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. [xyz-ihs snippet="Holiday-Donate"] 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. [xyz-ihs snippet="Donate"]

I EXPERIENCED a traumatic event recently: 24 hours without an iPhone. When I left the house, I felt out of touch, incommunicado. What if someone needed me or I needed them? What if I missed the latest Tweet? It was horrible. My iPhone X was just about kaput, with a cracked screen and a weak battery. On a trip to the mall, I walked into an AT&T store “just to look.” I ended up with an iPhone 13 Pro, gold-colored no less, with a clear cover so everyone can see it’s gold. To what purpose, I have no idea. In any case, I traded in the old model and my cost for the iPhone 13 was $27.70 a month for 36 months. But it gets better. I also received a billing credit—the salesman said it was some sort of special deal—which brought the net to $13.33 per month, so the total cost was $479.88. When I bought my old iPhone X, I paid $1,000 cash. Switching your data from an old to a new device is easy. You just set the two next to each other and they do it for you. That’s what happened—except the new phone couldn’t recognize my telephone number. That meant no texting, no calling in or out. We’re talking utter isolation. I tried everything recommended on various websites. Nothing worked. My wife knew I wouldn’t be worth living with until I was again part of the real world, so the next morning we were at the AT&T store when it opened. After several failed attempts to fix the phone, the technician decided the problem was a defective SIM card, whatever that is. A tiny piece of I don’t know what had disrupted my world. I’ve come to realize that the most important word in our language is “chip.” Our entire lives are controlled by chips, everything from cars to robotic surgery to your phone’s selfie EKG app. Technology gives new meaning to having a chip on your shoulder. The array of things we can do with our smart phones is truly amazing—and being a phone is the least of its functions. My love affair with phones goes back to the 1964 World’s Fair when AT&T displayed its new video phone. Imagine that, seeing the person you were talking to. But it turned out few people wanted to see the folks they were calling and the video phone was a flop. Good thing nobody told Steve Jobs. Communication has changed dramatically. We’ve gone from it taking months to get a message across the pond to milliseconds—-with video no less. I recently butt-dialed a friend in England and woke him at 1 a.m., but at least the call was free using WhatsApp. What about the ability to communicate without actually seeing or speaking with a person? Is that good? In some ways, I think it is. Still, receiving a birthday greeting via text message is surely different. But at least it’s cheaper than the $6.95 greeting card I refuse to buy.

I feel like I am in ranter's heaven. There is so much to rant about, the choices are confusing. I’ll skip the political scene.  Still there are dangerous drivers who ignore the rules -and common sense- of the road. There are those who insist on parking next to your car - sometimes making it nearly impossible to open your door- when there are 100 empty spaces a few feet away. Then there are the shopping cart inconsiderates  who leave their cart in the parking lot, even handicapped spaces, because they are too lazy to put the carts where they belong. While high on my list, they do not compare with the folks who you present with facts on a subject and their response is “that’s your opinion.” No it’s not my opinion, it is a fact.   Social Security is my favorite subject when it comes to ignorance and my opinion. The other day I was in a Threads “discussion” where I explained the income taxes paid on SS benefits go into the SS and Medicare trusts- $50.7 billion to Social Security alone. The other guy insisted SS benefits should be income tax free because his FICA taxes over the years had paid for HIS benefits. My reply - that was not true - was met with “that’s your opinion.” A women said SS was a scam because the government hadn’t contributed its share - let that sink in.  Another insisted the problem is that they didn’t factor in the people who die before collecting anything. Yup, the actuaries aren’t aware of mortality risks, that must be the problem. Ye gads.  Did you know FDR didn’t intend for Social Security to last beyond the Great Depression? Some people believe that. Probably the same folks who believe income taxes are illegal and voluntary.  Others don’t believe that nearly all beneficiaries collect in benefits more than the total they paid in FICA in five to six years of starting to collect benefits. I did the calculation using my earnings record and the benefit Connie and I collect each month. We’ve been collecting since 2008 and our payments long ago exceeded both my and my employers taxes paid. Connie receives a spousal benefit. What about the worker receiving a benefit along with his wife and ex-wife on his earnings record?  If beneficiaries paid for their benefits, how is it payments continue for life, exceeding all their working year taxes paid. Don’t bother using logic in an explanation, it’s only your opinion. SS is far more than individual retirement benefits too. My all time favorite anti-fact position is that all would be well if only Congress had not “stolen” the SS money and spent it on other things. It wouldn't and it didn’t.  SS funding has been basically the same since the beginning. Excess revenue was invested in special interest paying treasury bonds. Having sold those bonds, government uses the money as general revenue just as if we or Japan purchased a treasury bond. Of course it’s intra-government accounting, but that doesn’t change the facts. The last 2024 Trustee report shows that interest income was $66.9 billion. In 2020 it was $80.8 billion.  These days there is no excess revenue, interest income is declining and bonds are being redeemed to pay benefits. Hence, when they are all redeemed and interest income is zero, incoming FICA taxes and income taxes paid will only pay 80-83% of earned benefits. Make benefit payments tax-free and the situation is worse - fact - not my opinion 😎 There is one thing about Social Security where I admit my opinion surpasses facts - sort of - that’s the folks who insist they would be better off financially if they had the taxes to invested on their own. In a perfect life for 40 years that may be possible. If you escaped every vicissitude of life along they way and were disciplined that may be possible. In the real world, nope, it won’t happen. That’s my opinion of course. 

I'VE NEVER BUDGETED, meaning I’ve never planned every expense in detail. But I know many people do, especially as they look ahead to retirement. This doesn't mean I don't know what I spend. My utility bill is $127 a month, my homeowners’ association fee is $870, my property taxes are $3,117 a quarter and my BritBox subscription is $5.99 a month. Or is it $6.99? By the end of each month, our two credit cards are paid in full. There may or may not be much left in our checking accounts, but our spending never exceeds what’s in the bank. Our “budget” is set for us. I didn’t retire until age 67 because I wanted to be sure I could generate income equal to 100% of my base salary, while also keeping up with inflation. Sure, I may have a shorter retirement than others who retired earlier, but mine is financially less stressful. Many of those who are obsessed with keeping a budget are seeking to retire in their 50s. They’re trying to stretch their savings over a retirement that could be longer than the years they worked. I fear that may prove impossible. Some people say they need a detailed budget to determine how much they can save. For example, according to Frugalwoods.com, “Without a holistic picture of how much you spend every month, there’s no way to set savings, debt repayment, or investment goals. It’s a must, folks.” Sorry, that’s backward. You save first and then see what you can spend. Listening to a Retire with Style podcast, the commentators took two different approaches. One favored a very detailed budget. The other favored my formula of NE-S=S, meaning net earnings minus savings equals spending. This formula gives you your de facto budget. Why stress over budgeting? If you’re about to retire, I maintain your overall spending will be the same as before, unless you’ve just paid off the mortgage. I hear someone saying, “Wait, once you’re retired, you’ll no longer be saving for retirement, right? Can’t you live on less income?” Yes, if you’re one of those folks who saves 30% to 40% of your income, you may have a point. But for the great majority of Americans who save far less, you’ll still need to save something when retired because your spending will rise each year, thanks to inflation. I’m prepared to be criticized for repeating myself. But I feel my approach is the safe one. Our monthly “spending” includes saving something each month, plus an allowance for discretionary spending such as travel, plus a provision for surprise expenses like the two new tires I recently bought, several thousand dollars in car repairs and $8,000 in dental bills. Your spending will change over time. But I firmly believe there won’t be a significant decline. Keep in mind that many unforeseen expenses aren’t linked to your income. The cost of a new furnace will keep rising, no matter how much income you receive this year. [xyz-ihs snippet="Mobile-Subscribe"] A 2014 survey claims that, after three years, retirees are living on 66% of pre-retirement income, on average, with more than half saying they live as well or better than when they were working. Is that possible? I’d like to see their pre- and post-retirement budgets. Thoughts on budgeting vary widely. A comment from a friend has me bumfuzzled: “I started keeping a budget for one main reason. Financial advice websites kept saying we needed to have $X in annual income. I knew that wasn’t true since we lived on much less than our income for many years and lived comfortably, while putting away quite a bit. So, to determine if we could afford to retire early, I needed to figure out our real expenses/spending.” No website can accurately say that you need $X in income. At best, it can estimate the financial resources you need to generate $X in income. I just read a comment on a retirement blog. The commenter had $550,000 in savings, plus Social Security, and asked if that was sufficient to retire. What kind of question is that? Maybe yes, maybe no. If, at the end of the month, there’s no money left in the bank, or if credit card balances can’t be paid off in full, an assessment of spending is necessary. That’s when a detailed look at where the money goes is important. Make adjustments and move on. If that’s not your situation, you don’t need to spend hours constructing a detailed budget. That’s especially true if you’re trying to predict spending over decades of retirement—unless you just like playing with numbers. My oft-maligned notion is that you start retirement with income equal to 100% of your base salary. For most people, Social Security will get them to 40% of that target. That 100% income replacement will provide the financial cushion necessary for a less-stressful retirement—but you might have to work past age 60 to achieve it. Richard Quinn blogs at QuinnsCommentary.net. Before retiring in 2010, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles. [xyz-ihs snippet="Donate"]

Remember, starting in 2025 the annual out of pocket cost for prescription drugs is capped at $2,000. Roughly 10 percent 0f those of us on Medicare will benefit … luckily. But it’s good to know there is a limit. My suggestion, build that $2,000 into your planning, just in case. Plan to set up your own Rx fund or if already retired start one now. I just like funds designated for a single purpose. Or, if you have a HSA,  that’s good too.

ON DEC. 14, MY WIFE and I celebrated 54 years of marriage—not bad for a curmudgeon and the person who’s had to live with him. Considering that the average marriage in the U.S. lasts seven to eight years and the divorce rate is near 50%, we’ve done pretty well. On top of that, we got married just 10 months after our first date—and I was in the Army for eight of them. I remember receiving a letter from my dad while I was in the Army in which he basically asked, “Do you really know what you’re doing?” Apparently, I did. A lot has happened over the decades, mostly good and some very fortunate. My wife survived two car accidents unscathed. The first occurred when she was pregnant and driving on a highway at 50 mph, and a front wheel flew off. In the other, someone ran a red light and her car was totaled. We have what used to be considered a traditional marriage. My wife stopped working when the first of our four children was born in 1970. Thereafter, we lived on my income, and structured our standard of living and spending accordingly. There was little hope of keeping up with the Joneses. Still, after 54 years, we now are the Joneses—assuming the Joneses have no debt and money in the bank. When I returned from the Army, we saved 100% of my wife’s income toward a house down payment. When we bought our first and second homes, we chose houses we could afford on my income alone and that would meet the basic needs of a family of six. Finances are one of the main causes of divorce. Generally, one partner is a saver and the other a spender. We never had that issue. My wife and I both came from modest backgrounds. Her mother lived in near poverty, and my family was lower middle-class. If I were to tell you that, in 54 years, we never had a significant argument, would you believe me? I hope not. But when it comes to money, it’s true. QDROs, short for qualified domestic relations orders, became law while I was managing a pension plan, so I got to read a lot of divorce decrees. I couldn’t believe the fights over money, especially when the spouse—always a man—took the position that the wife had done nothing to earn a portion of his pension. [xyz-ihs snippet="Mobile-Subscribe"] Some decrees went into great detail. I recall one where the ex-spouses were going to live in the same house and share every expense down to the water bill. They couldn’t use the kitchen at the same time, however, so the husband was assigned times to eat. Could he cook, I wondered? My wife has little interest in our finances. I doubt she knows our net worth or much cares. She still refers to the first of the month—when my pension arrives—as “payday.” There are no financial secrets between us. She’s attended all the estate planning sessions and the one investment meeting we had. We have joint ownership of everything except my 401(k). I have explained how everything is structured to ensure our—and her—future financial security. I’ve prepared detailed instructions for her or, more likely, for our children to follow. Why has all this worked reasonably well for 54 years? I’d point to 10 factors: Neither of us is selfish or greedy. We trust each other. We both think long-term and are goal-oriented. We accepted delayed gratification as necessary. We’ve always lived within our means based on one income. We abhor debt. All credit card balances are paid off in full each month. We know how we’ll pay for something before it’s purchased. We have never, in 54 years, paid a penny in credit card interest. There has never been a time when we weren’t saving and reinvesting, though there was less of that when we were paying for the children’s colleges. And then there’s the matter of love. In the end, we haven’t denied ourselves anything important, as some pundits claim frugal seniors do. Granted, many things were delayed to a point that others might find unacceptable. But as the saying goes, first things first. Richard Quinn blogs at QuinnsCommentary.net. Before retiring in 2010, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles. [xyz-ihs snippet="Donate"]