When you are a baby boomer, every year is important to your overall retirement planning. Working, saving, investing, and looking ahead all play a part in the plan, while enjoying the life you have today. For us, 2010 was full of retirement planning events and steps, some small and some significant.
1. We finally closed and became part-time residents in our condominium at Long Branch Lakes. We believe this condo will be a primary residence for us in our retirement future. A lot will depend on: (a) how the overall equestrian and lake community of Long Branch Lakes evolves; (b) our ability to adapt to condominium living in a rural location; and (c) our health. Right now we are very optimistic.
2. We refinanced our mortgage on our principal residence. This refinance step substantially reduced our housing expenses, to the point that our total monthly mortgage payments in 2011 will be the same as in 2009, even after the condo purchase. When we eventually sell our Nashville home, we will use the proceeds to eliminate both mortgage payments. We are in no particular hurry now to sell the Nashville house because it keeps us close to our sons, my work, and Mrs. P’s health care providers.
3. We reduced our recurring monthly telephone charges. This was a small step in lowering what will be our fixed retirement living expenses. This step included eliminating the landline at our lake home in Kentucky and dumping my smartphone for a prepaid StraighTalk phone. The simplicity of this phone and no-contract service has been rewarding to me. Very soon we will be eliminating the land line at our Nashville home as well. Unfortunately, we had to add a land line at our condo because it comes automatically with the purchase of high-speed internet.
4. We simplified our asset allocation in our retirement portfolio. A substantial percentage of our retirement investments are in self-managed brokerage account in my 401(k) plan. In 2010, I transitioned from a “ten-speed” couch potato portfolio to “four square” portfolio. I also used ETFs to fill out four of the five components of that portfolio. (I modified the the four-square slightly to include a short-term bond fund.) This allowed me to use standing stop loss orders for the ETFs, reducing the risk of another calamitous loss in portfolio value. I have almost finished updating my personal finance spreadsheet so that I can do a full investment performance and net worth analysis for 2010. Stay tuned for that.
5. We bought more inflation protected securities. We bought more tax-deferred I-bonds and, inside my 401(k) account, some 5-year TIPS and 10-year TIPS. We have a lot more work to do to fully fund our plan for guaranteed retirement income.
6. We switched to a community bank rewards checking account. We were tired of the fees being charged by Bank of America and the ridiculously low rates paid on checking balances. I love everything about our rewards checking account at our new bank and particularly the 3.3% interest rate on deposits up to $25,000.
7. I bought a comfort bike (and started riding it.) How is this part of my retirement plan? Gotta stay healthy to keep those health care costs as low as possible. Comfort biking is good for my arthritic knees.
I also turned 60 in 2010. That counts for something, I suppose!
That’s a decent summary of our retirement planning steps for 2010. What about you?