“Oh, God. Not another of these posts from him.”
“Yeah, ‘fraid so.”
“Sneak away for a beer?”
” <expletive deleted> yeah! I’m outta here…”
My apologies ahead of time to those who come here solely for the inanity and preposterous-laden content; I do promise a return to absurd ramblings soon. But unfortunately bylaw #1.7(a)(4-3) of this blog’s charter requires that “a topical post relevant to retirement must be published at least three times a year.”
I hate that requirement. It prevents me from engaging in mischief, such as with the recent news about White House
capo advisor Stephen Miller, his uncle, and his former rabbi. These are three people who are in obvious need of an apples-and-honey intervention during this current high holiday season. Sadly, though, that’s going to have to be fodder for another time.
Today it’s instead all about my old age, or at least how I’m either paying attention to or ignoring its later arrival. So bear with me here, particularly you international readers who might find this country’s retirement protocols to be somewhat of a labyrinth. Trust me, you’re not alone.
It turns out that only 47% of Americans over the age of 50 managed to pass a true/false MassMutual quiz on Social Security back in 2015. Clearly, we find our own earned entitlements to be confusing also. Your braggadocio, not-so humble blogger, on the other hand, earned a perfect score. So do give it the old college try and tell us how you fare with the quiz. It remains vital that we each know how the system is supposed to work, especially before Congress and the president get their grubby mitts on it and try to enact their so-called “reforms.”¹
A recent article in Barron’s on the current stock market also got me thinking about the shape of my savings. With stock market valuations at near record highs courtesy of this ongoing nine-year bull market, there is an easy tendency to fall into a false sense of security about how well one is doing. For instance, the S&P 500 market index — the same one in which so many American worker 401(k) savings are invested via retirement index funds — has gone up an astonishing 330 percent since March of 2009.² That makes all of us really, really smart, right?
This past August I hit the four-year anniversary of my taking early retirement. I turn 59 in December.
So how has this “grand experiment” gone for me?
Except for taking a very small distribution (less taxes) to help “pad” a down-payment on our new home last year, I have left my nest egg alone. It has grown exponentially along with the rest of the market these last four years.
While I’ve been slightly aggressive in my allocation between stocks and bonds since retiring, I only recently put myself into a defensive posture with a more “traditional” 60/40% apportionment. For me it’s all about a better night of sleep. If a market correction does eventually hit, as the experts in the above Barron’s article feel it will, then at least I’ve taken some measures to be slightly less exposed.
My plan is to start monthly 401(k) distributions at age 62, which is in three years.
Curiously, Gorgeous and I are at somewhat contrarian positions with our respective nest eggs. While I am in partial protection mode, she is actually eager for a market correction because she wants to become even more aggressive than she’s been. She continues to make up for years of not having an income prior to our marriage, and so she hopes to increase her IRA contributions if (when?) market valuations start to fall. It does makes for some interesting cocktail hour conversations between us.
The plan all along was to be able to live on our joint income prior to the start of 401(k) distributions and Social Security. Fortunately this has so far worked out precisely as we had planned.
I receive each month a basic annuity from my government pension, less an amount that is deducted for my ex-wife as specified in my divorce decree. Also subtracted from my income is a monthly alimony obligation that I pay to her directly. However, the earnings which I receive from my part-time librarian job help to defray some of these payments.
Gorgeous, on the other hand, literally works seven days a week catering to the needs of her clients (she is a professional psychic). Getting her to take any time off involves bruising negotiations between us over the amount of time involved, how far away from home we can go, etc. I complain about it endlessly until she reports how much she’s made at the end of each month. Then I keep quiet for a couple of weeks until I conveniently forget again.
Bottom line? I never would have been able to retire without my wife’s income included in the total equation. As a good friend of mine consistently reminds me, “Hold onto her like the grim-grip of death, my friend.” (Hi, D.).
Social Security and Medicare:
Neither of us plan to start Social Security payments until we each reach our Full Retirement Age (66 and 10 months for me; 67 for Gorgeous). Depending on the general health for both us and the stock market at that time, I am hoping to even delay that by one or two years in order to get a larger benefit.
On a tangential note, both of my parents took a reduced benefit starting at age 62. I don’t recall (or was made privy to) the full details of why they made that decision, but I do know from having responsibility over their affairs before their deaths that it was a very costly choice. They used up all of their savings by the time they reached their early eighties, and a larger Social Security monthly payment would have certainly made a huge difference in their final years.
Currently I am fortunate to be able to continue health insurance for both of us from my former employer (on a shared cost basis, the amount deducted from my pension). Our plan is to continue with this coverage up-to-and-through signing up for Medicare at age 65. It will then revert to secondary coverage with Medicare as the primary. Once again, I watch with great worry at what measures Congress might take in enacting “remedies” to the program. If you feel the same, please join me in donating regularly to the National Center to Preserve Social Security and Medicare.
Travel and Leisure:
This is the one area where my pre-retirement hopes haven’t (yet) been met. What with relocating to Florida, moving three times since our arrival here, eventually buying a new home, and finally being married to a workaholic who has this crazy notion that things like furniture and new kitchen appliances are important, we’ve only made a handful of meaningful trips. I yearn for road trips up the northeast coast and into Canada, to the deep southern states, and west to the Rockies.
I’ll have to wait for this for a few years yet. I only learned yesterday that we need to look at new washer and dryers soon.
Fortunately things have for the most part worked out very well, especially considering that we started this adventure with no firm plans or even a specific location to live. It’s not a strategy that I’d recommend to everyone, nor has it been completely free of bumps and detours. But the financial parameters we counted on at the start have for the most part been consistently there for us. Starting next year, we plan on working with a financial advisor who will help guide us to those important next milestones.
Has your retirement plan worked out as you initially hoped? Please share what did and didn’t work for you.
Until next time…
¹ See: NYT, 9/17/2018.