The Way We Think About Financial Security Needs Adjusting

...or at least needs some serious rethinking. Historically low unemployment numbers (except for minorities), a stock market that regularly flirts with record highs, and an economy that has yet to show noticeable cracks due to tariffs would seem to say, "relax, come on in, the water's fine."

At the same time, serious questions are being raised about what lies ahead. There are a growing number of indicators that a recession is not unthinkable. Tariffs are starting to bite some segments of the economy. What has worked for the past few decades may not continue to produce the same results for us and those who follow us.

Long term, financial security, one of the keys to a satisfying retirement, is undergoing important adjustments. How are we to react? What financial planning linchpins do we have to reexamine, assess with fresh eyes, maybe adjust direction?

Let's consider five "basic" building blocks of financial health and see where we are:


1) Savings. Keeping money in a bank's savings account is rather pointless. The average yield is 0.06%. That means that $5,000 held in a bank earns $3.00 a year. The average household holds just under $9,000 savings in a bank or credit union, producing a pathetic $5.40 in interest. Online banks or money market funds average 2%, or $180 a year for the average savings account.

How about Certificates of Deposit? You can find an extra quarter to half a percentage point in interest if you are willing to lock up your money for a year or more. But, will that extra $45 really take care of business? Even with minimal inflation, at returns this low you are losing ground. Your money will be worth less next year than it is today.

The oft-cited finding that 40% of Americans would struggle to pay for a $400 emergency is actually a misleading figure. Based on how the question was worded, recent research suggests the percentage who would be unable to easily cover that size of an unplanned expense at closer to 20%. Of course, that raises the obvious question: how do 1 in 5 save for retirement if even $400 would cause a problem? 

Aggressive savings was one of the keys to my retirement planning. Bank rates were never great, but CDs regularly paid between 5-8%. Sure, inflation was higher, but by living well below our means, a 7% return on our cash was meaningful. Thirty years of saving 15% of our income was a solid foundation. I couldn't depend on that part of my plan today.

2) Home Ownership. The "American Dream" included owning a house. All of my generation (and the ones before) envisioned the home in the suburbs, white picket fence, and a 30 year mortgage. The route to happiness and financial stability included real estate.

Apartments were for college students or those scrimping and saving for a future than included a piece of land with a building on it.

That is not necessarily the case anymore. Younger folks are not nearly as likely to aspire to own a home. Besides the daunting barriers of saving enough for a down payment, one of the important benefits of owning a house has been severely restricted: mortgage interest deduction on our tax returns. With the doubling of personal deductions, the attractiveness of this longtime plus has lost its luster.

Also, and this is pure speculation on my part, is it likely that a culture where online ordering of everything, nearly instant shopping, and a decrease in marriage and child birth rates, lessens a desire to own? Having someone else take care of maintenance, retaining the freedom to move to follow a job or a lifestyle choice change all support a drop in home ownership as a necessity.


3) Stock Market growth. Over the past 50 years, the stock market has produced an average return of 10%. Over the past decade the rate is closer to 7%. Of course, inflation must be factored in, so subtract about 2% to get closer to an actual return. Virtually all financial experts (I am not one!) continue to tell us, over the long term, stocks are our best bet.

The problem? The periods of instability are also baked into the system. Recessions are a part of our economy. There have been at least five important recessions since the mid 70's in the United States. As I write this, there is a growing concern of world-wide economic slowdowns due to tariff battles, Brexit, and a more unstable political environment.

If these happen with regularity, why worry? Well, primarily because it becomes a timing issue. There are plenty of us who have yet to fully recover from the last big meltdown of 2008-9. If you are close to retirement when the cycle is going the wrong way, that creates a serious problem. During retirement, if you are dependent on a flow of investment income and it suddenly dries up, or drops precipitously, then what?

What can you do? One answer sounds great, but it isn't practical for most of us: save and invest enough to weather a recessionary cycle.  Lower your withdrawal rate (4% to ?) Realize that many of the dips are on paper. Unless you must sell at the bottom, things will recover in time.

For the rest of us, the only real option is to have the flexibility to cut expenses and change life styles to match reduced income with reduced spending. If you are downsizing things are easier if you don't own a home, though some equity in a piece of property might come in handy. Not selling what you do own in stocks or other investments during a big dip is vital. If you sell at the bottom you are locking in losses forever.

4) Health Insurance. I can't believe I am still writing about this. After so many years, many of us remain one health crisis away from bankruptcy. Too many of us shun necessary medical care, reduce required medications, or delay important procedures due to cost.

As an aside, I read about a new medicine for a serious disease that will cost $2 million for treatment. Besides the obvious ethical questions that pricing raises, there will be no insurance company anywhere (even Medicare) that will agree to fund that criminally high charge. 

Speaking of Medicare, the clock is ticking. Without changes in how the program is funded, the combination of an aging population, fewer workers to support each retiree, and ever-increasing costs without robust ways to negotiate savings at some point in the future there will be a reduction in benefits. I used to believe no politician would allow this to happen. That is no longer true. We are too polarized, too firm in our "us vs them" mindset to assume cooler heads will prevail.

I'm sure you have read the scary figure of $280,000. That is what the typical senior couple can expect to spend on health care costs from 65 until death. To put that in perspective, that is five times more than what the average 50 year old has saved for his our her retirement. Yes, Social Security will help (assuming its continued health...a subject for another post), but that is a major chunk of change.

What to do? Realize that saving for your health costs are every bit as serious as savings for any other part of your future. Make an investment in yourself by doing everything you can to delay the inevitable decline of our bodies and minds. Make friends with family members who will allow you to live with them (a joke, but maybe not!). 


For most of us, we can only do the best we can do in planning for our future. Unfortunately, in so many areas, some of our fate is in others' hands. My takeaway is to be optimistic that all your foresight and preparation will make your journey as pleasant and satisfying as possible. But, stay informed and remain open to adjustments. Too many other people have their hands on the steering wheel to ever fully relax.

Applying The Skills You Have

I am a firm believer in the positive power of volunteering one's time. Even so, over the years I have learned that limits need to be established. It is easy to find time spent on volunteer opportunities can begin to take over larger portions of one's time.

That said, volunteerism is an important aspect of retirement for a lot of people. The chance to give back one's time and experience is a win-win: you feel good and the organization or person you help benefits, too. If you are so motivated, I urge you to donate something of yourself to others.

Like anything, being an effective volunteer requires certain qualities. Regardless of how you choose to become involved, here are 6 basic considerations:

You have the skills needed  or can learn them in short order. In anything there is a learning curve. Whether you are restocking the shelves at a food bank or helping to build a house for Habitat for Humanity, there will be certain abilities of yours that can be used. If a certain way of doing something is needed, you will be taught how to accomplish your task. 

You can use common sense to problem-solve.Sometimes you have to make a decision without specific guidance or policies. Common sense comes in handy if there is no one you can turn to for an answer. Trust yourself to make the right choice. 

You are dependable. Even though being a volunteer means you are not being paid, there are others counting on you to do what you have promised to do, when you promised to do it. Make your word your contract. Be sure others know they can count on you.

You are able to cooperate with others. Often volunteer work means you will be interacting with others. If this is the case you should be able to operate well in a group environment. Complaining about this and that or trying to enforce your will isn't going to make your experience a positive one. It will also limit your effectiveness. Remember kindergarten...play nice.

You are able to serve someone else freely and openly. This is a tough one for many of us. We normally don't like to put ourselves in a position of serving others. Yet, that is exactly what being a volunteer all about. Your are a servant for a greater good. You must be able to be humble.


You have compassion. This probably should be listed first. Unless you are volunteering because your company tells you to, deciding to give some of your time and self to help others requires a well-developed sense of compassion. You have an urge to help others ease their pain and suffering. You are aware you are better off than another and want to help ease that person's burden just a bit.



One other type of volunteerism that often gets overlooked but is just as valuable is the type that occurs in your own family. If your daughter has young children, what are the odds she would welcome your offer to play with the kids or watch them while she took a break or went shopping? Could your Mom or Dad use your help in going to the pharmacy or grocery store? Does your son's or grandson's scout troop need another leader or someone to teach a merit badge?

It really doesn't matter if you donate time through an organization like the Red Cross, Habitat for Humanity, a local elementary school, prison ministry, or just within your own family. Volunteerism enriches your life and the lives of others. It is part of being human, and it feels great.

Finally, let me share a few quotes from various people that really capture the essence of sharing yourself:

It is the greatest of all mistakes to do nothing because you can only do little - do what you can.  ~Sydney Smith

It's easy to make a buck. It's a lot tougher to make a difference. ~Tom Brokaw

The purpose of life is not to be happy - but to matter, to be productive, to be useful, to have it make some difference that you have lived at all.  ~Leo Rosten

Wherever a man turns he can find someone who needs him.  ~Albert Schweitzer

Sometimes Creativity Just Appears

Several years ago I featured a post from Angelita Williams. She wrote about the importance of creativity during all stages of our life, but especially during retirement. For whatever reason, recently I have experienced a burst of fresh creative energy that is opening up some new experiences and areas of growth. So, it seemed logical to revisit a sampling of her thoughts and see how they fit what I am going through.

After years of tedious and difficult work in the same career  or job field, our capacity for creativity can diminish. This is not to say that doing the same type of work throughout your whole life ruins your creative edge, it's just likely that your creativity becomes narrowed and specialized to your specific area of work and thinking.

In my case, absolutely. I was so focused on building and growing my business, then maintaining it for as long as possible, that creativity was  limited to business-oriented thoughts. That wasn't bad, but too small a box for what might have been possible.

Creativity is one of the most powerful tools we as human beings possess. The power to think and create beyond our own immediate knowledge and existence is a very useful and invigorating thing. One of the luxuries that retirement can offer is the time and inspiration needed to rekindle your creative state of mind. While it can be a challenge to step into the world and mindset of creativity again, it can also be one of the most rewarding activities you have. 

Again, Yes. Angelita has described what happened within a few years of leaving full time employment.  In my case, I took my consulting experience and applied it to other teaching-type activities: lay minister, prison ministry, and teaching Junior Achievement classes. After years in radio, becoming involved in ham radio seemed a natural. Then, blogging allowed my need to write to be expressed.

However, as Ms. Williams points out in her next section, I wasn't trying new things or reaching for new parts of me. Teaching is what I had done for several decades. Was there any other way to push my creativity in new directions?

It is only through experiencing new things that we can engage in new avenues of creative thinking. Take on new experiences, visit new places, try things you've never done before—these things can help to spark some new line of thought that only that new sensation can inspire.

If coming up with new things to do is a challenge, going back to things and places from your past can be a good place to start. Revisit things that used to inspire and motivate you that you lost the time or place for in the working world. By revisiting these old interests and passions, you can rediscover why those things inspired your creative energy. 

I have been starting and stopping guitar for quite some time. I'd get to a certain point, then stop. Music has always been an important part of my life but I couldn't break through this barrier.

Then, a friend told me about an online guitar course he had discovered two years earlier that really excited him. Besides being free, the lessons are all available on both this fellow's web site and Youtube. Each takes a bite-sized step forward until you are feeling definite progress and playing songs.

I am about 5 weeks into Justin's (justinguitar.com) course and making more progress in feeling confident in my chord playing than I have in years. 

Next, the author suggested observing creativity in others. I had marveled at my wife's creativity vin the visual arts for all our married life, but assumed that was a type of creative outlet that was not on my horizon.

Submerging yourself in their world of creativity is bound to arouse some creative juices of your own. Spend time  with creative people—writers, artists, musicians—and take in their work and their spirit. While this may sound a bit hard to accomplish, it really is a great way to awaken your creativity.
What many people fail to realize (or at least fail to reveal) is that much of our creativity comes from seeing the creativity of others and mimicking it. Finding inspiration from the creative masters is just another method for tapping into your own more original ideas.

I was cleaning out some attic space and uncovered some of the paintings my father had produced in the last decade of his life. He had never shown any interest or artistic bent before, but something made him pick up brushes and a canvas. Now, I had a motivation. Betty had shown me how an artist worked, and my dad showed me what was possible.

I found years of Bob Ross videos (his happy clouds and powerful palette knife!) on YouTube. Betty convinced me to give it a try. Bob Ross made it seem doable. So, I bought some paints, brushes, canvas and other tools of the trade. Covering the dinette table in drop cloth, one morning a few weeks ago I gave painting a whirl. 

Well, my sky is greenish, my trees an unnatural shade of red, and water has never looked less wet. Even so, I enjoyed it! Betty gave me ideas to practice my color blending and how to use the palette knife. On video, Bob Ross continued to believe that a true artist is hidden (apparently very deeply) inside me.

The point of these examples is not to pass myself off as a Renaissance man, giving da Vinci a run for his money. Rather, I hope it gives you some encouragement to try something new, something that you don't believe you have the ability to pull off. 

My painting "career" might last only as long as my $150 worth of oil paints and canvas. I may find the experience interesting, but not my thing. Then, again, my dad might have passed on something to me that just needed a chance to blossom. Betty has promised I can put one of my paintings in the living room if I am comfortable with it (it won't be the one above).

Then, as I am gazing at my landscape, maybe I'll break into an extended guitar jam with my new-found ability to change chords without looking at my fingers!

Retirement is a journey that can take us down unexpected paths to uncharted destinations. We only have to have the little bit of courage it takes to try something new. If we fail, we are exactly where we were before we tried. If we succeed, we will have to explain that big smile on our face to everyone we meet.

Blogs You Recommend: Retirement or Otherwise

About once a year I turn to the experts, you, to help me find blogs that have slipped beneath my radar. I occasionally freshen the list of blogs I follow but am always open to suggestions about something that you find engaging and want to pass along to me.

Importantly, the blog(s) you want me to be aware of do not have to be just about retirement. If one lesson has become clear over the past nine years, it is that we are quite an eclectic group of people, with wide-ranging interests. To assume that someone who reads a retirement blog reads only retirement blogs is probably mistaken. 

So, I'd like to expand my blogroll (the list on the right side of the home page) to include well-written approaches to other subjects. No religion and no politics. 

Otherwise, almost anything is fair game: writing, reading and books, hobbies, artistic or creative thoughts, travel, relationships....anything that you find worth your time.

Of course, pointing me toward retirement blogs that I have overlooked is encouraged. I get (steal? borrow?) some of my best ideas from what others have to say about the struggles and joys of retirement living.

So, there is my request. Leave a comment that lists sites you think I'd enjoy. Don't worry about trying to type the full web address; if I have the title I will find it.

It is the middle of a very hot Phoenix summer. Your suggestions will give me every reason to stay inside, enjoying what you have found.

Success In Anything Is Built Slowly - Even Retirement

You are familiar with stories of actors who achieve "instant stardom" after fifteen years of hard work. Thomas Edison spent 14 months of testing to get a light bulb that lasted less than 14 hours. Hard work and time are usually required before the payoff. Still, as a society we expect instant gratification, instant solutions, instant success, even instant mashed potatoes. Are those expectations realistic? 

For most of us, most of the time, the answer is "No."  It is more likely that some or all of these five steps will have to be taken. It doesn't matter if you run a business, write a blog, want to maintain a marriage, or simply want to maximize your own potential. Every one of these strategies applies, even in retirement:

You must offer something of value
You may be able to fool some of the people some of the time, but they will not come back. If you try to sell an inferior product you will be out of business. If you think you don't need to work at making your marriage succeed but believe your partner needs to do all the work, you are headed for divorce court. Write a blog with below-average content and you will probably be writing for an audience of one.

Value isn't apparent immediately. For someone to judge value there has to be a period of time when you prove again and again that a consistently good outcome is associated with you.

You can't simply copy what someone else has done
Over the years I have spent a lot of time reading various blogs. looking at how others do what I am trying to do. It is impossible not to notice how many blogs basically copy each other. There are probably 1,000 simple living or minimalist blogs. Maybe 100 of them are original in content, approach, and feel. The rest recycle the same stale list of tips and ideas. 

Guess which ones are successful. Hollywood and TV networks are shameless in copying someone else's ideas. Reality shows went from a new idea to completely overdone and absurd in very short order. One hit movie will generate a dozen copycats (or sequels...think Avengers, or Star Wars).

In whatever you are doing, true success comes from something unique about your product, idea, or method. Unless your name is Xerox, copies aren't an acceptable approach. Look for that angle that makes you stand out. Don't repeat someone else's life, mold your own.

You must keep commitments
Keeping a promise has become somewhat of a rarity in many aspects of our life. Politicians will make campaign promises they have no intention or ability to keep. Health insurance companies try to drop you if you really need the protection you have paid for. Someone will make a commitment to you and break it without a moment's hesitation if it becomes inconvenient for them.

When you make a commitment to someone you must do everything in your power to keep it. If you promise to stay with a spouse "until death do us part," that doesn't give you much wiggle room. It  shouldn't mean you can split when things get a little tough or you've gotten bored. When you promise to complete a project in a certain way under a certain budget, then that's what you do. When you agree to head the church stewardship committee you agree to give it the best you have. You teach English as a second language twice a week at the library and show up every time because you know people are depending on you. Success will follow. You will be a person who can be trusted, can be depended upon.  


You must follow up after the sale.
How many times have you been involved in any type of transaction in which the seller only cared about closing the deal? They did nothing to insure you'd be happy after the sale. The only thing that mattered was your signature on the dotted line. They didn't care about turning you into a repeat customer.

As any successful business person knows, the sale is just the first step. Keeping a customer is much cheaper than constantly finding new buyers. Attracting readers to your blog doesn't mean you have succeeded, they must return. Building a beautiful wooden cabinet for someone doesn't mean you are done. It opens the door for more.  Success takes time, it takes building a firm foundation of delivering more than you promised. You must constantly strive to do something better than you did yesterday.


You must set goals but remain flexible.
If you don't know where you want to go, any road will take you there. This saying is absolutely true. Without goals you have no plan. You don't know where you want to go. You have no way to measure progress. You are depending on luck to make everything come out right. You are living like a casual gambler in Las Vegas who hopes just one more quarter in the machine will be the difference.

Goals are essential to success, in life, in business, in relationships, and certainly in retirement. Goal setting forces you to think through what you want and how you will get there. At the same time, you must remain flexible. Things change all the time. New opportunities open, old ones close. If you rigidly adhere to goals without making mid course adjustments you will not succeed.

Success doesn't just mean monetary gain. In life, success covers all aspects of your existence. To fail is not a usual goal of anyone in anything. But, success takes dedication, will power, and an understanding of yourself. It doesn't just happen, you must make it happen for a satisfying retirement or a satisfying life.

Care to share any of your "living" success secrets?