The older we get, the more we tend to think about priorities. Why? Because no matter how long we will survive in these earthly bodies, baby boomers as a group are playing in the second half of life and maybe even the fourth quarter. I have been reading and thinking a lot about this issue in recent years. I have also taken action by setting boundaries against external influences on my priorities.
Archives for July 2012
We are re-financing our mortgage again. In 2010 we refinanced to an adjustable rate mortgage at 3.875% for 7 years with a 30 year amortization. Recently I began investigating improving this because market rates continued to fall. This investigation has paid off so we are now going through another refinancing.
For several years we have used a Capitol One Direct savings account to stash money for emergencies and other irregular expenditures. We opened the account through Costco because of the 0.24% interest premium. All that is coming to an end. Capital One has acquired ING Direct and, as of June 1, 2012, has ended its relationship with Costco. The interest rate offered exclusively to Costco members is ending at the end of 2012. I do not believe that we will maintain this account after that, unless ING Direct upgrades its account offerings.
There are many large businesses that subtly encourage their employees to own company stock inside their retirement accounts. This is a big mistake in my opinion. In practical effect you are doubling down on the future success of your employer. First, your income depends on a continuation of your job. Second, your retirement depends – at least in part – on the strategic decisions of upper management. Bad decisions by management can cost you your job and cause your stock to tank. Folks working at Wall Street’s “too big to fail” banks have learned this lesson the hard way
A financial writer at Morningstar recently published an article about how to manage unplanned expenses in retirement. For the most part, the article contained a summary of comments submitted by readers of a Morningstar discussion board. I found the topic to be quite interesting because of the different philosophical approaches taken by different retirees to the “emergency fund” problem. I have some thoughts of my own about these issues.
Regular readers know that I am a big believer in net worth tracking. My reasoning is simple. When we retire, our income will come from Social Security and from our retirement nest egg. The more liquid assets we have, the more income we can theoretically generate. Net worth is one of the most direct ways of learning if you are making progress toward a reasonable retirement, at least financially.