Mis-underestimated

Scottish

Scottish Widows is a life insurance company in the UK. I’d prefer not to to have the bad retirement surprise of an early death. She does look vaguely sinister….

Surprised!

At one of the Friday AM breakfast group meetings I posed the question of retirement surprises to my fellow diners. No one seemed to have had a severe bad surprise, thank goodness. Of the surprises that were mentioned, most indicated that home maintenance was the culprit.

Ken and Bobbi (pseudonyms) had a water heater go out, as did Sean and Deala (more pseudonyms). Sean’s water heater was particularly problematic and expensive due to code issues. Water pipe issues and remodeling project scope creep were also mentioned by the group.

Goal

Remember – our goal here is to try and avoid retirement surprises. After thinking about the problem, I decided to see what we might do with the useful life of home items, such as appliances and paint, combined with costs.

The solution, but stay tuned for the mis-underestimated part

I mentally walked through my house and developed a list of appliances and maintenance items. Once I had the list I researched the usual lifespan of the item and what the cost to replace it might be. This took a lot longer than I thought it would, but no gain without pain, right?

With the costs and lifespans, I put together a spreadsheet. We’ll talk about it next, but you can find one to use here, available in both Excel and Google Sheets versions.

Mis-underestimated

Well golly, I tried the house maintenance costs spreadsheet. According to the spreadsheet, I mis-underestimated fairly significantly the amount of money that maintenance costs for a house over time. Especially if you try to accrue the money for those costs on a monthly basis. On the other hand, when some things wear out, such as a furnace or refrigerator, they are hard or impossible to live without.

When you look at the spreadsheet, you will see average life and average costs. You can enter your estimate of the remaining life, in years (ex. 5 for 5 years or .25 for 3 months), of your item and what you estimate your replacement cost to be. The spreadsheet will calculate a monthly cost to accrue (save up), so that when you need the replacement, the money is already in the bank.

Good news – surprise eliminated. Bad news – shock at the amount needed per month. Seriously, mine was three times what I had previously budgeted. I was shocked, but now at least I can plan in advance.

On the plus side, it looks like plumbing, electrical wiring, and walls last a very long time, so I did not need to include those.

Some of the reference sites I used:
https://www.thisoldhouse.com/ideas/how-long-things-last
https://www.thespruce.com/lifespan-of-household-appliances-4158782
https://www.homeadvisor.com/cost/heating-and-cooling/install-a-furnace/

Actions you can take include:
Download and personalize your House Maintenance Costs Spreadsheet.
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.

I RAPped!

Blizzard, A. Goicolea, Phoenix Art Museum

Per the NWS, we’re getting a blizzard here this afternoon – three to eight inches of fluffy snow!

Don’t miss the retirement action calendar after ‘Rapping’.

Rapping

As part of my RAP (Retirement Activity Plan and Free stuff!), one of my goals is to remain socially connected. Connection is not usually a problem when you’re employed because you have coworkers. I’m still employed 80% of the time and my coworkers are great (now, please tell me where my laptop is…).

Fortunately, for the 20% of the time when I am retired, the gentlemen from the old neighborhood have invited me to their weekly breakfast meeting. They are interesting and engaged people and the restaurant has excellent coffee and is extremely generous with the meat on the country breakfast. They are now one key part of my social connection in retirement. Excellent people and good food – what more could one ask for?

If you’ve seen the RAP template, it has areas for creativity, social, personal, and activity.

Looking back at last year, I give myself about a C for activity. I tracked exercise and averaged almost 12 times per month. My goal is about 17 times per month (4 times per week) or better.

I was pleased with my personal work. I made it through Pimsleur French I and most of II. I watched a French subtitled movie. I read a couple of investing books. (The one I recommend is The Four Pillars of Investing by William J. Bernstein. Get the old version; it’s cheaper and has 99.9% of the content.)

I was also happy with my creativity. I continued the blog. I completed some house projects and fixed a few laptops.

Retirement Action Calendar

I borrowed a genius idea from Vanguard, Merrill, Kiplinger, and Forbes and synthesized (RAP – creativity!) a spreadsheet with key dates for pre- and post-65 retirees. Excel and Google Sheets versions are located here.

The one time events show some dates for my friends Rick and Jean (pseudonyms), but will likely be useful you, too. The one time tab includes Medicare sign-up, initial RMD, any initial pension payments, and starting Social Security. You’ll need to research and customize your own dates. As an example, Rick will sign up for Medicare on, or soon after, 6/1/2020 because his Medicate will start 9/1. If Rick is too late (after 12/1), he’ll have a Medicare penalty.

The annual events tab includes Medicare open enrollments, estimated tax payments, a budget and RIP checkup, and a medical (Obamacare) open enrollment.

Actions you can take include:

Download and personalize your Retirement Action Calendar.

Do a check of your RAP for 2018. How did you do? What will you change for 2019?

And if you have not seen the “Why you should read this blog…WIIFY” post, it’s here https://nosurprisesretirement.com/2017/07/09/first-blog-post/

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 Survey Says…

dutch teu huis

Condos made from shipping containers, Amsterdam, NL.

The survey results

The first key result of the survey that was included in The Road to Hell post is, per my daughter and the tiny but loyal number of respondents, don’t put the survey link at the bottom of your blog post. Thanks to those of you that responded. The next survey will be easy to find.

Good news

Our survey respondents, may they be representative of our entire readership, are in pretty good shape with written budgets and spending tracking, but they need a little more attention to written retirement strategies/plans. The numbers:

Do you have a retirement plan or strategy?
Yes, but it is not written – 77.8%
Yes and it is written – 22.2%
No – 0%

Do you have a household budget?
Yes and it is written in one place – 66.7%
Yes, but it is not written in a single place – 22.2%
No, we wing it – 11.1%

Do you track your spending?
Yes and track on paper, spreadsheet, or app – 66.7%
Yes, but informally (ex. look at bills and checks) – 33.3%
No – 0%

The other survey says

I just glanced at The Insured Retirement Institute 2^nd Biennial Study on the American Retirement Experience (with that long of a name it takes a biennium to write!) Their results show that 80% of retirees have the same or less income as they did pre-retirement. 53% have less income, 27% about the same.

Mrs. NoSurprisesRetirement and I took note of the above and have had some success offsetting the less income thing as a pre-retirement practice. We used a BOGO (buy one, get one free) coupon at Jersey Mike’s subs on Friday, then used our Walgreens Balance Rewards to score 4 containers of our favorite coffee at the lowest price we’ve seen in the past 9 months. We got a deal on Blue Diamond almonds, too! Sunday got sweet as we used another BOGO at Dairy Queen for Blizzards. Overall savings was near $30! And, we won’t need to buy coffee for a couple of months!

What Mrs. NoSurprisesRetirement and I did was consistent with another study I saw (and can’t find to cite right now) that people in retirement tend to pull back on their spending, even with reasonable resources.

Actions you can take include:
What coupons should you be using? What staples should you stock up on when the deal is excellent? By the way, Target is having the equivalent of a 30% off sale on household cleaning products this week – a $15 Target gift card with a $50 ‘household essentials’ purchase.

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.

I got surprised!

Me, surprised last year in Bayeux, France.

The surprise!

Well, Mr. Smartypants-no-surprises got a bad surprise! Ouch! For those of you that saw the last post that looked at budget to actual, you may have noticed that I said, “We did find some areas that needed refinement which will push us closer to the retirement income spending ceiling next year. I under-budgeted for home maintenance expenses.” That was the understatement of 2018.

While most of our retirement budget was pretty well researched, the one area for which we really ‘winged it’ was maintenance. Basically, we just guessed at it. The guess was way low for the year. I decided that we should do a better job of quantifying how much ‘maintenance’ would really cost.

First, find out what maintenance is

In our case, last year maintenance was a new water heater, a furnace service call, a dryer service call, and a new dryer. I suspected the water heater would need to be replaced soon, but not quite so soon. The rest were true surprises.

In the spirit of no surprises, we researched all the items that we know have a maintenance life. These included the roof, driveway, appliances, HVAC, outside paint, snowblower, mower, and bed.

‘Personal association fee’

An association fee is a fee from, for example, a condo association that takes care of outside maintenance, snow shoveling, lawn mowing, etc. You might think of a monthly allocation for maintenance as your ‘personal association fee’. Take the monthly allocation and put it in a savings account for when you do need it. I’ve seen savings accounts and money funds now yielding over 2%!

After we assembled our list of maintenance items, we looked at the cost for a new comparable item and estimated the life of our current installations. The cost of the new item divided by the number of months until replacement gave us our monthly maintenance cost. Wow, we were surprised that our new ‘personal association fee’ has tripled over our ‘wing-it’ maintenance budget. The good news is that now we plan for maintenance expenses that will, no doubt, happen. Advance planning will help avoid a bad surprise dent our retirement savings.

Thank you

Thank you for reading the blog this year. Health, happiness, and prosperity to you in 2019. Also, may you have no bad surprises in 2019.

Actions you can take include:

Try your own assessment of what your ‘personal association fee’ should include and cost.

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.

Maybe MAGI is not a gift

We got to visit the Aalsmere flower auction facility near Amsterdam a few years ago. They have a cafeteria for visitors and workers, welcomed by what I call scary Chef!

The Gift of the Magi

The original Gift of the Magi is an O. Henry story about a young couple sacrificing their individual prized possessions to give the other a special Christmas gift. For Social Security and Medicare, MAGI is a whole different ballgame that gives you the potential opportunity to plan (a gift to yourself!) to avoid sacrificing (money.)

This blog post will be a little technical, but could contribute to tax savings when you plan for MAGI. I will try to keep it as entertaining as possible given the subject matter.

What is MAGI

MAGI is Modified Adjusted Gross Income and is calculated by taking your Adjusted Gross Income (AGI) and adding in tax-free income, like interest on state and municipal bonds. There are some other, less common items, that get added back also, for example savings bond interest excluded from income because it was used for post-secondary education; check with your tax advisor.

Why is MAGI important?

For pre-retirees, a higher MAGI may restrict your ability to contribute to a traditional pre-tax or a Roth IRA.

For retired people, a higher MAGI may subject some of your social security income to taxation and may cause you to pay higher Medicare Part B premiums. The Medicare higher premium, the Income Related Monthly Adjustment Amount, is called IRMAA (I pronounce it like the name, Irma.) The wind is called Mariah. (The Mariah link is fun, really.)

But I’m not rich!

Most of us aren’t rich, but MAGI can still affect us. A MAGI as low as $25,001 for a single person (or $32001 for a married couple) will start to subject Social Security payments to income taxes.

How can I plan around MAGI?

First the disclaimers – If you’re a wage earner, like me, your planning possibilities are limited. Small business owners have more control over wage versus business income and can exercise some control over timing of income. I have to warn you again to discuss planning with your qualified tax advisor; we are discussing generally available information here that will not directly apply to your personal tax situation.

For pre-retirees, you may be able to use a technique called the ‘backdoor Roth’ to fund a Roth IRA, regardless of MAGI. A good article from Ed Slott, an IRA expert, on backdoor Roth IRAs is here.

For both pre-retirees and retirees, the ways to lower MAGI are fairly straightforward:
-lower your W-2 and/or 1099-R income
-lower your tax-exempt income.

One way for retirees to lower 1099-R income is to take out less from the retirement accounts you have control over (IRA, SEP, 401(k), 403(b), etc.), subject of course to the Required Minimum Distribution (RMD) for those 70 ½ and over. If you have a Roth IRA, withdrawals from the Roth won’t count towards MAGI.

Zero coupon municipal bonds exist that would pay out no tax-exempt interest until maturity. Your financial advisor could help you plan the use of municipal zeros, instead of municipals paying semi-annual interest, to support MAGI planning.

If you have bank accounts, you could use withdrawals from savings accounts or CD’s as a substitute for the 1099-R income that you are avoiding.

Finally, selling mutual funds or stocks that have capital gains will contribute to AGI and MAGI only to the extent that you have a gain when you sell.

MAGI – gift or not?

I guess there are similarities to the Gift of the Magi because MAGI planning and executing requires you to give up something special, your time and perhaps payments to a tax advisor. The gift you get back (a gift to yourself and loved ones) is the tax and Medicare Part B premium savings from your efforts that could be significant.

Citroen

When I was a child I lived in France for a while courtesy of the USAF. Citroen cars were popular and this model of a DS in the window of a toy car shop in Haarlem, NL brought back memories.

Actions you can take include:

-Consider how MAGI can affect your tax situation pre- and post-retirement.

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

A correction

Back in the post Why not make money on your groceries? I thought a quote was from the movie ‘An Officer and a Gentleman’. A reader informed me it was from ‘A Few Good Men’. Thank you for the correction!

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 short, valuable Medicare primer

First, a picture of the world’s best raspberry-iced Bismarck from Grandma’s Bakery, White Bear Lake, MN:

The roll - c

I’ve been a little busy with work and the holiday this week, so you’re getting an abbreviated but meaty post, 99.8% created by one of the website ‘Seeking Alpha’ contributors who goes by Tipswatch (from Treasury Inflation Protected Securities). The article is titled, “Nearing 65? Don’t Get Caught By Medicare’s ‘Money Traps’”.

I think it’s a definite read, so here’s the link: Don’t get caught by Medicare’s money traps.

Now, ‘In the Lenin Mountains’, (1958), B. Talberg & Y. Korolev; The Raymond & Susan Johnson Collection of Russian Art; The Museum of Russian Art, Minneapolis, MN:

Lenin Mountains

Note – outstanding smaller museum in south Minneapolis. Make it a stop if you’re visiting.

Actions you can take include:

-Think about your medical needs and budget and make a Medicare plan.

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.

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.

Positives:
-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.

Negatives:
-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!

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.

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.

Values

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.

Actions

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.

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.

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