MY WIFE CALLS HER 99-year-old mother every morning. One morning, her mother asked, “Are you making big things happen?” After Rachel reminds her mother that she’s retired, her mother asked, “How do you make money?” Although I chuckled when I heard the conversation, those two questions are probably on most folks’ minds as they prepare for retirement. First, how are they going to generate enough income to fund their retirement? Second, how are they going to stay busy doing meaningful activities? Funding our retirement. When I retired, I was eligible for a pension. But I took a lump-sum payout instead of the annuity, rolling the money into an IRA. One of the reasons I took the lump sum: I was single at the time. I was concerned that, if I eventually got married, my future wife wouldn’t receive any money if I took the annuity. There would be no survivor benefit upon my death. It turned out to be the right choice. In 2020, Rachel and I got married. As a result, our retirement income comes from two sources: Social Security and retirement account withdrawals. I believe this is a viable strategy for folks like us who want to remain in their home, self-fund their long-term-care needs, and not run out of money. In 2024, when I turn age 73, I’ll need to start taking required minimum distributions, or RMDs, from my retirement accounts. Rachel is six years younger, so that milestone is still a handful of years away for her. Each year, our RMDs will be determined by dividing our tax-deferred retirement account balances as of Dec. 31 by a life expectancy factor. That means that, as we grow older and our life expectancy shortens, we withdraw a larger percentage of our retirement funds each year. Relying on RMDs to guide our spending will lead us to spend less in the early years of retirement, while increasing spending in our later years when health care costs may be higher. Since I didn’t take my pension as an annuity, I thought about buying an immediate-fixed annuity after I retired. But I was never convinced that was the right move for us. I always thought having the lump sum rather than an additional income stream might be more valuable as we age. I know that runs contrary to the idea that having guaranteed lifetime income reduces the risk that you’ll run out of money. My thinking: In retirement, health care costs can come rapidly and in large chunks. For instance, the annual cost for a private room in a nursing home is approximately $108,405. The average stay in a nursing home is about two years, though it could be far longer, of course. In California, where we live, a home health aide costs an average $29 per hour. Having a lump sum might be more valuable in covering these types of spikes in health care costs, especially if your health fails you early in retirement. At that juncture, the additional lifetime income might not be that useful. I do believe it’s important to have an annuity, and we have that with our two Social Security checks. These are the two best annuities we could buy. Compared to annuities sold by insurance companies, Social Security offers inflation protection, it’s taxed less heavily and there’s less credit risk. When I start RMDs next year, our Social Security benefits will probably be about 45% of our total income. That 45% is more than enough to cover our low fixed living costs, allowing us to ride out the ups and downs of the stock market without selling shares at depressed prices. Relying on the safety net offered by Social Security works best if at least one of the spouses—preferably the one with the higher lifetime earnings—delays his or her benefit until age 70. With any luck, that will ensure the surviving spouse will have sufficient predictable income to cover fixed living expenses. If one of your Social Security checks does that, I don't think there’s a pressing need for an immediate-fixed annuity. Staying busy in retirement. When I retired, my father said to me, “Don’t worry about staying busy in retirement. Your doctor’s appointments will keep you busy.” He was almost right. It was my dad’s doctor’s appointments that kept me busy. Shortly after I retired, my dad was diagnosed with lymphoma. The next three years, my mother and I helped him fight his battle against cancer. Being a caregiver for both my parents for the first 10 years of my retirement wasn't something I planned for. You find out there’s a lot of things that can happen in retirement that aren’t planned. This doesn’t mean you shouldn’t have a retirement plan. Rather, it means your plan should be flexible. My initial plan was to stay busy by taking cooking classes. I got the bug from watching cooking shows. Seeing those chefs make mouth-watering dishes motivated me to buy new cooking utensils, knives, and pots and pans. When I wasn’t taking cooking lessons, I thought I’d get a part-time job. I didn’t want a job that was stressful. I had one of those. I wanted a job that allowed me to be around a lot of people, so I wouldn’t get lonely. My first choice was Trader Joe’s. There was one a few miles from my home. No long commutes to ruin my day. Plenty of people to mingle with, young and old. In my spare time, I would travel. Maybe a cross-country trip in the Volkswagen van that I always wanted. Better yet, how about a trip to Europe? But none of that happened. My parents needed help, and they came first. Luckily, my retirement plan wasn’t carved in stone. I could easily drop everything I planned and take care of my parents. I hadn’t made any major financial commitments. For instance, I didn’t plow money into a second home in another part of the country, where I’d spend part of my retirement. These days, I devote some of my free time to writing. I started keeping a journal to record my experiences, ideas and feelings. I believe a journal will help me achieve my goals by tracking my progress. I also hope the journal will improve my memory. When you write something down, you tend to remember it better. Lately, I’ve been recording my dreams when I wake up. I dream a lot, and I’d like to find some meaning behind those dreams. The real inspiration behind keeping a journal was to improve my writing skill. I thought that the more I write, the more my writing will improve. Of course, I still plan on writing for HumbleDollar when I have something worthwhile to say. When I’m not writing, I spend my time reading, exercising, gardening and traveling. I’d be remiss if I didn’t mention those doctor’s appointments. My dad was right. They can keep you busy as you grow older. 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 Twitter @DMFrie. [xyz-ihs snippet="Donate"]

LIKE OTHER FOLLOWERS of HumbleDollar, I look forward to Jonathan’s Saturday articles. I have to admit that my interest has been heightened by his cancer diagnosis. Not many folks would have the courage to write about what's going through their mind when they’re fighting for their life. We don’t often get this kind of insight into someone’s life. Jonathan has probably received a lot of advice about treatment plans and the doctors he should see. I’m sure most of it is out of love and respect for him. I’m not going to offer an opinion on how he should deal with his illness. But I do have one piece of advice: Make sure you have a power of attorney for health care, not just for your own sake, but also for the sake of loved ones. Why is that so important? We don’t know how our life is going to end and how it’s going to affect those around us. Unfortunately, most of us are so focused on the financial aspect of retirement that a health-care power of attorney is often overlooked. I didn’t realize how important it was until my father started his cancer treatment. He battled cancer for almost three years. His journey had a profound effect not only on him, but also on our family. After my father started chemotherapy, we noticed his behavior changed. He would easily get angry and rattled. We had to take his car keys away because we feared he’d experience road rage. My mother would sometimes phone, and ask if I’d come over and see if I could calm him down. He’d get verbally abusive. My dad would tell my mom that he didn’t need her, and that she should leave and not come back. I started spending more time at my parents’ home, because there were times when my mother didn’t want to be alone with my father. This was not the father I’d known. We told the doctor about my dad’s volatile temper, but he didn’t take us seriously and thought we were overreacting. He even made light of it. “Oh, you’re asking for a happy pill.” Then, one day, I told the doctor that we’d removed my father’s gun from the house because we were afraid of what he might do when he got angry. The doctor finally prescribed medication, but it didn’t help. Meanwhile, the doctor became increasingly difficult to work with and showed little sympathy. During his medical training, he must have skipped the class on bedside manner. My mother and I would catch hell not only from my father’s outbursts at home, but also from his doctor during office visits. One day, we told the doctor that my father was complaining about his back bothering him. After examining him, he saw he had shingles. The doctor started berating my mother, telling her she needed to do a better job taking care of her husband. The problem was, my father wasn’t a good patient. He wouldn’t let us touch him. We tried changing doctors. But two doctors we contacted wouldn’t take him. The third one, we felt, was located too far away. Also, my dad didn’t want to leave his current doctor, so we stayed. Finally, the doctor told us he couldn’t cure my father, but he could try to extend his life if we wanted to continue treatment. If it was left up to me, I would have said no. My dad’s quality of life was already poor, and I was concerned about my mother’s well-being. But it wasn’t up to me. The only one who could stop treatment was my mother. She had power of attorney over my father’s health care and it was her decision to make, because my dad couldn’t fully comprehend what was going on. My mother wanted to continue. She wasn’t ready to let go of him. The doctor prescribed an expensive drug that wasn’t covered under my father’s prescription drug plan. Luckily, because my parents’ income was low, we were able to get financial help from a charitable organization. Unfortunately, the drug caused my dad to become incontinent. My mother decided it was time to stop treatment and my father entered hospice care. A few weeks later, we received a letter from my father’s doctor. He was informing all his patients he was closing his office. We heard his practice was in financial trouble because of some bad business decisions. Maybe that’s why he treated us the way he did. During hospice care, the softer side of my father started to reappear. He was no longer the angry person that he’d been during his treatment. The drugs he was given must have worked their way out of his system. During my father’s ordeal, I learned that you have to take into consideration how your treatment for a life-threatening illness is affecting the loved ones who are taking care of you. When there’s no hope for survival and my quality of life is poor, I don’t want to burden my wife. I hope that I’m of sound mind and that I’ll know when it’s time for me to go. If not, I want my wife—who holds my power of attorney for health care—to step in and make that decision for me. 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. Follow Dennis on X @DMFrie and check out his earlier articles. [xyz-ihs snippet="Donate"]

I DIDN'T ALWAYS LIKE my retirement. After I quit my full-time job, I briefly went to work for another aerospace company. It seemed like the perfect arrangement for a retiree: just 16 hours a week, with the luxury of setting my own schedule. But it was the same old pressure cooker environment that I’d wanted to get away from. Although I was working fewer hours, it didn’t feel like I was retired. Instead, it felt like the same old grind. That’s when I realized a successful retirement was less about whether you worked or not, and more about doing things you enjoy. If I’d liked that part-time job, perhaps I would have felt like other folks, who call themselves retired and yet continue to work. That was a key lesson I learned early in retirement. Here are four other important lessons I’ve learned in the years since: 1. Staying independent. In California, if you’re age 70 or older, you have to pass a written test to renew your driver’s license. Many seniors dread the test. When my mother took it, there were 30 questions and you can only miss three. I was so proud of my mother, who at age 92 passed on her first try. My mother was a good driver in her later years. She had no physical or mental ailments that would keep her from driving. She valued her independence, and loved driving to her local grocery store or a nearby restaurant. Except I made one big mistake. After I retired and started spending more time with my mother, I drove her everywhere she wanted to go. By the time it dawned on me that I should let her drive to keep her driving skills sharp, it was too late. She no longer felt comfortable behind the wheel. She’d lost confidence and the feel for the road. She never drove again. My mother used to walk a mile every day. But she had an injury that kept her from walking for a couple of months. After she recovered, she was never able to walk that far again. Her favorite afternoon walk was gone for good. The saying “use it or lose it” is especially applicable to the elderly. As you get older, it’s so easy to lose something for good, even if you stop doing it for just a short while. If you’re consistent in your daily routine, you’re more likely to remain independent. 2. Buying Series I savings bonds. When inflation-protected savings bonds were yielding 9.62% in 2022, I thought about purchasing some through TreasuryDirect.gov. As a retiree, I’m always looking for a good, safe investment return. But I was concerned about the fixed rate being 0%. The fixed rate is one of two components of a Series I bond’s yield, and it stays the same throughout the life of the bond. The other component is a variable rate that changes every six months based on inflation. With a fixed rate at 0%, you could never beat inflation. But if the fixed rate is above 0%, you’re guaranteed to beat inflation, at least before taxes. That’s why today’s I bond rate of 5.27%, which includes a fixed rate of 1.3%, looks so appealing. If you had purchased an I bond back in 2022, when it was yielding 9.62% but with a 0% fixed rate, today’s yield would be just 3.94%—a lot less than the current 5.27% yield. If you were lucky enough to have purchased an I bond back in September 1998, when the fixed rate was 3.4%, you’d be earning a whopping 7.41%. The lesson: If you’re thinking about buying I bonds, it’s important to pay close attention to the fixed rate, and not to be too enamored of the current inflation-driven nominal yield. There are other disadvantages to I bonds: You can’t spend the income if you need it. Although the income is earned from the first day you buy, you don’t have access to that interest until you redeem your bonds. Another drawback: You have to wait at least a year before selling. Moreover, if you sell before five years, you lose the last three months of interest. You should also be aware that $10,000 is the maximum you can purchase annually per person. The IRS, however, allows you to purchase an additional $5,000 with your tax refund. 3. Choosing the right Medicare plan. About one in three Medicare beneficiaries use an insurance agent or broker to choose a Medicare plan. If you’re among them, you should be aware of a key conflict of interest. Commonwealth Fund conducted focus groups with brokers and found most are paid more—and sometimes a lot more—to enroll folks in a Medicare Advantage plan, rather than a Medigap plan that supplements traditional Medicare. The brokers in the focus group also said most Medicare Part D drug plans don’t offer commissions and, among those that do, it isn’t much money. Brokers don’t receive any money for enrolling someone in traditional Medicare. It was also revealed that the commission structure on Medigap plans encourages agents and brokers to sell high-premium plans, such as plans G and F, that cover most of the costs that aren't paid by traditional Medicare. Plans like K and L, with lower premiums but also limits on out-of-pocket expenses, might be more appropriate for someone on a shoestring budget—but these plans also tend to pay smaller commissions to insurance brokers and agents. When these salespeople were asked what they’d choose for themselves, most said they’d pick traditional Medicare. 4. Staying positive. Today, I’m enjoying retirement immensely. But it’s not always easy growing old. There are more health issues to contend with. As you age, you lose more family members and friends. Then there’s the stark reality that you might have to live alone for some part of your retirement. I read a New York Times article by Melissa Kirsch where she asked her readers to submit the best changes to their routines in 2023. One reader responded: “Each week this year I wrote something that happened that I was grateful for on a slip of paper and put it into a jar.” I thought that was a great way to try to stay positive when things aren’t going your way. If we write down some of the good things in our life that we tend to forget, we can revisit them during difficult times. We might also put the jar where we can see it, so it’s a constant reminder of all the positive things in our life. 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. [xyz-ihs snippet="Donate"]

I’m not the same person I was when I retired at 59. Back then, I was frugal to a fault, afraid to spend money, even on myself. Now I treat myself more often, take better care of my health, and I like to think I’ve grown more patient. But the biggest change is this: I cry more easily. I didn’t use to understand that kind of emotion. When I was about 11, I was watching television with Uncle Lou. I don’t remember how old he was, but he was retired, and to a young kid, he seemed ancient. At one point, he started to cry. I didn’t understand why — the film didn’t seem that sad to me. But now, at 74, I do. I, too, get emotional at times without knowing exactly why. A few years ago, I went to a gathering for Jeremy, a high school friend who had passed away. The mood was upbeat — people were eating, drinking, and chatting like it was a neighborhood get-together. I had fun seeing some of my old childhood friends. Jeremy’s daughter spoke first, offering a few touching words about her father. Then Ron stood up, notes in hand, and started cracking jokes about Jeremy’s drinking habits — like how he could fall asleep holding a drink and never spill a drop. He kept going until his wife nudged him to wrap it up. I had planned to say something about a different side of Jeremy — the responsible guy who always held a job from high school graduation until retirement. I thought that deserved recognition. But suddenly, I felt overwhelmed with emotion. I couldn’t explain why. This wasn’t a somber funeral — it felt more like a casual celebration. I just sat there, silent. I knew I wouldn’t be able to hold it together. It didn’t feel like the right time or place to get emotional and risk dampening the mood. Everyone was there to celebrate, not mourn. Looking back, I wonder why I was so emotional. These days, my oldest friends and I are gentler with each other, more appreciative of our connection. As you get older, the value of those relationships becomes more apparent. If I reacted so strongly to Jeremy’s death, I can’t imagine how I’d handle losing my wife. My mother struggled with my father’s death. When my father passed and I started spending more time with her, she sometimes called me Sam, my father’s name. I took her to see a couple of therapists. One sold her his book, and mostly talked about himself. She even tried attending church again. But none of it relieved the pain she was feeling. I think it was because she never gave herself time to grieve. She cleaned out his closet and packed away his things quickly, hid the photos, thinking that erasing reminders would ease the pain. I’d do the opposite. Rachel likes to keep her laptop on the dining room table, right by the sliding glass door, where the light pours in and the morning breeze flows through. It only gets moved when we have company. If, God forbid, something ever happened to her, I wouldn’t move it. I found out early in our relationship how much Rachel values greeting cards. When I give her one for a special occasion, she always keeps it by her laptop for weeks, until it eventually finds its way upstairs to a shelf in our hallway, displayed alongside all the other cards I’ve given her. I would keep those cards right where they are. Those things — her pictures, her favorite places, her saved notes — would hurt to see and remind me of her every day. But I think they’d help me heal. I’d want to give myself the time and space to feel the loss and the sadness, not run from it. I’ve learned from my mother that ignoring grief doesn’t make it go away. Facing it — little by little, everyday — might be the only real way through.

MANY FINANCIAL planners say you shouldn’t look at your investment portfolio too often because it may prompt you to make poor decisions based on short-term stock market performance. I try to follow this advice, even though it would be easy for me to take a peek, because we have almost all our money with Vanguard Group. Ever since we consolidated our investments, I’ve noticed a change in my wife’s attitude toward money: Rachel is more willing to spend. Maybe it's the visual of having one large balance at Vanguard, rather than smaller balances spread across multiple financial institutions, that makes her feel more financially secure. It becomes clearer to her how much money we really have when it’s parked in one spot. What about me? Although I don’t look at my portfolio too often, there are four other things I pay close attention to. 1. My Social Security deposit. Around the seventh of every month, when my Social Security is scheduled to be deposited, I check to see if it’s been posted to my account. Then I log that payment on a spreadsheet to track the total amount I’ve received. I don’t track my wife’s benefit, just mine. I waited until age 70 to take Social Security. I’m approaching 74 and, so far, I’ve received $176,750. I don’t really know the significance of this number or why it’s so important to me. My friend Art also waited until 70 to take Social Security. About a month later, he was diagnosed with incurable pancreatic cancer. Could that be the reason I track the total benefits I’ve received? Perhaps. I'm concerned about not reaching my breakeven point, which is around age 81. Yet that shouldn’t be my focus. After all, the main reason I delayed my benefit is to provide a larger income stream later in life, when there’s a risk of Rachel and me running out of money. Thanks to delaying, not only do I get a larger initial check, but also a larger dollar amount in annual cost-of-living increases. Those increases compound over the years, resulting in exponential growth that could give us significant income down the road. Remember, although all recipients got the same 2.5% inflation increase for 2025, the actual dollar amount is based on the amount of your benefit. 2. My credit card balance and transactions.  Every time I charge something, I look at the Citi app on my smartphone to make sure the amount charged is correct. It’s easy to do. The app has a snapshot feature where I can see the transactions without logging in. Another reason I keep close tabs on our primary credit card: I found if I keep the balance under $2,000, my FICO score is higher. I’ll usually make multiple payments during the month to keep it below the desired amount. It seems to work. My current FICO score rose to 816 because my credit utilization ratio—how much I owe creditors relative to how much credit I have available—is so low. The other day, we were purchasing some vinyl windows for our house. The window manufacturer had a special financing promotion: no money down, no monthly payments and no interest for 12 months. Since I froze my credit because my personal information was compromised, I had Rachel apply. The sales representative was surprised at how fast Rachel’s credit application was approved. “I’ve never had anyone approved that quickly,” she said. I wasn’t surprised. My wife’s FICO score is 840. We’ll probably pay off the windows as soon as they’re installed to our satisfaction. We both hate owing money. 3. My blood pressure. Why is it so important to monitor your blood pressure? Because it’s a silent killer that often goes undetected until it causes harm. More Americans die from heart disease than any other illness. My best friend Jeremy died of a heart attack. Maybe all his drinking caught up with him. My longtime coworker John also died from one. Could all those burgers and fries from the lunch wagon have caught up with John? Who knows? I know that, at my age, I’m at more risk of dying from heart disease. My mother did. I check my blood pressure a few times a week at home, where I feel I get a more accurate reading than during a one-time visit to my doctor’s office. When I go to see the doctor, my blood pressure is usually high. I have what they call white-coat hypertension. When I check it at home, it’s usually below the recommended level of 120 over 80. I keep a log on my smartphone of my blood pressure readings by date and time of day, so I can easily show my doctor. Based on the reading in the doctor’s office, I’d probably be on unnecessary medication. 4. My daily steps and distance walked. I try to walk seven miles a day. My father walked a lot. In fact, I take the same route that he used to walk. I didn’t realize how much walking meant to him until his final days. When he was in hospice care, he still wanted to go for his daily walk. We told him it was too dangerous because he didn’t have the strength. He said, “How can I get better if I don’t walk?” I’m like my father. I believe walking can make my life better. I’m hoping all those steps will lead to a longer, healthier life. 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. Follow Dennis on X @DMFrie and check out his earlier articles. [xyz-ihs snippet="Donate"]

I WASN'T COMPLETELY honest when I wrote a recent article. HumbleDollar’s editor asked why I reduced my stock position in 2017 from roughly 50% to 25%. He suggested I should mention it in my article. My answer: "At the time I made these changes, I was losing confidence in the sustainability of the bull market and wanted to reduce my risk." That was true—but it wasn’t the whole truth. There’s another reason I initially left out the explanation for reducing my stock exposure: I'm simply not comfortable discussing my finances in great detail. There are only two things I will not talk about: my sex life and personal money matters. And it isn’t necessarily in that order. It’s one reason I write mostly about my life experiences that don't reveal too much about my money. I did write a blog that revealed a little more financial information than I would like. It was uncomfortable. But I thought it was necessary. Some of my friends are very open about their money. I sit there like a bump on a log, amazed at what they are telling me. I feel guilty. But I just can't share my personal financial information with them. It's not because I'm stingy and trying to hide my money from my friends. When I go out with them, I usually pick up the tab or pay a portion. I have also helped friends who were going through difficult times with their finances. To be honest, I don't want to know about their financial situation. When I hear them talk about their money, it sometimes makes me jealous. I feel that I'm not doing as well financially as I should. But in truth, I shouldn't be comparing myself to them. It’s a shame, because I find myself avoiding them. I use the same approach that I use with my favorite baseball team, the Cleveland Indians. When they lose, I avoid reading articles about the game. There is only one person who knows about my financial affairs. It's my close friend, with whom I'm planning to spend the rest of my life. I feel she needs to know, because we are in this together. She is the only person with whom I'm an open book. I think it is important that your spouse or significant other knows your financial life. If something should happen to you, he or she needs to know where to go to access the assets to support him or herself. I have given a lot of thought to my reluctance to reveal information about my finances. I haven't come up with a good answer. I do, however, know this: In our society, we are sometimes judged by the type of car we drive, the house we live in or how much money we have. Maybe I just don't want to be judged. Dennis Friedman retired at age 58 from Boeing Aerospace Company. He enjoys reading and writing about personal finance. His previous articles include Mind Games, Looking Forward and More Than Money. [xyz-ihs snippet="Donate"]