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, 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.

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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