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.

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.

Pluses

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.

Minuses

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?

Truk

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 1^st of the year following 70 ½th year (that April 1^st thing is the ‘Required Beginning Date’), which is also my 72^st 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 https://www.volunteermatch.org/ 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 nosurprisesretirement.com 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.

Volunteering

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

Oops!

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.