Cash rich.  Lifestyle poor.

Cash rich. Lifestyle poor.

The retirement question most people seem intent on answering is “How am I going to pay for it?”  That’s an important question, of course, but retirement is more than just a math problem.

In my opinion, we spend too much time thinking about how to get there (math) and not enough time thinking about what we’re going to do once we arrive (meaning).  If you focus solely on your finances, you risk having a retirement that is cash rich and lifestyle poor.

Cash is great, but it’s not the end goal.  Your money is nothing more than fancy paper that our government has created to make commerce and exchange easier.  The end goal is not to have money.  It’s to use that money to do things that you really care about; things that provide joy, meaning and fulfillment.  If you do that, then money (contrary to popular opinion) CAN buy happiness.  Let me show you what I mean.  I’m assuming you’re all familiar with the mathematical proof: If A=B and B=C then A=C.

Applying that to our discussion:

  • If money=control
  • And control=doing what fulfills you
  • And doing what fulfills you=happiness
  • Then money=happiness.

Of course that transitive logic only holds true if you use the time you control to do what fulfills you.  Which brings me back to my original point:  If you want a meaningful retirement, then you need to treat your planning like more than just a math problem.  You need to decide what it is that you really want out of life and use whatever resources you have and time you control to pursue those things.  Are you doing that?  If so, great.  If not, spend some time thinking about what it is you actually want to do with all that money you’re saving.

Have a great week.


30 day learning challenge: Speed reading edition

30 day learning challenge: Speed reading edition

“The man who doesn’t read good books has no advantage over the man who can’t read them.”  ~ Mark Twain

I spend a good part of every day reading.  Some of that is for pleasure, some for education, some for work.  I read books, magazines, newspapers, blogs, social media, trade journals, research reports, financial statements and regulatory filings.

Here’s the problem.  I’m a painfully slow reader.  Painfully.  Slow.  Reader.  As a result, I always have a pile of books on my nightstand and stacks of newspapers and magazines on my desk waiting to be read.  I eventually get to most of it, but I’m definitely more tortoise than hare.

With so much room to improve, I thought it was an area that was ripe for a learning challenge.  I’ve spent the last week or so reading everything I could find on speed reading.  My goal is to double my speed (without sacrificing comprehension) in 30 days.  If I can do that, I’ll cut my typical daily reading time in half (from about 3 hours to 1.5) and free up time to either read more or do something else.

Step 1: Test my current speed

To get a baseline, I took a timed reading test at, followed by a reading comprehension test.  I read at about 213 words per minute with a comprehension of 82 percent.  According to the site, that’s about average:

  • Insufficient reader: 110 wpm, 50% comprehension
  • Average reader: 240 wpm, 60% comprehension
  • Good reader: 400 wpm, 80% comprehension
  • Excellent reader: 1000 wpm, 85% comprehension

Step 2: Where can I most improve

There are a number of techniques to help you read faster and with better comprehension.  After learning about those and thinking about how I read, I feel like I can easily double my speed if I work on three key things:

  • Stop subvocalizing:  If you’re like most people, when you read to yourself you pronounce the words in your mind.  I know I do.  In fact, prior to reading about subvocalizing, I didn’t even consider the fact that it was possible to read something without saying the words in your head.  It is, however, and if you can figure out how, it will make a huge difference in your reading speed.
  • Get rid of distractions:  I will often read with music on in the background, my cell phone by my side and/or while sitting in a room with other people.  I’ll often end up getting distracted if my phone beeps or someone asks me a question.  To improve my speed I’m going to start getting rid of the distractions.
  • Improve perceptual expansion:  If you focus on a particular word while reading, you can see several words before and after that word thanks to your peripheral vision.  If you can train your eye to see and comprehend those words without having to read each line of text from beginning to end, you can greatly increase your speed.  Take the following sentence for example: “If you want to have a meaningful retirement, you need to be intentional.”  An untrained reader will read each word in that sentence from beginning to end.  A trained reader will start with “want” and end with “need,” using his peripheral vision to comprehend the rest.  This reduces the total amount of words that need to be read and greatly increases speed.  For more on perceptual expansion, read this post by Tim Ferriss.

Those are the tips that were most helpful to me, but there are many others such as:

  • Read early in the day
  • Use a flexible reading speed depending on the material
  • Train yourself not to reread
  • Follow text with your finger (to improve eye efficiency)

Step 3: Practice and Measure

For the next 30 days I’ll practice the techniques outlined above.  I downloaded an app called Toggl (get it for free in the App Store) that I will use to time myself and track how long it takes me to read each of the books that I’ll be using for practice this month.

Step 4: Retest

At the end of the 30 days I’ll retake the speed/comprehension test so I can see how much I was able to improve.

As with all of our learning challenges, I’d encourage you to follow along.  If reading isn’t your thing, feel free to look back on our other learning challenges for ideas and read this for a good refresher on why it’s important to be a lifelong learner.

I hope you’re all doing well.  Touch base if I can ever help.

~ Joe

Which state will give you the lowest tax bill?

Which state will give you the lowest tax bill?

Your tax bill will vary in retirement depending on which state you call home.  Some states are tax-friendly to retirees and their income.  Others, not so much.  Once you no longer have a job anchoring you in place, you have more freedom to evaluate your options.  To help do that, here are three questions to ask.

1) What are my sources of retirement income?  The typical retiree gets his or her income from a variety of sources.  Some of the more common sources include a pension, Social Security, part-time work, IRA distributions and dividend income.  Different states tax those income sources differently.  States like Alaska, Florida, Texas, South Dakota, Nevada, Washington and Wyoming have no personal income tax at all.  More than half of the states exempt Social Security benefits from tax.  States like Illinois and Mississippi exclude income from retirement plan distributions.   Nearly two dozen states exempt military and government pensions.  As you mull over where you want to retire, think about your income sources and then work with your financial and tax advisers to determine your potential tax burden in the states you’re considering.

2) How will I spend my retirement income?  Just because a state has low or no income tax doesn’t mean that your tax bill will be low.  Some states, like Alaska, have a genuinely low tax burden.  Other states, like Arizona, have low income taxes, but high sales taxes.  Depending on how you spend money during retirement, a high sales tax (or a high property tax) can be just as much of a burden as a high income tax.  In short, beware the tax “shell game” that some states play.  Rather than genuinely trying to reduce the tax burden, they simply change which pocket they take it from.

3) What other factors should I be considering?  When deciding where to retire, taxes are an important piece of the decision, but they aren’t the only piece.  Don’t get so hung up on your tax bill that you forget to consider things like proximity to family and friends, climate, cost of living, quality of medical facilities, entertainment options and outdoor activities (e.g. mountains, oceans, etc.).  Make your decision based on all those factors and you’ll not only have a fun, meaningful retirement, but you might even have a little extra money in your pocket to pay for it.

~ Joe