Ships Log w32 – Beam Reach

The points of sail. A. in irons (into the wind); B. close hauled; C. beam reach; D. broad reach; E. running (the "no go zone" is shaded

Beam reach, meaning sailing across the wind or a precise point of sail, 45 degrees to the wind. I use this because I want to be precise when I talk about the voyage toward and through retirement.

First of all, why am I so concerned about this voyage?  Why not just go with the flow?  NPR came out with a poll and a series of articles this week, around retirement life, finances and health.  From the article, Robert Blendon, of the Harvard School of Public Health, says “People thinking about retirement don’t envision any of the potential problems that they could face”. “But you have to face up to them, because otherwise it’s very hard just when events start happening to respond.”  Their poll measured the concerns around health and finances for both those planning retirement and those already there.

Age to Retire – NPR Poll

The poll reports that people in retirement feel they are (17%) less happy and (24%) more stressed than the 5 years prior.  If we openly discuss the changes that occur in retirement and plan for those, do we become more optimistic?  For example, I talked with a retired person who did not expect that a lack of routine would be something that would affect them so.

I find it hard not to be Optimistic about the future.  (I repeat myself here) This is a life change and like all life changes, marriage, family, career, you plan for them and you get your thoughts together.  Over the last few weeks, my daughter, who in addition to her Mom and Sister, is planning her wedding.  The family is buzzing around these life change plans.  I am fascinated by drawing the parallel between her life change and mine.  I had some fun with these thoughts and I hope you do also, I think I have them nailed!

Here is a list of those parallel thoughts.

Wedding	Parallel Thought	Retirement
The venue for the affair	Location	Where to live post-retirement (check, done that)
The wedding dress	What to wear	Why would I ever need another new sport coat or tie?
The wedding rings	Symbol of attainment	Hmmm, my contented smile? (okay, a stretch), loss of dark circles under my eyes? Or my ever- “blonding” hair?
The reception	Celebration	A retirement party (got to get on that)
The invitee list	Participants	Our contacts – family, friends
The reception menu	Meals	Can we afford our current dining-out costs?
The Honeymoon	Trips	Need to plan our retirement trip
The cake, music, dancing	Activities	What we have as our hobbies and interests
The wedding budget	Costs	Our retirement budget (and everyone has one)

Ships Log w31 – Celestial Observation

Let’s see…. 33 years ago, there were no iPods, iPads, or even CDs.  We are talking 1978.  You really didn’t see many “personal” computers because they were all huge, air-conditioned machines with dumb terminals attached…yes, by wires!  Remember Simon, the game?  Or how about an Apple II computer costing $3,000?  The first cellular phone was introduced but the Fax machine would not show up until the following year. Space Wars video game was just catching fire.  Why all this nostalgia?

I was flying from Denver last night and the pilot came on the intercom and welcomed everyone to the flight.  He said we had a very special person on board, Steve, one of our flight attendants who was retiring and this was to be his last flight.  After 33 years, he was folding his wings.  Later, while serving us drinks, he tapped the person next to me, who was listening to his iPod, and said, “33 years ago, we didn’t have to tell people to turn those off”.  We laughed and started talking about everything that has occurred since then.

In 1978, I was a Registered Respiratory Therapist, specializing in Neonatal and Pediatric care.  I made $12/hour and was told the maximum I could make was $15/hour. I saved many lives back then in the ER and ICU.  I crafted ventilators out of tubing, jugs of water (water pressure), and oxygen.  I transported newborns and even scrubbed up for surgery because there was no Anesthesiologist available for an emergency cranial operation.  I worked on gunshot cases, motorcycle crash cases and even an “unexpected” delivery in our ER restroom (her mother said it couldn’t be, she just had the flu!).

I know I had to make a change to support a family and offer us a better future so I went back to college and changed professions to computer science or IT.  I took a job at Boeing and had to take a dollar less per hour but that was just for a short time.  I quickly made that back and started climbing in job and pay.  I look back now a wish I was still working in respiratory therapy but I cannot complain about where that decision, and many others, have taken me.

As I spoke with my seat mate on the plane, we shared the concept of retirement.  He, 15 years away, and I, 2 years.  He agreed that retirement was different these days….more a life change.  He told me he knew about people who didn’t know how to make the change or just couldn’t.  He shared a great story about a professor he once had who showed up for class wearing plaid shorts, tie-died shirt and flip-flops; you know, thongs.  The class thought this as strange and he announced that he was thinking about retiring.  Someone posed the question of when.  The professor answered, “when I have 2 bad days in a row!”.  What a great line!  I will retire when I have 2 bad days in a row….. just the thought of going to work, knowing you don’t have to be there….enought to make me smile and turn up my Bee Gees album.

Ships Log w30 – Dropping Anchor

The difficulty was that they were from such different backgrounds and different upbringing.  As kids, one was given up for adoption the other was part of a small, loving family. One, now an older, set-in-her-ways girl who knows how to manipulate people to get her way.  The other is much younger, by years, and delights in the pleasure of meeting new people and joining the fun at hand.

Their week together started out with a lot of argument and frustration which quickly turned to fights, tussle, growls, some whining, until one finally walked out. A sense of accomplishment was seen in the eyes of the winner who came forward as if to say, there, I showed her!  Seeking, but not getting any acknowledgement from us, she retreated to bed to replay the events that occurred.  Her solitude would not last long for in the end, they had to sleep together which brought on another fight over who’s bed was who’s.  They argued about possessions.  They fought over meals.  If one had something the other wanted, then an all-out battle ensued until broken up. They were so different. Could they ever get along….quietly?

Their week together ended playful but respectful and I think I finally came to understand that each of these dogs has her own sense of priority that really defines them.  One, a 3-year-old Jack Russell, Niki, where the other, Cleo, was an 8-month old Golden Retriever. Like I said, they had very distinct personalities that could be defined by their priorities.  I stopped to observe them and found the differences…

Niki - Jack Russel, Cleo-Golden

Niki, the Jack Russel was all about food, it came first.  She didn’t eat a lot and was pure muscle. But food could distract her from anything.  Whereas Cleo stopped anything just to go say hi to a new friend. She would leave a full bowl of food to run to the yard to say “hi”.  From there, it was all about playtime.  Niki obsessed about a ball and not just any ball – the one she held at that time.  Nothing distracted her from retrieving that particular ball, but food…or if Cleo got hold of it which is what started the arguments.  Niki would pursue that ball until she dropped. Cleo, she didn’t care what to play with as long it was what Niki had.  Niki’s next priority was the hunt, or kill… moles, rats, birds, anything small, while Cleo watched.  Each girl had her priorities and nothing could deter them.

From 4 legs to 2 legs in retirement….what priorities drive us? We come from different background and different upbringings but is there a common set of priorities or is each unique. I have talked with a number of retired folks and those planning to retire.  What are priorities and what should they be?  The initial review of many articles seems to indicate one of 2 sets of priority schemes….

One would have me focused on the fun aspects of retired life, mainly travel, projects, people and not to focus solely on finances.  This, to my initial eye seems the right frame of mind.  Tho other approach is to focus on money and be the driver of activities.  For those with limited funds, this may be the case.  I ask, does a fixed income encourage this priority scheme?

What I do know is that for me, I think a modification of the first is appropriate ASSUMING I have the finances to support them. This means a tight control of the budget as many retired folks do.

• Freedom – do not want to get into a rut
• Projects and creative outlets a must have to dictate the days/weeks
• Family, friends are a big part
• Travel limited to funds but wanting to find interesting towns/sites
• Wine and dine – explore cooking, new recipes, new restaurants, good wines
• Learning new things

Somewhere in there is money.  I also assume health trumps all but being in good health, it stays low.  So what are your priorities or what do foresee them being?  I would love to hear and share…..  Comment below

Ships Log w29 – Course Update

A funny thing happened on the way to the Casino….Ann was in her early 40s, with a good job and wanting to buy a house so she could stop renting.  She lived in the San Fransisco area and liked to go to Reno once in a while with friends.  On one of these occasions, while waiting for a show in a large casino, she asked for them to hold her place in line while she went over to the slots.  The casino was noisy, the slots paying off pretty well, and Ann had a roll of quarters left.   So she left the line and slowly made her way across the red and black mosaic carpet, past the nickel machines, weaving musical machines, coins cascading down, bells playing and occasionally there was a WHOO HOO coming from a winner. In the corner was a lone slot machine with a racing car motif to it.

Ann put 8 quarters in the slot at a time and pulled down on the handle.  The machine spun, bells chimed and finally showed a red car in the first slot, paying back 10 quarters.  This went on for few pulls, winning some, and giving back some.  Then, just as the doors to the show were to open, Ann put in 8 quarters and pulled the lever.  When the wheels stopping turning, nothing happened, a loser she thought. But before getting up to leave, she saw not one but 3 red racing cars lined up in a row.  A light blazed above the machine and an attendant came over.  Ann was not sure what she won but the attendant asked her to stay with the machine as she left to get her supervisor.  Ann’s friends came over to see what she won and they all speculated on great sums of cash, free meals, even the room comp’d.  The supervisor, in a black suit with an ear piece followed the attendant back to Ann and congratulated her on winning.  He said he would need to notify the manager who must authorize the payout from the machine and that he first needed her driver’s license.  He told Ann to stay there and not leave the area.  Ann was nervous now.  How much had she won?  $1,000? $10,000? More?  In a few minutes the supervisor returned with the manager. Beaming, the manager approached Ann and congratulated her on winning her choice of three cars or $50,000.  They were in the lobby and if she would please follow him, he would fill her in on the details.  There they were, glistening in lights, cordoned off from the crowd, a Lamborghini, a Rolls Royce, and a Ferrari. 

Ann, a co-worker of mine, shared this true story with me.  She said she picked the Ferrari for its color, “the Rolls was an awful yellow color” she said.  Ann paid to have it shipped back to the bay area where she put it up for sale at a local dealer.  Being new, red, and in demand, she sold the car for $95,000 which she put toward the down payment on a house.

Now, I haven’t been so lucky as to win a car, nor the Lotto.  We have just worked hard, like you, to save in our IRA and a 401K. We also will have pensions from current and a past employer.  Our house is not yet paid for, but has an equity value we would use as an asset. I met with our financial planner to go over our plan and see where we stood both on an overal financial status but also to work out the “what if” scenarios of retiring at 60, 61, 62…or heaven forbid, later.  The great thing about having someone to assist with the plan is that they can share questions, ideas and options – reconfiguring the plan based on changing assumptions.

Plan Spending Rate w/ Inflation

Our plan is a “retire at 60” scenario.  The assumption, as in all plans, is that there would be a constant spending rate based on how many dollars you will need each month.  This is then inflated by some factor for inflations which we have set at 3%.  Please note that $50,000/yr today is hundreds of thousands in 30 years which is why the blue bars go up and up!

Plan @ 60

The assumption then takes the savings, pensions, Gov’t programs (Social Security) and other incomes and determines where income would come from, and for how long…the next diagram shows retiring at 60 with 5 years part-time work (initial green), our savings would last until we were 94 then pensions and SS would be our source of income (purple and green).  The plan says at the constant expense rate we started with, we would have a shortfall (red) but I assume spending will go down when we turn 90.  It also shows a spike of investment from the equity in our house in year 5. This can either be a direct sale of the home and move to something at a less cost or look into a reverse mortgage (I know, scary). We are now working to determine the impact of taking money out of the plan to pay off the house, therefore reducing the monthly expenses by $1,500.  It is an option.

Plan @ 61

This is the same plan but at a retirement date of 61 with less initial part time income so more initial draw from savings.  As you see, the savings run out sooner even though I retire later.  That is because the draw starts at a higher level so compounding is affected.  These plans are based on the IRA and 401K making 7.5%  and an inflation rate of 3%. Inflation isn’t there yet but the investments have exceeded 7.5% this past year.  So both are helping the plan.

We use a local person at Edward Jones who we have worked with for over 15 years.  He has encouraged us to diversify and buy large companies that pay good dividends that re-invest. He has also asked the right questions to test assumptions and offer ideas and options.  The plan is just that, a plan that can be altered as long as we understand underlying assumptions and the effects of the change.  For example, if I continued working until I was 65, we would have plenty of funds to last past 100 years old. So we are balancing the need to maintain our life-style with the need to alter our work-style.

I share these to encourage others to produce their own plans.  There are many online estimators and they are just that, an estimation.  They generally do not allow a lot of “what if” scenarios or options.  By working with a planner, usually free, they can set this plan up and help discuss and manage it over time.

A Ferrari would be nice to win,and so would the Lotto. But alas, you can’t live solely on the hopes of a handful of quarters and a racy slot machine.