by Joe Hearn | Jan 9, 2014 | Retirement
Most Popular Posts of 2013
Happy New Year! I hope your year is off to a great start. I’ve been on the road (a little R&R in Colorado with friends and family), so my apologies for a less than prolific few weeks at Intentional Retirement.
I just have two quick things I wanted to run by you today. First, in case you’ve only recently joined us or you missed a post or two, I thought I’d list off the Top 10 most popular posts on the site for 2013. Not that the herd is always right, but there’s some good stuff here so I hope you’ll check it out.
Retirement Rules
Second, I’d like you to help me write a book. Here’s the idea.
I recently read a book by bestselling author Michael Pollan called “Food Rules: An Eater’s Manual.” In it he argues that eating has gotten overly complicated. Basically, there are too many diet books, food pyramids, health claims, so-called experts and weird ingredients that you can’t pronounce. He attempts to cut through the clutter and lay out some simple rules (some of which were submitted by readers or date back to advice that grandma gave), that are easy to understand and follow for the majority of people.
As I read the book, I couldn’t help but see parallels with the financial planning industry. It too has gotten extremely complex with endless products, research, regulation, advice, articles, experts, contradictory claims, credentials, DIY options and fee structures. All of that exists to help people prepare and yet 57% of the population reports having less than $25,000 saved for retirement. Obviously, the complexity does not seem to be helping. We need a Vince Lombardi “This is a football” type moment to get us back to the basics.
So today, I’m inviting all of you to offer up your best retirement planning advice. Maybe it is something that your parents or grandparents taught you. Maybe it’s something that has worked particularly well in your situation. Maybe it’s something that you learned the hard way and you want to help others avoid the same mistake. Whatever it is, either email me or scroll down to the comments section and type it in. It doesn’t need to be long. A few sentences or a short paragraph would be ideal.
Once I have enough entries, I’ll compile them all, choose the most helpful, combine duplicates, edit them for clarity, write some of my own and then lay them out into an ebook which I’ll make available for free in a future article. If you’d like your idea attributed to you in the book, be sure to include your name with your comment. Sound good?
Your turn
I’ll list some potential topics below. Feel free write about one of those or start a new one. My only request is that you keep it simple and try to focus on rules that will work for the vast majority of people.
- Should you have an adviser or go it alone?
- Rules for saving
- Rules for investing
- Finding purpose and fulfillment
- What percentage should you save?
- Asset allocation rules of thumb
- Withdrawal strategies
- Habits of effective retirees
- Importance of discipline in staying on track and saving enough
- Social Security
- Medicare
- Pensions
- The importance of friends
- Estate planning
- Caring for aging parents
- Debt
- Spending and budgeting
- Insurance and Annuities
Thanks for the help!
~ Joe
Photo by Sacha Fernandez. Used under Creative Commons License.
by Joe Hearn | Dec 19, 2013 | Retirement
Well, it’s that time of year again. As many of you know, each December I spend a few days reflecting on the previous 12 months and planning for the coming year. Going through this exercise helps me to reflect on past successes, fix problems, set priorities and generally be more intentional during the year ahead.
I write about the process here in the hopes that some of you might find it helpful as you make plans and set goals of your own. As in years past, I will use a simple, three step process: 1) Do a quick annual review (i.e. what went well and what didn’t go well), 2) Set specific goals, 3) Outline strategy and tactics.
Review: What went well in 2013
Work. As many of you know, I’m a financial planner. The primary focus of my practice is helping people plan for retirement. I work with clients in about 25 states and, for the most part, business was good this year. The markets had a great year as well and it was nice to finally regain the level in the stock market where things abruptly fell apart five years ago. One other milestone: earlier this year I passed a major exam that I’ve been studying for and was awarded the CRPC® designation (Chartered Retirement Planning Counselor).
Writing. In addition to writing for this site and my local newspaper, I also started to write for Dow Jones MarketWatch this year. That has been a rewarding experience, because it gets my writing in front of a much broader audience. In fact, many of you probably found your way to Intentional Retirement from one of my articles at MarketWatch. For the year I wrote about 35 posts for Intentional Retirement, several dozen articles for the aforementioned news outlets and one manifesto called A Brief Guide to Retirement Bliss. I hope you all found something from that list that was entertaining, informative and helpful. More good stuff is on the way for 2014.
Travel. Travel is one of my top priorities and I made it to a few cool places this year. Inside the U.S. we made it to Kansas, Missouri, Oregon, Washington, Colorado and Minnesota. There wasn’t much international travel this year, but I did manage to make it to the Cayman Islands and Canada. The high point of all of these trips was getting to spend time with family and friends, but we also managed to do some fun activities like scuba diving, beach volleyball, hiking, camping, biking, horseback riding and rock climbing.
50 State Challenge. While we’re on the subject of travel, I have a goal to get my daughter to all 50 states before she graduates from high school. We made it to three new ones in 2013: Kansas, Missouri and Washington. So far we’ve done 18 plus Washington D.C. 32 to go.
Subscribers. I enjoy writing, but I primarily see it as a vehicle to spread my ideas about retirement and living an interesting, rewarding life. Viewed that way, it’s important to me to get my writing in front of as many people as possible. One metric I use to track that is subscribers at my site (that’s you!). I set a big goal for new subscribers this year and ended up surpassing it by about 60 percent. Thanks so much for the part you played in that. If you find anything interesting, helpful or entertaining at Intentional Retirement, I would really appreciate it if you’d pass it on to people you know so that we can continue to grow our little community.
Review: What didn’t go so well in 2013
As you might imagine, it wasn’t all rainbows and unicorns this year. Here’s a few of the things that didn’t go so well.
Consistency. I had a lot on my plate this year and I feel like one consequence of that was a lack of consistency in several key areas. For example, posts at the site were sometimes irregular, my learning challenges were up and down and I didn’t do a great job keeping my regular date night with my wife. Some of this busyness is unavoidable, but much of it is self-inflicted and the result of poor planning. For 2014 I’m going to try to cut, simplify, focus and delegate so I can be more consistent with the things that are most important to me.
Physical fitness. Speaking of inconsistency, my physical fitness was up and down this year. I had periods where I was working with a trainer and doing great, followed by periods where I took lethargy to new heights. I’m hoping that simplifying my schedule a bit will help correct this problem. I’ll keep you posted.
New Products. I had a goal to launch The Ideal Retirement Design Guide before Christmas this year. That self-imposed deadline turned out to be a bit optimistic. It’s coming along, however, and it’s turning out even better than I’d hoped. Stay tuned. It should be ready early next year.
Helping others. I spend a lot of time thinking and writing about how to live a full life. If you’re not careful though, constantly looking for ways to suck the marrow out of life can leave you feeling self-centered and narcissistic. Yes, I want to enjoy life, but I also want to use my time and resources to help others and leave the world a better place than I found it. Next year I want to do a better job in that regard.
So that’s my list of what went well and what didn’t. I’m sure I could add more (especially to the “didn’t go well” list!). I’ll spend time over the next few days outlining some specific goals for 2014 as well as my strategy for accomplishing them. I hope you’ll do the same. Don’t just leave your year to chance. The type of life you want to live—one filled with meaning, accomplishment, and purpose—does not happen by accident. You need to be intentional. You need to know what kinds of things you value and work toward making them a reality.
A few things to keep in mind as you plan…
Dream Big
When you dream big, something happens. It changes how you think and how you act. It changes the types of questions you ask. It inspires and changes those around you. Dreaming big has led to things like cures, computers and space travel. Don’t limit yourself to those things that seem “reasonable” or “probable.” Take a risk and dream big.
Start small
Someone once said that people tend to overestimate what they can do in one year and underestimate what they can do in ten years. That is so true. Don’t put so much stuff on your to-do list that you don’t know where to begin. Big goals (like retirement) can take years to plan and execute. Don’t try to do too much too soon or you’ll just find yourself overwhelmed and discouraged. Outline your strategy and then take the smallest step possible to get started. Then do it again tomorrow and the next day and the next. Before you know it, you’ll have some real momentum.
Allow room for serendipity
Goals are great, but don’t be a slave to them. Be open to opportunities that you hadn’t anticipated or planned for. Don’t be afraid to say yes.
Have a vision for your life
Imagine trying to put together a puzzle without the picture on the box. It would be incredibly difficult because you wouldn’t know the end goal. The same is true of your life. Your goals are important, but you need to have a vision for where you want those goals to take you. What are your dreams for the future? What is the vision you have, not just for retirement, but also for the rest of your life? If you can’t answer that question or if your answer doesn’t really inspire you, then stop everything else you’re doing and really think that through. It’s your life. No one else is going to know more about it or take it more seriously than you.
Celebrate along the way
Don’t forget to celebrate along the way. Take time to enjoy your incremental progress and reward yourself for a job well done.
Good luck with your planning! Let me know if there’s ever anything I can do to help.
~ Joe
by Joe Hearn | Nov 13, 2013 | Retirement
Think for minute about every building you’ve ever seen. The gas station where you fill up. The farmer’s barn. Your home or office. Or maybe something a little more swank. The White House. The Empire State Building. Notre Dame Cathedral. The Parthenon. The Sydney Opera House. Big Ben. The Taj Mahal. The Colosseum. The Pyramid of Giza.
What do they all have in common?
At first glance, not much. They were built in different time periods using different methods and different materials. They are in different countries. Some are little known. Others are celebrated. Some are massive while others are more modest.
The common thread woven through all of them, however, is design. None of those buildings just appeared out of thin air without design or forethought. Before the first hole was dug or the first block was cut, someone (or a team of someones) sat down with pencil and paper and came up with a design. It was a very intentional process that took into account things like the building site, climate, technology, cost, schedule, regulations and, perhaps most importantly, what the building would be used for.
Consider those buildings as a metaphor for your retirement. Your ideal retirement won’t just spring up out of thin air. Someone needs to design it. And since it’s YOUR retirement with YOUR plans and dreams, YOU need to be the one doing the designing. It’s your job to consider all the factors involved and decide what you want that period of your life to look like.
That might sound a little overwhelming, but fear not! I’m coming out with a great new resource that will walk you step-by-step through the process (more on that in a bit). It’s not done yet, however, so for now I thought I’d give you three critical things that you need to accomplish when designing your ideal retirement.
Three things every retirement plan should accomplish
First, your plan should be structured to accumulate the amount of money that you (and your spouse, if married) need to fund the type of retirement you want. The number one fear of pre-retirees is “Will I have enough?” Why lay awake at night worrying when you can know for sure? All it takes is a little homework. The answer is different for everyone, though, so it’s important to arrive at a number after a careful analysis of your plans, circumstances and estimated expenses.
Second, your plan needs to be comprehensive. Retirement has a lot of moving parts. Answering “How much?” is important, but retirement is more than just a math problem. Don’t forget about Medicare, Social Security, your distribution strategy, asset allocation, long-term care and estate planning to name a few. Your plan needs to cover each of those areas and each piece needs to fit together and perform its necessary function. If they don’t, your dreams will never get off the drawing board.
Finally, your plan needs to focus significant attention on lifestyle design. What’s the point of having money and time if you don’t spend those valuable commodities doing what is important to you? You need a detailed lifestyle plan that is designed to provide a fulfilling retirement doing the things you want with the people you love.
As I mentioned earlier, I’ll soon be coming out with a resource that will help you accomplish all three of these things and more. I’m calling it The Ideal Retirement Design Guide. I’ll have more to say about it soon, but if it sounds like something that might be helpful for your situation, you can add your name to our notification list and I’ll send you an email when it’s finished. There may even be an early bird discount for people on the list, so sign up if it sounds like it might be for you.
Thanks for reading. Touch base if I can ever help.
Joe
by Joe Hearn | Oct 30, 2013 | Retirement, Social Security
When it comes to retirement, your bank account is more important than your birthday. Even so, there are several key retirement ages that you will want to keep in mind as you plan.
Age 50: Once you hit the big 5-0, the government raises the contribution limits on your IRA and 401(k). For those turning 50 in 2013, you can put an extra $1,000 into your IRA and an extra $5,500 into your 401(k). That raises the contribution limits to $6,500 and $23,000 respectively. These “catch-up” contributions can be great if you still have some ground to cover in order to reach your savings goal.
Age 55: If you plan on retiring earlier than most, 55 might be a good target. That’s because there is a provision in the tax code that allows you to take early distributions from your retirement plans at age 55 without paying the usual 10% penalty. These are called 72t distributions and, as you might expect, certain rules apply. Work closely with a trusted adviser if this is an option you’re considering.
Age 59 ½: This is the magic age where the government allows you to start taking distributions from your retirement plans without paying the 10% early withdrawal penalty.
Age 62: This is the earliest date that you can elect to receive Social Security benefits. As I said in a recent article, however, claiming Social Security at age 62 is like buying a pair of leather pants: almost always a bad idea. Claiming at 62 would result in a 25% permanent reduction in your benefits. The longer you wait, the more you will get.
Age 65: This is the age that you become eligible for Medicare. If you’re already receiving Social Security benefits by your 65th birthday, you’ll be automatically enrolled in Medicare. If not, then you’ll need to actually sign up. You will have a 7-month window to enroll: 3 months before your birth month, your birth month, and 3 months after. Sign up in that window, because there are penalties if you sign up late.
Age 66: Most baby boomers can receive full Social Security benefits at age 66. Depending on when you were born, however, you might be able to get full benefits a little sooner or have to wait a little longer. Check here to see when you will be eligible for full benefits.
Age 70: Just like the Social Security Administration reduces your benefits if you retire early, they increase your benefits if you retire late. For those born after 1943, you get an extra 8% for every year you wait past full retirement age up to age 70. After age 70, there’s no benefit for waiting. Said another way, claiming Social Security benefits at 62 will result in the smallest check and claiming at 70 will result in the biggest check.
Age 70 ½: One of the key benefits of your retirement accounts is that they grow tax deferred. Uncle Sam can’t wait forever, though. Congress needs money to fund all those brilliant schemes that they’re always hatching. So at 70 ½ they start forcing you to take required amounts from your retirement accounts each year. Work closely with your adviser to determine your Required Minimum Distributions (RMD), because there is a 50% tax penalty on any amount that you should have taken, but didn’t. The RMD rules don’t apply to Roth IRAs.
~ Joe
Photo by louderthanever. Used under Creative Commons License.
by Joe Hearn | Sep 10, 2013 | Lifestyle Design, Pursuits, Retirement
What is a mini-retirement?
Long-suffering readers know that I have a bit of a different take on retirement than most. Where others see something based on age or assets, I see something based on control. Where others see a life-stage, I see a lifestyle philosophy.
After all, why should living the life you truly want to live depend on how many birthdays you’ve had or whether or not you punch a time clock? How in the world has it become acceptable to defer your dreams and push the best things in life to the very end?
The concept sounds great, of course, but how do you do it? I’ve offered some ideas before (for example, here, here and here), but I’d like to expand on an additional idea that I’ve only briefly mentioned in the past: Mini-Retirements. What exactly is a mini-retirement?
With traditional retirement, you save up the good stuff for that 20-30 year period at the end of life.
The idea of mini-retirements takes some of that 20-30 year period (say 5 years), breaks it up into 1-3 month chunks and spreads it out over your working years. A mini-retirement is longer than a vacation, but shorter than…well…retirement.
As you might imagine, there are a number of benefits to taking these extended periods off:
- You have time to actually experience a place rather than just visiting the touristy spots.
- It allows you to enjoy some of the benefits of retirement while you’re still young and healthy.
- It rejuvenates you and can help you come back to work more engaged and more productive.
I didn’t invent the idea of mini-retirements (I was introduced to it by Tim Ferriss), but the concept fits perfectly with my philosophy here at Intentional Retirement. Namely that retirement shouldn’t be something that is delayed until “Someday,” but rather it should be an incremental process that is incorporated into your life now.
My mini-retirement experiment
Renting an apartment in Madrid or Melbourne and immersing yourself in the culture for a few months sounds great, but there are a number of challenges. For example:
- How do you pay for it?
- How can you get the time off work?
- Where should you go?
- What about your spouse and/or kids?
- What do you do with your house when you leave?
- What type of planning is involved (e.g. housing, airfare, language barrier)?
To answer those questions, I plan on researching and writing a series of posts and then scheduling a mini-retirement for myself by the end of next year (You may have noticed a few of them on my 50-by-50 List). As some of you know, I’m working, married and have an 8-year-old daughter, so this will be no small task. I don’t yet know where, when or how, but I know why and as faithful readers know, why is half the battle.
So follow along and let’s figure it out together. I’d love it if some of you were inspired to do something similar. Feel free to email me questions or leave comments in the articles about your own thoughts and planning. It’s always easier to tackle big goals when you have company.
Hope to see you on the road.
~ Joe
P.S. Have you read the IR Manifesto A Brief Guide to Retirement Bliss? If not, you can download a free copy over here.
Photo courtesy of Mihhailov. Used under Creative Commons License.
by Joe Hearn | Aug 29, 2013 | Lifestyle Design, Pursuits, Retirement
Earlier this week I talked about how time usually opens doors between the ages of 0 and 21 and then starts to close them from 21 on. I promised a follow up email with some ideas on how to maximize your time and opportunities. Here are 15 practical ways to live a purposeful life and get things done before time closes the door.
(BTW, I added a few pictures from a recent trip to Washington as inspiration. If they cause the email to display incorrectly, just click the title above and you can view the post in your browser.)
- Know your “Why.” If you don’t have a good answer for “why” you won’t have much success with “What” or “How.”
- 80/20 your life. Pareto’s Law says that 80% of your results will come from 20% of your efforts. Look at every area of your life from your work day to your wardrobe; from your friendships to your finances; from your possessions to your future plans. What if I told you that you had to cut 80% from every area? What 20% would keep? More than likely, that is the 20% that will make the biggest impact on your life. Focus on those “Big Wins.”
- Don’t let meaningful dates sneak up on you. On January 1st of each year, print out a list of holidays, birthdays and other special occasions. Next to each one, jot down some ideas for how you want to spend that day and what you need to do in order to prepare. Once December 31st rolls around, time has closed that year’s “doors” for good.
- Always know “What’s next.” What are the key things you need to do at work tomorrow? What is the next trip you’re planning? What is the next date night with your spouse or activity with your kids? Don’t just be O.K. with what the day throws at you. Have an agenda. To help in this area, I use a free software program called Asana.
- Add more time. We all have 24 hours in our day, but some have more days than others. If you want to keep time from shutting certain doors, don’t overlook the obvious solution of getting yourself healthy so you can do more things over a longer period of time. It’s like shoveling sand into the top of your hourglass.
- Control more of the time you have. Each day subtracts from fewer and fewer. No matter how healthy you are, you won’t live forever. Once you’ve done your best to add days (see #5), work at controlling more of each day that you have left (e.g. save more to achieve financial independence, be intentional with your free time, outsource as many tasks as possible, negotiate a remote work agreement, etc.).
- Focus on milestones (e.g. family, relationships, meaningful work, education, adventure), not maintenance (e.g. paying bills, mowing the yard, worthless meetings, pushing paper). When you reflect on your life, the milestones will be the things that stand out. They will be the things that you are most proud of. The maintenance will just fade into the background.
- Given the choice between “more stuff” and “more experiences,” choose the latter. A life spent in dogged pursuit of rich experiences will usually have a much better payoff than one seeking the latest gadget or gizmo.
- Consistently shake up your routine. There’s nothing wrong with having a place you go for coffee every day or a list of tasks that need to be done each week, but be careful that your routine doesn’t become, well…routine. Try to live a life where you have 60+ years of great experiences, not 1 year of experiences lived 60 times over.
- Create some margin in your life. One problem that business owners often have is that they spend so much time working IN their business that they don’t have much time to work ON their business. The same can be true for individuals. Create margin in your life so you can spend some time every day or every week thinking about and doing things that will actually make your life better.
- Schedule the “fun” stuff. If something is on your calendar, it gets done. Don’t just schedule the things you have to do. Schedule the things you want to do and then keep that “appointment” just like you would any other important meeting or obligation.
- Make a Bucket List. You can see mine over here. If you have specific plans, you’re more likely to follow through with them.
- Curate your life. Your life will largely be defined by what you allow in and what you keep out. Choose everything—friends, hobbies, work, philanthropy, clothes, vacations, meals, gadgets, books, etc.—with a discerning eye. Be a tough curator and you’ll have an interesting life.
- Dream big. Daniel Burnham (designer of such small projects as Chicago, Washington D.C. and Union Station) once said “Make no little plans. They have no magic to stir men’s blood and probably will not themselves be realized.” When you dream big, it changes how you think and how you act. It inspires and changes you. Dream big and have a vision for your life.
- DON’T WAIT! The longer you wait, the less you believe yourself when you say “Someday.” Your dreams begin to atrophy. Your opportunities begin to vanish. You aim lower. You talk yourself out of things. Time begins to close doors. Before you know it, it’s too late. Don’t wait.
Your “trying to make the most out the time he has left” blogger,
~ Joe
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