With retirement saving, the fundamental discipline problem is the willingness to honestly separate spending “wants” from “needs” while keeping retirement saving firmly in the “needs” category.

At least one financial planner reports this frequent sequence of responses when clients engage him to provide guidance for retirement.

1. When asked how much retirement income the clients expect to need, the answer is “I don’t know.” (I can understand this.)

2. As a follow-up, the planner asks the clients what their current spending budget is or category spending levels are. The answer: “I don’t know.” (This reflects an irresponsible but curable attitude.)

3. So, the planner asks the clients to go home, study their actual recurring spending and savings amounts in different categories, and report back.

4. Many clients leave with their homework assignment but never return. Apparently, facing and analyzing their own spending is just too much to handle. (This shows a definite lack of discipline.)

When clients are challenged about their spending on new cars and vacations instead of for retirement, this planner hears responses such as:

“A new SUV is a “need” not a “want” because it’s just not safe to be out on the road without one. “

“A vacation in the Caribbean is not merely a dream, but a family health necessity.”

And guess what category of spending no client stated was a “need”?   Saving for retirement.

Wow. I guess these folks were looking for a magic bullet, no sacrifice, retirement plan and when it didn’t materialize in that first visit, they bailed on the entire process.

As the writer points out, it takes discipline to stop rationalizing unnecessary spending.

Sadly, many of our fellow boomers just don’t have that discipline. What may follow, years down the road, is the pain of regret.

Here is the link to the full article:  Saving for Retirement is Possible.

This is an article from Go To Retirement
Copyright 2012 Go To Retirement. All Rights Reserved.

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1. The Lines Between Vacation and Retirement are Blurring

Our neighbors the birders were extremely helpful and informative. In less than 90 minutes I
was able to identify 15 bird species including a flock of snipes, a bird that is rarely seen in Tennessee. The fresh air, exercise, and neighborly companionship were plentiful. I was pleasantly surprised by how much I enjoyed it. This will likely turn into a regular activity for me because our neighbors will be leading a “birding” walk every Monday morning.

This “test drive” of a new activity had a double benefit for me. First, it taught me that I can learn and enjoy new things that earlier in my life I never would have considered. Second, it allowed me to socially engage with new people while doing more than making small-talk.

This coming week I will write a little about my recent experiences as a pony caretaker which is another activity that potentially looms large for retirement.

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1. A Safe Way to Test Drive Your Retirement
2. Driving Hunger Away from Our Senior Citizens

No more.

Actually, I haven’t balanced a checkbook or formally reconciled a bank account since we moved from Bank of America to a rewards checking account at a community bank in May 2010.  There are two basic reasons for this change to a less rigorous mode of financial due diligence.

First, the need for account reconciliation has largely disappeared. Second, not reconciling or balancing the checkbook is part of my goal of simplifying my life, including our financial life.

For us, monthly account balancing and reconciliation accomplished two purposes: (1) validation that all of the transactions posted to our account –  and their amounts – were legitimate; and (2) confirmation of our actual account balance.  I have found that I can accomplish both of these purposes by at least weekly (and usually daily) online review of our checking account transactions.

Most of our checking account transactions are debit card transactions, electronic payments and direct deposits. These are posted almost instantaneously which means that our memories of the transactions are better.  The instantaneous account balance is right there to see, along with any pending transactions that will affect the balance.

Some may question whether I am spending more time with this more frequent monitoring. I don’t think I am. It takes me just a few seconds to connect to our account and a few seconds more to scan our recent transactions and check the balance.  Compared to month-end reconciliation, there is no lost memory head scratching trying to figure out what a transaction was for, etc.

There are extra benefits from this more frequent method of account verification.  It serves as a form of identity theft monitoring. If a transaction looks strange (hasn’t happened yet), I can check on it immediately.  (I also receive instant emails from the bank for any transaction that exceeds $100 and weekly emails with our account balance.)

Also, the account balance is updated in real time. This allows me to move money into and out of the account to maintain our balance near $25,000, which is the cutoff amount for earning Tier 1 interest, currently 2.8%.  (I love this rewards checking account.)

Finally, the online banking system allows me to quickly categorize and identify the payee of each transaction so that I can run reports later that summarize what we spent our money on and who received it.

Yet another benefit is that we no longer receive paper statements. This makes it easier for us  to travel and move about without worrying about what is in our mailbox and who might want to grab it for illegal purposes.

I’m certain that we are just one of many bank account owners who no longer receive paper statements or “balance the checkbook.” I’m speculating that most of the younger generation never has, period. Baby boomers grew up with no online bank account options so we were forced to go through paper reconciliation.

Have most of you moved away from regular account balancing and reconciliation?

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Here is a proposal for testing a retirement lifestyle that makes a lot of sense:

1. When you hit your early ’60s, keep working to increase your Social Security retirement benefit (by 8-9% per year!)

2. Make a retirement spending budget and start living on it.

3. Stop or at least reduce your retirement plan contributions.

4. Use the money you are not contributing to your retirement plan as a “retirement lifestyle” fund, e.g., use it to travel, explore possible retirement destinations, enjoy your present hobbies or find new ones, etc. In other words, this is temporary “fun money” over and above your predicted retirement living budget.

5. Closely track and monitor the results, be realistic and learn from all of the above, and adjust your retirement plan accordingly.

We are working a modified version of this plan. I am still working but not has much. We are experimenting with condo living in a rural setting. I am trying new things – working with ponies in our non-profit activity, taking yoga, etc.

What do you think about this approach?  Are you looking for ways to test drive your retirement?

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1. Test Driving Retirement Activities
2. Driving Hunger Away from Our Senior Citizens
3. The Lines Between Vacation and Retirement are Blurring

The appeal of yoga to me was its focus on a combination of mind/body health and awareness. I wanted to try something that specifically included mental health as part of the program. Baby boomers have lots of life experiences – good and bad – that can create a lot of  residual stress, anxiety, and other mental health “baggage.” I’m sure you know what I mean. I wanted to learn a way to help clear that baggage away. What I had read about how yoga could aid that process was interesting to me. Of course, I was also interested in the strength and flexibility benefits that yoga had to offer.

Finding a yoga studio was not difficult. There are two within 5 minutes of our Brentwood house and another just a 10 minute drive. One of the studios was primarily a “hot yoga” gym. I didn’t want to start my yoga experience in a high temperature room so I crossed that off the list. The other studio close by offered a variety of classes and programs, 7 days a week. They also had a “new student” special – unlimited classes for a month, all for $39.

Signing up was also easy. You pay for and register for classes online as well. First, I called the studio owner and explained my situation: A 61 year old guy who had never tried yoga before. She recommended their “deep and stretchy” class as being perfect for beginners. Everything is done in moderation, with long poses and slow transitions. Sounded good to me.

The “deep and stretchy” class is offered at least 6 days each week, by different instructors. I had my first class on Wednesday, starting at 11:30 AM.  (This is one of the advantages of having a job where I can mostly work whenever and wherever suits me best. I am very fortunate to be in this situation.)  There were only four of us in the class. This dude plus a woman about my age, a woman who looked to be in her 70′s, and 30-ish woman who appeared to be recovering from cancer therapy (a bald head with fuzzy re-growth.)  The instructor was a woman – maybe in her late 30′s – of Indian heritage.

As I settled in waiting for the class to start – a very strange thing happened. I became very emotional. It took everything I had to not openly shed tears. I think it was a combination of factors – the peaceful room, the quiet music, the vision of calm as my instructor prepared herself to teach, and just knowing why I was there – why we all were there:  To improve our minds and bodies.  It was as if my body was expressing relief in anticipation of what was to come.

What was to come was a real ass-kicking, although in a good way.

In a nutshell, we slowly learned different poses, each providing a different challenge to a body afflicted with years of in-grained inflexibility. The instructor was very helpful to me, as she understood that I was brand new to the practice of yoga. During each pose, she would gently talk about how the pose and our breathing could be used to improve both our minds and bodies. I tried very hard to follow her guidance.

75 minutes later, we were done. Even though every movement was slow and deliberate, I felt as though I had gone through a real workout. On the other hand, there was no residual soreness so apparently I hadn’t pushed myself too hard. Kudos to my yoga instructor for that.

My second class was yesterday morning at 9:30 AM. This was a much larger class, with a different instructor. The class was all female except for me and one other man who was older than me.

Many of the poses were different. Clearly, each instructor has a different approach, with the ultimate goal being the same. I liked her too. We held the poses longer and she talked us through the proper (and optional positions), with plenty of spiritual philosophy included.  I liked every bit of it, including learning again how little flexibility I have. But I am determined to change that.

My third class is tomorrow. I am hoping that my wife will join me. I will miss the first 45 minutes of the Super Bowl but my sons have assured me that I will not lose my man-card for that.

Do any of you have experience with yoga as a baby boomer?

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A blogger named Jacob has for a number of years built up quite a following at his Early Retirement Extreme blog. I haven’t read a lot of his stuff because he takes a more extreme philosophical approach to frugal living (or at least he did) than I care to emulate. In a nutshell, he swore off consumerism, lived in an RV, used a bike for transportation, and saved like crazy so that he could leave the workforce at age 33. He used an extreme lifestyle to retire early.

Until this past week.

Now Jacob is unretiring. If you read his goodbye post, he uses many words to describe his need to solve a complex problem. He is filling that need by becoming a “quant trader/researcher. ”  (I guess he won’t be saving the world with that work but he still has plenty of time for that.)

I could have written that part for him in one brief sentence: “I’m bored.”

Some folks might criticize his decision as hypocrisy. I won’t be so harsh. I think that at age 33, he was not as self-aware as he thought he was.  He thought that retirement – as in no work needed – was the goal. Now he understands better that financial independence is the goal, so that money needs do not dictate other lifestyle choices.

Being bored is no fun, whether you are an old or a young retiree. Being able to afford a non-working lifestyle won’t solve a boredom problem.

Maybe Jacob’s extreme frugality did not give him the financial freedom to explore other interests. Or maybe his interests were most readily available to him in an employment situation.  So he went back to work to kill the boredom. There is nothing wrong with that.

But those choices are not available to everyone. Jacob is still a young man, not subject to the cruelties of age discrimination. He does not suffer from age-related health problems.  Not all baby boomers can decide that they are bored and therefore  just go back to work. There may not be any work for them to do.

Where I am headed with this is that if you are afraid that for you, retirement = boredom, you may be right. So start solving that problem before you leave the workforce. Experiment, try new things, learn new things, all in an effort to fill your eventual non-working life with challenges that will keep you mentally and emotionally engaged.

That’s what I have been exploring for the past few years. It’s a work in progress but I am getting there.

How about you? What will keep you from becoming a bored retiree?

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After our boat hauling chores were finished, we had lunch and a beer at the local “Fishin’ Hole” restaurant. The talk turned to our sons’ early childhood experiences at my father’s lake home in near Brevard, North Carolina. They loved those weeks with the grandparents. What put a smile on my face was their talk of someday giving their kids a similar experience with us at our lake home. I hope that can happen. First, we need some grandkids!

Here are some articles I read this week that might be of interest to you:

Flexo at Consumerism Commentary wrote about a study showing that while materialistic people may have more money, they are less happy in their marriages.

The Moolanomy blog explains how TIPS provide a guaranteed real return. We are big fans of TIPS and I-Bonds, both of which provide an inflation protection component.

Todd Tresidder wrote an exhaustive piece on the science and myths associates with safe withdrawal rates in retirement.

I participated in two carnivals this week: Carnival of Personal Finance and the Baby Boomers Blog Carnival.

Enjoy the rest of your weekend!

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1. Boomer and Retirement Weekly Reader – Fall Colors Edition

First up is a CNN Money piece on bargains to be had in homes purchased for retirement.  The lesson here is that one person’s housing misfortune can be a great deal for someone else. The key is being prepared financially to exploit these opportunities so as not to take excessive risk.

Five Cent Nickel reminds us that it’s not too soon to think about end-of-year tax saving moves.  While you are at it, do not overlook the triple tax-free benefits of using your HSA as a retirement investment.

Dough Roller has an excellent summary of systems and expert opinions discussing the topic of how much money you need to retire. I would stay away from that outdated 4% rule on withdrawal rates. Otherwise, there is not much consensus on the retirement nest egg “accumulation phase.” That’s why liability-based investing is the way to go.

I love stories from people of all ages who leave their “cubicle world” and pursue something that is more important to them. Sometimes it’s a young couple who “retire” toward a more satisfying life.  (Hat tip to J. Money at Budgets are Sexy).  Are you inspired/motivated by these stories also?

Finally, check out this week’s Carnival of Personal Finance at the Boomer and Echo blog and the Baby Boomers Blog Carnival for some articles that may interest you.

Have a great weekend!

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1. Boomer and Retirement Weekly Reader – Boats Out of Water Edition

Mrs. P and I drove to the lake yesterday. The weather was beautiful so I enjoyed a sunset and a beer on the deck. This morning I walked to the dock to check on things. The sailboat was dirty so I started cleaning it. Then I stopped, admired the blue sky, the early Autumn leaves, the smooth water, and the gentle breeze. I realized that I should be sailing, not cleaning. So I stopped cleaning and I sailed. It was awesome.

I could easily have chosen to finish cleaning the boat, thinking that I would have time to sail later. But when would “later” be. Today? Next week? Would I have ideal sailing weather “later”? So “later” became “now.”

After my sail I went for a drive with Mrs. P. We were looking at horse trailers to use with our Personal Ponies volunteer work. (I will write more about this later but you can follow the link now if you are curious.) That was fun also, adding to the enjoyment of the day. In the past I probably would have let Mrs. P  go by herself. She is the horse expert while I am the horse know-nothing. But this was a golden opportunity to spend time together, working toward a shared goal that will enrich our future.

Something else influenced my thinking today. The death of Steve Jobs, a slightly younger man than me, has been on my mind. I read his Stanford commencement address. I thought about his reminder that we should try to live each day as if it might be our last.

You should read and consider Jobs’ words yourself. Then, when you have the good fortune to recognize and choose a “golden day” as I did today, maybe you will.

That would be good, don’t you think?

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First, we are burning a lot of gas! We still have our large home near Nashville, now occupied full-time by two sons, a future daughter-in-law, three dogs and a cat. We are there on average 2-3 days each week because of obligations I have to see clients or attend meetings in my “real” office. My wife sometimes joins me or will stay here at the condo with our two dogs until I return.  We also spend time at our lake home in Kentucky that we have now owned for eight years. Our plan is still to sell the “big house” in a year or two when conditions are right. At that time, we will rotate between rural Kentucky and rural Tennessee, with stops in Nashville where we may end up with a small condo or apartment.

Our horse is here, of course. Very soon, we expect to bring two miniature horses to the Long Branch Lakes property as part of our involvement in the Personal Ponies program.  This non-profit will eventually become a significant occupier of my wife’s time and, when I retire, my time. Our expectation is that other homeowners in our community will become volunteers as well.

I have nice office set up here at the condo. The photo below shows the view from my desk, looking out the rear of the condo building.

This view is one of the main reasons we selected this particular unit. You can see the small lake through the tree line. This lake winds around the “island” on which the condos are built and is suitable for fishing, swimming, and canoeing/kayaking.

On the other side of the lake is a separate wooded area.  That property is also owned by the developers but is in the process of becoming subject to a conservation easement.  This means that it cannot be developed, i.e., this view will not change.

Note the headset hanging from my desktop monitor in the first photo above.  Almost two years ago I began using Google Voice as my primary mode of telephone communication. That headset plugs into the speaker and microphone jacks on my PC. This allows me to place and receive phone calls from my PC, using the Google Voice technology. I can use the speakers if I want but for client calls, the headset is better.   We also have a land-line in the condo, which we were forced to get as a condition of obtaining high speed Internet and TV service.

I still have my Straight Talk “dumb” cell phone which runs on the Verizon network. It works great except inside the condo, where no carrier’s signal is reliable.  Since I went on the Straight Talk service in 2010, my wife, two of our sons, and our daughter-in-law to be have all converted as well. Why? Try $30/month for 1000 minutes, 1000 texts, and 30 MB of data with no contract!

Our deck has a similar view as seen below:

Our condo is on the second floor of a three story building. You can see in the photos above that the rear is elevated so that all of our windows and our deck are a full story off the ground.  This makes it more secure and provides better views of the lake. However, our front door, storage room and garage are at ground level. No stairs to walk – ever!

I brought my comfort bike up here recently and now ride it around the community for exercise. (At 5000 acres, there is a lot of room to ride!) Most of the roads up here are still gravel so I have to be careful and sometimes have to walk the hills. Hopefully, the roads will be paved by this time next year.  You can see the bike in the photo of our deck below:

I want to briefly mention the two chairs you see on the deck. Our deck is quite wide but not deep. We wanted chairs to lounge in but that did not take up much floor surface area. After a bit of searching, I discovered that LazyBoy made outdoor recliners! When you lean back, those chairs will go into two different reclining positions, with the foot rest (vertically positioned in the photo) extending out and into a horizontal position.  They are very comfortable so if you desire a low-profile lounging chair for your deck or patio, give these some thought. I do not believe that LazyBoy sells them direct. You have to buy them from a big box retailer.  Surprisingly, we found ours at K-Mart!

In the corner of the deck you can see our grill. In most condos, only electric grills can be used for fire safety reasons. That grill is a George Foreman indoor/outdoor grill that I recently found online for $75.  The grill unit itself can be lifted from the stand and moved into your kitchen. I have used it to grill chicken and tuna steaks. So far I am very pleased with its performance.

I am able to get a lot of work done while in my remote offices here and at the lake. Other folks I know struggle to stay focused on work.  I think one key is managing competing interests and senses of urgency. If you have a second home that you use only occasionally, there is a natural tendency to concentrate on the recreational aspects of being there, and shove your work obligations to the background. On the other hand, if you make a point to live in that second home on a regular basis, it is much easier to balance recreational living with your work obligations. That is what I am finding, anyway. Of course, having the right technology is also important.  As rural as this condo is, our internet service is blazing fast and extremely reliable.

Our telecom provider uses an advanced fiber-optic network for voice, TV, and data – but does not provide any HD channels! Go figure! Fortunately, because the data download speeds are so high, we can get streaming HD content using our SlingBox and home theater PC.

So that is a bunch of random thoughts about our condo living experience so far. Any questions or comments?

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