May 28, 2016

Trying to Follow Ben Franklin's Plan

Ben Franklin was a man who had an oversized impact on the beginnings of our country. He is considered to be one of the Founding Fathers. Wikipedia lists his accomplishments as being an author, printer, political theorist, postmaster, scientist (think kite and lightning), inventor, statesman, and diplomat.

He gave us the memorable quotes, "Tell me and I forget, teach me and I may remember, involve me and I learn; by failing to prepare, you are preparing to fail; they who give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety."

In 1726, while only 20 years old, he wrote a book that continues to sell today. He listed 13 virtues that he was determined to follow in his quest for moral perfection. Later in life he admitted he was not able to keep all the virtues completely, but was sure he lived a happier and more productive life just from making the attempt. His baker's dozen included:

  1. temperance
  2. silence
  3. order
  4. resolution
  5. frugality
  6. industry
  7. sincerity
  8. justice
  9. moderation
  10. cleanliness
  11. tranquility
  12. chastity
  13. humility

For our purposes I want to highlight just five of his traits and draw a connection to a satisfying retirement.

Temperance: Though akin to another word on his list, moderation, this word implies not overeating or overdrinking by showing self restraint. For our purposes, I see this virtue as being part of our overall attempt to maintain our health. As we age our body's metabolism slows down. We must eat less or burn more calories. We also lose muscle mass and the ability to process oxygen as well. Regular exercise is a requirement, not an option.   

Frugality: This is a word that has gotten a bad reputation. Frugality doesn't mean reusing paper towels, living in a tent, or keeping your possessions in a duffle bag. It does mean the acceptance of the limits of one's financial resources and living within those constraints. Ultimately, it means understanding the difference between needs and wants and satisfying the true wants after needs are accounted for. It doesn't have to mean doing without; it does mean eliminating waste and cutting back where possible.

Industry: He said, "Lose no time. be always employed in something useful. Cut off all unnecessary actions." Ben was referring to hard work and dedication to the task at hand. Today, we may use the words energy or vigor to describe this attribute. It means working for what we want until the job is finished to our satisfaction. It would be the opposite of laziness. 

Moderation: Like the first virtue, temperance, though usually we think of this as covering more ground. Moderation in everything, including moderation, is one of the keys to happiness and contentment. He says we must "avoid extremes." 

Tranquility: Being peaceful or calm are two personality traits that are often in short supply in our lives. Of course, the virtue of industry teaches us that there are times when hard work and dedication to the task at hand are necessary. But, for too many of us, that highly-stressed, use-every-moment-to-be productive attitude is our setting for every moment we are awake. That results in burnout and health problems. As Mr. Franklin said, "be not concerned with trifles, or at accidents common or unavoidable."

Someday I may write about  the remaining virtues (though chastity may be difficult to tackle, especially for a man who wrote a rather famous letter entitled, "Advice to a Friend on Choosing a Mistress" ). He owned several slaves, so his list of virtues was missing at least one key component.

Even with those shortcomings, Ben Franklin's is as good a list as any to ponder about how to make our lives more satisfying and meaningful.

NOTE: Betty and I are on an Alaskan Cruise! Comments will take awhile to be responded to, but please leave your thoughts.

May 20, 2016

Health Care Costs: Is Next Year Going To Be Bad?

credit: Huffington
I guess we should be thankful we won't be surprised: the warnings about a major increase in health care insurance costs are hard to avoid. Several leading insurers have already announced they will not participate in the Marketplace in any states, or areas that are too rural to provide them with enough income. Some places, like Alaska or Alabama, may have only one company offering to sell insurance through starting in the fall. With no competition, I think we can all guess what the costs and policy limitations will look like.

In those states that will offer the customer several choices, rate increases as high as 35% are being mentioned. That will be coupled with fewer doctors or specialists in network, a limited choice of hospitals or clinics, and fewer drugs in the lowest tiers of coverage. The Affordable Care Act's flaws are starting to cause serious problems. They are fixable, but at the moment our political climate is more interested in fixing blame.

If you are 65 or older, this drumbeat of bad news doesn't affect you directly. Medicare will have little, if any, premium changes. Rate increases for Medigap, Part D drug coverage, or Medicare Advantage programs are likely to be much more reasonable because of intense competition. 

However, pre-retirees, or younger spouses will find themselves trapped in a system that is rapidly reaching unsustainability.The health care system in the United States is unlike any other developed country. We have a for-profit approach to health care. While that provides for the best medical care possible, it has the very real potential for financial hardships or even ruin if someone isn't prepared or can't find coverage.

Recent studies tell us that at least $250,000 in lifetime costs are very possible for those over 65. Don't we assume that with Medicare, a Medigap policy, or an Advantage option, and drug coverage that can't possibly be right? 

Unfortunately, the most expensive parts of our health costs aren't covered by those items. Moving into an assisted living facility can easily cost $3-$4,000 a month (or more). A nursing home might be closer to $5,000 a month. Medicare pays nothing, or for only a limited period of time.

If you elect to stay in your home you will still need expensive on-site nursing and custodial care that can cost about the same as being in a facility. Research shows 70% of us will need either short and long term care at some point.

Traditional Medicare doesn't pay for hearing aids, dental care, or eyeglasses (except after cataract surgery). It has limits on durable equipment. Except for a few exceptions it does not cover alternative care. Even with Part D coverage, prescription drugs are not going to get cheaper. Medicare is prohibited by law from negotiating lower drug prices. Congress has decided that Big Pharma must be protected, even with profits approaching $100 billion a year.

Lots of folks insist that health insurance is better and cheaper when left to private companies. Having been in the individual health market for over 30 years, I beg to differ. Rates always went up, sometimes by a little, sometimes by a lot, but always up. Coverage went down, drug costs showed massive increases, and deductible got higher. Since I became Medicare-eligible my direct costs have fallen by over 50%.

Of course, with some new drugs costing up to $10,000 a month (!), I still face very high costs if I am unlucky enough to get a serious disease that requires such expensive treatment.

What I will never understand is the protest against single-payer insurance until someone signs up for Medicare. Then, the complaints cease and the praise begins. Medicare is a single-payer system that works well for the consumer. Is there fraud? Sure. Do doctors make less? Yes. Does it need to make itself financially healthy? Of course. But, looking at the private system those under 65 must live (or die) with, I am hard pressed to see how the price gouging, lack of competition, and poor service is better. And, all of that started well before the Affordable Care Act.

Next year is going to bring back-breaking cost increases to millions of our fellow citizens. It is also going to bring us a new president and many new members of Congress. Whether that means any fundamental changes is anyone's guess.

May 17, 2016

Can You Spend Part Of The Year Away From Family?

This is  an intriguing question posed by a new reader. I have addressed something similar in a past post, but from the perspective of the kids who are left behind when parents or grandparents spend part of the year somewhere else. This time let's turn our focus on those who leave for the summer or winter.

The ability to follow the sun, live part of the year in a place you love, or spend extended time visiting family and friends is one of the true blessings of retirement. If the budget, spirit, and obligations permit, there is nothing preventing you from jumping in the RV, a plane, or car and hitting the road. 

Living in Arizona, I am exposed to this concept every year. Folks from colder or rainier places stream into the state from October until April. Then, they head back to the places that are much more pleasant than the desert during our blistering summers. Those of us who live here fulltime do our best to find places to hide for at least part of those super-hot months. Flagstaff is two hours away and 30 degrees cooler. San Diego beckons with its moderate temperatures and foggy coastline. Portland or Seattle are a 4 hour flight north (or 7 day RV trip!).

If someone has family scattered across the country, being a seasonal traveller can solve two problems: allowing you to satisfy your wanderlust and renew family ties. With no offspring or a family setup that doesn't invite much contact, living part of the year in another location is simply a question of affordability and desire. 

But, what about the situations where some or all of your close family and good friends live where you call home? How do you feel when you move away for part of the year? How do you maintain contact with loved ones when you are away? 

One common response is that the the reason for an empty nest is to feel free to get up and go when the urge is there. E-mail, video services like Skype, text messaging, even a private Facebook page or blog meant just for family members can keep everyone up to date. In the case of an emergency or major family event, driving or flying home are options. 

Another reaction might be that your kids have their own family, and the grandkid are of the age (think teenage) when contact with the grandparents is less frequent anyway. Being gone for a season would not as big an obstacle as it was when they were younger.  

Some folks have told me that the chance to travel and live in places that make them happy, while still healthy enough, is a key factor in deciding to be away from family. Missing loved ones is not easy, but giving up lifestyle dreams would be harder.

I know a few couples who love the fact they now have two places that feel like home. Friends, belongings, and activities exist in both their summer and winter locations that make them feel settled and comfortable. They have built important relationships in both locations.

Betty and I have had to find our personal limits and what mix of family closeness and road trips work for us. For a few years we had given serious thought to spending several months of our summers in Portland, Oregon. We love the area and have some great friends we enjoy tremendously. We would escape the heat that has been our companion for over 30 years in Arizona.

Being honest with ourselves, though, we realized that being gone all summer in Oregon would not work. Neither of us wants to be away from other family members that long.  We love our new home and being close to those we care about. 

We do like RV travel. Some of our trips are just a few days or a week, but some of them have lasted for almost two months. Much like the Oregon decision, we have determined that two months away from family and our home is our limit. 

Even with all the ways to stay in touch, our thoughts begin to turn toward home somewhere around the 6 week mark. Like a horse heading for the barn, the RV starts to point that way.

The reader who submitted the question, and I too, am interested in your thoughts. Living for part of the year somewhere other than your primary home - is it difficult, create problems, or have you adjusted to the separation well?

May 10, 2016

Satisfying Retirement Planning: Three Keys To "Success?"


There are a few pieces of "common knowledge" about retirement I'd like to modify. They may holding you back from deciding to retire. Or, maybe, they are forcing you to live in a way that isn't really satisfying. Certainly, they are preventing you from believing retirement can be joyful with your resouces.

There are three of this nuggets of wisdom that are not hard and fast truths:

1) You need 75-80% of your preretirement income to live a satisfying lifestyle. Amazingly, even though this has been disproved and discounted for years, you will still find this gem quoted quite regularly. It is very possible to spend 80% of the income you once enjoyed as an employed person. Lots of people do. 

Some folks spend even more than they once earned, at least in the first few years of retirement. They want to maximize their healthy years. So they "front-load" their expenses with extra travel and discretionary spending, with plans to cut back when the mind, body, or spirit starts to run low on energy. While this isn't the post to discuss that strategy, I can tell you that it is a legitimate approach to retirement planning, if you have the resources to support such a choice and the discipline to cut back after a period of time.

Importantly, you absolutely don't need to plan on spending 80% of your working days' income after you retire. I have been retired for 15 years and am spending approximately 40% of what I once brought home each year. Readers of this blog report spending from as low as 25% to a high of 60-75%.

Once you retire, what you spend your money on usually changes dramatically. Commuting expenses vanish. Clothing tends to change from maintaining a wardrobe for work to jeans and a T-shirt, or other casual choices. Trips to the dry cleaners become infrequent. Many retirees find themselves with no mortgage, or downsized living space with lower taxes and insurance costs. Paying for your kids' education is usually finished. Since you have the time to prepare more meals at home, restaurant bills can drop dramatically.

2) You need at least one million dollars in savings to not outlive your money. What you need is enough to cover your current and projected expenses. For many of us, that does not add up to a seven figure investment account. While a million dollars may be what you eventually spend, you do not need to amass that total on your own. 

Over the course of what I hope to be another 20 or 25 years on this planet, Social Security will have paid me several hundreds of thousands of dollars. The equity I have in my home will bring more when I sell it. The money I do have in IRA and investment accounts will grow each year, maybe by not as much as I'd like, but enough to keep me ahead of inflation.

As point #1 notes above, my living expenses are dramatically lower than they once were, even as the quality of my life has improved. Health costs will begin to consume more of my budget each year. But, Medicare, medigap and drug coverage means virtually anything that happens to me will not put me seriously upside down.

3) You can withdraw 4% of your savings each year and it will outlast you. For the last several years, and for the foreseeable future, this is no longer an automatic guideline. With interest rates mired as low as they are, withdrawing 4% from your investment pot of money runs the risk of a shortfall. 

Even though points #1 and #2 are true, a retiree still must manage his or her investments prudently. While doable for the first few years of retirement when travel and lifestyle expenses may be higher, a drawdown of 4% over an extended time frame could leave you in a bind.

This is a when you adjust your lifestyle and expenses to allow you to sleep at well at night. If you can safely take out 3%, then build your budget around that number (along with Social Security and other income). If it is 2%, then make it work or add part time income to the mix.

In my case, I withdraw about 3% each year and find that is entirely sufficient for a very satisfying retirement lifestyle of family, home life, and travel. Can I afford a new car every three years? No, but I don't want a new car that often. Can I fly off to Maui on a whim? No. But, with careful planning I can still make a trip to paradise every few years. Frankly, I have happily adjusted to an income level that I would not dramatically increase even if I could. 

I have chosen experiences over things, less worry instead of stress, and building a life around what I need and what I can afford to want: those are my three keys to success.

What are yours?

May 7, 2016

A History Lesson on Being Green

First posted 5 years, not much has changed. I have left the original comments because several good points were made. Please, add your thoughts.

Simple living, voluntary simplicity, and looking for ways to live a less wasteful life are important topics to readers of Satisfying Retirement. In the past, posts that dealt with these subjects have generated lost of traffic and comments.

This time let's have a little history lesson, a reminder that simple living and "being green"  existed well before now. A few days ago a good friend sent me the following story pulled from somewhere on the Internet. Read it and I'll have a few questions for you at the end.

In the line at the grocery store, the young cashier told the older woman that plastic bags weren't good for the environment. The woman apologized to her and explained, "We didn't have the green thing back in my day...."

That's right, they didn't have the green thing in her day. Back then, they returned their milk bottles, Coke bottles and beer bottles to the store. The store sent them back to the plant to be washed and sterilized and refilled, using the same bottles over and over. So they really were recycled.

But they didn't have the green thing back her day......

In her day, they walked up stairs, because they didn't have an escalator in every store and office building. They walked to the grocery store and didn't climb into a 300-horsepower machine every time they had to go two blocks.

But she's right. They didn't have the green thing in her day......

Back then, they washed the baby's diapers because they didn't have the throw-away kind. They dried clothes on a line, not in an energy gobbling machine burning up 220 volts. "Wind and solar power" really did dry the
clothes. Kids got hand-me-down clothes from their brothers or sisters, not always brand-new clothing.

But that old lady is right, they didn't have the green thing back in her day......

Back then, they had one TV, or radio, in the house not a TV in every room. And the TV had a small screen the size of a pizza dish, not a screen the size of the state of Montana. In the kitchen, they blended and stirred by hand because they didn't have electric machines to do everything for you. When they packaged a fragile item to send in the mail, they used wadded up newspaper to cushion it, not Styrofoam or plastic bubble wrap.....

Back then, they didn't fire up an engine and burn gasoline just to cut the lawn. They used a push mower that ran on human power. They exercised
by working so they didn't need to go to a health club to run on treadmills that operate on electricity.

But she's right, they didn't have the green thing back then......

They drank from a fountain when they were thirsty, instead of using a cup or a plastic bottle every time they had a drink of water. They refilled pens with ink, instead of buying a new pen, and they replaced the razor blades in a razor instead of throwing away the whole razor just because the blade got dull.

But they didn't have the green thing back then......

Back then, people took the streetcar and kids rode their bikes to school or rode the school bus, instead of turning their moms into a 24-hour taxi service. They had one electrical outlet in a room, not an entire bank of sockets to power a dozen appliances. And they didn't need a computerized gadget to receive a signal beamed from satellites 2,000 miles out in space in order to find the nearest pizza joint......

But that old lady is right. They didn't have the green thing back in her day.......

Makes you think doesn't it? What used to be the way we lived now has a name. Today it takes effort and sacrifice to simplify and be aware of our environmental impact. What used to be commonplace could now be considered somewhat extreme if we followed these practices.

We've made tremendous strides in learning how to minimize damage to the planet. But, as I read this story I realized how many of the examples given could easily be replicated today. It isn't that we can't take many of the steps, we just have to be reminded of our past.

Is there anything in this story that might prompt you to make a change in your lifestyle? Did this remind you of something you miss and would like to recapture?

May 3, 2016

Being a Beginner - I Hate The Feeling

As I was reading a book I had been sent to review, there was a phrase that jumped off the page for me and became the basis of this post. I can relate completely to the concept of fear when beginning something new. I wrote about it from a slightly different perspective just a few weeks ago. Of course, that fear is silly. No one is born good at anything, except crying. But, as we age I think we forget that basic fact and miss so many great experiences.

I have started and stopped tennis because I couldn't put the ball in the corner after three or four lessons. Golf lasted longer, but my inability to develop instant muscle memory doomed me to once-a year-duffer stage when my brother visited town from Kansas. 

Playing the guitar? I have started and stopped and started again six or seven times. At some point, my inability to play chord transitions smoothly, or tackle a song with three flats leaves me feeling stuck in beginner mode. I slowly lessen my time each week with the instrument until it retreats to a corner of the room. Not being able to match what any 20 year old kid could do during the Beatle era leaves me disappointed. I don't push through that wall, I stop. I simply cannot handle being a beginner at a new skill. Irrationally, I think others are judging me for my lack of expertise.

The fear of being a beginner probably affects most of us at some time or another. Being a parent for the first time might top the list. No one, I repeat, no one is ever really ready to be a parent. All the books and advice in the world does not diminish that feeling of being completely unprepared for the responsibility of parenthood. You learn as you go. You and the baby are beginners together.

Your first real, "adult" job is another time when fear of being exposed as a beginner can be a common response. No matter how dazzling your resume, until the work actually begins and the consequences become real do you find out what you are capable of accomplishing.

Retirement: we all start as beginners. As I have written many times before, the journey we take will not be the exact one you thought it would be. We will be a "beginner" over and over, though we may not recognize it as such. 

So, why is being a beginner as I navigate my retirement journey OK but not in other areas? I have no idea, but I wish I could apply the same mindset to both situations.

The book I'm reading focuses on artistic and creative activities. For her purposes, the fear of being a beginner keeps someone from trying to paint or draw, play an instrument or sing in a choir, sculpt or throw a pot on a wheel, write a novel or a series of poems. She urges those with this limitation to simply take the first, small step, then the next. If that creative expression is pleasing, continue. If not, shift to something else. But, don't quit before giving something a real chance, just for fear of being less than perfect.

There isn't one creative or successful person who started out knowing it all. Each one started at the very beginning, stumbling and searching for the right combination of technique and skill. Practice, followed by more practice, losing a lot, failing often, and looking for a teacher that could help get over a hurdle was the path to "instant" success. 

I know all that is true. Then, how come I allow the fear of being a beginner keep me from trying something I might find I love?