Feb 6, 2019
Some people don’t want to retire, even though they have enough money to do so. They see retirement almost like a punishment.
Especially for people who have had professional careers, their identity often comes from their work. This is how they see themselves and how others see them—they are respected because they are a doctor, lawyer, professor, executive… Being a “used-to-be” professional has a lot less value or honor. Moreover, if they don’t have significant hobbies or side-interests, they think, “What am I going to do with all of my free time? I might die of boredom.”
What can be so compelling about work? It can be some combination of at least a few of these:
- They enjoy the excitement of working. They are challenged and stretched, pushed to be their best. They use their skills to solve challenging problems. As a result they have major accomplishments and are recognized and rewarded for them.
- The work provides structure and meaning for their lives. They like the location, space, and, most of all, their team mates.
- They are treated with respect at work They are appreciated for who they are and what they do. They are invited to share ideas and their opinion counts. They are encouraged to develop themselves.
- The work they do is meaningful. Perhaps their work is important to them by helping to make the world a better place.
It is important to realize that you do not have to retire if you are willing and able to continue working, even if you are “supposed to.” Nor do you have to feel guilty about working while others retire. Many people continue working way past age 65.
You might consider a less standard approach to work and retirement—for example, working part-time, starting a new business, or serving as a consultant. All of this requires effort, research, creativity and courage. Talk with other people who have taken an approach similar to what you are thinking about. They can give you lots of ideas about how to pull it off.
As you get more serious about retiring, you can and should consider your alternatives. This will take some time. The more time you give yourself, the better will be the decisions you make.
Jan 22, 2019
After my heart attack in 2000, my doctor said, “It’s simple – exercise or die.” When my father was 40, his doctor told him to stop smoking or die. My father wanted to live and he was a person of strong determination. He stopped smoking (cold-turkey) and lived a very successful life for another 50 years.
We all know the “rules” for a healthy lifestyle. We should eat properly and get plenty of exercise. This is simple advice but certainly not easy to do. Most people fail, at least at first. In fact, there are whole industries designed to help people achieve their “simple” objectives.
Here are some of the approaches that have worked for me in the past that I am sharing with you.
Partners
My physician, a nutritionist, and a personal trainer all have been exceptionally helpful in providing information, advice, accountability, and support. Friends have also been supportive.
A few years after my heart attack, I realized that I needed an outrageous goal to keep me motivated. I decide to bike the entire Mississippi River. I asked my friend Charlie if he would like to do this with me. “Sure,” he said. We planned to accomplish this in one-week intervals over a period of years. I also announced to other friends what we were planning to do. Over the next six years, they would ask me periodically, how was it going? They held me accountable. It was sometimes hard—Charlie and I biked in all kinds of weather. But we did it together—and we made it!
Measuring
Whatever you measure keeps you focused. A year after my heart attack, I was diagnosed with Type II diabetes. My physician orders quarterly measures of my average glucose levels. But a measurement of the last three months looks backwards and is not particularly helpful in motivating me to change my day-to-day behavior. So in addition I measure my weight and glucose levels daily. This provides ongoing feedback and accountability for how I am doing and encourages me to tweak my behaviors.
I also measure my exercising and my cello practicing (I like numbers). Both measurements help motivate me to make progress.
Heart disease and diabetes are both serious conditions. I can’t make either disease go away. But I can control my response to help manage these conditions. For me, having partners and measurement are both important and useful.
I understand that my life is finite—no matter what I do to preserve my health. But it is my hope that I will continue to have energy for an active, fun and fulfilling life along the way.
I wish the same for you—a great retirement with good health and the energy to do all that you want.
Jan 1, 2019
Do you like to travel? Do you ever wonder—can we afford such-and-such a trip? Or think—if we go on this holiday, will we bust our budget for the year? My wife and I love to travel, and now many travel companies send us their colorful travel brochures almost every day. Some of the itineraries look spectacular. So, the other day, my wife and I were discussing future trips and I said—“let’s go!” The trip I wanted was quite expensive. “We can’t afford that,” she said. “Yes we can,” I said. Our conversation went back and forth. This was really a question of numbers. I decided to look at our budget and figure it out.
In my financial planning practice, I use a three-tier process for helping my clients build a budget. Each budget includes three different levels of expenses. I call the budgets “minimal”, “better”, and “dream.”
In brief, here is how the budgeting process works. You first estimate how much you spend on core expenses, such as food, shelter, clothing, healthcare, transportation, and taxes. In my case, I used actual numbers over a few years that I had entered in Quicken, a low-cost computer program for tracking expenses. I estimated what our other expenses are for categories such as travel, eating out and other recreation, home improvement, charity, gifting to family members, and others.
Then I built three budgets from the expenses. In our situation the largest elective expenses in the three budgets are different levels of travel and charitable contributions, but you may have different categories that are important for you.
Next I listed our sources of income. For us, we have pensions, annuities, Social Security, and investment income. Because I was working on a post-retirement budget, I did not include earned income. I calculated the income from investments at 3%. (For a fuller discussion of maximizing income from investments, see my White Paper on the home page of my website.)
Matching up income with expenses, I knew that the “better” but not the “dream” budget was the most appropriate for us. And here was the critical step – I reviewed each of the numbers with my wife. If she disagreed with any of my estimates, I further researched them until we were in agreement. If we disagreed, I chose the higher estimated expenses and lower estimated income.
When I was done, we had a budget that makes sense and is based on our actual financial situation. We leave on a trip in a week to escape the cold Minnesota weather for a couple of weeks.
In coming months, I’ll be addressing various ways to get our “ducks in a row”—balancing our finances and our dreams.
Nov 27, 2018
We live longer than previous generations. You may have more years ahead of you than you think. Perhaps you are familiar with current U.S. life-expectancy numbers for the general population: seventy-six for men and eighty-one for women. These are the numbers for newborns and are not particularly relevant for you.
Here are more appropriate numbers to consider:
|
Life expectancy by age
|
|
Age
|
Men
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Women
|
|
60
|
81
|
84
|
|
70
|
84
|
86
|
|
80
|
88
|
90
|
|
90
|
94
|
95
|
Remember what life expectancy means. If you are a member of a group, say sixty-year-old women of average health and genetics, you can expect that by the time you are eighty-four, half of your group will have died and half will still be alive. That means you will have a fifty-fifty chance of lasting beyond your current life expectancy—perhaps well beyond it.
Maybe you think of your life expectancy based on how long your parents or other relatives lived. But are you taking advances in medicine into account? Life expectancies have been increasing approximately two years per decade for the last century or more. For example, if your parents were born thirty years before you, then your equivalent lifespan would last an additional six years. If they died at age 80, then the genetic component of your life expectancy would be about eighty-six.
Medical research marches on, with advances in diagnosis and treatment emerging all the time. Unless the U.S. suffers an uncontrolled plague or a war, life expectancies probably will continue increasing markedly during your lifetime.
Your long life expectancy could give you many years, perhaps 30 or more, to enjoy yourself and accomplish great things, if you so choose. As you plan for your retirement, you need to take the extra years into account.
Here are the areas for you to concentrate on:
What you do with your time. If what you do gets you excited and gives you joy and meaning, then your extra years will be a blessing – to yourself and to others.
Your health. It‘s critical to invest in your health to prevent or lessen serious health issues and to give you the energy you need. If you buy a car and plan to keep it for a long time, you would want to make sure that it is properly maintained. The same is true with your health. Proper maintenance includes exercise, proper nutrition and preventive medical care.
Family and friendship. Your retirement gives you a chance to spend more time with both friends and family. Being alone and lonely isn’t good for your health – so invest in your significant relationships.
Your money. Your money must finance those potentially many years, particularly in light of inflation, with gradually increasing costs for goods and services. Use two main tools – budgeting and projections – to get a handle on this.
These issues are discussed in detail in Serious About Retiring: A Practical Roadmap for a Healthier, Wealthier, Happier Retirement by Mark S Fischer, CFP & MBA, to be published in Spring 2019.
Nov 6, 2018
I started taking cello lessons when I was 73. A friend told me that to be a really good cello player, I needed to put in 10,000 hours of hard work. I calculated that at my rate of practicing an hour each day, I would be good enough to play string quartets when I reached 118 years of age.
So why the cello and why now? For me there has always been something special about cellos. I love the way they look and how they sound when played well. Four and half years ago I semi-retired after 28 years in the financial planning business. I wanted to do something in music.
I had some musical background. I grew up listening to classical music. Both of my parents loved music and played their vinyl records frequently. In high school I checked classical records out of the library and played them at home.
In fourth grade I took up clarinet and took lessons through my school. I played in the (football) marching band through high school. And I played in our local community orchestra for a year. Then came college, graduate school, and jobs of many kinds. I have always been a committed worker, and there was never enough time for playing music.
Now, in my semi-retirement, I had more time. I called MacPhail, the largest music non-profit in the country which is only 15 minutes from where I live. I said that I needed a teacher. They assigned Jacqueline Ultan. I was shocked when I read about her background. Not only had she been teaching for many years, but she also led two bands and composed the music for them. Why would she take a beginner like me as a student?
Jacqueline enjoys working with a variety of students of different ages and experience. She has been an inspiration to me. She is incredibly patient and encouraging. She works with me and expects near perfection in my playing the simple exercises. I coined the term “perfect enough.”
In an early lesson I noticed that there might be something wrong with my cello – it did not sound like hers. To my surprise, however, when she played my cello, it did sound like hers.
Last summer, after only a year of lessons, I auditioned for chamber music camp for beginning adults at MacPhail and amazingly was accepted. It was thrilling to work with three other musicians my age on two pieces and then play in front of other students in the program.
Will I ever be good enough to routinely play chamber music? I don’t know. But I enjoy the journey. I like to play the cello. I like my lessons and teacher. I like the feeling of accomplishment when I tackle a piece that seems impossibly difficult for me, yet after a few weeks I play it perfect enough.
Oct 16, 2018
How can you set yourself up so that you do not have to worry about money issues during retirement? The act of retiring has the feeling of being an irrevocable decision in an uncertain world. The stakes seem enormous. If you have a choice of when to retire, you do not want to make a serious mistake by retiring too early. And you may not want to work longer than you have to. You want to get your timing just right.
Before retirement your financial focus may have been on getting by and also accumulating money that you could live off during retirement. Your real choices were about how much money to spend or save and how to invest it in investments for growth. Most likely, your income from your salary has been fixed. It has been neither simple nor easy to make substantial changes to that income and cash flow.
But during retirement it is the other way around. Your investments are relatively fixed and you choose how much income to take from them. Your investments, after all, are nothing more than future income. Do you want your income now or later?
When you take income from investments and other sources, you need to match your income against your expenses. This is budgeting. Actually, the questions – Do you or will you have enough to retire? – is shorthand for – Can you match up your projected income and expenses to have the lifestyle you want? A retirement budget is necessary to show that the match will work throughout your lifetime.
The creative part of budgeting is to think through your alternative lifestyles and make the tradeoffs you need to make. Think of your budget as a guideline that provides you with some flexibility. Yes, you can spend somewhat more now with the idea that you may be spending less later, especially if you reach an age or circumstance when you do not get out as much.
What if there is a gap between where you will be and where you want to be? There are two basic approaches you can use to address the issue of having enough. One is to increase your income. The other is to pare back budgeted expenses to match your future income. Can you cut back without seriously affecting your lifestyle? Creativity will help your thinking.
