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.

Expectation v. Reality

I get a fair amount of opportunities to discuss retirement with people.  The opportunities arise because retirement is a topic that interests me and because a lot of my friends and acquaintances are close to retirement or retired.  When we discuss retirement ages, the younger (late-40’s to early-50’s) group tends to think they will retire relatively early (say in the 54-57 range).  The older group tends to be aiming a little later, even up to age 70 to maximize savings and Social Security before hanging up the spurs (or in reality, the PC and Excel…).  My opinion is that the younger group is over-optimistic, primarily because of what health care would cost them for a decade prior to Medicare.  I was not as sure on the older group.

Survey says

As it turns out, the older group may be overestimating their staying power. smartasset® , in their analysis of data from the US Census Bureau found that 63 is the average retirement age across the US, with state variations (find your state using the link).

working paper from the Center for Retirement Research at Boston College suggests that 41% of retirees retire earlier than they had planned, with health (fact, we’re getting older and nobody gets out of here alive) and involuntary job loss as the leading factors.

bike lunch

Since at least one of my readers likes pictures, here’s a picture of one of the lunches we enjoyed as part of a Netherlands bike and barge back in 2013.  The cardboard box in the lower right is chocolate sprinkles, which are popular to the point of being a staple in the Netherlands.

I’m not planning to retire at 63

But I was planning to retire at 54!  My original plan, at a large firm covered by a defined benefit plan and retiree healthcare had me retiring at 54.  That plan disappeared in 1999 when I changed jobs.

Now, I’m not planning to retire at 63, but the averages say I might. How do you deal with that uncertainty in your retirement income plan (RIP)?  My RIP has multiple tabs with plans starting immediately and at ages 63, 64, and 65.  Those plans all show how our retirement income would fare at the various ages. Starting earlier leads to lower incomes at higher ages, but sometimes you don’t get a choice.

RIP is serious business

The RIP is serious business, because as you age your ability to improve the nest egg or re-do Social Security will be extremely limited.  Once you retire, you are your own payroll department, unless your only income is Social Security. Since most people will be taking a look at their finances at this time of year because it’s tax season, this would be a good time to review (or create) your RIP, with at least one tab for age 63.

Here’s a link to the RIP template.

Actions you can take include:
-Update or create your personal RIP.  Own it!
-Check yourself – What’s your retirement goal?  How are you tracking toward that?  What is your plan if you have to retire early?
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.

What was I thinking?

The other day I said to myself, “When I retire, I’ll spend more time on exercise and flexibility.”  What was I thinking?  If you want your best retirement, why would you not make the investment in your health well in advance.  (I know I’m probably not telling you anything you have not heard before here…).  In my case, and I am not a model for physical fitness, I am gradually upping my exercise goal from 30 minutes four times per week to 1 hour four times per week.  I already do strength and cardio and I will add in flexibility.  This will also go into my Retirement Activity Plan (RAP)!  Reviewer’s note – Mrs. NoSurprisesRetirement notes that a) the road to hell is paved with good intentions and b) not everyone will be able to keep this schedule.  She’s not wrong.  I’ll let you know how I do.

One part of my goal for being in better shape is to support the more or less standard flow of retirement; go-go, slow-go, no-go. The other part is to help me keep living, working, and travelling now.

Speaking of travel, here’s a picture of me, morphed with the other 13,500 or so visitors to the Kunsthal Rotterdam that participated in the digital image exhibit a couple of years ago. (Off season, literally had the place to ourselves!) In modern art museums you can frequently become part of the art.

Rotter - modern IMG_0279-cropped

Go-Go, Slow-Go, No-Go

Michael Kitces, the financial planner, in his blog , notes, “Michael Stein, author of “The Prosperous Retirement” first popularized the concept of a three-phase retirement: the Go-Go years, the Slow-Go years, and the No-Go years.  The approach was relatively straightforward: early retirement is represented by the “Go-Go” years and is characterized by an active phase, that may include a continuation of a lifestyle similar to pre-retirement, but with more time for spending and “extra” activities like travel; the  “Slow-Go” years are when health and energy begin to decline a bit, resulting in some spending reductions as the budget for activities like travel or even just eating out begin to decline; and the “No-Go” years are characterized by an almost total shutdown of activity-related spending, as consumption decreases to just the core expenditures necessary to maintain the household itself.”

My takeaway from the above is:
-understand the phases
-understand what your budget can support (a trip up North v. an 83 day around the world cruise or something in the middle)
-think about not only your cash budget, but your energy requirements in each phase and see what your personal ‘energy budget’ will support.

There is some argument about the timing and applicability of the three phases, but it seems like a useful model.  (Old saying, “All models are wrong, some models are useful.”). We have planned for go-go years until about 71, then the budget supports slow-go and no-go until ‘end of retirement…’

I know we watched the in-laws move through the three phases, some faster than others. Re-reading this before I posted it reminded me of the favorite saying of another friend, “Don’t postpone joy.” Genes, luck, and your version of the supreme deity will have a big say in the timing of each of our phases. We’ll likely return to look at the phases more in detail in later posts.  In the meantime, think about your RAP and what you’ll do in the go-go years.

Do as I do?

In the Free Stuff post post I mentioned taking classes from providers such as  FutureLearn and edX . I signed up for FutureLearn , but it’s for the past, the Cold War.  I enrolled in “From World War to White Heat: the RAF in the Cold War.” taught by a professor from the U of London and a PhD from the RAF Museum.

Actions you can take include:
-Check yourself – are you doing what you can to be in your best shape for retirement?
-Take a look at the free education resources, including YouTube.  An esteemed consultant once taught me, “We reserve the right to get smarter.”

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.

Singin’ in the rain, or travel in the off season.

Dave and I

Here’s a picture of me posing with Dave, aka David of David and Goliath.  Dave is Michelangelo’s ‘David’ in Firenze (Florence) Italy.

Me and dave - cropped-2

There are a couple of things you can’t see in the picture.  First, it’s a very famous statue, but there is not a huge crowd and second, I’m wearing what I refer to as my formal fleece.  The lack of crowd and the fleece indicate that we’re travelling during the off (or off-to-shoulder) season. This post, we’ll talk travel.  Since statistics say many retirees want to travel, this post may help mitigate some surprises on the price of travel.

Off season travel

My formal fleece is the black polar-fleece jacket I use for sightseeing and as a (poor) substitute blazer when dining on vacation, because Mrs. No Surprises Retirement and I usually take our major sightseeing trips in the off season (or really close to the off season). Rick Steves suggests that in Europe shoulder season is April to mid-June and off-season is November through March.  As you might guess, this means that the weather is not always warm and sunny, so we pack for cool and potential rain. Overall, we’ve been lucky with the weather and it was only really cold and wet once and we were prepared for it.


The pluses to the off-season include savings from lower air fares and lower hotel prices. There is little competition for trains, ferries, restaurants, or attractions. Walking down streets there are no tourist crowds, mostly locals with just a few tourists.

The best part of the deal for us is the lack of crowds.  We were almost alone on Omaha beach, reflecting on the sacrifice of the Allies and the French Resistance on D-Day. We have found that the museums we visit almost feel like we have private reservations, because there are so few people visiting. In major cities and major attractions (Louvre, British Museum), you’ll still find crowds in the off and shoulder season, but they will be smaller than high season and they will include a lot of school groups. Note that British children wear those fluorescent construction vests when out in school groups.

A plus for us is the weather. Cooler weather (40’s-60’s) is much more conducive for us to tour than the hotter summer season.


On the minus side is the weather and access.  Weather in the shoulder season is somewhat unpredictable.  It can be comfortable one day (50 and sunny) and the next day less so (35, wind, and rain).  Layers, umbrellas, and rain jackets are lifesavers.  Access in the shoulder season can be a problem for some venues that simply can’t afford to be open year-round.  If one of those is your special favorite, perhaps shoulder season won’t work for you.  Also, at least in Europe, you will be at higher latitudes which means that daylight will be much more limited than during the high season.  We’ve experienced sunrise at 8:30 AM and sunset at 4:30, so you have to be comfortable navigating streets in twilight. (It’s safe, you just can’t see things as well.)

If you are empty nesters like we are and you like to travel on your own, we recommend the off (or near off) season for the price and the lack of crowds.  Also, you may want to Google ‘european school holidays’ before scheduling your trip to determine if you’ll be in the midst of a mid-term school break which can make attractions crowded and hotel prices increase.

Pick one, be first

Remember the picture of Dave and I, above.  That was part of Mrs. No Surprises Retirement ‘pick one, be first’ philosophy. Pick the most important attraction of that day’s itinerary and be the first ones there when it opens.  That prevents Mr. No Surprises Retirement from getting too much sleep. When you’re the first ones into one of the more important venues, you’ll have 15-30 minutes to really enjoy the major exhibits before the crowds start to clog things up.  That’s why we had breakfast as soon as the hotel breakfast room opened and were walking several blocks to the Accademia in Firenze (Florence) to be there at 8:00, 15 minutes before opening, to see the David unobstructed.

Actions you can take include:

-Think about the pros and cons of off (and near off) season travel and see if the pros make travel in retirement more affordable/achievable for you.

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.

When does 70 ½ equal 2?

A picture!

Since a reader asked for pictures, here is this week’s photo and a question for you.  What is the furthest away license plate that you have seen driving near home?


Yes, you are correct, I got a picture of a license plate from Truk of the Federated States of Micronesia right here in Minnesota.  Truk is in the Pacific, north of Papua New Guinea and SE of Guam.  Anyone seen one from farther away near your home?

When is 70 ½ equal to 2?

We will be discussing RMDs here – Required Minimum Distributions.  RMDs are what the government requires for you to generate taxable income (and, likely, taxes!) on the untaxed income you put away in your IRA/401(k)/etc.  At some point (70 ½) they require you to take money out (or for most of us, we need to take money out…)

Remember that No Surprises Retirement’s goal is to help you not have bad retirement surprises.  A key element of many people’s retirement income plans is the use of funds from IRAs/401(k)s, etc.  Frequently those will be rolled into an IRA, so we’ll just use IRA as the example here. As always, please seek professional advice when you need it, because there are some wrinkles with defined contribution plans v. IRAs.

70 ½ equals two when you are required to take two RMDs in the same year!

As it happens, I will (hopefully) turn 70 in one calendar year and then (again, hopefully) turn 70 ½ in the year following.  I was planning to take my first RMD, by April 1st of the year following 70 ½th year (that April 1st thing is the ‘Required Beginning Date’), which is also my 72st year. Confused?  I sure was; it reminded me of algebra class.  Then I remembered a CRPC class I had taken which noted that in some cases two RMDs may need to be taken in the same calendar year!  Yikes, that has the potential to affect the taxation of Social Security benefits in the RMD year as well as Medicare premiums in the following year!

I went to my friends* at the IRS who have this covered.  They have a website that explains it all and it’s easy to understand, mostly.

Here’s a quote from the IRS RMD site (I added the bold italic underline):

“Date for receiving subsequent required minimum distributions

For each subsequent year after your required beginning date, you must withdraw your RMD by December 31.

The first year following the year you reach age 70½ you will generally have two required distribution dates: an April 1 withdrawal (for the year you turn 70½), and an additional withdrawal by December 31 (for the year following the year you turn 70½). To avoid having both of these amounts included in your income for the same year, you can make your first withdrawal by December 31 of the year you turn 70½ instead of waiting until April 1 of the following year.

Example: John reached age 70½ on August 20, 2013. He must receive his 2013 required minimum distribution by April 1, 2014, based on his 2012 year-end balance. John must receive his 2014 required minimum distribution by December 31, 2014, based on his 2013 year-end balance.

If John receives his initial required minimum distribution for 2013 on April 1, 2014, then both his 2013 and 2014 distributions will be included in income on his 2014 income tax return.”

Now you know! Also, that’s why you should save your year-end statements and Form 5498s’.

Now that we all know the rules, we can plan on when we will take that first required distribution from our plans that require RMDs.  Good news, it won’t be a surprise.

Actions you can take include:

-Review the IRS RMD site and update your retirement income plan.

-Check out Volunteer Match for a volunteer opportunity that fits you.

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.

*  –  Seriously, I work with a number of IRS people when volunteering and they have all been professional and try very hard to get everything right for the taxpayer.

Potpourri for $100 please, Alex.

This week’s post is a potpourri of things.

You may remember a reader suggested more personal anecdotes and pictures.  The picture is below a couple of sections. The anecdote is that the budget tracking is going well. We did discover that I left off my wife’s health club dues, so those got added in.  Plus, I had some bagels and leftover pork roast, so I brought lunch to work instead of eating out three days last week. Saved money (no entries on budget tracking for those!) and enjoyed some fantastic roast pork from the Showtime rotisserie.  Remember that you can still comment below or email with suggestions for content.

Time management

I usually try to publish a No Surprises Retirement post on Sundays.  This weekend was a time management problem as I had about 14 hours of tax classes and tests for my volunteer gig. I volunteer at an organization that does free tax preparation for low-income people, mostly families and very small business owners. So, No Surprises Retirement took second place in terms of completion.


RAC - star UL

I place volunteering on the Activity-Social quadrant of the Retirement Activity Plan Compass, so if your RAP is lacking there, volunteering may be an opportunity. I had an Aunt, Mildred W. of Sun City, AZ, who was volunteering at the local hospital into her late-80’s. Don’t let yourself be limited by age if you don’t have to.

I found my volunteer organization about 20 years ago through the IRS, the happy way – I contacted them. You may want to try a volunteer position or two in pre-retirement to see what fits for you.  If you’re looking for a volunteer position, check out Volunteer Match. You can put in your zip code and key words and find the volunteer opportunity that’s perfect for you. Last week I looked up some opportunities for a young lad, who is between IT jobs, to help keep his skills fresh and there were plenty of opportunities out there.

Memento mori*

It was a great day until I got the mail. I received a memento mori* from Globe Life today:


A reminder to us all, I guess. Now that it’s the new year, you might want to revisit, or draft your first, living will (aka advanced directive).  Make it easier on those who may have to make decisions for you when you cannot.

Actions you can take include:

-Check out Volunteer Match for a volunteer opportunity that fits you.

-Memento mori yourself – create or update your living will.  Your local hospital or library will likely have forms for you for free.

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.

*  Memento mori is the medieval Latin Christian theory and practice of reflection on mortality, especially as a means of considering the vanity of earthly life and the transient nature of all earthly goods and pursuits. (Wikipedia)

Oops, or New Year Fiscal Fitness


One of our readers suggested more pictures and personal anecdotes, so here is an anecdote:

Last week Mr. and Mrs. No Surprises Retirement compared our actual spending to our proposed retirement budget.  Oops – there were a number of areas where we were way over budget!

The picture, below, is of me looking at the results of the comparison!


The good news is that we’re not retired yet, so we weren’t overspending our ‘real’ retirement spending plan.  There’s still time to tune and track better.

Fiscal fitness

The goal of No Surprises Retirement is helping you avoid bad retirement surprises.  One of the worst retirement surprises is overspending in the early years and then running out of money in the later years.  Almost every TV show now has a lot of fitness and weight loss advertising (like every late-December through early-January).  This post will help you with improving your fiscal fitness in 2018.

Corporations and non-profits are experts at fiscal fitness (at least the ones that stay in business are!) They use budgets, income statements, and balance sheets to manage their business.  We may talk about income statements and balance sheets in some later post, but for this post we’ll focus on the budget.  The key parts to budgetary fiscal fitness are:

Budget – know what you plan to spend monthly/annually (and that the spending fits within your income).

Tracking – track your spending to the budget and determine where there you are going under or over, and why. (In corporate speak, we call these ‘variances’.)

Adapting – adapt to variances by adjusting future spending.  For example, if you spent too much on medical because you went to the ER, you may need to cut out movies for the rest of your life a few months.

Just like the stretches you’ll do in the three times a week aerobics class that one month you go to the gym, budgeting is something you need to pay attention to frequently (at least bi-weekly) but unlike the gym, you need to do it all year.

Tools for you to manage your budget – spreadsheets

Since we had the budget surprise, I decided to upgrade our budget capability by finding a better spreadsheet than we are currently using.  I decided to stay with a spreadsheet because I don’t need all the features of a personal finance software package and don’t want to maintain my finances on a website. I also decided to download (and don’t forget to virus scan!) because apparently a billion people have already shared their budget spreadsheets  online and this way I could start without having to reinvent the spreadsheet the wheel!

As usual, Google helped out with the search and I ran across ‘the balance’.

There are a number of budget spreadsheets reviewed and linked to on ‘the balance’ site, so you’ll probably find one to use and like.

I liked a couple:

It’s Your Money! in their ‘Free Budgeting Spreadsheets’ has a number of budgeting spreadsheets.  The IYM Spending Plan Spreadsheet looked promising.

Vertex42 also had budget spreadsheets.  Their Family Budget Planner looked excellent.

‘the balance’ also has a section for Google Docs Budget Spreadsheets. I think we’re going to try the cleverly named Best-Personal-Budget-Planner.  I downloaded it and converted it to Excel, but it looked very usable in Google Sheets as well (and if you don’t own Excel, Sheets is free.)

Most of the spreadsheets suggest budget categories.  Another excellent source for retirement expense budget categories comes from BlackRock.

Actions you can take include:

-If you’re not already using one, pick a spreadsheet or some software to track your expense budget.

-Put your 2018 budget in the tool and start tracking and analyzing!  Good luck!

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.

Dear Reader, please share your genius!

First, a thank you!

Thank you! From the visitor counts, apparently a lot of people stopped by to read one of No Surprises Retirement’s blog entries in 2017.  I hope they were entertaining and helpful.  Entertaining is sometimes a challenge with financial topics as they can be dry and directive, or, as some people call it, ‘boring’.

Share your genius

Please let us know what your favorite posts (post?, anything Bueller?) of 2017 were. Then, please think about topics you would like to see from No Surprises Retirement in 2018. Leave me a comment (click on ‘leave a comment, below) or send an email to

What, me blog?

Think about perhaps doing your own blog in 2018 – maybe you have expertise or opinions to share on fishing, travel, dining, or something else.  A basic WordPress site is free.  Think of it as part of your Creative-Social Retirement Activity plan!

RAC - star LL

Actions you can take include:

-PLEASE – leave us a comment or send us an email on what you like, don’t like, and want to see in 2018!

-Check out WordPress and start blogging.

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.

A Christmas 10%, 15%, 25% or more short term return!

I forked over

I paid my 2018 property taxes early and I will net at least 15% on the deal!  My county made it extremely easy to go on their website and eCheck the 2018 payment.  I reviewed our 2016 Schedule A and our deductions were less than the 2018 tax year standard deduction ($24,400 for a married couple). I roughed in 2017 and it looked like the same case for what I’ll be filling out here in a month or so, still below the 2018 limit. Poof – easy choice to accelerate my 2018 payment, so then I went and found the money to put in checking to pay it (less poof there!).

Disclaimers, always disclaimers

Again, no, not a scam.  This may actually be an opportunity for you.  The latest tax changes have passed and will take effect in 2018 (mostly).  We noted some tax planning opportunities in the “Urgent money opportunity!” post. Still acting quickly, there may be another 2017 tax planning opportunity with property taxes for you that could be the equivalent of a 10-25% return (or more depending on your marginal tax bracket).  We’re providing general advice here, please check with your tax adviser for your specific situation.  And by act quickly, that means by 12/31/2017.

Facts, again

Tax rates – generally going down next year, meaning that deductions are worth more this year than next.

Standard deduction – going up next year, meaning you need more deductions to obtain any benefit from a Schedule A deduction.  Also, your state and local tax deduction (property and income taxes) will be limited to $10,000.

Property taxes

The facts above may add up to a planning opportunity for you this year with property taxes.

Hypothetically, maybe you are a retiree or near retiree that has paid their 2017 property taxes and you itemize on Schedule A and your Schedule A deductions exceed the standard deduction.  The 2017 property taxes will be part of your Schedule A deduction.

You may be able to prepay your 2018 property taxes, on or before 12/31/2017.  If you do, you will also include those on your Schedule A and the tax ‘reduction’ from that additional deduction should decrease the tax you owe by your marginal rate, 10 to 25% or more.  That’s kind of like getting a CD paying a huge rate – something you likely don’t want to pass up.


As an example, let’s say your 2018 property taxes are $1,000 (easy round number) and your marginal rate is 15%, and the extra $1,000 deduction does not move you into a lower marginal rate – that’s an extra $150 back as a refund.  Or, like getting a one-year CD with a 15% return.  You’ll have to pay the tax anyway, why not make it a little less painful.

In this example, we assume that in the 2018 tax year (the one you file by April 15, 2019) the $1,000 is ‘buried’ in the standard deduction and there is no ‘additional’ tax benefit.  You only get an explicit deduction and bigger refund if you accelerate the payment to 2017.

If, based on your tax advisers’ analysis and your state/county/city allowing it, you make your 2018 property tax payment now, you may get a bigger deduction (and lower taxes/bigger refund) on your 2017 return.

How to from WUSA

Here’s a piece that WUSA 9 in DC did to help people understand how to prepay.  They mention mortgages where taxes are escrowed.

Actions you can take include:

-Call your tax advisor and analyze your 2017/2018 planning opportunity.

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.