Took Time

HOW DID I GET financially to where I am today, 15 years into retirement? It’s a good question—one that’s taken me a lifetime to answer.

I’ve been fortunate in a way that’s nearly impossible for Americans today. I worked for one company for nearly 50 years and I accumulated a traditional pension based on that service. In addition, during my last few years on the job, I was eligible for stock options, restricted stock awards and enhanced bonuses. My pension, plus investing nearly all that extra compensation, solidified my financial security.

But my retirement success was also built on sticking to my often-criticized goal of replacing 100% of my base pay from my working years—that is, my pay excluding bonuses and other compensation. I met that goal with my pension, my Social Security, my wife Connie’s Social Security spousal benefit, and by working until age 67.

The story begins much earlier, however. I started working at age 18, and soon after signed up to buy savings bonds through payroll deduction, which I continued to do for decades. Now, I’m forced to redeem those bonds that have reached their 30-year maturity.

When I became eligible, I also signed up for the employee discount stock purchase plan (symbol: PEG) and, for the 60 years since, I’ve reinvested dividends. Today, those shares are about 20% of our total investments. While I purchased some shares, I received most of them as part of my compensation. I again showed my “unique” approach to investing by converting my stock options into shares rather than cash. Today, the annual dividends I receive are equal to almost 10% of my pension.

In 1982, I gained access to the company’s newly launched 401(k) plan, and I kept contributing until I retired. I always saved enough to receive the full employer match, and often I socked away even more, except during the 10 years when we had up to three children in college at the same time. My 401(k), which now sits in a rollover IRA, accounts for 42% of our total investments.

Connie and I began Social Security at my full retirement age. I was still working at the time, so—for the next two years—we invested both payments in municipal bond funds. We’ve since reinvested all income distributions. I’ve also added to the funds using part of my required minimum distributions. Today, the muni funds equal 19% of our investments. Were the muni funds a smart investment choice? Probably not. But I find the idea of something tax-free fascinating.

Being young and foolish, at around age 45, I was talked into buying two tax-deferred annuities. I stopped adding money decades ago. Today, they have a combined value of $200,000. But as far as being a good investment goes, your guess is as good as mine. Fees? I haven’t a clue.

About that time, I also enrolled in a group universal life insurance plan. The premiums were age-based and a portion of that money was invested. If you died, the policy’s proceeds were tax-free. As I got older, the premiums became too much, so I used the investment fund to buy paid-up life insurance. It got me $70,000’s worth of coverage. One of these days, somebody will benefit—but not too soon, I hope.

My fundamental rule of investing is that, as long as our net worth is higher than last year, I’m good. But if we were living off our investments and counting on a steady withdrawal of assets each year, I’d likely throw that rule out the window. In fact, if I didn’t have a pension and needed to cover our living costs with our investments, I’m pretty sure I’d have purchased an immediate annuity with a portion of our savings. I’d need the resulting retirement income stream to soothe my nerves.

My largest single investment, other than my company stock, is Fidelity Large Cap Growth Index Fund (symbol: FSPGX). I also own Fidelity Mid Cap Index Fund (FSMDX).

We have a few other mutual funds: Fidelity Balanced Fund (FBALX), Columbia Large Cap Growth Fund Class A (LEGAX), Fidelity VIP Balanced (FJBAC), Janus Henderson Global Life Sciences Fund Class T (JAGLX) and Allspring Large Company Value Fund Class A (WLCAX).

Those fund names contained words I found attractive like “balanced,” “growth” and “value.” Besides, they invest in some cool companies, such as Berkshire Hathaway, Apple, Microsoft, even McDonald’s. What could go wrong?

According to my Fidelity Investments account, I have 53% in U.S. stocks, 4% in international stocks, 32% in bond funds, including munis, and 10% in what Fidelity calls short-term, meaning cash investments. Did I mention that I’m 80 years old?

Do I have an investment strategy? Other than trying to keep my money growing, not really, except sticking with mutual funds, mostly index funds. I do have a goal, though: It’s never to sell any shares. With reinvestment, the shares are still growing, but in 2024 I’m considering not reinvesting dividends and interest so we can build up more cash.

My approach to investing hasn’t changed since I was 18. Save, always save, never stop saving. Even in retirement, we still save each month. Saving is not investing, you say? You’re right, it’s not. But if you don’t save, there’s nothing to invest.

The real secret to my success—if I can call it that—is time, all the years since I graduated high school in 1961. Call me the dollar-cost-averaging guru. My reinvesting—for now—keeps that going.

No doubt, as wiser folks analyze my investing acumen, they’ll find it amusing, perhaps scary, even foolish. But keep in mind that the overwhelming majority of American investors, who might think they’re diversified because they own three different large-cap mutual funds, are more like me—and less like the typical HumbleDollar reader.

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

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