Part 5: Preparing for Retirement - Will you have enough money to live on?

Will you have enough money to live on after you retire? This question is so scary that many people just decide not to explore the answer. Others are put off by the repeated mantra of the media that you need "x" million $s to be able to retire as the vast majority of us will never have anywhere near the amount cited.

Sharon of MidLifeMomMusings has used this retirement calculator to figure out an estimate of what she and her husband will need and made a plan to start working towards achieving those savings. I highly suggest you read her post and think about where you are starting from and want to end up.

We went to a fee only financial planner some years ago and asked this very question. Based on the assumptions used for the calculations at that time we were going to be ok but a lot has changed in the world economy and our personal economy since then so I need to try out this calculator myself and keep adding as much as possible to our savings.

If you do decide to run the numbers don't forget that many people manage to retire by downsizing their lifestyle or moving to a less expensive location. Others live in shared housing or take other steps to stretch what they have.

Part 4: Preparing for Retirement - Who would handle your finances if you couldn't?

I have had excellent role models for this part of retirement planning. My parent's took the time and effort to make sure both my brother and I have powers of attorney and health care power of attorney. Still, when my father was close to death we discovered there were some gaps in the legal authority to handle financial matters and had to have their attorney come to the hospital with documents for him to sign. We also had to change how the bank and investment firm listed ownership of /access to accounts. Not too bad to take care of because my mother was, and still is, living. We think we have done the legal paperwork our children would need to have to take over our finances but probably should get some legal advice as we did it all 15 years ago when we moved to the state we currently live in. I do update a list of all of our accounts including insurance annually and send it to the designated executors of our estate. With online accounts and no paper trail in many cases this becomes even more important.

My parents also spent the last few years of my Dad's life showing us all of their financial records so we would be very familiar with it. We made lists of accounts, credit cards, etc. and make sure everything was easy to find in their files. That led to getting updated copies of their trust and other legal documents. We still review things for my Mom although she is fully capable of and does handle her own finances at 92.

These are hard things to talk about and to take care of especially if your family is dispersed around the country as ours is. My brother has it even worse because one of his sons lives overseas. Yet it is important.

Have you and your spouse if you have one addressed these issues for yourselves and kept them up to date? Are you open with information that the designated persons would need to take over?

Part 3: Preparing for Retirement continued - Still more about whether to continue life insurance in retirement

I just read an article about this very topic (I'm Retired - Do I Still Need Life Insurance? ) and it brought up a question I will be thinking about - How much income will the surviving spouse lose if the other dies? In case of the decision as to whether or not to continue my term life insurance, right now my husband would not lose any income. Once I start collecting SS and other retirement income he would lose the SS income only if I died.  We need to talk about whether or not he would need to replace that income. More thought required here.

Situations Where Life Insurance Is Needed

• Couples in their peak earning years, saving for retirement.
• Retirees who will lose a substantial portion of the family income when one spouse dies.
• Parents with non adult children.
• Families with a large, illiquid estate, who’s estate will be subject to estate tax.
• Business owners, business partners, and key employees employed by small businesses.

Part 3: Preparing for Retirement continued - Some resources to help think about the long term care insurance question

Here's some interesting articles to get you thinking:

Should you buy long term care insurance?

10 questions to ask before buying long-term care insurance

Part 3: Preparing for Retirement - What to do about long term care and life insurance?

I just received the quarterly bill for my term life insurance policy and recently my older brother announced that he is shopping for long term care insurance and he and his wife no longer have life insurance. I don't know what to do about these things.

My life insurance is reasonable and if I needed long term care for a terminal illness it would compensate for the expense either post hoc or, depending on the state I lived in at the time, we could tap into it for those expenses as they occurred. I no longer earn any significant income so it isn't needed to compensate for lost income and we don't have a mortgage or other debt to pay off. My slightly younger hubby however is the sole breadwinner for 5 more years and we will be keeping his life insurance.

We haven't shopped for long term care insurance being put off by our pre-existing health conditions, the cost, the ongoing changes in the industry, etc. I can't seem to wrap my usually analytical and decisive mind around this one. I am curious what my brother will learn and perhaps letting him do the research will help us make a decision.


What are your thoughts? What are you doing in these two areas once your children are grown?

Part 2: Preparing for Retirement - Do you plan to work?

My Hubby plans to work for pay after he "retires" after 20 years in his current job. I joke that it is because he can't even get through a three day weekend in town without going into the office because he can't think of anything else to do. All his hobbies/interests have fallen by the wayside. While I honestly think that is part of his reason for wanting to continue to work I do believe the real reasons are that he finds his work very interesting, has great colleagues and enjoys what he does. Most of us aren't so lucky.

Then there are those who have a choice between working and being broke. I'd work too in that situation. NPR is doing a series on working in retirement years and this is the latest article -When a bad economy means working forever.

It is interesting that even this person talks about the non-financial benefits of working - being around people, continuing to learn, etc. I'd like those things but I don't want to be tied to a work schedule right now. Perhaps when seeing family members no longer requires travel across the country I'll be more interested. I would like the other benefits though and am looking for ways to build them into my life along with more structure to my days.

Do you expect to work for pay after retirement age either because you want to or because you will need the income?

Part 1: Preparing for Retirement - Are you on a financial path that will prepare you for retirement?

The last few days have been book ended with reading that present opposite perspectives on managing the financial side of retirement. I just finished reading How to Retire the Cheapskate Way by Jeff Yeager (checked out from the library of course) and then an article in this morning's Washington Post. Both are correct and have wisdom to offer. And then there is the movie, Best Exotic Marigold Hotel, that we watched last night - touches on all the same issues. Losing retirement funds, not having enough in the first place, surprises about finances after death of a spouse, needing to work in old age, health care problems, relationships, etc. albeit in a superficial manner.

Yeager talks about how long term decisions can ease the financial burdens of retirement including buying a small forever home and living in it through all the stages of life. Those of us with careers that move us around can't do that, but we can downsize for retirement. He also talks about remedies for not having a lot of money to retire on and cites examples of people who are making retirement work on little money. His approach is to find ways to live happy and meaning filled lives regardless of your financial situation. He does bring up the health care cost conundrum near the end of the book, but really has no solutions for those with few assets and acknowledges that is a difficult and perhaps unsolvable issue.

Fiscal trouble ahead for most future retirees talks about how the fiscal downturn destroyed 40% of Americans personal wealth coupled with pressures to reduce Social Security and Medicare benefits and evidence that 53% of Americans 30 and older are on a path that leaves them financially unprepared for retirement creates a perfect storm.

A lot of people struggle with how to know how much they will have as income as they age and you can't know if you are on a reasonable financial and lifestyle path if you don't have that information. The Social Security Administration makes getting an estimate of your monthly benefit easy with their My Social Security page where you create an account that lets you get benefit estimates and later sign up for benefits, etc. If you have a 401k, 403b or similar account your account holder may have a web based tool that lets you estimate your monthly benefit at different ages or have a representative who can assist you in doing that. There are other tools available but pick them carefully as some are designed to encourage you to invest in their products.

The key is to get an idea of what your after retirement income will be and how your income streams will be designed. That can include rental property income or renting out a room or storage space in your home. It may include a job but it can be risky to count on that as your health or the economy may make that difficult.

We are just under 5 years from my husband's retirement and I have already basically retired (I'm older, have had health problems and seen my career derailed by the economy). This past week we have been looking at income estimates from our various retirement income sources and discussing some of the decisions we will have to make before knowing the final number (e.g. single life or survivor annuities, monthly cash withdrawals, etc.). It is not simple and we will take advantage of our access to Federal employee retirement seminars, TIAA-CREF's individualize counseling and online tools. I do update annually a simple spreadsheet with estimates for each income stream - it helps us sleep at night.

On a personal level, the fact that concerns me the most is that health care costs continue to outpace inflation and long term care costs could wipe us out. Can't control that, but when you couple it with our plan to relocate close to our sons in S. Cal and go on at least one major trip a year and we will have a more expensive retirement than we would if we would live in a location with a low cost of living. So this is a topic of great interest to me.

Some other aspects of Preparing for Retirement that also interest me and that I will be writing about are:

- How you will spend your time in retirement & starting now to live it on a smaller scale
- Keeping physically fit as you age
- Living large while living frugally
- Seeing the world and learning new things in retirement
- When spouse's have different visions for their retirement

Suggestions for other topics? I would love to get a discussion going about this!

5 years to retirement - Financial planning to do list?

I have already transitioned to working very part time instead of full time, but my slightly younger hubby loves his job and plans to remain in it until he has 20 years of service which will bump up his Federal pension a bit. So health willing we are planning to officially "retire" at the end of 2017 when he is 65 and I am 68.

I've been researching advice on what to do in terms of financial planning to prepare for this life change and here is what I've found is recommended for us to do in 2013.

1.       Cash Flow: Write out two budgets – one with current expenses, the other with expected expenses in retirement.

2.       Investments: Use computer programs to project retirement needs and investment returns.  Discuss with a financial planner your goals and how to adjust your asset mix to meet them.

3.       Defined Benefit Retirement Plan: Ask your benefits office to project your pension in monthly and lump-sum payments

4.       IRA & 403b: Put the maximum in your plan.  Wait as long as possible to tap the money so earnings grow tax-deferred.

5.       SS: Check your earnings statement annually.

Some of this makes sense and some doesn't.

1. We have an annual budget and have tracked our actual spending for years. Since we expect to sell our house and relocate it is very hard to come up with an expected budget 5 years down the road. All we can do is continue to save as much as possible while making sure we also live each day fully.
2. I can do this online and will do so.
3. Again, this is available online.
4. We do maximize these and will do so in 2013.
5. Will do.


The bigger question that is unanswerable right now is what will our life be like in 5 years?

Will we both be healthy?
Will our children still live near each other in southern CA so that will be where we will move?
Will we still have elderly parents living on opposite sides of the country?
How will we want to spend our time? Because I have greatly reduced my work hours I am faced with this now.

How do you plan to prepare for your retirement when it is 5 years out - both financially and in terms of a satisfying lifestyle?

More resources on when to take Social Security

The Wall Street Journal has a great summary article about When to Take Social Security that provides links to a variety of calculators that will help you with your planning.

Check out this NPR series on Life in Retirement

Life in Retirement: The not so Golden Years

I stumbled across this and found it interesting and thought provoking.  Hope it is the same for you.

An addition to yesterday's post

Go on over to Retire in Style to see her post that adds to the links I shared yesterday - Permission Granted: You are Allowed to Guard Retirement Money

Links about making sure you can fund your retirement

Here are some great links to help all of us continue on with thinking and talking about how to fund our retirements.

The Power of Saying "No" to Preserve Your Retirement Bucksome Boomer post really makes a great point about not sacrificing your own retirement to pay for adult children's (or siblings) wants and needs now.

I also hope you will check out this great post at Satisfying Retirement - How to Mess up a Retirement

Thanks again to Baby Boomers Blog Carnival

Check out this week's carnival over at Baby Boomers U.S. and the many wonderful posts they included (including mine - blush).

Check out this week's edition of Baby Boomers Blog Carnival

Another interesting collection of links including one of my own posts over at Baby Boomers Blog Carnival.  Check them out - you are sure to find one that speaks to you.

Check out Baby Boomers U. S. Blog Carnival

 I'm happy to say that I have another post included in this week's edition of Baby Boomers U. S. Blog Carnival where there is always such an interesting selection and variety of posts to choose from!

Check out my post at Baby Boomers Blog Carnival this week

Great reading over at Baby Boomers Blog Carnival including my post on an often neglected piece of retirement planning (How Long Should it Last?).

What other blog carnivals do you find helpful?

How do we use this time?

Recently I watched a TED Talk by Jane Fonda who focused on life's third act.  One thing she said, "How do we use this time?" - referring to the years after 50 - resonated with me.  It can be a challenge to use our time meaningfully while aging.  My struggles to decide what to devote my time to revolve around a series of questions.

- Should I seek out more paid work to continue to use my education and experience to contribute financially to my family or can I let that go?
- Do I seek out volunteer activities that address problems in the world that I dearly wish were solved or do I pursue those that hit the "sweet spot" of my lifelong interests and provide a "fun" quotient?
- How much time do I spend on health related activities such as exercising and creating healthy meals?
- Do I devote a few or many hours to having fun, exploring my world, sharing time with friends?
- How much time do I spend on activities that are of low or no value to me and how do I stop doing that?

I could go on.

How do you use your time during your third act?  How did you decide to use it that way?

A big thanks to Baby Boomers blog carnival  for listing my post on Finding role models for aging successfully!

Finding role models for aging successfully

When I work with my executive coaching clients I often suggest that they identify role models for specific areas of learning.  For example, if they are working on inspiring and motivating others then they are to identify 1 to 3 people who do this well and in a way that fits the coachee's style.  They then identify specific things these people do or say that leads others to find them inspiring and try out some of these behaviors themselves.

I think I need a dose of my own advice.  The challenge for me is that I have not been clear about the ways in which I want to focus my own development vis-a-vis aging successfully.  I have focused more on what I don't want to emulate and lifelong frustrations with some of my personality traits.  So to turn those thoughts on their head I need to first think about what I want of learn, improve or become more effective at doing.  Well, the obvious way to approach that is to look at my Happiness Commandments which need work and look for role models in those areas.  That means I will have to find role models for aging successfully who:

- handle difficult situations without complaining
- have long term goals and take action to make them a reality

- have lots of physical energy and endurance
- make new friends regularly and spend time nurturing their friendships

- listen with curiosity 
- engage in activities/have goals that push them to learn something challenging

- use their creativity in ways that stretch this "muscle"

Since I am rather sore and tired from a Pilates session yesterday, I think I'll use the search for a role model for having lots of physical energy and endurance as one ages as an example.  I can think of several people right of the bat.  At Pilates yesterday was an older man who was working through an advanced routine by himself.  Turns out he is a Pilates instructor and a massage therapist.  In the newspaper was a story about a woman in her 70's who is a body building champion and who started working on this at 70.  Both of these people take working on their fitness as a primary part of their life.  

On the other hand I have a 104 year old neighbor who still take short walks each day and is able to climb stairs and a steep driveway with only the help of a cane.  My donated book sorting buddy for the Friends of the Library book sale is in her mid-70's and does this bending, lifting, stretching type of volunteer work 3 days a week despite needing to work with a chiropractor and physical therapist on her back problems.  She has tons of energy. And my aunt rides her bike or walks to the store, has a large vegetable and flower garden each year and swims regularly in her mid-80's.

So what do I pull out of these example?  The fittest, most energetic persons make physical fitness activities a, if not the, core part of their life and/or livelihood.  Others build it into their daily life on a regular basis without fail. 

What can I try to do that these role models do?  Continue with Pilates once a week and recommit to long walks with the dog daily despite the weather.  Take up my new friend's invitation to join her and others on some Saturday morning hikes.  Add in other planned physical fitness activities such as actually using one of those DVDs that I have.  Sign my husband and myself up for ballroom dancing lessons instead of just talking about learning to dance for our son's wedding.  Embrace raking leaves as exercise!

This is a pretty straightforward example but one that has been a lifelong challenge for me as I tend more towards thinking, reading, creativity that involves sitting, etc.  However after visiting my Mom who has the same preferences and seeing how her lack of commitment to physical fitness has limited her even more than her arthritis, etc. requires, I don't want that to be my future if I can avoid it!

How do you prepare to live large in "retirement"?

Some friends and I have been starting to think about what it will mean to reach traditional retirement age, to stop working while our husbands plan to work for 6 or 7 more years, or generally to try to prepare for being in our mid-60s and beyond.

We didn't come up with answers yet, but agreed that we want to make sure we are living "larger" lives.  Work and other mid-life obligations have tended to shrink the lives of most people I know unless their work enables otherwise.  Time to change that!

How have you enlarged your life right before or during your retirement years?

What makes you feel like you are living a "large" life?  What holds you back?