Is It That Hard?

Richard Quinn

I READ QUITE OFTEN on HumbleDollar about the trials and tribulations of those planning for retirement—questions like when to retire, where to retire, what will my expenses be, when to take Social Security, how to minimize taxes, how much money to save, how much to spend.

I approached retirement quite differently. Even I’ll admit I’m not typical, and perhaps only questionably normal. I tend to set major long-term goals with modest attention to details.

Before I retired, I never thought about our taxes, monthly expenses or where to live. Would my life be all that different than before I retired? Nope. Our mortgages were paid off years before I left my job, so our spending had already adjusted.

Where to live was easy. With our entire family within an hour’s drive, we weren’t going anywhere. We eventually downsized to within a mile of our home, so our activities, friends, doctors and church remained as they were.

In a recent Nationwide survey, 40% of workers said they plan to move to a different city or region after they retire. The most common reasons given were to lower expenses and pay less in taxes. We didn’t want those sorts of financial worries, so I kept working until age 67—three years longer than average.

When you’re retired, you still pay taxes. You also have mostly the same fixed monthly bills, face occasional unexpected expenses, need health insurance, a place to live and—from time to time—to buy a new this or that. No surprises there.

I never used a spreadsheet or software to plan retirement. What I did do was track my pension and Social Security benefits. From 1982 on, I also saved at least enough in my employer’s 401(k) to receive the company’s full matching contribution.

My working compensation included base salary, an annual cash incentive bonus and—in the last few years before retirement—stock options and restricted stock awards. Our standard of living was always based on my salary alone. Bonuses were invested except for one year, when the money was used for a home addition.

I was a bit afraid of retiring because I never accepted we could live on less than my working base pay. I took the leap when I realized my pension and Social Security met that goal. I never considered our investments in the equation and still don’t.

My income stream is my pension and Social Security. I also have a supplemental income stream as an inflation hedge, which is comprised of bond interest—most of it tax-free—and dividends from two stocks that I’ve accumulated over more than five decades. I reinvest these streams of income now, but I could use them for spending money, increasing our monthly cash flow by 16%.

Pensions are dwindling in the U.S., although 59% of retirees reported receiving some pension income in 2021. Defined benefit plans are still common for state and local government workers, but only 15% of private industry workers had access to a defined benefit plan in 2022. If I hadn’t had a pension, I would have saved more and focused on building additional income streams, including buying an immediate annuity with a portion of my assets.

My wife and I started collecting Social Security at my full retirement age of 66. I was still working, so we saved and invested the proceeds until I retired. There are many arguments against that move, but it worked for us. We built up a tidy sum in investments that contributed to the supplemental income stream I mentioned earlier.

So, where do we stand on spending versus income? Our expenses are just about equal to our net monthly income. Our expenses include travel and renting a house in Florida in the winter, contributing to 11 grandchildren’s 529 plans, saving in our emergency fund and occasionally helping children pay medical bills.

In other words, just like before retirement—almost.

The money that we saved in payroll taxes and 401(k) contributions has largely been offset by higher spending on health-care premiums and travel. At the end of the month, my net income after taxes and deductions has been fully spent.

Oh, yes, what about the question of how folks spend all their free time in retirement? What free time? I still get up by 6 a.m. and the days are filled. We’re attending grandchildren’s activities, playing golf, and sometimes reading, writing and drawing.

I’ll admit that, if I stop moving around 3 p.m., I might add a nap—but that’s only possible because I’ve been practicing retirement for nearly 14 years. I don’t have a rocking chair, though only because the Cracker Barrel model won’t fit in my car.

So, what have I proved? That there’s no one way to retire. The only right way is the one that makes you not only happy, but also content.

Don’t overthink it because you’re never going to account for everything anyway. It’s your retirement that needs to work, not just the numbers on a spreadsheet.

Richard Quinn blogs at Before retiring in 2010, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles.

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