My USAToday '15 minutes of fame'

More baby boomers stay in their homes as they reach retirement, skipping downsizing

Excerpt:

Jim Peet, 70, of Plymouth, Minnesota, may seriously consider selling his 3,300-square-foot house but not until he’s 80. Peet, a retired information technology professional, and his wife, Kathee, flirted with downsizing several years ago, largely to reduce maintenance hassles, but found that a condo in downtown Minneapolis would cost more than their house. They also shopped for a similar-sized house in Tallahassee, Florida, but backed out after realizing they didn’t want to be so far from their family.

In fact, their kids and grandchildren generate a consistent hive of activity in their house. “It’s just so comfortable to entertain people,” Peet says. “The kids run from the living room to the kitchen – I love watching them.”

Peet, who uses a walker because of a spine-related injury, also appreciates the support of decades-long neighbors. Recently, he says, a neighbor helped him when he fell from a chair.

Comment: Nice mention. How I was contacted. Responded to this:

Are you a baby boomer who plans to stay in your larger house when you retire rather than downsize? Or are you delaying downsizing? Please email pdavidson@usatoday.com, and let us know why.

— Paul Davidson (@PDavidsonusat) May 15, 2019

Retirement Party

The cake

Kathee in her office for the last time

New adventures await

Waterford crystal from Nancy

Nona - a long time friend

Rick - Kathee's close co-worker / Don in background

I really did a poor job taking pictures. So many people there. 

Kathee Retires - May 2nd, 2016

Kathee's career

• Kathee graduated from Florida State in 1973 with a degree in Math (4.0)
• Offered a job with the IRS ... declined
• Hired by IBM and sat across the desk from a very handsome guy
• Worked for IBM ... then Mellon Bank ... then again for IBM
• Was a stay at home Mom for 9 years
• Hired by the Rocky Mountain Tariff Bureau for 2 years
• Hired by Norwest Colorado (just after Norwest acquired United Bank of Colorado)
• Moved to Minneapolis in 1996 (20 years ago)
• Retires as an Application Engineer 6 (Application architect) and Vice President

I am so very proud of her!

Lump Sum vs. Annuity?

The Trouble With Taking a Lump Sum Pension Payout

Excerpt:

Congratulations! You’re one of the shrinking number of Americans who have earned the right to a pension—guaranteed income for life for you and maybe for your spouse as well. Just make sure you don’t give it up too easily. That’s a real risk. Up to half of companies with pension plans, say experts, give workers the option of taking their pension as a lump sum. On top of that, 47% of corporate plans, including those from Boeing and Hewlett-Packard, either have just made or will soon make pension buyout offers to vested former employees, benefits firm Aon Hewitt reported earlier this year. Driving those offers are IRS rules expected to make buyouts less favorable for employers within a year or so. Lump-sum checks, often in the hundreds of thousands of dollars, are tempting. Fifty-eight percent of employees take buyouts, and the share taking the lump-sum option at retirement is likely higher, says Aon Hewitt consultant Ari Jacobs. Pension industry experts and consumer advocates, however, say that for most workers the traditional pension is a better deal. So before you decide, think this over:

When to Take Steady Payments:  If you or your spouse is in good health and has a family history of longevity, lean toward taking the monthly pension. The advantages: The money lasts for life. If you make it to age 90—and 28% of 65-year-olds do—you’ll still be getting that check. And, in exchange for smaller benefits, your spouse can continue to receive half or often all of those monthly payments after your death. So if you’re a man and your wife survives you—on average, she will—she’ll get cash for life too. One downside: Unlike Social Security, most private pensions don’t adjust for inflation, so your purchasing power will diminish over time.

Comment: I chose the annuity option with 100% benefit to my wife if she survives me. It was the lesser of the amounts but we viewed it as the most conservative of the options. Image source.

Throwing in the Badge ... I am officially retired

End sequence of Dirty Harry

• I started working (in a job that would have paid into Social Security) in 1967 (farm labor at $ 1. per hour in a greenhouse in Delhi OH. 

• I graduated from college in 1971. While in college:
  • I worked for Baker's Shoes (selling shoes)
  • Worked at a greenhouse 
  • Worked 2 years for American Airlines as a Campus Sales Representative
  • Worked 4 summers at Monsanto at a large chemical plant on the Ohio River
  • Worked for the Cincinnati Enquirer some weekends loading newspaper bundles onto delivery trucks
  • Did some light warehouse work
  • Sold my blood for book-money
• I worked 1 year for Campus Crusade for Christ
• 3 years for IBM. What I sold: System 3; System 7; System 32
• 2 ½ years for Digital Equipment Corporation: What I sold: PDP-10 and System 20
• 2 years of not working while I was in seminary
• 17 years as a vocational pastor (there was overlap with the following two jobs)
• ½ years for International Multifoods Corporation
• 21 ½ years for Wells Fargo (and predecessor Norwest)
• July 17th will be my last paycheck
• My pension starts in August
• Social Security starts in September

Comment: Dirty Harry was released in December 1971. I am officially unemployed

About my time at Norwest / Wells Fargo:

• I had what I would regard as a good career with them. I think Wells Fargo is a great company from my vantage point of a customer and an investor. 
• I was fairly paid ... and well paid! I thank the Lord for this
• I had some really good managers: Jeff W, Steve K, Denise R; and some so so managers; and one very bad manager (fortunately for less than 6 months)
• I learned a lot:
• Technical:
• JCL
• MVS systems programming
• PL/1
• COBOL
• HTML
• CSS
• Cold Fusion 
• Non-technical: Mostly in the realm of project management
• I made many many friends and one or two enemies (that's not too bad!)
• Am I going to miss it? Time will tell. As of today I am glad I am retired. 

My Retirement was Announced Today

Jim will be retiring on July 3rd after 22 years with Wells Fargo. While I am excited for Jim that he is able to move on to the next chapter in his life, I will truly miss having him on my team. Jim’s greatest quality is caring about people and he shows that to everyone he meets. Please join me in congratulating Jim on his retirement.

Thank you!

Tami K.

Technology Manager Release Management

Comment: 7 more days! Image Source

Dividend Investing for Retirement Income

Dividend Stocks Beat Bonds for Retirement Income 

Excerpt:

Your goal isn’t only to save enough, but also to buy assets that match your future liability—which is your need for retirement income. Traditionally, bonds have been viewed as a pension plan’s surest bet. But with bond yields so low, here is why stocks could prove to be the better choice—even if share prices plunge. ... Mr. Farrell’s suggestion: Buy stocks instead. He isn’t focused on price appreciation, which is always iffy. Instead, he suggests purchasing stocks for their dividends. “If you put together a portfolio of good blue chips, you might start with a yield of 3%,” he says. “You have to train your brain to ignore the price movement. You want to focus on the income production and the growth of that income.” Over the past 50 years, the S&P 500’s dividends have grown an average 5.7% a year, somewhat ahead of the average 4.1% inflation rate. If we continue to see that sort of 1.6 percentage-point gap, retirees who have a big enough portfolio to live solely off dividends would potentially be in great shape, because they would be collecting a stream of income that is rising faster than inflation.

Comment: My strategy is just this! An example is Glaxo Smith Kline (GSK). Our portfolio has a 3% dividend yield overall. I am counting on it growing with inflation AND producing a 3% yield. See also Top Dividend Stocks for 2015

Retirement: Finishing Life for the Glory of Christ

Rethinking Retirement: Finishing Life for the Glory of Christ Excerpt:

Finishing life to the glory of Christ means finishing life in a way that makes Christ look glorious. It means living and dying in a way that shows Christ to be the all-satisfying Treasure that he is

Comment: Perhaps I have posted this before. John Piper's book Rethinking Retirement is a book that I've read multiple times and recommend to all. Follow the link above and download in PDF format. Image source = screen snap from here.  I am definitely in retirement countdown mode - I'm not announcing anything! The terminus ad quem of my retirement is when Kathee turns 65 in April 2016. Since I am already 65 (almost 66), I could retire at any time. I was thinking this morning about the personal economic / paradigm shift of retirement:

• The ancients knew nothing about retirement. They worked and worked and died! This whole "retirement thing" is a new thing. Weird
• What of the Biblical command to work? Adam worked the garden pre-fall (Genesis). The curse among other things is that he would work by the sweat of his brow and labor would be less productive. Think of the rebukes of the lazy and slothful (Proverbs) or the directive "if a man doesn't work, neither shall he eat". 
• So today I labor to live. I've been laboring to live for all of my adult life. I have that Puritan work ethic as part of my DNA. You have to work! You want or need something? Work for it. When I raised support for campus ministry my parents were uncomfortable with that! To them it was wrong to ask for money!
• In retirement, one lives off his capital. Pre-retirement, one lives off his labor. 
• Here's an interesting blog post: Why Your Financial Goal Should Be to Stop Trading Time for Money: So today I am trading time for money. Every day I make XXX and every two weeks I receive a paycheck for that trade off.
• What about working in retirement? I doubt I will need to work (I have a hard time wrapping my brain around that - so imprinted into me is this "I have to work"! What if I found a job that paid $ 15 per hour. Suppose it is something I might even enjoy doing? Is that a good use of my time? (not bragging but I make a multiple of that today).
• Suppose there were an opportunity in a ministry (say a college or a church) to work? Is it sinful to NOT take a wage? What would that be like to be making $ 0 when others are being paid. Would that be demeaning? Would that devalue my labor?
• Finally a Marxist quote (that I disagree with but I find interesting): "Capital is dead labor, which, vampire-like, lives only by sucking living labor, and lives the more, the more labor it sucks." I personally view capital as stored labor (hence the image above). Capital is that which I have earned but not yet spent. 

Ten Seconds at a Time

Americans are deluded about when they will retire

Excerpt:

There’s a big gap between when workers expect they will retire and when people who’ve actually retired say they left the workforce, according to the latest retirement confidence survey from the Employee Benefit Research Institute. Half of retirees say they retire earlier than they planned. Fewer than one in 10 workers say they expect to retire before age 60, when in fact 36% of retirees say they stopped working before 60. Comparatively, only 29% of workers retired between the ages of 60 and 64 and only 9% retired at the traditional age of 65. The odds of making it until age 70 and still working — which more than one-quarter of workers say they want to do — are even slimmer. A mere 6% manage to last that long. “Most retirees retired earlier than they planned predominantly due to health problems,” says Luke Vandermillen, vice president of the Principal Financial Group, a co-sponsor of the study. “All you can do is try to control what you have planned, how you have saved, and whether you’ve taken steps to prepare for retirement as best you can.” What’s clear is that the vast majority of premature retirees did not leave work because they wanted to. Sixty percent of premature retirees cited health issues or a disability as the reason. Others had little choice in the matter — their company downsized or closed, leaving them out of a job (27%), or they needed to care for a spouse or family member (22%).

Comment: In the elevator today ... chatting briefly with a woman whom I see from time to time. Me: "When are you going to retire?" She: "Three years". Me: "Sometimes I don't think I can take it anymore". She: Laughs, "My financial advisor says I need to work until I am 62". Me thinking ... 49 more weeks .... to quote Kimmy: "Just take it 10 seconds at a time and everything will be okay". Some Kimmy Schmidt motivational posters.

More: Work in Retirement? Don’t Bet on It

“People consistently overestimate their ability to work in retirement,” says Mr. Vandermillen. Among the things that can cause people to leave the workforce earlier than they expect are health crises, layoffs and ageism on the part of prospective employers.

... Jim Emerman, executive vice president at encore.org, a San Francisco-based nonprofit that promotes second careers in the nonprofit sector, says he isn’t surprised by the large gap between those who want to work in retirement and those who actually do so. Due to ageism, he says, “those who expect to find paid work in retirement often can’t.” Over time, Mr. Emerman says, he “expects we will see the gap narrow” as employers come to realize that older, experienced workers can help solve projected skills gaps and labor shortages. “If we want a healthier, more productive, more engaged society, employers need to make opportunities available to older people and meet them halfway,” by providing flexible arrangements, he says. “These opportunities aren’t there yet but we will see more of them as we see a rethinking of the roles older people can play.” According to the EBRI survey, 83% of today’s retirees who are working say they are doing so because they enjoy it. Almost 80% say their motivation is to stay active and involved. But 54% say they enjoy earning money to pay for extras. And 52% say they need their paychecks to make ends meet.

Comment: Why I'm still working ... I enjoy investing and the the income enables that. Also I enjoy my friends at work.

Retirement: The More You Save, the Less You Will Need

Why You Will Need Less Money Than You Think for Retirement
Excerpt:

Conventional wisdom says you need retirement income equal to 80% of your final salary. But there is a decent chance you could happily retire with far less. ...

[Because]:

• You no longer are saving 10% a year or so toward retirement.
• You are no longer making an employee’s 7.65% payroll-tax contribution to Social Security and Medicare.
• Your children are off the family payroll
• Your mortgage is paid off.

Comment: The more you save the lower the lifestyle you have to replace. In our case, we have been able to save more than 10%. Our children all support themselves (thank you Nathan, Roger, and Rachel!). Another item we won't "miss" is the downtown parking contract.

Retirement: " known knowns ... known unknowns ... unknown unknowns"

Here's one way not to fall short on retirement $$$

From the video: (if one makes $ 100,000)

• If one is saving $ 10,000 per year that reduces the financial need by that amount
• Also will not be paying payroll taxes that are 7.65% of paycheck

Channeling Rumseld's quote:

• Known knowns:
• While I expect to be able to save, we won't be saving & investing at our our current rate.
• No need to pay for contracted downtown underground parking
• We know what our social security income will be (or closely estimated)
• We know what our pensions will be (or closely estimated)
• Known unknowns:
• We know our state and federal income taxes will be less. But what will be the new normal?
• I have a general sense what our healthcare costs will be but will need to be more precise. 
• We will not have dental insurance from our company but Delta sells individual plans. Needed?
• Same with vision insurance. Provider. Needed?
• How much will we need to draw from IRAs? When will we need to start?

‘Selfie’ (DIY) Retirement Investing - “Selfies are the army"

‘Selfie’ Shtick Focuses on Dividends

Excerpt:

In Australia, almost all employees are covered by the country’s compulsory contribution system. Companies must pay at least 9.5% of workers’ income into a pension fund of the worker’s choice. Employees can opt to put even more aside for retirement, making Australia’s pension-fund system the fourth-largest in the world. And they can bypass institutional money managers and handle their own investments. ... Ms. McGuiness said their strategy is simple: They target companies with household names that pay healthy dividends, which are then reinvested.

Comment: Kathee and I are "selfie" investors. Kathee shares the wheel with me so that if I precede her she knows the ropes.

Yet another "Preparing for Retirement" post

5 Issues to Face Before You Retire

Excerpt:

1. Do a rough draft of your retirement budget
2. Determine your post-retirement investment plan
3. Start making plans for your new living arrangement
4. Give yourself a health checkup
5. Make a plan

Comment: Our three legged stool ... IRAs, 401Ks (to be rolled over into IRAs), 2 pensions, and social security. It is coming together. I was doubtful just 5 years ago. On the above points:

1. Do a rough draft of your retirement budget: We basically have this in place because we track everything.
2. Determine your post-retirement investment plan: I think that in the early years, we will be able to continue to save but at a reduced rate. We have a plan on the remaining roll-over from 401Ks to IRAs
3. Start making plans for your new living arrangement: Our plan is to stay in our existing home for at least two more years. We continue to shop condos but not ready to make that move yet.
4. Give yourself a health checkup: Need to lose weight. Working on it.
5. Make a plan: This is in flux. I am going to have a lot of free time I will need to fill. On the travel front, we would like to get away to Florida or Arizona for 2-3 weeks every Winter

You don’t need millions to retire happy

"The Retiree Next Door": How successful retirees stretch their savings

 Excerpt:

... more than 500 retirees who shared the keys to their success in a new eBook "The Retiree Next Door" to be released on Thursday by MoneyTips.com. The personal finance education site asked retirees who considered themselves to be living comfortably to discuss everything from their net worth and income to their shopping habits and savings strategies. “About six months ago we did a survey and found that one-third of baby boomers had no retirement plan,” says Marc Diana, CEO of MoneyTips.com. “We wanted to go to the other end of the spectrum and [talk to] retirees who were successfully retired to see if they could help connect the dots.”

Comment:Link free Ebook: The Retiree Next Door. On my vacation last week: 5 1st cousins: 2 dead ... three retired. Of all the relatives we connected with: 2 still working (one 71 ... other 61) ... all others retired. My siblings: 1 retired. 1 works part time. Kathee's siblings: 1 dead ... 3 retired ... only Kathee works. Saturday we are having 2 couples by for dinner. One couple: the husband is retired ... the wife (63) still works. Other couple, the husband is retiring at the end of the month

Retiring Abroad

31% of Americans have no retirement savings at all


Excerpt:

It's no secret that many Americans aren't saving enough for retirement, but a big chunk of households have saved nothing at all. Nearly a third, or 31% of U.S. adults said they had no savings or pension to help them afford retirement, according to the Federal Reserve Board. Even more alarming: 19% of those very close to retirement age, between the ages of 55 and 64, said they had no savings. As a result, more than half of these respondents said they planned to either work full-time or part-time during their retirement years

Comment: Scary!!!!


5 reasons not to retire in the U.S. - The number of retirees overseas has more than doubled in 10 years
Excerpt:

Americans’ dollars have more buying power in countries with a favorable exchange rate. Michael Ward, CEO of Europe and North America at USForex, an international money transfer service, notes that Americans abroad will only get around 75 euro cents on the U.S. dollar. However, the Czech Republic is not part of the Eurozone and, therefore has a more favorable exchange rate. Costa Rica, Argentina and Mexico are other countries with a good exchange rate and lower cost of living than the U.S., he says. For the truly adventurous, the U.S./Australian dollar rate has greatly improved over the last year, Ward adds.

Comment: Close friends are intending in retiring to Costa Rica. He was born there and they have a farm AND beachfront property in Costa Rica. He is currently retired and she is 2 years away from retirement. Image source

Take a Retirement Annuity or a Lump Sum?

Take a retirement annuity or a lump sum?

Excerpt:

Theoretically, you often can make more money by taking a lump sum and investing it than by accepting the annuity, which offers a lifetime stream of payments. But perhaps you've heard the quote "In theory, theory and practice are the same; in practice, they are not." Anyone who knows much about behavioral finance knows there are many, many ways such a plan can go wrong. You could pick the wrong investments, take too much or too little risk, trade too much or spend too much, and wind up much worse off than if you'd chosen the annuity. You could turn over the investing decisions to a pro, but there's no guarantee that person won't make mistakes. Even if he or she chooses great investments and allocates your assets well, your nest egg could still take a hit from the market. If you were comfortable taking that extra risk to get the extra possible reward of more cash, accepting the lump sum would be the way to go.

Comment: Image source with a related article: Using Annuities to Generate Retirement Income . We've worked through this and decided to take the lump sums. Both of us qualify (we were grand-fathered in to the previous company's retirement plan) and the total amount is not insignificant. The annuity option would provide a greater monthly income but have nothing left for the estate.

Retirement and Taxes

Taxes to Watch Out for in Retirement

Excerpt:

Taxes are likely to be one of your biggest bills in retirement, especially if you have done most of your saving in tax-deferred retirement accounts. But where you live plays a big role in the tax rate you pay on your retirement income. "Taxes are not the only thing that matters for retirement, but they can definitely have a sizable impact as people start to narrow down which states they are considering for retirement," says Scott Drenkard, an economist for The Tax Foundation. "I think one of the driving reasons to move to Florida is because the weather is a lot nicer, and there's no tax on income." Here are the taxes to consider as you select a place to retire:

Income tax. If your retirement income is high enough that you will owe taxes on it in retirement, you can reduce your tax burden if you move from a state with high income taxes to one without an income tax. Seven states do not have an individual income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two other states -- New Hampshire and Tennessee -- tax dividend and interest income only. However, reducing your income tax bill isn't a guarantee that your overall tax bill will decline. "Before impulsively moving to a state without an income tax, though, the retiree should make sure he or she isn't trading one tax for another," says Twila Slesnick, co-author of "Nolo's Essential Retirement Tax Guide." "For example, although Texas does not have an income tax, the average property tax rate in the state is quite high. You might find that you are paying more in property taxes in the new state than you were paying in income tax and property tax combined in the old state."

Comment: We don't really have a tax avoidance plan. My brother is planning on moving to Wyoming (May 2016). He loves the West. He and his wife formerly lived in Colorado and she has family there. One of my brother-in-laws is preparing to re-domicile in Florida (from Edina MN). They own a condo in Naples and are already gone from the state (MN) for almost 6 months. His main reason to re-domicile is estate taxes. I used to talk about moving to Tennessee but of late (the last 2 years) we have planned to stay in Minnesota. One child has moved away. If one more would move away we would move. But the other two are planning on staying here. Image source with a related article

The best time to begin taking Social Security

At what age should you start claiming Social Security?

Excerpt:

"Most people take it at 62," he says. "They end up losing in the long run. If they delay it till 70, they will get 30% more. Unfortunately," he says, "most Americans can't do that." Improper timing can cost you $100,000 to $150,000 over a lifetime, says John Gajkowski, of Money Managers Financial Group in Chicago. When should you take it? If you delay taking Social Security, it increases your monthly benefit about 8% a year until you're eligible for the maximum at 70. Most financial planners pretty much recommend that you do that if you can, or delay at least until age 66. But most people can't delay.

Comment: Obviously we have not taken it at 62. Kathee is 63 and I am 65. Image of "gramps": "(1939). poster of old man smoking pipe. This poster announces the passage of the 1939 Social Security Amendments." Source. (many cool retro posters here!)

What You Don't Know About Social Security—but Should - A Look at Claiming Strategies, Tax Angles and More to Help You Make Sense of a Complicated Program

Excerpt:

You may have heard the advice countless times: Minimize (or avoid) withdrawals from your nest egg (401(k), individual retirement accounts, etc.) for as long as possible to take advantage of tax-deferred growth. Many investors who follow that advice grab Social Security benefits, typically at age 62, to help pay the bills. But that advice ignores the possible tax benefits associated with following the opposite course: accelerating withdrawals from savings early in retirement so that you can hold off on claiming Social Security. The thinking here is tied to the fact that Social Security benefits are taxable. As much as 85% of a married couple's benefits are subject to tax when their income exceeds $44,000 ($34,000 for individuals); as much as 50% of benefits are taxable at lower income levels. If you delay claiming Social Security and, as a result, end up with larger benefits, future withdrawals from savings will likely be smaller—a recipe for lower levels of taxable income. (For a detailed discussion of these tax issues, see "Innovative Strategies to Help Maximize Social Security Benefits," from James Mahaney, vice president at Prudential Financial Inc. "Many retirees don't consider the impact of their withdrawal strategy on how their Social Security is taxed," says Mr. Meyer, the SocialSecuritySolutions.com founder. "Missteps in tapping the wrong account and investments to generate income can significantly increase your taxes."

Helpful 16 page guide from Prudential: INNOVATIVE STRATEGIES TO HELP MAXIMIZE SOCIAL SECURITY BENEFITS



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Ready to Retire?

5 Ways to Tell if You Are Ready to Retire Early
Excerpt:

One way to estimate if you're ready for early retirement is to divide your investable assets by your annual expense. I call this the financial freedom ratio. If your financial freedom ratio is above 25, then you're in pretty good shape. You can use the 4 percent rule to withdraw from your portfolio, and chances are good that your money will last for 30 years or more. Of course, if you retire very early, then you probably need to be a bit more conservative and withdraw less until you're near 65, the normal retirement age.

Comment: As for us

• We meet all of the above criteria except my wife is 2 years younger than I
• She does not want to retire yet AND
• I don't want to retire without her
• So basically we are waiting 22 months (her 65th birthday)
• And using these months to double down on investments.

Retirement: How to invest wisely to live comfortably

Retirement: How to invest wisely to live comfortably
Excerpt:

People think, "I've accumulated this much," and their inclination is to put it in stable investments — cash or bonds, but they run the risk of eroding their purchasing power. Their essential expenses will increase in retirement — taxes will go up on their property, health care will go up, the cost of food will go up — so they need an equity portfolio that is growing so it maintains or increases their purchasing power in the future. ...

Fidelity offers this rule of thumb: Save at least eight times your final salary to help increase the odds that you won't outlive your savings during 30 years in retirement. This amount assumes that you'll get some money from Social Security and that your expenses after you retire will be lower than when you were working. Higher net-worth folks usually need to save more than eight times their final salary.

Comment: Message is start investing early and stay in equities