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Less Is Better

Dennis Friedman

I CONTINUE TO LOOK for ways to simplify my life. At age 71, I want fewer things to deal with and to worry about. To that end, here are five steps that my wife and I are taking:

1. Consolidating finances. I mentioned in an article last year that my wife and I have consolidated our investments at Vanguard Group, while our savings and checking accounts are at a local credit union.

I’d also like to trim the number of exchange-traded funds (ETFs) we have at Vanguard. We currently have six. I’d like to reduce that number to three. I believe it would further simplify our finances without sacrificing performance. I envision a low-cost, highly diversified portfolio consisting of these ETFs:

  • Vanguard Total World Stock ETF (symbol: VT)
  • Vanguard Total Bond Market ETF (BND)
  • Vanguard Short-Term Inflation-Protected Securities ETF (VTIP)

Currently, a personal financial advisor from Vanguard is managing our investments. I’ll have to fire her because she’d never approve of a portfolio without a total international bond index holding.

What about making our portfolio even simpler by owning just one fund, such as Vanguard Target Retirement Income Fund (VTINX)? Even though it’s a fund of funds, I feel uncomfortable putting all our money in just one fund because of the lack of flexibility.

For instance, if I needed to withdraw money from my investments in a bear market, I’d probably want the money to come from my short-term bond holdings. When you own a target date fund, you don’t have that option.

I’ll wait until my portfolio rebounds from this bear market to make any changes.

2. Consolidating medical records. This year, I switched medical providers. I chose the University of California-Irvine (UCI) as my primary provider. It can give me all the medical services I need.

My previous provider would sometimes refer me to specialists who weren’t within the same medical group. As a result, all my medical records weren’t available in one, easily retrievable location.

Now, all of my doctors’ notes, tests, medications and vaccination records are located on UCI’s medical website. This increased transparency can help prevent duplicate tests and prescriptions, while providing me with better overall health care.

3. Owning fewer automobiles. After my wife and I retired, we realized owning a second car wasn’t a necessity. We rarely needed two cars. When we did, one of us could have easily used a ride-sharing service.

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Our 2007 Honda Fit is unreliable. Instead of replacing it, we’re going to give it a go with one car. Not only will we avoid purchasing another vehicle, but also we’ll save on insurance, registration and maintenance costs. In addition, there’ll be time savings because we won’t have a second car that needs to be gassed up or taken to be serviced.

4. Using less water. I’m debating today whether I should take a shower or wash my car. I shouldn’t do both. I live in California, where we’re living under an extreme drought. The state has asked residents to voluntarily reduce water usage by 15%. In some parts of California, there are restrictions on outdoor watering.

Where we live, there are no mandatory restrictions. But my wife and I are careful not to waste water. For instance, when we’re cleaning the floors or doing other household chores, we pour the excess water on our plants. We also don’t let the water run when brushing our teeth or showering.

We could easily afford to pay a penalty and use as much water as we desire. But we don’t see it as a money issue. It’s not about what we can afford—it’s about doing what’s right.

5. Taking shorter trips. My wife and I recently came home from a five-week trip to the U.K. Although we had fun, it was too long. We were exhausted when we got back. Maybe driving on the left-hand side of those winding, narrow streets had something to do with it. I know my wife was uncomfortable watching me navigate those roads.

After returning home, I told her we aren’t spring chickens anymore. It might be wise to limit our overseas trips to no more than three weeks to reduce the chances of getting caught abroad with a medical disorder. Although we could purchase insurance for medical care outside the U.S., it’s always best to be close to your own doctors in case of an emergency.

Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor’s degree in history and an MBA. A self-described “humble investor,” he likes reading historical novels and about personal finance. Check out his earlier articles and follow him on Twitter @DMFrie.

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Sunil Sharma
Sunil Sharma
3 months ago

Deleted

Last edited 3 months ago by Sunil Sharma
Boomerst3
Boomerst3
3 months ago

Traveling by plane now is like rolling the dice, and covid is till spreading. Thousands of flights are being cancelled daily. At age 71 I have no interest in going through the airport hassles now, and wouldn’t want that at any age. Traveling is out for now.
Consolidated at Vanguard many years ago, before retirement. Have 65/35 stock/money market mix, with a few ETFs and a handful of individual stocks with too much gain to sell. Plan is to pass these off to the kids and they can sell with the stepped up basis. Sold all bonds when rates started rising, which were short term and tips because even they were going down as interest rates rose. I’ll get back in short term bonds when rates stabilize. I’m not worried about missing an uptick as I would if these were equities. We have been thinking about getting rid of a second car, but both are paid for and we can afford the insurance, so for the time being will keep both, just for convenience.
. We have a primary doctor but record sharing is easy because they all have portals now, and if I see a different doctor at another hospital, I share this info, as well as vaccines, medications etc. if and when these occur. I’ve always saved water, even though I’m on the northeast coast and not in a super drought area. Never liked seeing some shaving and brushing teeth with the water gushing out, clueless to the fact they are wasting water. Keep it to myself though and try to preserve water always.

GaryW
GaryW
3 months ago

I live near Rochester NY, two of your points wouldn’t be very relevant here. There are two major medical systems here, both non-profit, with one run by the University of Rochester. Between the two, they run all of the hospitals in the region and many other medical facilities. Health insurance in the region is dominated by two non-profits. While they are competitors, they cooperate in major areas and most medical providers are tied into the same records system. My sister recently underwent treatment for breast cancer and used facilities and services from both healthcare systems, pretty much seamlessly. My Medicare Advantage covers all of the hospitals and 99% of the physicians in the region, with no referrals required for specialists.

My water supply comes from Lake Ontario. While there have been a lot of arguments in recent years about the water level in the lake, they are mostly from owners of lake shore properties who argue that levels are too high. My water bills for the last year total less than $150. While I do try to save water, I wouldn’t save a significant amount of money.

I did consolidate nearly of my investments at Vanguard about 20 years ago.

jc glover
jc glover
3 months ago

don’t use target fund in taxable account.

Richard Gore
Richard Gore
3 months ago

You are man after my own heart regarding simplicity. However, perhaps the simplest thing to do with your portfolio is to not change anything. Six funds is perfectly reasonable and you probably don’t need to spend any time thinking about the change.

Michael1
Michael1
3 months ago
Reply to  Richard Gore

Good point. I’m curious as to what the other three are and how much their presence or absence changes the portfolio.

Jonathan Clements
Admin
Jonathan Clements
3 months ago
Reply to  Michael1

Dennis wrote about his portfolio here:

https://humbledollar.com/2020/04/keeping-my-balance/

Michael1
Michael1
3 months ago

Thanks. So, looks like the move is basically on the bond side – consolidate separate long, int and short bond fund into one bond fund, and replacing the international bond with a short TIPS one.

While I agree six funds isn’t too complex, I like the consolidation of the US bonds. I also like having more short ones, and some TIPS. I don’t have TIPS, but still like it.)

Nate Allen
Nate Allen
3 months ago

Would it be possible to move to an area other than California? (To both eliminate the water issue and save on the high cost of living.)

It might not be possible in your case due to family/work/etc. but it might be possible for others.

Chazooo
Chazooo
3 months ago
Reply to  Nate Allen

It is difficult for many people to just simply move once they reach a certain age because of certain inconveniences, plus there is that question “do I really want to?” Why do people retire in North Dakota or Newfoundland, but many do for various reasons.

Michael1
Michael1
3 months ago

We’ve found we enjoy ourselves more not trying to see everything. There’s a lot to choosing one’s destination well, then just parking ourselves and enjoying being there, not being on the go all the time trying to see everything.

Ditto to the comment about health insurance, we all need to have it no matter what your age or how long or short your trip.

Arnold Hold
Arnold Hold
3 months ago

Good points, particularly about consolidating medical records. After multiple surgeries with ongoing followup with specialists, having access to your medical history and past tests cannot be overstated. Arguably, this point regarding easy access to medical records may be the most important.

mytimetotravel
mytimetotravel
3 months ago

‘Although we could purchase insurance for medical care outside the U.S., it’s always best to be close to your own doctors in case of an emergency.”

Do you mean you have been traveling abroad without medical insurance? And without medical evacuation/repatriation insurance? That is a really bad idea, no matter what age you are. It is not just a question of an existing medical condition suddenly getting worse, there is also the matter of accidents. I once fell and broke my wrist in Switzerland (no, I wasn’t skiing), I have a friend who fell and broke a hip in Portugal. Accidents can happen at any age. In my case my employer’s plan covered the medical costs and my evacuation insurance provided a car and driver to Geneva airport and airline tickets. Medicare does not cover treatment abroad, and although some Medigap and Medicare Advantage plans have some coverage, they won’t get you home. If you want coverage for pre-existing conditions you usually need to buy coverage within 14 days of the first payment.

Edited to add that you can see a lot of most countries without driving yourself, which is a lot less stressful and generally cheaper. I have had very successful trips to the UK using public transport.

Last edited 3 months ago by mytimetotravel
Olin
Olin
3 months ago
Reply to  mytimetotravel

My doctor fell in Europe and broke an ankle. She soon learned what socialized medicine was like.

Philip Karp
Philip Karp
3 months ago

We all age in some common ways but the rate of aging can vary quite a bit.
As I read this column the thought came to me of the sterotype of “old people
get tunnel vision”. The options for independence narrow and it’s a decending slope into dependency.
I know this article has a more practical intent to simplify one’s life with cost saving and altruistic suggestions.
But I can’t shake my emotional reaction reading your article.

parkslope
parkslope
3 months ago

I agree that having all of one’s medical providers affiliated with the same organization makes things more convenient. However, many health care systems use MyChart (including UCI) which makes it easy for both your providers and you to access your records across organizations. When I recently saw an ophthalmologist at Duke University he commented about a treatment I received from an ophthalmologist at NYU Medical Center 5 years earlier without my bringing it to his attention.

1PF
1PF
3 months ago

Re: #1 VTINX “if I needed to withdraw money from my investments in a bear market, I’d probably want the money to come from my short-term bond holdings. When you own a target date fund, you don’t have that option.”
Since Vanguard TDFs are rebalanced daily, in a bear market would the imbalance of withdrawing from the TDF one day get fixed by the next day’s rebalancing?

Jonathan Clements
Admin
Jonathan Clements
3 months ago
Reply to  1PF

If you own a target-date fund with, say, a 30% stock-70% bond mix, the daily rebalancing would keep you at that target, whether you’re adding money or withdrawing it. Thus, if you sell in a bear market, 30% of what you sell would be stocks. On the other hand, if you separately owned 30% stocks and 70% bonds and sold from the bond side during a stock market decline, there’s still a risk you could end up with less than 30% of what remains in stocks because the market decline drives down the value of your stocks. In other words, you may not be as diligent about rebalancing as the target-date fund, and thus you could find yourself less aggressively positioned at a market bottom than a comparable target fund would be. Still, I agree with Dennis — I prefer to have money for upcoming expenses in a short-term bond fund and it’s a reason I don’t think retirees should have everything in a target fund.

M Plate
M Plate
3 months ago

Please choose the shower option. I don’t mind being downwind of a dirty car 🙂

R Quinn
R Quinn
3 months ago

Good ideas Dennis, I have taken a similar route at age 78.

I consolidated with Fidelity and while I won’t trim the number of investments, their website makes managing them so easy.

The idea of consolidating medical records is so important not only for individuals, but for the country as a whole. With all the talk about health care costs and high administrative costs and everything that goes with that, I cannot understand why we don’t have an ID card and universal record system with all of our health info, tests, insurance overage, etc. on it. Not only would that be highly efficient, it would mean less duplication and better health care.

I’m not sure about one car yet, my car has been in the shop for two months because they can’t get the needed parts, so it’s nice to have a backup.

Shorter trips are sadly a necessity as we age, but mostly because of the hassle of getting there and back. We just cancelled a cruise in September because of that, but we hope to be off on a road trip in the fall.

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