I STARTED WORK in 1961 as a mailroom boy earning $1.49 an hour. There was a fellow named Tony who worked there, too. He started a few years before me. Today, Tony is 87 years old and he still works in the same mailroom. He collects his pay, his pension and his Social Security. I don’t know what motivates Tony, but apparently retirement holds no attraction. Tony is atypical.
When my work situation changed after 49 years in a way that took the fun out of the job, I knew it was time to retire. That was 2010.
Today, I participate in several Facebook groups. The groups include more than 2,500 retirees and those concerned with retirement planning issues. I know from these discussions that I’m fortunate and that many retirees face significant problems, often compounded by their own lack of knowledge and planning. Here are eight key things I’ve learned in the decade since I retired:
1. Money helps buy peace of mind. I have a steady retirement income stream, but I’m frequently reminded that most people don’t. They’re always grappling with the questions, “Do I have enough saved? What can I spend?”
2. Time is a blessing and a challenge. Before retiring, I never thought about what I’d do with my time—despite counseling others to do so. What I’ve learned is that, while retirement offers more flexibility, there’s rarely nothing to do. I started a blog in 2009, not knowing you can make money at it. That’s a good thing, because I don’t. Between reading, writing, drawing, travel, golf and, oh yes, grocery shopping, time is fleeting.
3. Inflation is a worry. The fact that my pension, which is the bulk of my income, will never increase is a matter of concern. Cumulative inflation since 2010 has been about 19%. Having a plan to deal with that is essential. The more you rely on retirement income that doesn’t adjust for inflation—which Social Security does—the more essential an inflation strategy is. My plan: As inflation bites, I plan to stop reinvesting my stock dividends and municipal-bond interest, and instead use that money to supplement my pension.
4. Grandkids grow up. When I retired, we had five grandchildren, the oldest age five. When the first was born, in our enthusiasm, we decided to start funding a 529 plan each month. Now we’re doing so for 11 grandkids. When I first retired, we spent a lot of time with the kids. As time goes by, their interest in school, sports, friends and summer activities grows. But that’s a good thing. Now, my goal is to see at least the oldest graduate college.
5. Promises get broken. After 10 years, my employer-provided retiree health and dental benefits are being terminated. Instead, my former employer is giving Medicare-eligible retirees a lump sum each year toward the cost of Medigap coverage, a Part D prescription drug plan and dental insurance.
On the surface, it’s a good deal. There’s lower or no out-of-pocket costs, plus money left in the health reimbursement account (HRA) rolls over from one year to the next. The kicker is reduced drug benefits. On top of that, the HRA employer contribution will increase at only 1.5% a year, thereby violating the “promise” that a retiree’s contribution would equal a fixed percentage of premiums based on his or her years of service and salary at retirement. That’s how my old employer reduced its accounting liability by $500 million. But it could be worse and, indeed, it has been for many retirees.
6. Not working can be hard work. My wife and I lived a 1950s lifestyle. When our first child was born in 1970, she stopped working and became a fulltime mother. Thereafter, we lived on one income. That meant our discretionary spending was limited. No, the kids never did go to Disney.
It also meant that my wife mostly raised our four children—who are only five years apart—and did all the cleaning, shopping, cooking and volunteering, while I worked 12 to 14 hours a day. Even though the kids were out of the house when I retired, I quickly saw the work involved. Now, I do the shopping and cooking, as well as a few other minor duties. But cleaning the condo is a bit too much for us, so I’m thankful we can afford a cleaning service.
7. Financial emergencies still happen. I’ve harped on this several times. The odds of a financial emergency are no smaller in retirement than while working. Even in retirement, my wife and I still live below our means, so we can add regularly to our emergency fund. Why? Ponder this: If you’re living off a nest egg and take a lump sum to cover a financial emergency, you could put your future income at risk.
8. There’s always something to think about. Should I have retired when I did? Am I enjoying my retirement? Am I prepared for the future?
These days, I’m mostly focused on the future, perhaps motivated by the pandemic. Have I planned correctly? Have I thought of everything? Will the kids know where to find what they need? Who wants the Lenox and Waterford? Answer: nobody.
Seriously, will my wife be okay financially? I’m confident right now. But who knows? I may mess things up and make it to 99.
Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include Boredwalk, Last Stop and The Late Show. Follow Dick on Twitter @QuinnsComments.