Making It Easy

Dennis Friedman

ONE OF MY BIGGEST retirement surprises: how difficult it is to maintain a robust social network.

My wife and I decided last Thanksgiving to travel overseas. In the past, we would have spent the holiday with family and friends. But now, most are no longer near us—or with us.

My mother passed away about four years ago. Afterward, my sister and brother-in-law moved to Tennessee to be closer to their son. My cousin Barb and her husband moved to Florida to be near their daughter. Elaine, my other cousin, moved to Colorado, where her son lives. My wife’s longtime friend Tina and her daughter Jessica no longer live close by. My stepson, who lives in Virginia, was planning on visiting at Christmas, instead of Thanksgiving.

Meanwhile, I had lunch with my three old high school buddies from my 1969 graduating class. Seeing my old schoolmates reminds me of the good old days, but also the uncertainty that lies ahead. There used to be five of us, but now there are only four. Jeremy passed away a year ago. Bob, who attended the lunch, has cancer. He was given six months to live, but he’s beaten that dire forecast.

While our social network is shrinking, we still have close friends in the area. But most of them are about our age. The rest of our family are scattered across the country. If we stay in California, I can see us becoming more socially isolated as time goes by. Maybe we won’t have the support we need in our later years, especially when it comes to our financial affairs.

That’s one reason we decided to have Vanguard Group’s Personal Advisor Select help us manage our money. If we were basing that decision strictly on cost, we might be making a mistake. But I’ve learned not all financial decisions can be made with a spreadsheet. In our case, there’s a human element involved. We might find ourselves alone one day, with no trusted acquaintances close by. Getting a financial advisor on board now seems like a wise move.

Here are four other strategies we’ve adopted to make it easier to manage our financial affairs in our declining years.

Keep it simple. I’ve found that, when you have fewer things to deal with, you have a greater sense of control over your life. You’re also likely to make better decisions, because there are fewer opportunities to make a mistake.

For these reasons, we’ve simplified our finances by consolidating investments at Vanguard, while keeping all our savings and checking accounts at our local credit union. It makes managing our money so much easier. Indeed, in my head, I can calculate our net worth in a matter of seconds.

All I have to do is add up our total assets at Vanguard and the credit union, plus the equity in our home and cars. Then I subtract our total debt, which is zero. This is our total net worth.

Our emphasis on financial simplicity is also a plus during tax season. Our uncomplicated finances allow us to easily file our own income-tax returns.

Do nothing. I learned an important lesson during my 30-year career in manufacturing: You never want to make changes to something you’ve already built unless absolutely necessary. Why? There’s always the risk you could make things worse.

I remember overseeing the delivery of a digital signal processor unit for use in a satellite. After the unit was assembled, we had to replace an electrical component that didn’t meet specification. In the process of removing and installing the new part, we damaged the other components around it. Not only did this rework cost us a lot of money, we missed our delivery date. We made a bad situation worse.

The same thing can happen with your investment portfolio. Whenever you make changes, you run the risk of incurring trading costs, triggering taxes, and selecting an inappropriate or underperforming investment that can lead to lower returns. This is why doing nothing, except for rebalancing, is usually the best strategy when managing a portfolio.

Delay Social Security. I made a lot of bonehead mistakes with my money during my lifetime. But waiting until age 70 to claim Social Security benefits was one of the best financial decisions I’ve ever made. It helps address one of the biggest threats to our retirement: running out of money.

If you can afford to wait until 70, your monthly check might be 77% higher than at age 62, plus you get an annual cost-of-living adjustment on this larger sum for the rest of your life. According to the Social Security Administration, “About 1 out of every 3 65-year-olds today will live until at least age 90, and 1 out of 7 will live until at least age 95.” In addition, married couples at age 65 have a 50% chance that at least one of the spouses will survive beyond age 90.

Autopay bills. To combat scams, it’s best to avoid writing checks and to keep tabs on all money going out. An easy way to do that: Autopay your bills using a credit card. That also ensures your bills get paid on time.

But when it comes to paying critical bills—such as gas, water, electricity and cell phone—credit cards can be risky. What if the credit card is denied because the card is compromised or you forget to update the expiration date on a company’s website when a new card is issued? To avoid the potential disruption to our life if these bills aren’t paid, we autopay them using our checking account.

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 X (Twitter) @DMFrie.

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