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Retiring Right

Jonathan Clements

THE CLOSER IT GETS, the more attention I pay.

“It,” in this case, is retirement. In January, I’ll celebrate my 60th birthday. I have no intention of fully retiring, but I am thinking about how to work less, travel more and prep my finances for the years ahead. As I sketch out my plans, I’m drawing not only on a lifetime of writing and thinking about personal finance, but also on an even more valuable resource: you.

I never intended for HumbleDollar to be so heavily focused on retirement—but, then again, I didn’t start the site with any great, overarching plan. Still, the fact is, many of the site’s writers and readers are retired or close to it, and that’s reflected in the articles we publish and the comments that readers post. I’ve learned so much from both. In particular, here are seven lessons I’m taking to heart:

1. Travel early in retirement. Got foreign lands you want to see? Don’t delay. That’s a theme Rick Connor recently touched upon.

There’s a moment—probably in our 70s—when international travel will simply seem too arduous. On top of that, the risk grows that we may have a medical issue that either derails our plans or necessitates getting medical help abroad.

I’ve never bought trip-cancellation insurance. But once you’re in your 70s, it seems like a smart move. Ditto for international travel health insurance. As we get older, that can become fairly expensive. The upshot: Before our 70s are done, we might find we’re less inclined to head abroad and instead our travel focus may turn to trips within the U.S.

2. Plan for long-term care (LTC), but don’t necessarily buy traditional LTC insurance. James McGlynn has written about his preference for hybrid LTC policies. Hybrid policies don’t carry the risk of big premium increases—an ongoing problem for those covered by traditional LTC insurance.

Meanwhile, other writers and commenters have suggested alternative approaches, including paying out of pocket or signing up for a continuing care retirement community. Howard Rohleder recently discussed the latter option. Thinking of self-insuring? If you delay claiming Social Security benefits, you can lock in a healthy stream of regular income that might cover perhaps half of potential nursing home costs.

3. The big win isn’t claiming Social Security late. Rather, the big loss is claiming benefits early. After playing around with OpenSocialSecurity.com, Howard realized that he could claim benefits at any point from his full Social Security retirement age of 66½ onward and get close to maximizing the “present value” of his expected benefits.

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Indeed, as OpenSocialSecurity illustrates, what you really want to avoid is claiming benefits early. If you take Social Security at, say, age 63 or 64, you might fall far short of maximizing your benefit, especially if your life expectancy is better than average.

4. Downsize before it becomes too daunting. Like international travel, the idea of moving grows less appealing as we age—and, if we wait too long, we may find ourselves in a home that’s difficult to maintain and navigate.

Many of the site’s commenters and writers, including Dick Quinn, have talked about rearranging their lives so they can age in place. I’ve also taken such steps myself—in part because I’ve seen what happens if folks fail to do so. My maternal grandparents looked into downsizing but never pulled the trigger. Result: By the time my grandmother died, her home was in such poor shape—I can still vividly recall the ceilings marked by mold and water stains—that the buyers tore the place down and rebuilt it from the ground up.

5. Simplify, simplify, simplify. This is another theme I’ve taken to heart, and I’m hardly alone. Dennis Friedman has written about how he’s consolidated his money at two financial firms, would like to shrink his portfolio from six exchange-traded funds to three, and is sticking with a single university health system, so his medical records are in one place.

6. Time is more valuable than money—and that means good health is priceless. As I’ve grown older, I’ve come to appreciate how precious time is. But to get the most out of that time, we need good health, as Dennis recently reminded readers. Careful eating, moderate drinking and regular exercise all help. But even with all that, nothing—of course—is guaranteed.

7. We need to retire for a reason. We shouldn’t retire simply to escape work. Rather, we should retire because there’s something better we’d like to do with our time. Mike Drak has written about this theme frequently, and Jim Kerr is living it with the book he’s working on.

Jonathan Clements is the founder and editor of HumbleDollar. Follow him on Twitter @ClementsMoney and on Facebook, and check out his earlier articles.

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Sara Brothers
Sara Brothers
1 month ago

I really like this list – it mirrors my own long range plans – as an inveterate spreadsheeter and partially retired (went 50% in August) I have laid out goals for each year that move me along the path. I have to comment on LTC policies though – having watched a 90 year old parent attempt to actually get the benefits she has paid for for the last 40 years…(including premium increases) – be aware: most LTC policies have a 100 day deductible – in addition they require that the policy holder can’t meet at least 2 of 6 activities of daily living. If you have to be in a memory facility or nursing home permanently they will pay for some (not all – there is a daily limit and at most 3 years is total benefits) , however, if you want to age in place at home and just need some additional help (home health aide for example) it probably will not unless can’t walk / bathe / feed etc – also took a letter threatening to contact to state insurance commissioner to finally get them to start to pay claim! Given this negative experience, I am self funding a “bucket” that I will use for elder care if / when I get that far – I’m 61 – hopefully won’t ever need it -but I want money available that I and my family can use without the insurance company struggles and limitations. My initial budget is 250k for the bucket – maybe at some point I will look at a annuity solution but at this point just knowing that I have a “bucket” makes me sleep easier at night.

SanLouisKid
SanLouisKid
2 months ago

Several years ago we put “grab bars” by the entry doors for the older people who were visiting us. Now we use them ourselves. I consider us lucky that we have been able to evolve into most things and not be catapulted into them (permanent serious health, financial, or other issues).

I’ve found that “if you are curious about the world” you’ll never be bored in retirement (probably where travel comes into play). My wife retired recently. She was working 12-to-14-hour days and I was afraid she would be totally bored in retirement. She flipped the switch and has been perfectly happy since.

The more I’ve read about personal finance the more convinced I am that personality and psychology play a major part in how things work out for people.

R Quinn
R Quinn
2 months ago

#7 is widely written about and accepted and with mostly good reason, but I wonder if it is emphasized too much? I had a couple of retirees recently tell me they have no desire to travel. One said he would rather sit and contemplate nature and the other actually said he liked to watch seeds grow.

The point is that some people don’t have to do anything to be happy. I don’t get it, but true. People will be the same after retirement as before. I have no intention of taking up rock climbing, but I’ve always had a thing for history so I like to see historic places- I just visited Thomas Edison’s birth place, bet you don’t know where.

The thing is I didn’t retire to anything in particular I just wanted to be relieved of some things I no longer enjoyed that I once did for many decades. It all worked out fine.

I think placing too much effort on having a plan for something can place too much new stress on people and may even prevent a few from retiring. Far more likely to derail even a modest, perhaps dull retirement by some standards are health issues and financial worries.

Arnold Hold
Arnold Hold
2 months ago

It is not a surprise this site is good to visit. Frankly, liked your writing in the Journal years back as it was pleasant, though in your face with an edge…it was good. Lost track of your writing for awhile, and happened to stumble on Humble Dollar by chance a few years ago.

Look, could not agree more with your points, and this site not only has decent writing, but is practical and is prepared to back up the articles, that is important.

Richard Gore
Richard Gore
2 months ago

Are you going to let us know in real time when you are buying more stocks?

Jonathan Clements
Admin
Jonathan Clements
2 months ago
Reply to  Richard Gore

I’ve been putting more in stock funds throughout this decline and, if the decline continues, I’ll continue to buy more.

Boomerst3
Boomerst3
2 months ago

I am 71 and my wife is 68. We are both very healthy and can travel with no problem. I think a key is to eat well and do some form of exercise all the time. Do not wait until you are close to retirement to try to get ‘healthy’. I don’t think it is age as much as how well you take care of yourself.

Last edited 2 months ago by Boomerst3
Boomerst3
Boomerst3
2 months ago

I retired because I didn’t want to work anymore. That was good reason enough. I have all the money I need. Not working is GREAT

tshort
tshort
2 months ago

Love this – great post! I retired four years ago at 58, and wife just retired at 55. We’re both very clear that the reason for pulling the plug was to travel a lot more and take advantage of our health to enjoy an active lifestyle for as long as can. It didn’t hurt that we were both pretty well done with our work and careers, having attained about as much as we could have wanted.

On the travel insurance front, I couldn’t agree more. Half way through a recent one-month driving trip through the Alps my wife tripped in a parking lot and broke her hip, requiring emergency hip replacement surgery in Slovenia (after literally doing some mountain climbing the previous day).

Fortunately we had purchased travel interruption insurance with COVID protection in case one of us got sick and we had to quarantine or otherwise delay our return flight. It was the first time we’d ever purchased travel insurance before, but figured it would be worth it for peace of mind.

We sure didn’t expect to need it for a major injury – and we had to actually look at the rider to find out how much medical insurance there even was. Turns out more than enough to cover all the medical costs. And all the canceled hotel reservations. And the one-way rental car drop fee in a different city than we started in. And first class one-way flights home, which the surgeon mandated in order for my wife to fly safely (she had to be laying down).

Lesson learned. Travel insurance is worth considering, especially if your planning a longer trip; and/or one that includes lots of physical activities. Check out squaremouth.com – that’s the site we used. Will use again.

Last edited 2 months ago by tshort
Catherine
Catherine
2 months ago

Possibly the skew toward retirees and near retirees in HD contributors might be the profound effect of retirement in our culture, a shift from relative clarity about one’s financial future to murky uncertainty and insecurity both regarding health and financial stability. Retirees have time to consider the known and unknowns of their own situation in making choices for the present moment. Many also find satisfaction in sharing what they’ve figured out. I sure enjoy reading their stories and hearing their ideas.

Your own “lessons learned” above are the things we mainly agree are solid bets.

The closer to the current moment, the more certain the outcome for our decisions and choices. Some seem obvious and useful even at a much younger age than conventional wisdom suggests. If right now I am in pretty good health, I should do things I might have left for the future soon. Carpe diem.

Your #1,3,6 are central to my life at present.

Your #2,4,5 are all elements of the graphic memoir “Can’t we talk about something more pleasant?” by Roz Chast.
https://www.goodreads.com/book/show/18594409-can-t-we-talk-about-something-more-pleasant?from_search=true

I’m gradually whittling away at what is no longer essential in my life as I spend more time on activities of joy and wonder. Having fun while trying to avoid leaving too much unpleasant work behind for my family.

Your #7 is important. And yet, for many people, retirement comes early, when it has little congruence with their personal sense of purpose or preparation. Health decline, corporate reorganization, family obligation, and most recently, retirement related to self-protection during the pandemic come to mind. Persons in these categories may require a long spell of reflection and trial efforts in discovering the meaning of this portion of their lives.

Glad for Humble Dollar and your ongoing efforts, Jonathan.

UofODuck
UofODuck
2 months ago

All good points, especially the advice to travel early in retirement. The pandemic has interrupted the travel plans of many retirees and, depending upon your age, the consequences of delayed travel likely becomes greater with age. I am very conscious of that fact that my wife and I only have so many “good” years in which to travel and the pandemic has shortened out travel window considerably.

Martin McCue
Martin McCue
2 months ago

Excellent article. Timeless advice.

As for item 7, I think that “doing nothing for a while” qualifies as something better to do with your time than work, at least initially. It is a little like going on vacation after working hard for a very long stretch. It takes a day or two just to unwind. Then you are ready to roll.

Kevin Knox
Kevin Knox
2 months ago

Thanks Jonathan for yet another wise, well-written and timely post!

I’d like to suggest Lewis Mandel’s provocatively-titled book “What To Do When I Get Stupid,” as a more detailed elaboration of some of the points you make. He’s especially strong in his concrete suggestions for what’s needed to successfully age in place, including not just a tidy home all on one level but things like having friends and key facilities, from grocery stores to health care and socializing opportunities, within walking, mass transit or an Uber ride. And the info he provides on some level of loss of our ability to make good financial decisions as we age is quite sobering.

https://www.goodreads.com/book/show/19393070-what-to-do-when-i-get-stupid

AmeliaRose
AmeliaRose
2 months ago
Reply to  Kevin Knox

Thank you! By the way, for those who have Kindle Unlimited, the book can be downloaded and read for free.

TomandDeb Leigl
TomandDeb Leigl
2 months ago

Wow Jonathan……you just hit another one out of the park… outstanding article!! Like others have said, I first got to lay my eyes on your well penned articles in the WSJ; I still get the WSJ everyday but there has been a void in every issue without your valuable contributions. So happy that you started HD.
#4 above resonates with me. My wife and I lived in a log home for nearly 20 years…. loved every moment of it but it was lifetime of maintenance. Three years ago, we (both in late 60’s) decided to downsize and built a small ranch house. Really miss the ambience of the log home but the downsizing has turned out to be a wise decision. This past spring, I was diagnosed with a very serious health issue. Not sure where that journey will take us but I’m very happy that we no longer have the burden of the ongoing maintenance of the log home.

Paula Karabelias
Paula Karabelias
2 months ago

Excellent article. In Massachusetts where I live a decent but not outstanding nursing home is now rapidly approaching 200k for a shared room . Subtract your Medicare and supplement costs and other personal care needs from even the maximum possible Social Security check and it falls far short of reaching 50% of the nursing home cost. Fortunately the vast majority have relatively short stays – delay as long as possible !

Rick Connor
Rick Connor
2 months ago

Great article Jonathan. I heartily agree that I have learned so much from yours and other HD authors articles. This article nicely summarizes many of the key considerations. With regard to No. 6 – be careful on the Schuykill bike path.

Edmund Marsh
Edmund Marsh
2 months ago

I’m focused on the same list, as I look ahead toward retirement in a few years. I appreciate the writing you reference, and others, that help me in my pondering.

John Yeigh
John Yeigh
2 months ago

8 – Maximize family interactions and connectivity. Friends may fade for all sorts of reasons, while kids and grandkids can forever provide positive social rewards. You just never know when this might end…..

Walter Abbott
Walter Abbott
2 months ago

Congratulations! I hope you enjoy your retirement as much as we have. Your old WSJ columns were a must read for me back in the day. They were a tremendous help to us in reaching our retirement goals.

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