Go-Go, Slow-Go and No-Go

Walter Updegrave is one of my favorite columnists at Money Magazine. He has an interesting article on the three stages of retirement. These are catchily characterized as Go-Go (meaning the first stage of retirement where volunteering, maybe part-time work, traveling, etc. are high priorities), Slow-Go where staying home more often becomes attractive and less exhausting, and, finally, No-Go, where health concerns for oneself or spouse may to put limitations on retirement activities.

Updegrave does a nice job of setting out the financial issues at each stage, though he provides no real answers. I get that. Just what we will personally face in retirement is too unpredictable for there to be a "one size fits all" formula.

I have a particularly hard time trying to forcast my retirment future.

My plan is to retire at age 69. I hope, of course, that my health will be generally good throughout my sixties and seventies. But I do have to be realistic. I'm diabetic and I've already had major heart surgery. There is a good chance I won't be a really active retiree. On the money side, that could mean less expenses for travel. But perhaps more for health care?

Or, given the very real possiblity of health issues, will I want to travel a lot and do more during my first years of retirement, in anticipation of a more sedentary lifestyle becoming necessary?

And what about my home? If I keep my current residence, which is ten minutes from the urban center, with three different bus lines nearby, will I have to spend money retrofitting the home? I probably will, given that my house has three stories. My parents bought a home when I was a teenager that had been remodeled specifically for the prior owner's wheelchair-bound wife. It turned out to be great as my parents aged because everything was on one floor, there were grab bars everywhere, and the kitchen counters and shelves were accessible. (My parents were both short, and greatly appreciated the lowered shelves even while they were perfectly healthy.)

Once I reach the No-go stage, comfort is going to be my highest priority. Plus there is the possibility of long term care.

All of which requires differing amounts of money.

So much to think about and plan for.

Too Funny and Maybe Even True!

Analise, over at Financially Free to Be Me tells this story about credit cards. I thought it was pretty funny. Based on some inane conversations I've had with credit card companies, it even sounded plausible.

Check out the rest of Analise's blog--having saved well, she's now retired, traveling, and loving it.

Monthly and Quarterly Updates

One scary benefit of the new credit card laws is that every monthly statement now shows me how long it will take to pay off that particular card if I just make minimum payments: 22 years; 26 years; 7 years; etc.

NOT a pretty sight.

But I think having this brought home to me each month when I open the envelope will help keep me on track to get rid of my credit card debt.

In March, I reduced my debt by $866.22--not as much as I'd hoped because I pretty much only made minimum payments. My debt snowball added a mere $12 to my lowest credit card.

My quarterly net-worth went down by $1642.72. I'm less worried there, because my retirement funds are up nearly $20,000. What brings the total down is my real property. Houses held onto their value for longer in the Pacific NW than in many other parts of the country, but have started to drop over the last year. According to local reports, I can expect another 5% drop in value by December. However, given that I purchased my two homes in 1975 and 1993, and paid nowhere near their current values, I really can't complain. The rental property was paid off years ago. My current home will be paid off in exactly four years.

So, Grace is solvent. YAY! But I really, really need to reduce the debt. [Have you heard me say that before?]

Getting In Sync With HTML

OK!

With a flurry of e-mails and a whole lot of patient instruction from The Frugal Zeitgeist , I think I have made my links visible to everyone.

At least I hope so.

If you've been using Google Chrome or Firefox as a browser, try reading that last post again, and tell me if the links finally show up.

GAK! I don't think I have it in me to become a computer nerd!

Life In The Non-Profit Lane

Thanks to Frugal Zeitgeist for pointing out this article in the New York times. It's about a program geared to retirees who miss the workplace but NOT their prior jobs. I'm intrigued that it pays--not much, but $25,000 year, which would be a handy supplement to one's retirement funds.

It really isn't for me, since I've spent my working life with non-profits.

But I wonder if my banker-sister would like it? She's retiring this year after thirty years in the upper echelons of the banking world. She isn't sure what she wants to do after she retires. Volunteering appeals to her, but she would like to use skills other than her financial ones, which are of course, the particular skills everyone wants from her. She's thinking about teaching. Or religious study. Or something.

I plan to send this article her way, if she hasn't already read it.

Birthday on the Cheap

Yesterday, I turned 61.

It's a corner of sorts--I can no longer think of myself as being halfway through my life.

But I have to say that I don't particularly feel old. My parents seemed old to me while they were still in their fifties. But now that I've arrived in my sixth decade, I feel surprisingly young.

Altogether, I had a good, and frugal birthday. I took the day off from work--we get three mental health days a year, and this was one of mine.

The frugality started with my Entertainment Book. I had purchased it in January through My Points at $15 off the $35 purchase price plus free shipping plus 1500 My Points. If one eats at chains or fast food places, the Entertainment Book pays for itself quickly. I have grandkids, therefore I am a regular at McDonald's, Taco Bell, etc. I try to time my purchase through My Points to pay the least for the book while getting maximum points. This year, I should have waited because two weeks after I made my purchase, the same deal was offered with 1750 points. Oh Well. I immediately traded the My Points for a $10 Starbucks card.

One of the Entertainment coupons was for a free movie at a local chain on my birthday. I chose to go see Avatar in 3D. Another coupon was for free popcorn with the purchase of an outrageously priced soft drink. But altogether I got $15 worth of admission, 3D glasses, and treats for $5.75.

Earlier that morning, I used a coupon that Starbucks sent me for a free coffee drink on my birthday.

Then a friend treated me to a late lunch at a very nice middle eastern restaurant.

And my kids did the whole dinner/cake/small presents routine, which I enjoyed immensely in the evening.

Speaking of cheap, today (Tuesday) is "free pastry day" at Starbuck's, and "free cone day" at Ben & Jerry's. I've already taken advantage of the former, and plan to chase down the latter this afternoon.

Happy birthday, indeed!

Will I Need More or Less During Retirement

Some of my most interesting thoughts about finances come in response to reader's comments.

Master Po, the author of The Po File left a comment on my last post wherein he takes issue with my expectation that my financial needs will be less after I retire.

I will resist all my inclinations to make "grasshopper" jokes (though anyone setting themselves up as "Master Po" has certainly heard more than a few!) but I would respectfully disagree with his position.

I admit to being influenced by Jonathan Pond, particularly his book, "You Can Do It: The Boomer's Guide to a Great Retirement."

It is Pond's theory that all those charts showing that we're going to be eating catfood once we reach age 70 are self-serving statistics twisted by various financial institutions who want us to invest with them.

If all our dreams are of fancy beachhouses in Bermuda, then most of us are bound to be disappointed in retirement. But if we're looking for a moderate level of comfort and security, perhaps on along the lines our parents enjoyed, then we are likely to get there. And that is true even for those of us with late-life debt and nearly-but-not-quite-enough savings.

My personal plans are to have $50,000 a year from a combination of Social Security and investments in retirement. But as I've said before, I actually think I could live well on $36,000 a year.

Why do I think that?

Well, for starters, that's what I live on now. I make more, but I'm putting a third of each paycheck into my 401(k). And I currently have a mortgage. But in 4.5 years, the mortgage will be gone. I'll still have homeowner's insurance and property taxes to pay, but that's a far cry from my current $1334 a month.

For another thing, by delaying retirement to age 69, I'll get a maximum social security payment, and I will be eligible for Medicare. I'm just not one of those folks who believes that social security is going down the tubes and won't be available when I retire.

And finally, there is always my hope that my family's needs will lessen over time as they become more adult in terms of their finances. I certainly do not expect to have children or grandchildren still living with me when I retire.

While I do want to do some traveling during retirement, most of my desires for retirement living have to do with reading, sleeping in, volunteering, and other things that do not take much in the way of money.

I do recognize that inflation is a factor, and that it must be accounted for. Hence, my desire to have $50,000 per year available to me.

While I value Master Po's input, I still think he's wrong. But if it turns out he's right, I'll put away my catfood and head over to his house for dinner!

Lifestyles Vary, As Do Goals

A lot of bloggers, particularly the more seasoned ones (Ahem! That would be the OLDER bloggers!) are talking about frugality, lifestyle changes and altered goals in the face of our current economic situation. Morrison at "All Doors Considered" has addressed this issue in several posts, as has Syd from "Retirement: A Fulltime Job".

One of my anonymous commenters took issue with Syd's lifestyle, quite as though everyone has the same goals and wants the same lifestyle when retired. Syd chose to retire earlier than most folks--that means some careful conservation of financial resources that those of us who retire later won't have.

It was a choice. She made hers and she's enjoying living with her choice.

Tony from "My Road to Freedom" says he's fine, living on $13,600 a
year. He lives in an RV by choice, doesn't stint on his hobbies, one of which is gun-collecting, and clearly has savings because he's in the market for land on which to park the RV. His lifestyle is a far cry from what I want in my retirement, but it obviously suits him, which is the point.

Another of my anonymous commenters (why don't these folks ever put their name to their rants?) has nothing good to say about today's "forced frugality," insinuating that those who say they've learned from this crisis are deluding themselves.

I don't know if he/she is right, but I hope not.

With all the money in the world, I'd probably live in a McMansion. But to be comfortable, I can make do with much less than that.

Watching every penny for the rest of my life would be a depressing prospect. But paying closer attention for the next eight years, so that my retirement years will be adequately funded doesn't seem all that bad.

It's becoming clearer to me that practicing a moderate level of frugality both now and in retirement will allow me to live out my life in comfort if not excess.

Passing a Milestone

What d'ya know!

My retirement funds have finally caught up and passed their prior high mark of $174,518, set in October, 2007.

Mathmatically, of course, this isn't quite true, since I have been faithfully depositing over $1000 a month into the account ever since.

BUT, psychologically, it feels like I've turned a corner in my accounts and that my retirement is, once again, back on track.

As of yesterday, I now have $175,089 in the 401(k) and 403(b) plans.

According to Financial Engines, I have an 83% chance of retiring on $50,000 a year, provided I keep saving at the same rate.

Since I honestly think I can live pretty easily on $36,000 a year once my debts and house are paid off, I'm ecstatic!

A Raise For Grace--Kinda, Sorta

Collective bargaining at work has concluded. We've signed a three year contract, so now I know what my income will be through 2012.

Nothing to write home about!

In order to keep my 19 year old daughter insured, I'll be paying an additional $45 a month through May, 2011 (when she turns 21 and can no longer be covered under my plan).

I'll get an immediate $1000 annual raise.

Do the math--$1000 minus $540 for insurance equals an astounding $460. Divided over 24 paychecks, I can look forward to an additional $19 per pay period.

Hmm--guess I won't be spending it all in one place!

For 2011 and 2012, my pay will stay the same but I'll get an extra $800 as a lump sum.

That is probably better than the extra $19 a paycheck.

I'm at the top of our pay scale--that's what I get for staying in this field for 38 years and this employer for the past 20 years.

However, I DO have a secure job and I DO make in excess of $75,000 a year.

Nothing to sneeze at in these tough economic times.

How Does Grace Compare With Everyone Else in Debt?

Liz Pulliam Weston's latest column at MSN Money has me comparing myself to others in my age group and income bracket.

As Liz points out, sometimes we kid ourselves that if we're making all our minimum payments each month, we must be doing fine. It helps to run some calculations to see if that's really true. She provides four ways to measure.

Grace's results were not surprising but they were disappointing.

For example, my Leverage Ratio of 14% was pretty good for my income group. For my age? Not so much. But it makes sense that I'd be about ten years behind my age group given that I started saving so much later.

Then I checked out my Debt to Income ratio--talk about depressing. Mine is 36% which is right on the edge of disaster. According to Weston, disaster comes at 40%--and I'm way too close to that point.

But it's when I check out my Bad Debt to Income Ratio that things get really bad!

32%!

Note that this does NOT mean that all my debt is bad--but my so-called toxic debt (credit cards, loans, etc.) equal 32% of my annual income. NOT a good plan! And not good compared to others in my age and income brackets.

OK, Liz now has me worried! The hope is that these calculations will spur me on to reduce the debt.

The Face of Homelessness

It's not often that someone homeless also has the literary bent (and access to the internet) to blog on the subject.

But then again, when we think of homeless folks, how often do we think of a college-educated single woman with four kids? Kids, I think, she adopted.

An anonymous reader pointed me to
"The Boxcar Kids" blog and asked me what I thought. A guest poster at Get Rich Slowly wrote about her earlier, evoking both sympathy and blistering criticism from J.D.'s readers.

I somehow missed the post on Get Rich Slowly--lately I've been paying less attention to the blog because it contains information that is too general and not as personal as I prefer when reading financial blogs. I'm grateful to Anonymous for making sure I caught up with The Boxcar Kids. I read the entire blog (it's only a few months old) and it's a frightening lesson in just how close many of us are to being homeless.

Never did the author expect to find herself in her current position Then, again, she finds herself at the pinnacle of the homeless hierarchy--her family is not technically homeless since they have a 26 foot travel trailer in which to live.

In another frame of mind, it might be an adventure.

But for a single mom who spent 30 years with a job and a middle class income, the adventure palled some time ago.

Personally, I see the blog leading to a book contract which may, in the end, save the author's family. But I'm also guessing that a publisher will want a happy ending first.

I hope she gets one.

Getting Back to First Base

My February financial figures look OK--Thank God it is a short month!

As you may or may not recall, I wound up January (thanks to Christmas bills that trickeled in late) $784.81 more in debt that I had been the previous month.

NOT a good direction for debt to go!

But in February, I managed to throw $1273.92 at my accumulated debt, thereby putting myself back in the black (metaphorically speaking, since I'm still WAY IN THE RED!) by $489.11.

I'm pleased to have returned to first base, but would really like to hit a home run by the end of the year.

And, uh, yes--that'll be it for the sports metaphors!

Are We Failing If We Don't Apply All of Our Savings to Debt Reduction?

Beks, at Blogging Away Debt has decided NOT to apply her $3000 tax refund to her debts. Instead, she will use it to accompany her family on a European vacation, possibly the last big trip the family will take together.

Note that she is NOT planning to accumulate more debt or to use her credit cards for the trip. The point is that her tax refund could be applied to her indebtedness, but won't be.

Single Guy would get this. He recently bought a new computer that he didn't need and couldn't wait to purchase. His situation is a tad more complicated in that he put the purchase on a new credit card with no interest, intending to pay in full by the time interest would kick in.

Beks has the money in hand. Single Guy--not so much.

As one might expect, Mr.Tough Money Love has more than a few harsh words for Single Guy. I don't know what he'd think about Beks, but since he reads and responds to this blog, I'm guessing we'll soon know.

My question is, is there a problem saving up for, or using available cash for a financial spree at the same time one is reducing debt?

Personally, I think not, at least not if it doesn't happen all the time. Things do come up--friends or family have weddings; once-in-a-lifetime trips appear on the horizon (witness Grace's trip to Japan in 2008); the plasma TV bites the dust during the Olympic hockey finals; whatever.

If one can come up with the funds WITHOUT incurring more debt, then I say, Go for it! It may lack Dave Ramsey's "gazelle intensity" but it is NOT the death knell for eventual financial success.

Convention Freebies

Yesterday was my Saturday for conventions, or rather "Expo's."

The first was a diabetes "Expo." Entry was free and they were giving out H1N1 and flu vaccines at no cost. The shots were a major freebie so my friend and I both took advantage of them even though she is not diabetic. I am, and have been for some 11 years. It was also interesting going around to the exhibitors and collecting both information, and innumerable pens, keyrings, and pill cases.

Then my friend and I wandered over to an even bigger exhibition labeled a "Baby Boomer Expo." It, too, had no entry fee. I was interested in collecting information on long-term care insurance which I did. The freebies here were amazing--candy and cookies everywhere. [Yes, Grace does see the inherent contradiction in taking these treats, having just come from a convention for diabetics! But we're talking white chocolate, macadamia nut cookies here, not to mention Tootsie Rolls!]

The assisted living folks were out in force as were travel agencies. My friend and I were particularly intrigued with the furniture manufacturers and contractors--does every baby boomer need a new kitchen, a walk-in bathtub, and a recliner that literally throws you out when you want to get up?

A little sad to me were all the "health foods" and supplements being touted. Apparently I can insure against any future physical ailment provided I take Acai berries, Xocai chocolate, Nopales cacti, or organic coffee with mushroom extract. (The sampled coffee wasn't bad until I was told about the mushroom!)

My favorite exhibit concerned raised (like four feet off the ground!) garden beds that could be accessed by wheel chair and didn't require much stooping or bending to reach. It was a clever idea even for the non-handicapped.

All in all, a good and cheap day out, complete with presents.

Good Time to be Poor?

I had an interesting discussion with friend this week-end. We were dining at a trendy local restaurant during their "Happy Hour," (4 pm to 6 pm) taking advantage of the daily $5 cocktail special, the $4 Fontina Burger, and the $2 sweet potato fries.

She is 66 and thinking of retiring in another year or so.

She was comparing her financial situation to that of a much older sister who retired in 1999. Both have limited savings. Both have reduced lifestyles.

But my friend says it is much easier to be poor these days. When she suggests having dinner during "Happy Hour," as she did with me, folks no longer pity her or object. Like me, they are happy to comply.

But her sister had to watch her pennies at a time when no one else was. Her sister's friends were flying to Tahoe to ski, had vacation homes, and travelled at will. They either had no money worries or refused to acknowledge them. Either way, her sister felt like she was the only one behaving frugally.

Nowadays, frugality is practically the national pasttime. My friend is not seen as cheap, but smart.

I found her point of view interesting and, quite possibly, correct. I do know that I am less envious than I used to be of those with money. It seems like the recession has equalized the playing field and I don't feel as much the "odd person out."

Cool Couple

The Boston Globe profiles retirees, Claudette and Manny Wise, who, at ages 71 and 83, have concerns about their retirement funds.

We should all have such concerns!

Since they only get $20,000 a year in combined Social Security, I assume they didn't have spectacular earnings. (This makes sense when one considers that Manny is a former bandleader.) But they have over $900,000 in retirement funds, which means they did some spectacular saving during their income-producing years.

My question is why they don't want to invade their principal--why save it at their ages? The article doesn't mention children so I'm assuming they don't have any.

I was also interested in the financial planner's take on annuities. I still haven't figured out what I think about them or whether they would be useful when I retire.

At any rate, while the Wises have concerns, I was impressed to see how well set up they really are in their retirement.

The Tax Man Cometh

It was a depressing week-end.

It was the week-end I set aside to do my taxes.

I always get money back--anywhere from $1000 to $5000.

I knew this year's refund would be lower since I no longer have any exemptions other than myself and I now have to file "Single" as opposed to "Head of Household."

But never did it occur to me that I was going to have to PAY!!!!!

Sigh.

The Feds will give me $45 back, but the state wants $165.

So much for my plans to set up my emergency account (which currently has $54 in it) and maybe pay off one of my credit cards.

Color Grace bummed!

Credit Cards, Seriously

An anonymous response to my last post called my credit card debt "disgraceful."

Uh, tell me something I DON'T know! It is indeed a disgrace, and I have to settle down and get serious about eliminating it.

I have six credit cards, with a total of $24,125.06 in debt. The interest rates range from 0% on two cards to a high of 13.24% on one card.

I try to follow Dave Ramsey's snowball, paying minimums on all the cards with the exception of the lowest debt (in my case, a credit union VISA on which I owe $1763) where I pay more than the minimum.

Given that this year I have a car payment, and a significantly larger mortgage PITI payment, finding money to pay on the lowest card is going to be more difficult. I still don't know, and won't for another or so, if my wages will increase.

But I have no intention of retiring with credit card debt of any kind. Good thing retirement is not for eight years down the road.

My fallback plan, should I still have credit card debt in 4.5 years when my mortgage is paid off, is to then throw all of the money previously used for the mortgage toward the VISA/MasterCard indebtedness.

But who wants to carry around that debt for more than 4.5 years?

Certainly NOT moi!

The Post Christmas, Post Paris Reality Round Up

So I did my end-of-the-month financial check up.

Not a good idea for my peace of mind!

My total indebtedness is UP (say what?) $784.81. That's the result of a couple of Christmas bills coming in late. I will wipe it out with my income tax refund, and then get the debts started back in a downward direction.

All of my debts, including my mortgage, add up to a nauseating $100,319.86. Credit cards alone account for $24,125.06 of it. And, of course, the new-to-me van. But I have to say, it does feel good not to freak out every time my vehicle makes a strange noise.

Overall, January was a wonderful month. But financially? Not so much!