Retirement Surprises: Most Good, Others Not So Much, Part III

Recently the Wall Street Journal polled their readers regarding their biggest retirement surprises. The responses were varied and expressed more joy than pain, and more satisfaction than frustration. In Parts I and II of this series I recounted a number of the good surprises. In the final post of the series I want to share some of the bad surprises.


Boomer Attitudes, top concerns as we approach our retirement
  • Most common among the bad surprises experienced by the retirees was that it was painful leaving work. And in fact, more so than expected. This idea was expressed by many and in many different ways. Several expressed missing being a part of a team at work. One expressed it this way. “It was very surprising to encounter the depth of the loss of not being part of a team doing important work.”
    Others expressed the fact that their self value and identity was entirely driven by their position. “I used to define myself by my title. I had flashy business cards, a company car, and a generous expense account. Without these, I didn’t know who I was. I felt naked.” I believe this woman from California describes beautifully what many of us felt upon leaving our careers behind.
  • One simply said that his biggest surprise was the challenge of figuring out “the Second Act.”
  • Some missed the pay aspect of work once they had retired. One in particular struck me. He filled his retired life with time with grandchildren, church activities, exercise, academic studies, reading, and walks on the beach. As perfect a picture as this is, he still really misses being paid for work.
    On this same subject, one indicated that finding a rewarding post-retirement occupation had been problematic. He expressed surprise that in spite of his very impressive resume and a somewhat aggressive search for an interesting position, there was no interest shown by the companies he approached. He assumed his age (70) was the main obstacle preventing at least some interviews.
  • Some responded that their biggest surprise in retirement was mortality. They went on to say that they had looked forward to many wonderful retirement years with their spouse. Unfortunately, however, one spouse or the other passed away far sooner than expected. One person’s advice as a result was: do not wait until retirement to enjoy life.  How sad and tragic that would be!
  • One person whose health surprisingly began to slip early in retirement advised as follows. Appreciate that every day you are probably as healthy as you will ever again be.
  • The bad surprise faced by many had to do with the cost of living. Many have been caught off guard and surprised. Different expense categories were cited. Some mentioned the cost of healthcare, more specifically the cost of medicare premiums for Part B, D, and F. Premiums in many cases are increasing by 20% or more annually. Some indicated that household expenses in general were quite a bit higher than expected.
    One respondent claimed that his living expenses in retirement were tracking at 100% of his pre-retirement expenses. For most this would be entirely unsustainable. He listed his expenses that were higher than expected: healthcare, travel, recreation, vehicle expenses, and fuel and energy. In this same vein, another individual suggested adding 10% to any expense budget you prepare because there will surely be expenses you underestimate.
  •  “Negative Dan” from Portland, Oregon reported that he has become a charter member of the over-the-hill club. He is now unattached to the business world, a retiree with a gold whatchamacallit signifying his long-term service. In his words, “sadly (he) spends his days striving to create the perception that he still has intrinsic value.” Hopefully there are only a scant few who share his view.

On a lighter note, Arthur believed that in retirement he would play golf all the time. But upon retirement he came to realize that he used to play golf to reduce the stress from work. But now in retirement he finds golf to be stressful in and of itself.

In conclusion, the content for these last three posts came from the Wall Street Journal of February 10, 2017 – “Readers’ Biggest Retirement Surprises.” Clearly for most the biggest surprises they experienced in retirement were positive ones. There are the wonderful gifts of friends and family, and better yet, the time to enjoy them. In addition there is time to focus on exercise and health, travel, and new activities or causes. For most, all of this make retirement a precious gift… even in trying times!


A Lemonade Retirement Dilemma: Should You Rent or Buy?

Housing decisions for Baby Boomer retirees and soon to be retirees can be among the most challenging issues to be faced. As part of your retirement plan, let’s assume you have made the decision to sell your home. You will either downsize locally to something more practical, size and budget-wise, or you will relocate for family or cost of living considerations. Home ownership is in your DNA, like most you are probably “hard wired” to own. But is that the best decision at this time in your life? Perhaps renting is the better decision.

For people 65 and up, about 80% own homes. And for married couples with at least one person 65 or older it is about 90%! Astonishing, if you ask me. The remaining group rent because they believe it makes more sense or because they can no longer afford a mortgage.

There are several reasons why renting may, in fact, be the better way to go.

  1. If there is a chance you will move in five years or less, renting is almost a no brainer. This is because it may cost 8-10% of the sales price of your home to sell it. The commission alone may be 6-7%. Appreciation would likely be inadequate to cover all of the selling costs. And worse yet, what if, due to market conditions, the house just doesn’t sell?
  2. As an appreciating investment, later in your life your home becomes less important. This is because it is more important to focus on the income you will need to live a Lemonade Retirement than it is to leave a real estate investment to your children.
  3. Renting allows you to invest the proceeds of the sale of your existing home. The income from the investment can then be used to defray your rent cost.
  4. Renters have less headaches and less cost as they avoid repairs and maintenance costs, landscaping and snow removal.
  5. Renting means more options and more flexibility.

A common argument against renting is that rents will go up. But so will real estate taxes and the cost of maintenance and insurance for home owners. Another argument is that “rent” is money down a “black hole.” But so are many of the costs of home ownership. To the contrary, renting most likely frees up cash which keeps you living comfortably.

On the other side of the coin, if you can pay cash for a house or a condo, and still have plenty of money to live on, you may be a better candidate for buying. The point only being that if home ownership will put a strain on your lifestyle then renting may be an answer. Financial planners usually suggest budgeting 15-25% of income for housing in retirement. The difference between 15 and 25% is significant. So when working on your retirement budget, see which of these figures fits best. This may be helpful information in making an own or rent decision.

Knowing how predisposed the vast majority are toward home ownership, here is a suggestion. If you are among the group of Baby Boomers who do not have their retirement finances perfectly buttoned down, after selling your home rent for a year as a trial. Just try it. You might like it enough to consider it for the long term. And if the trial tells you it is not for you, at least you know.

But if that “hard wire” dictates home ownership, does one pay cash for the new home or acquire a mortgage? This can be an interesting question to face. In it’s simplest terms, it comes down to a question of opportunity cost. Which is the better investment opportunity, real estate or the return on the invested cash. And at this stage of the game, obviously risk and safety need to be carefully considered in every investment decision.

I have included a link from Vanguard for a home ownership versus rent calculator. It works well, and you may want to play around with it using real or “what if” data.


For a “rent versus buy” crent-vs-buy-calculator-1024x683alculator, click on this link.


Retirement Challenge: Where to Live?

We raised our three daughters to be independent and self-reliant. Our “contract” with them was: 1.  We will put you through the college of your choice, 2. please complete your degree in four years, and 3. then please, please create the life you wish free of further financial support from us.

Happily, we all lived up to the contract. There has been one downside, however. None of them returned to Baltimore. Two of the three settled, and still live, in Montana. Our other daughter headed to the West coast and lived in southern California and Seattle for ten years. Luckily, she returned to the East coast about ten years ago and now looks to be entrenched in Lancaster, PA for the long term. As a result of all of this, six of our seven grandchildren live in Montana and one lives in Pennsylvania.

This poses a very interesting challenge for us in terms of where we spend our retirement years, as we would like to be near our grandchildren.

We have lived in Baltimore for fifteen years. Our life is here, our friends are here, and my mother is here. But financially speaking, Maryland is not a “retirement-friendly” state. In addition, Baltimore city is among the nation’s leaders when it comes to violent crime (and frankly, I find even nuisance crime to be intolerable). Consequently, we are feeling stress over whether to stay or to go. It would be extremely difficult, if not impossible, to leave my 89-year-old mother. She could come with us, but I don’t think she would.

It would seem that ultimately, though, Montana or Pennsylvania would likely become our home. But it is not quite that simple. Although not as bad as Maryland, neither Montana or Pennsylvania are “retirement-friendly” states. In fact, Montana has made some “retirement unfriendly” lists that I have seen. Perhaps we should just ignore this inconvenient information due to our grandchildren.

But here is why I am troubled by this. Lifespans are much longer today. When Social Security became law in the 1930’s the average lifespan was in the mid-’60’s. Today it is the mid-’80’s, but here is the kicker. Also today there is a one in four chance if you are a man you live to at least 92. And for women, there is a one in four chance you will live to at least 94. Heck, Suzanna’s mom almost made it to 90, and my mom just celebrated her 89thimages birthday. I’m 70 now and blessed with wonderful health, so I believe Suzanna or I or both of us, could easily reach or exceed the mid-’90’s.

My point here is that if we lived another fifteen to twenty years, I believe we stand a very good chance of not outliving our savings. But if we live another 25 to 30 years, I have my doubts. Was retirement intended to last 25 to 30 years? Consequently, I am seeing a future new home base where we can stretch our dollars. We believe that in a state such as Delaware, which is very much a “retirement-friendly” state, we could save $12,000-$15,000 per year, which over a long period of time is a substantial amount of money.

This certainlimg_3229y seems to be the most prudent decision. We would rather live where we only had to travel a distance to see one set of our grandchildren as opposed to all of them. However, if we do end up choosing Delaware, and further, we choose northwest Delaware, we will be less than a one hour drive to Lancaster, PA and our five-year-old grandson Luke.

That will mean we will be traveling two to three times a year to Montana, and Montana is surely a great place to visit. These trips, which I see being two to four weeks each in duration, hopefully, will see us staying in the rental cabin on our youngest daughter’s property. They rent it out and if we plan far enough in advance we should be able to lock it in. I do expect a family discount on the rate. Sounds like this will be a ‘lemonade retirement’ for Suzanna and me!

Best Boomer’s Retirement Advice: “Just Do It!”

The ultimate luxury is time! And our retirement years are the only time when we have complete control over 100% of our time. So it follows that retirement is one of the greatest gifts that Baby Boomers can receive in their life. Ponder that thought for a moment.

Sadly, though, a significant number of the seventy- six million Baby Boomers, probably 45%, are prepared to extend their working years well into what should be retirement. Many, and some say this number is 10% or higher, indicate they don’t expect to ever be able to retire. All of this, of course, is due to financial reasons in the form of a lack of retirement savings and/or retirement income. For many, social security income, which was intended initially only as a safety net, is their only income.

delaying retirement photo of grandad fishing

I believe that giving up ANY retirement time is a huge mistake. The gift of time (in the form of retirement) should be maximized and preserved, not traded for dollars. Certainly, it is far more prudent to adjust one’s lifestyle to his finances than to work to minimize or eliminate a need to scale back one’s pre-retirement lifestyle. Yet, fear, stubbornness, and/or misplaced values prevail too often and retirement is delayed or canceled.

So with no hesitation or fear of not being correct, I’m shouting “Just Do It” (excuse me from stealing that mantra from Nike). Just go ahead and retire. Savor these years and live passionately. Be grateful for every day you wake up. Recall and be thankful the first thing every day for each one of your blessings. And never forget that one of those blessings is your well-earned retirement.

Certainly it is easy to understand why many Boomers are dealing with anxiety at this time. And it is easy to understand why continuing to work may seem to be the only solution. Going ahead and retiring when finances are up in the air seems to be counter-intuitive. But let me try to prove my point with the following:

  1. How many years do yo have left? How many of those will be years you have your health and independence? Sadly, just yesterday I learned of a fifty-year-old man who has just been diagnosed with ALS and has been told he has two years to live. He has been in perfect health until now. His family is obviously devastated. At this stage of our life, these stories are all too commonplace and this will not change.
  2. “The best things in life are not things.”– Art Buchwald. We have all heard these words of wisdom before. They are obviously true and need no explanation. But they do need contemplation!
  3. Without knowing the future, no one can really know how much money they will need in their retirement years. This thought has been very troublesome to me for some time. The answer is totally a function of – lifespan (who knows); the cost of living (can’t be predicted accurately beyond a couple of years); the cost of healthcare (beyond unpredictable!); and some “big unknowns” such as end of life care or family emergency. Wouldn’t it be positively foolish to continue working to chase the unknown?
  4. Spending in retirement for most people is at least 25-30% less than it was  pre-retirement. But many are able to live comfortably on 50-60% less than they did prior to retiring, particularly if they enter their retirement years debt free.
  5. Most people say they believe that they could live within their means whatever their means may be. Therefore, in order to retire, doesn’t it make more sense to adjust one’s lifestyle to his income than to chase money in order to minimize or eliminate the need to cut back one’s lifestyle? In this costly, materialistic world in which we have been living, many have never lived within their means. This is the time and the reason for a paradigm shift.
  6. Millions of couples have retired and enjoy fulfilling, happy retirements on $1,500 to $2,000 per month. And they report that they do not feel they are lacking for anything. Rather many indicate that their lives are richer than they have ever been. Oftentimes this is accomplished in part by relocating to another state or possibly even another country. Central America and Mexico are the most popular destinations beyond the U.S. And ‘yes’, high-quality healthcare is available in these countries at very affordable prices. (It is very unfortunate that to use the words ‘healthcare’ and ‘affordable’ in the same sentence, you have to leave the United States!).
  7. Good jobs for Boomers are very scarce and extremely difficult to secure. Bad jobs are literally not worth the time. Obviously,  I really don’t think good jobs are worth the time either for Baby Boomers. But my point here is that those who reject my arguments and insist on giving up retirement time for work are going to face a significant obstacle in the form of age discrimination. Ageism is as prevalent as ever.

So please tell me, what do you intend to do with your one precious life and  your valuable time? As for me, I am trying every day to live in the present, enjoy, and be thankful for every one of my many blessings.


Five Reasons Why Financial Planning For Retirement Is A Futile Exercise!

At this age I wouldn’t think it would be asking too much to want to know little things like: are we financially prepared for our retirement journey? And how about, where will we be living in retirement and what will it cost? But actually, I’m not close to knowing the answers to these questions. Surprising? A guy who has worked with numbers all of his life, whose formal education was in accounting and cost analysis, and has been retired for thirteen months and hasn’t buttoned down this critical information?

Here is the problem.

10,000 Baby Boomers reach retirement age in this country every day and this is to continue up until 2029. 15% or maybe a few more are prepared financially for whatever comes their way throughout their retirement. They are the fortunate ones. But things are much more complicated for the rest. I would very much prefer to live a lifestyle in retirement that is similar to the one I have lived for the last thirty years or so. Although we have not lived extravagantly by any means, we have been comfortable. But it is impossible to know what retirement income and retirement assets would be required to maintain our lifestyle going forward. But actually we recognize that like so many, we may have to scale our lifestyle back by some significant percentage.

Why? The answer lies in five numbers all of which to varying degrees are extremely difficult to forecast.


Forecasting retirement income and asset balances may be the easiest of the five, but is still challenging. How much will retirement income and assets grow (nothing is growing now)? Will real estate be sold and/or purchased? Will new income sources come to fruition, either as part time or full time work or a business opportunity? Will any assets be reserved as an emergency fund?


TMaxine retirementhen comes the issue of life span. How can you know what it will cost to finance the rest of your lives if you do not know how long you will live? And obviously no one knows this answer.  Here is what we do know. Our generation is living longer than previous generations. I attended my 50th high school reunion in 2014. I was very pleasantly surprised at just how good and healthy so many of my classmates appear to be.

Those who study such things, and the financial planners who use such numbers, currently say the average life expectancy for a male is 85 and for a female is 87 years. That is terrific, but it’s just an average. Beating those averages, and certainly many will, comes with a significant financial cost. In our case, Suzanna’s mother lived nearly to 90. My mother, whose genes I seem to have, is coming up on 89 and rolling right along. So clearly, to be conservative, I would think a good financial plan for us should be based on outliving the averages (85 and 87) by eight to ten years. This would mean that we might live another twenty-five years.  Good news? Sure, but at a significant cost, and …. That brings us to the third number.


What will it cost us to live another fifteen, twenty or even twenty-five years? Come on! Who can begin to estimate the cost of living and the effects of inflation on goods and services that far out? Beyond five years who knows?

Look at it this way. Do you think prices will rise in the next fifteen to twenty years as much as they have in the last fifteen to twenty years? Why would one think otherwise?

And like it or not, government both at the federal and state levels will have a lot to say about our cost of living in the near and distant future. The American political system is tied up in knots at this point due to competing ideologies, unwillingness to compromise, and a “kick the can down the road” mentality that has prevailed for years. And this is not to mention the corruption, the greed, and the focus on the main goal of the political class: maintaining their positions.

The point here is that based upon the high cost of government, the deplorable financial condition of the country at this point and the growing demands the Baby Boomer generation will make upon the Social Security and Medicare systems from here on, clearly government policies and practices will have a significant negative impact on our cost of living. Part of this impact will likely come in the form of tax increases which may be inevitable at this point. This area scares the bejeebees out of me!


And speaking of scary, the cost of healthcare in this country is close to spiraling out of control. Recently Fidelity Benefits Consulting Group published a study which predicted that a couple going on Medicare today at age 65 will spend $245,000 for premiums, deductibles, co-pays, and prescriptions over the course of their lifetime. Their forecast is based on males living to 85 and females to 87.Maxine I say going to the Jim instead of the John

Again, my argument is: who can possibly forecast with a degree of accuracy what healthcare will cost cumulatively over a period of twenty to thirty years? Obviously living longer than 85 and 87 would increase Fidelity’s forecast. But in addition to that, as the huge Baby Boomer generation moves into their elderly years, the U.S. healthcare system will be overwhelmed. Baby Boomers will have to  bear their fair share of the costs which result. This could potentially far exceed Fidelity’s forecast, which currently breaks down to $500/month per person.


I read that more and more people plan to age in place, that is not to move into a senior living facility where they can move from independent living to assisted living to nursing home care, as needed. A plan to age in place may, or may not, be necessitated by one’s financial situation. In any event those aging in place may very possibly experience a medical situation or emergency which is totally outside of their budget and their insurance coverage. Such situations may seriously deplete, or even wipe out, their retirement assets.

Another type of emergency which may bring the same result is a special or emergency need of one’s child.

In conclusion, these five factors make developing a good, dependable, useful financial plan for retirement an extremely difficult proposition. There are simply too many unknowns in this equation! Next week I plan to talk further about this and how I am currently dealing with it.


Quote of the day:

Mark Cuban regarding the recent winning Powerball lottery ticket– “If you weren’t happy yesterday you won’t be happy tomorrow. It’s money. It’s not happiness. If you were happy yesterday, you are going to be a lot happier tomorrow. It’s money. Life gets easier when you don’t have to worry about the bills”.