.

True or false – 69% of Boomers see Social Security as a major income source in retirement.

True or false – 57% of Boomers have less than $250,000 saved for retirement.

True or false – Boomers who use a financial advisor saved less than Boomers who did not use a financial advisor.

Basically, in this post we’ll go Facts -> Implications -> Potential Actions.

The post might be a little dry (percentages!, dollar figures!, commentary!) but I think it can help you examine your situation and take action if required.

Disclaimer – As most you should know, from reading the disclosures, I work in the life insurance/annuity/financial services industry.

Who knew that an old church in Amsterdam (actually called the new church, but built starting in 1409) would host a modern art exhibition? Here’s me with the Jeff Koons’ piece. Also, I was not the one who broke it…

blue sphere-cropped

Several days after:

Koons after

Bummer, dude…

Fact – This year’s survey shows that only 25% of Boomers think they will have enough money in retirement. (The answer is ‘true’.)

Implications – 75% of Boomers don’t feel they will have enough money to last in retirement.  The implication here is that many people’s standard of living will decline or these people will have to work long into their retirement years.  In fact, the survey says that 29% of Boomers plan to work to age 70 or greater.

Potential actions – read on, the actions to deal with this issue are covered in the following sections.


Fact – One of the survey results that surprised me most was emergency funds.  70% of baby boomers have less than $5,000 in an emergency fund; 45% have less than $1,000 for an emergency fund. (The answer is, again, true.)

Implications – If ‘something’ goes wrong, perhaps a major car repair is needed or the water heater goes, you may need to use ‘retirement’ funds (IRA/401(k)/etc) or use a credit card to pay.  This can permanently lower your retirement income.

Potential action – If you’re not retired yet, consider deferring some discretionary spending to build up an emergency fund that you are comfortable with. (I see you over there with the avocado toast and the cappuccino…) If you are retired and on a ‘fixed’ income, consider the above, but perhaps more slowly.

Social Security

Fact – 69% of Boomers see Social Security as a major source of income in retirement. I know that Mrs. No Surprises Retirement and I do! (Again, answer is ‘true’.)

Implications – If there are legislative changes to cut Social Security, your income could be unilaterally cut.

Potential action – Understand what Social Security means to you and determine what your Representative and Senators stand for on Social Security.  Call or write them to state your position.  Register and vote for candidates that support your position on Social Security and Medicare.

Amount Saved for Retirement

Fact – 38% of Boomers have less than $100,000 saved for retirement.  19% have $100K-$250K saved. 43% have more than $250K saved. (38% + 19% = 57% – answer is ‘true’.)

Implications – The lower the amount saved for retirement, the lower the overall lifetime income that can be supported.

Let’s say that you have $200,000 saved when you retire and assume you use the 4% rule (withdraw 4% and never run out of money – it’s a not entirely correct ‘rule’ but close enough here for an example) – that would give you $8,000 a year to add to your other retirement income sources.  If you’re an average couple, you’ll be getting approximately $34,000 in Social Security and with the 4% withdrawal, you’ll have a family income of $42,000.  Nothing to sneeze at, but if your budget is more than $42K (say $55,000), you’ve got a deficit.

Potential action – Know your budget requirements and your retirement income plan.  Look at how they match up.  If you have a mismatch where the budget is greater than the income, look to see how you can either cut the budget or increase the income. Consider saving more pre-retirement.

Take a look at our budgeting post here .  The Retirement Income Plan post is here here and the spreadsheet is at this link (copy and paste):

Advice? You want me to take advice?

Fact – 79% of Boomers who used a financial advisor (FA) have over $100K saved for retirement, while only 48% of those who did not use an FA have over $100K saved. (The answer is ‘false’.)

Implications – It seems like using an FA has a correlation to greater retirement savings. My suspicion on this one is that with an FA you have someone whose focus is your planning, especially for retirement, and therefore they are more likely to help you develop and stick with a plan.

91% of people in the survey felt that their FA works in their best interest.  My feeling has always been that if the FA is not acting in the client’s best interest, they are not going to stay in business for the long term.

A CFP or ChFC designation indicates the FA has actual experience in the field, they have learned and passed exams on planning, and have taken an oath to put the client first.

Potential action – If you don’t have an FA or RIA, talk you your friends and relatives to find a trusted financial advisor.  Trust me, there are a lot of tricky areas in retirement planning and having a team to advise, counsel, and assist is a good thing.

Sorry I missed you!

The last month was a busy one with work, volunteer work, and vacation.  I’m back now and hopefully you can look forward to more regular posts.  Thanks for your patience.

Actions you can take include:

-We covered this week’s actions above.

And if you have not seen the “Why you should read this blog…WIIFY” post, it’s here .

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.

Take a Second Look at Your Life – Insurance

Disclosure – I am providing general life insurance advice and definitely not investment advice.  For your personal situation, please consult with your trusted financial professional.

This one gets a little insurance-y

I know that most people would prefer to chew on aluminum foil rather than read about life insurance.  This post might be a tad insurance-y, but it could provide a lot of value for you, your spouse, or your heirs.  Worst case – read it fast, send a link to your trusted financial professional, then go meet with them.

Once you meet with your financial professional, you can go garage sale-ing, where you might find a Dutch Brandweer (brand (fire) weer (fighter)) set!


Life insurance (almost) always has value

Don’t get rid of life insurance without looking at all alternatives.  Life insurance is valuable property, pre and post-retirement.

Life insurance provides a tax favored ‘instant estate’ that can:

  • protect your loved ones from the sudden loss of your income earning power (sounds better than ‘sudden death’ or even just death)
  • provide a cost effective ‘guaranteed’ legacy to your heirs that could be unaffected by the vagaries of the stock market
  • let you use policy loans for retirement or other purposes that may have interest rate or tax advantages.

There are a couple of different kinds of life insurance, term and permanent.  Term goes for a given time (say 20 years) and is sometimes convertible into permanent.  Permanent comes in a couple of flavors, whole life or universal life. Whole life is generally a simple concept: you pay level premiums for your whole life and the policy usually gains cash value over time because some interest or dividend is paid. In universal life the protection cost (cost of insurance) and cash value are separate.  With universal life the cash value may grow with an interest rate that resets every year or it may be allocated to a variable subaccount (that acts a lot like a mutual fund) that then corresponds to a cash value.

I had some term policies that I converted late in their term because I decided that I might need insurance for my entire life instead of having the coverage ‘expire’ at age 65.  In my case, I wanted to make sure my wife was provided for if I died ‘too early’ (isn’t it always ‘too early’?!).  If we lived long enough, the insurance might be a component of a legacy to the children/grandchildren.

My need for protection is diminishing because I am nearing the end of income earning (retirement!), so we won’t need that protection anymore.  The premiums of the insurance seemed relatively high (don’t they always?) and, because the policies were recent conversions, the cash value is low.  I looked at how to decide what to do with them.

Sunk costs

First. I decided that my prior premiums were ‘sunk costs’, which are costs that have been incurred and cannot be recovered.  In business ‘sunk costs’ are usually excluded from future business decisions, because the future cost is not affected by the sunk cost.  In our case, we paid the premiums and had the protection.

Internal rate of return (IRR)

IRR is the ‘interest rate’ that you earn on a series of payments (premiums) that pay off with a profit (or, in business sometimes a loss) in the case of life insurance, the death benefit is used in place of profit in the formula. I used the Excel internal rate of return (IRR) function to determine what the IRR would be on each policy if I lasted until various ages, up to 100.

I wanted to see if the premiums that we would pay over the next couple of decades would generate enough of a return to be a ‘better’ investment than the alternatives (stocks or bonds). For me, the IRR did not have to equal or better the stock market, because my life insurance is with highly rated firms (so less risk than the market) and life insurance proceeds are not taxed, while stock returns at death might be.

Kind of a good news/bad news thing – my IRR is great if I die soon…  After examining all three policies, I found one did have a good IRR going out to age 90, one was OK, and one was poor.  I will keep the good IRR policy and have planned the premiums in our retirement expense plan.  We will revisit the OK policy in a couple of years and we will laps or surrender the poor IRR policy when I retire.

If you’re not familiar with IRR or Excel, ask for help (or search ‘excel irr insurance example’).  I entered the premiums as costs (negative numbers) each year until my assumed ‘end of retirement’, then entered the death benefit as a positive and used that range in the IRR formula.

My plan

Because the insurance policy has a guaranteed death benefit, we will use that as the base for a legacy to the children. It is possible (likely?) that our 401(k) funds will be used up if we live long enough, but if there are some left, those could add to the legacy.

Actions you can take include:

-Review your insurance policies with your trusted financial professional.  Are there term policies that might be beneficial to convert?  Do you have whole/universal life policies that have features that might provide some tax favored retirement benefits?

And if you have not seen the “Why you should read this blog…WIIFY” post, it’s here.

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.