Month: February 2018

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).

A 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.