Financial Security in an Insecure World

 

Over the last few months, the stock market has proven yet again it is no place for sissies. Huge drops in the Dow Jones average one day (over 1,100 points in a single session last week!), followed by encouraging partial recovery, only to be dashed by another fear-induced sell-off, makes for an emotional roller coaster. What will the Fed do about interest rates? What happens to the price of oil? Who can do something about inflation? Will the supply chain problem ever be corrected?

The war in Ukraine drags on, with millions of its citizens displaced and thousands killed. Putin doesn't know how to quit without putting control of his country in serious jeopardy. The underdog lives to fight another day, but the outcome is pure speculation. The world economy is in a tizzy, and Europe trying to make do without Russian oil, gas, and wheat. NATO might gain new members, but only if Turkey allows it. 

China has become the financial equivalent of jello: a seemingly solid mass that quivers and shakes with each new move by its government to hold things together. Covid is back, resulting in millions back into lockdown.

The bottom line is financial headaches, real or imagined, for nearly all of us. Even if you don't have much skin in what happens on Wall Street, we are all affected by what happens worldwide. It is absolutely true that if one developed country sneezes, we all worry about catching a cold. 

So, what does all this mean for the concept of planning for retirement financial security? If you are retired, close to leaving the workforce, or even just thinking about the time when you will be freer to live your dreams, what are you supposed to do when the Dow drops 1,000, you can't afford your dream home, or China, the world's second-largest economy, starts to slow down? 

Do you rejoice when gas prices drop or realize that it is likely a temporary blip Prices around $5 a gallon may be the new norm for quite a while. ? What about the West's drought...how will that affect food prices and life for the 40 million people who depend on the Colorado River to keep flowing?? Lake Mead and Lake Powell are draining faster than a toddler's bathtub.

As regular readers know, I am a non-financial blogger. I still managed to retire at 52 by following a simple rule: spend less than I made. I have had a few financial advisers over the years. Generally speaking, they have been positives for me.

Yes, some of their recommendations were poor (think Greek banks in 2012), and I lost money. Since the financial markets are not logical and are subject to seemingly counterintuitive moves, I  know losing is part of the process. As long as the growth exceeds the decline by a decent percentage, I am happy. 

So, what is financial security, and how do you achieve it? I suggest there are three parts to the answer:

1. Knowledge. I don't mean understanding derivatives, swaps, or other esoteric financial tactics that helped launch the 2008 meltdown. Obviously, many professionals didn't understand what they were buying either. I mean knowledge about your goals, the actual state of your financial health, and the amount of risk and uncertainty you are willing to tolerate. Self-knowledge is key. Without it, your future is at the mercy of others.

2. Patience. This is a tough one in a culture that literally screams at us, "buy now and buy often." Saving for something and delayed gratification is not part of our collective mindset. An article in the paper last weekend recounted the trend of those under 35 giving up on saving for retirement. After two years of Covid, these folks have decided that planning for an unknown future is silly. Enjoy life while you can before another ...whatever...knocks us on our rears again.

Even if we have little or nothing invested in stocks, when the market falls, we react in precisely the wrong way by allowing panic or fear to dictate how we manage our financial assets. When housing prices begin to skyrocket like they have been for the last few years, we decide to sell our homes so we don't miss out on the rising tide - completely forgetting that the house we are moving to is also hugely more expensive. 

Patience is a winning strategy in much of life, particularly in financial matters. The hare lives up to 10 years. The tortoise is closer to 150 years. There is a reason he eventually wins the race. 

3. Attitude.  This is the belief that you have successfully prepared for your retirement. Life may make that difficult, but without an attitude that the problems can be overcome or worked to your advantage, severe damage will have been done to your long-term success. This isn't just positive thinking. Instead, the proper attitude allows you to make appropriate decisions, execute your plan, and adjust your goals. I know that the losses my investment account is showing are only real if I liquidate now. My attitude is they are paper losses, I will not deviate from my plan.

Financial security does require some money. It does require being smart with your investments. It does require a certain level of resources, though that level is different for each of us. That is the reality. 

But, I contend that the mental part of the equation is as important. With self-knowledge, patience, and the right attitude, your financial security is not just what is in the bank or the broker's, but what is in your mind. 

And, unlike a stock market that runs more on emotion than logic, I find it quite comforting that the mental part of financial security is 100% under my control.

 I find that quite satisfying.

Grownups in The Room

 

The title grabbed my attention: 10 Ways to Live More Frugally. In the section on retirement, this article in a national newspaper listed ideas for cutting back spending during retirement.

Unfortunately, the author used an approach I refer to as "Eat Your Vegetables," meaning the information is so basic, so much common knowledge, it is like telling someone to stop smoking, exercise more, and eat more fruits and vegetables to improve his health. There is nothing new, nothing that hasn't been suggested a million times before.

A sampling of the 10 Ways included:

* Plan carefully if you are thinking of moving
* Plan your meals for the week
* Review your cable or streaming bills
* Be a savvy grocery shopper
* Check out discounts and freebies

I am a little surprised that the list didn't include: don't walk in front of a bus, and close the windows when it is raining. OK, that is a bit snarky. But, seriously, the best this national newspaper can come up with is to review your Internet bill and look for dining discounts?

Sometimes I think folks who write retirement articles are all in their 20s or 30s and look at us as if we have lost the ability to think. They present ideas as if their target reader is a class of 2nd graders. They have no clue what our life is like or what steps we have already taken to ensure a satisfying retirement. They tend to overlook that we have had to make a lot of decisions and hard choices just to be old enough to qualify as a retiree! 

A thoughtful article on ways to cut expenses during retirement is always welcome. Cutting out waste and evaluating where our money goes is important. A  national survey of those 65-74 suggests that we spend 43% of our money on our home and house-related expenses. 14% for transportation, 13% for food, and 11% for health costs (thank you Medicare!). 

If those numbers are accurate, nearly half our money each year goes to keeping a roof over our head and in good repair. Logically, there are substantial saving possibilities in that category alone. Everything from freezing property taxes for those over 65, or getting help with utility bills if your income is low enough to qualify, to the potential savings from installing energy-efficient windows, solar panels, new siding, or using LED lights are worth exploring. 

My bottom line is simple: articles in national newspapers and magazines that target retirees should be putting more effort into the content. We are not simpletons that need to be told to look for coupons to save money when dining out. We are grownups who have done quite well, thank you very much. Give us meaningful, actionable information that isn't a simple repackaging of hackneyed, trite, and obvious material. 

Does this qualify as a rant?

I feel better now.

When Should I retire?

 Every so often, I am returning to the roots of Satisfying Retirement and rerunning an older post that deals with the nuts and bolts of retirement. This post has been read almost 50,000 times since first published, so if anything I have written before is deserving of another airing, this is it.

If you have yet to leave full-time work and have questions about what is ahead, I trust these posts will help you. If you have already retired, there is never a bad time to review what got you there and how to improve your experience. 

From eleven years ago

"When should I retire" is a question I hear a lot. Comments left on the blog or e-mails filling my inbox ask for help in knowing when it is time to call it quits. The answer I give is usually the same: For your individual situation, I have no idea. Retiring from your present full-time job to begin your satisfying retirement is one of the more important decisions you will make during your lifetime. There are so many factors to consider that you must put in the time and effort to come to the best answer for you.

I wrote the  following post about 6 months ago. In looking it over I think the information is valuable enough to repeat now without many changes. I have a lot of new readers who may not have seen this the first time. If so, I urge you to add your comments at the end. Fresh input is very valuable to all of us. If you remember reading this post when first published, I hope a second time will spark your thinking about one or more of the points raised.

You know it is time to retire when....

You dread going to work every day. You are tired and dispirited. Everyone has an off day or a few days every now and then. But, if that feeling is present pretty much all the time, you may have reached your limit.


You are being asked to do more work for a less money. This is the hidden message in that last productivity memo you received. To preserve your job you will have to accept a salary cut and pick up the slack of those unfortunate souls who got a pink slip. For the short term it may be in your best interest to accept this. But if the situation begins to look semi-permanent, you may have second thoughts.


You feel the essential "you" is slipping away. There isn't enough time for you to do what satisfies you and makes you happy. You find yourself doing things that make you uncomfortable. Your world has shrunk to work-sleep-work.

You can't wait to get home to work on a project or new passion. Closely tied to the "you" reference above. All your thoughts revolve around after work hours. There never is any time to do that thing you really love.

You complain to anyone who will listen (and even many who will not) about work. Spending your energy and life in a negative place increases your stress and shortens your life. It is also a quick way to get fired.

You have saved enough to live without a regular paycheck. You have run the numbers so often your calculator is melting. There are solid income streams that make you feel you can do this. You have thought through contingencies. You have thought about worst-case scenarios. The numbers still work. You feel confident in your financial planning and long term situation.


A loved one is very sick, and you'd rather spend your time with that person while you can. Whether a parent, child, relative, or best friend, there is no do-over if that person isn't likely to be with you through your retirement. Do you feel strongly that person needs you right now? 


Your health is beginning to slip and you have things you want to accomplish while you still can. In this case you are on the other side of the fence. You are sure you will not be physically or mentally able to do what you'd like to do if you wait too long to retire. You decide it is more important to enjoy your freedom while you have it, even if it means a more limited lifestyle.


You have affordable alternatives for acceptable health insurance and care. This question is hard to answer at the moment. Everything seems to be in a state of flux. But, if your health coverage through work will continue, or your Medicare and supplemental policy are working well you are better off than many. Plan to spend much more than you think you will. If the budget still works you have dealt with one of the biggest hurdles to a satisfying retirement.



You are excited about making a major change in your life (where you live, how you spend your time) Change is life. A life without change is in a rut. Change can be stimulating, exciting, terrifying, and necessary. Sometimes you just have to shake it up and that thought gets your blood racing.


Your self-identity isn't defined by your job. You have a life and and sense of self worth not dependent on work. This is important. There are few things sadder than someone who retires and discovers he has no life outside of work. If you have at least some friends who are not co-workers, enjoy hobbies or other activities you are much closer to being ready to leave the job.


What do you want to do with the rest of your life? When do you want to do it? Aren't those the most important questions? When you can answer them, you may be ready.



Which of these questions and statements fit your situation? If you are retired, which ones were most important to you when you made the decision? Retirement today is quite different from a retirement lifestyle of even 10-15 years ago. You may plan for more work. You may want to stay in your home as long as possible. Sun City holds little appeal. You may be chomping at the bit to spend a few years overseas on mission work. You are ready for a new phase of your life, not for your life to end in a whimper. Your thought: retirement  only the beginning of a new part of my life.


How do you know when to retire? You just do.

Traveling and Pets: What's An Owner To Do?

A reader asked if I would address an issue that is causing her some conflicting emotions. She and her husband like to travel on occasion. What deeply bothers her is the reality of pets that must be left behind. She has a friend that will take care of the basic daily needs of her cats. Yet, she worries about loneliness and shirking responsibility for the animal's well-being. She notes the cats have difficult schedules and need special attention. Her concern is deep enough that it is affecting her willingness to travel.

For some of us with pets, friends willing to act as pet-minders don't exist. That means our furry family member must endure days or weeks in a kennel cage. Sure, the better facilities will make sure the dog or cat gets daily exercise and human contact. Even so, to think of Muffin in a cage, away from all she knows, can be just as upsetting for the human owner.

One option is a pet sitter. We have used this option a time or two with good results.  A trained and vetted person moves into your home or apartment for the time you will be gone. They will allow the animal to stay in a familiar setting and retain its usual schedule. Obviously, the owner must be comfortable having a stranger spend time in their home, sleeping in their bed, using their facilities, all while caring for the pet. There is a level of trust that may be uncomfortable for some. While not inexpensive, our experience is the cost is no greater than a good quality kennel. 

Even though our beloved Bailey died almost a year and a half ago, we are experiencing the same travel-dog issues as the reader. One of our daughters is out of town a lot for her business. That means we are home to her doggie, Adler, for probably 100 days a year. The good news: we love her, and she loves our house. For the first few days, she mopes around wondering where her real mommy is. But then she settles into life with Gran and Grandad.

The only problem, and it is a minor one, is our travel. Any plans we have must be fitted into those times when we aren't dog-sitters. A spur-of-the-moment getaway has to be carefully planned, which kind of kills the spontaneity of the concept! But, we willingly accept that restriction because we know Adi would not do very well in a kennel environment. She is a very people-centered pet who needs to be around humans on a continuous basis. She has never been crate-trained so a kennel would not be in her best mental interest.

Plus, we can save our daughter thousands of dollars in boarding fees by opening our door and hearts to her fur baby, and the hole in our home left by the passing of Bailey is amply filled by Adi. All in all, a win-win for our daughter, her pet, and us.

Obviously, there are solutions to the pet-travel puzzle. However, none really address the very real problem of being able to leave a beloved pet that may have special needs. Worry is not conducive to a great travel experience.

So, here is my question to you: if you have a pet, how do you handle this situation? What steps do you take to feel OK about leaving? If you don't have a pet at the moment but did at one time, I invite you to share your story. 

Each one of us has a different attachment to our pet(s), For some, the pet is such a part of the family, and we have bonded in a way that our emotional attachment can alter travel or lifestyle choices. For others, the dog or cat is a positive addition to one's life, but not something that affects decisions at this level.

There is no wrong answer to this dilemma. But, I trust we can offer this reader some options, or at least words of support for this predicament. She is aware her feelings are an impediment to fully enjoying travel and vacation options. I think she just wants understanding and "I've been there" kind of backing.

And, for those of us with pets, I am anxious to learn how others address this situation.

A Leap of Faith

Which door will I pick?

How many times in your life have you had to make a decision but you were not sure that was the best one? How many people did you trust with important secrets or information? When you decided it was time to retire, how sure were you things would work out the way you dreamed they would?

In each case and too many more to mention, you had to take a leap of faith. You had to trust instinct, experience, feedback from others, and maybe, just a dash of bravado and luck to take that step.

Retirement is very much a leap of faith. Think back to the first morning you woke up retired and unemployed. Do you remember that incredible feeling of freedom, followed almost immediately by, "what have I done?" A blank slate replaced an obligatory schedule. The comfort of familiarity and routine was not there.

If you married, a huge leap of faith came with the vows. With 50% of all marriages ending before "death do us part" you were rolling the dice with not only your future, but that of another, and even future miniature versions of you.

If you decided to remain single, you probably fought against loud voices from family and friends, telling you to get with the program. Mom and dad wanted grandkids. Your buddies are worried about you remaining the only one in the group without a wife or husband to complain about. Your singlehood required a solid sense of who you are and a leap of faith that you were right.

Divorce? A big leap. Regardless of the circumstances of breaking up a marriage or long-term partnership, such a move comes with serious costs, both financial and emotional. Add some children to the equation and life becomes much more complicated.

Back to retirement, suddenly you are truly the master of your own universe. Sure, there are plenty of responsibilities that don't stop with the job, but the amount of freedom can be overwhelming, at first. "What Do I Do All Day" remains the number one question among new retirees.

It is easy to make two very different decisions at this point: over-commit or lock the door and stay on the coach, regretting the lack of a purpose. Neither shows a leap of faith, but a misguided attempt to avoid that jump.

The majority of new retirees fall into the first trap. Family suddenly sees you as an always available babysitter. A parent asks you to be their full time shuttle to medical appointments, shopping trips, and bingo night at church. Every volunteer bone in your body urges you to fill your newly blank day with a two hour shift here, a weekend schedule there, and a board position with an organization you can barely spell. 

Or, instead, you bemoan your sudden lack of relevance and involvement. Work friends quickly drop away. The projects around the house feel like make-do work. You have a noticeable drop in energy and drive. You may blame that on age; in reality it is feeling a lack of purpose.

I won't rehash all your options to get out of the over-volunteer situation, or the ways to break away from feeling like you lost your identity after leaving work, There are nearly twelve years worth of posts here that can help you.

But, what I will say is you must embrace a leap of faith...making a choice right now, to open your arms to something, anything, that pushes you forward. Importantly, whatever you decide to do isn't going to be the final answer, the perfect choice. If life is change, then retirement is life facing a revolving door with unlimited exists.

 What are you waiting for...being wrong? Did you ever make a mistakes in all the years you were working? Did you ever commit a stupid blunder (or two, or three) with a loved one? Remember that 1976 AMC Gremlin car in orange you really wanted? What about that tie-died coat? 

You survived all those "mistakes." You are here, alive, and reading this post. The worst that could happen...didn't. 

Now is the time to consider a leap of faith, a jump into freedom, a step into the unknown as simply one of the benefits of living a satisfying retirement.

You can do this. You must do it to prove to yourself that you have unlimited potential and boundless opportunities straight ahead. 

You just have to jump over that little boulder in your path. Have faith!

A Disappointing Vacation

 

A week or two ago I asked about your vacation plans for this coming summer and fall. Has Covid and its aftermath changed how and where you will go? Have the last few years of being pent-up made you ready to hop onto or into anything that moves...any excuse to get out of town?

As expected, the responses reflected folks' mixed emotions about an important part of their life that is being approached with caution. Slowly, major trips are being rescheduled and fingers crossed by some, while others remain close to home or in the more protected confines of an RV.

With these travel possibilities ahead, one reminder must be voiced: all of us have probably experienced at least one vacation that didn't live up to expectations. The planning, the anticipation, along with the money and time invested produced a flop. No matter how we sugar-coated the experience, that vacation was disappointing. Yes, even post-Covid, a getaway can get away from you.

Of course, some of the reasons can be purely bad luck: getting sick or being injured can happen. Something goes wrong at home or with family and the vacation must be ended quickly. But, in thinking about vacations my family and I have taken over the years, there are five factors that seem to conspire to lay waste to the best-laid plans. Being reminded of their potential to mess things up may help you avoid a vacation washout. 

Over or Under Scheduled

I am a planner. When my family and I take a vacation, the days are often plotted as carefully as a military campaign. If we are going to spend the money and take the time, by golly, we will not waste a minute, we will enjoy everything at double speed. Luckily, my wife and one of my daughters are fine with this. Our other offspring though does her best to suggest we take time off to smell those darn roses, sleep in, and leave time for simple pleasures. I will be the first to admit, that her approach has gained much appeal as I get older. Why should a vacation be a forced march?

When Betty and I took our first Alaskan cruise a few years ago (just before Covid was even a thing), I became aware of the joys of under-scheduling. Yes, a cruise ship offers all sorts of ways to separate you from your time and money. But, you can choose to skip most of it and simply enjoy the scenery passing by the windows, eat when you are hungry, and watch others rush from seminar to casino to sales pitch. 

Each of us feels most comfortable with one of these two models. Adopting the wrong approach can leave you frustrated.  

Unrealistic Expectations

You walk to the corner mailbox and back once a day. You stroll with the dog to the neighborhood park first thing every morning. Neither of these activities means you are ready to hike across England or tackle part of the Application Trail. Swimming a few laps in your pool doesn't prepare you for an ocean dive to earn your scuba certificate.

A vacation with an ambitious goal can be tremendously satisfying, or quite a letdown. Trying different foods, and avoiding the top tourist destinations while seeking out where the locals go are laudable targets. Trying something physically beyond your capabilities, or forcing yourself to only eat local cuisine for a two-week stay in Sweden will probably lead to disappointment, if not injury or illness.

Knowing your limits and knowing what crosses the line from interesting to excessive is important.

Wrong place or wrong time

You don't like cold weather yet you decide to go to Iceland in January because the airfares are cheap. Bugs and humidity drive you batty. Even so, you decide Miami in August would be a fun experience because the hotels are less expensive. 

Your oldest child just landed the lead in the school play, but you think it best to take the whole family on a camping trip to Yosemite. Your wife opened a new business that needs her full-time attention for several months. You are surprised when she balks at a week in New York City.

A vacation is a balancing act between time, needs, and location. While not everyone may be jumping with joy, everyone should be engaged enough to agree that the potential for fun exists.

Expecting it to be the same as home

I shudder when I hear a tourist complain about something by saying, "We do that differently at home." My immediate thought is, well, stay home! What would be the point of going somewhere and having everything just like where you live? Isn't the point of travel to see and experience differences? 

During our trips to Europe, I can't count the number of times I heard travelers react poorly to everything, from the time restaurants open to the type of toilets that are available. A foreign country isn't home. Even parts of this country have different customs and norms, even names. Don't ask for a milkshake in Boston or a grinder in Amarillo. Different can be good.

Bad weather (really bad!)

We have spent 3 days stuck in a motel in Key West during a hurricane. We have almost been blown off the road during an RV trip through West Texas. Betty and I experienced six straight days of rain in Bermuda. We were caught in a blizzard near Yellowstone in late May.

Bad weather happens. It happens when you are spending time and money on a special trip. Mother Nature always wins. You can only change plans on the fly. Make the most of a bad situation, but realize you will have a great story to tell when you do get home (our daughters still remember the Key West "adventure" almost 30 years later). 

Bad weather also teaches us that no matter how much we like to be in control, that is usually just an illusion.

There is never a bad time to learn to exhibit more patience at things you cannot change. There is never a wrong time to learn to adjust your plans.

But, why do these learning moments have to happen on vacation?