by Joe Hearn | Dec 13, 2011 | Pursuits, Retirement, Travel
I received an email the other day from a friend who had just finished reading an article of mine in the newspaper. His email said:
“I awoke this morning feeling at peace with my future; thinking I had everything under control and that my family’s needs were completely taken care of. Then I read your article. I broke out into a frantic sweat and [expletive deleted] my pants. Thanks a lot for the reality check. Much like the rest of America I prefer to operate in a delusional universe where I don’t need to think about those things.”
I’m not going to lie to you; I laughed pretty hard at that. But his point was a good one. Sometimes the coverage devoted to retirement planning can seem kind of negative (either by design to draw attention or simply because the reader feels convicted).
Because of that, it’s easy to lose site of all the things that are right with the world, great about retirement and amazing about the opportunities available to each of us. So as penance to my friend and as a reminder to us all, I give you some reasons to look at the glass as half full.
Peace, love and understanding
According to Harvard Professor Steven Pinker, we’re living during the most peaceful time in our species’ existence. Yes, we still have wars (I suspect those will always be with us), but the average number of violent deaths per 100,000 people has dropped from 15 percent during prehistoric times, to 3 percent during the 20th century, to a fraction of 1 percent now. True, I have sometimes felt nervous on the subway when traveling in a strange city, but at least I don’t have to worry about being thrown to the lions in the Coliseum or being used in an elaborate human sacrifice to appease the volcano god.
Medicine and life expectancy
I take Lipitor to lower my cholesterol and reduce my risk of heart disease. My sister had a cancerous tumor the size of a grapefruit in her neck, but after treatment she has been cancer free for years. My grandfather was cutting firewood when a tree fell on him and shattered his hip. His doctors replaced it with a new one made out of titanium and he’s been getting around great for the last decade. Modern medicine has been enormously successful at increasing both the quantity and quality of our lives. As life expectancy has increased, retirement has changed dramatically. Rather than being a time to wind down, it is now viewed as a new chapter in life that is active and can last for decades. Be thankful for your health and use all that extra time wisely.
Technology
If asked, I would have to put my iPad in the same category as such worthwhile inventions as the wheel, penicillin and the printing press. That might be a bit of an overstatement, but you get my point: Technology is pretty remarkable. More than just cool, however, it is useful and helps us live fuller, more productive lives. It’s hard to imagine life without things like computers, the Internet, email, cell phones, digital cameras, ATM machines, MRIs, global positioning satellites, iPads, iPods, Kindles, and cloud computing. The other night our daughter was using FaceTime to video chat with her grandparents in Alaska. That’s the kind of invention that was imagined for the 23rd century in old Star Trek episodes! After looking at how technology has advanced in the last 30 years, imagine what the next 30 years will look like (especially since the pace of advancement is accelerating). It should be pretty amazing.
Learning
All that technology has greatly expanded our avenues for learning. Gone are the days when you need to spend $100,000 and four years of your life just to learn about something you’re interested in. With iTunesU you can sit in on history classes at Oxford or take photography classes from National Geographic (all free). Search engines like Google can answer any question you put to it. You can bring subjects into focus with Squidoo. Wikipedia can give you a basic understanding of almost anything. You can take guitar lessons on You Tube, learn to simplify your life on Zen Habits, or learn how to mix a martini like James Bond (or any number of other things) on Expert Enough. With so many resources, it’s easy to channel your inner Jefferson and make learning a broad and lifelong endeavor.
Social interaction
Yes, there are negatives to sites like Facebook and Twitter, but used properly they do an amazing job at connecting you to the people you care about. Social interaction is a critical element to human happiness and we have more ways than ever to experience community and connect with friends and family.
Doing good
Even with everything that is right with the world, there is still a lot that is wrong. Thankfully, there are some amazing people trying to do something about that and they’re looking for people like you and me to jump in and help. Charity is no longer limited to just writing a check or dropping a few bucks in the offering plate. Volunteering locally or getting involved with organizations like charity: water, International Justice Mission, and World Vision allow us to reach beyond ourselves and do work that not only helps others, but gives us a deep sense of satisfaction, fulfillment and purpose.
Traveling the world
There hasn’t been a more exciting time in travel since Kitty Hawk. The triumvirate of jetliners, online travel resources, and countries clamoring for tourist dollars have combined to make global travel accessible to almost anyone. A hundred years ago, most people lived their entire lives within walking distance of their house. Now you can hop on a plane and be hiking in the Andes or walking down the Champs Elysees by breakfast. For a little inspiration visit Everything Everywhere or Lonely Planet. And don’t let money hold you back. There are sites like travelhacking.org that can teach you how to search out deals and rack up frequent flyer miles. Then you can spend those miles on a round-the-world plane ticket and take off in search of adventure. As Saint Augustine said, “The World is a book, and those who do not travel read only a page.”
Well, there you have it. While certainly not a complete list, I’ve given you a few reasons to look on the bright side. Sure, there are still a lot of people unemployed, the housing market is still a mess and the stock market is just as bipolar as ever, but resist the temptation to focus on the negative. It sounds trite, but you only live once. None of us should let fear and uncertainty keep us from pursuing our dreams or living a rewarding and meaningful life. To paraphrase Oliver Wendell Holmes, don’t die with your music still inside you. Look at the glass as half full and live a life you can be proud of.
Thanks for reading. Have a great week!
Joe
by Joe Hearn | Nov 30, 2011 | Pursuits, Retirement, Travel
In case you missed anything, below is a list of articles published at Intentional Retirement during the month of November. We’re heading into the home stretch of 2011. Touch base if I there’s ever anything I can do to help you out.
Thanks for reading!
Joe
by Joe Hearn | Nov 29, 2011 | Pursuits, Retirement
Well, another year is almost in the record books. How did you do? Did you accomplish what you’d hoped? Did you achieve any key milestones during the last eleven months or did you find yourself a slave to daily maintenance (those things that take up a lot of time, but don’t provide a whole lot of meaning or get you any closer to your goals)? If you’re like me, there were some of both, but you’d love to do better in 2012. After all, the clock is ticking and retirement is a year closer!
In my last post I mentioned how I spend time at the end of each year thinking about life, reviewing the past year and planning for the next. Doing this has made a huge difference and has helped me with key goals like running a marathon, starting a business, being a better husband and father, and writing two books. Below I take a detailed look at my simple, three step process, but first…
More than just resolutions
Don’t confuse this article with the usual New Year’s Resolutions talk that you hear this time of year. It’s more than good intentions and wishful thinking. It’s about setting measurable goals in key areas of your life so that you can make huge strides in the coming year. With that said, let’s jump right in.
Step 1: The annual review
I kick off my planning each year by reviewing the past year. I look at what I did well and not so well; at what worked and what crashed and burned. I’ll go through my plan for the previous year and see which of my goals I was able to accomplish and which are still in process. I’ll also look at a number of metrics that I use to gauge my progress, such as words written, books sold, and new clients served.
This review process gives me a good overview of what I was able to accomplish as well as what still needs to be done. Once I know the “state of the union” I can move on to Step 2.
Step 2: Outline specific, measurable goals for each key category
After reviewing how I did the previous year, I spend time thinking about the things I’d like to accomplish in the coming year and what I’ll need to do to make those things happen. For me, it’s easier to break my life down into major categories and then spend time planning and setting goals in each area. My categories are marriage, parenting, faith, finances, health, business, writing, pursuits (e.g. guitar, photography, reading), and travel. For each area I’ll lay out between three and six specific, measurable goals for the coming year.
Step 3: Strategy and tactics
Once the goals are in place, I spend time thinking through the steps (strategy and tactics) that I will need to take to accomplish each goal. To stay on track and to make sure that I’m focused on milestones instead of just maintenance, I start each month by filling out a simple spreadsheet that I call my 4 x 4. On it I list the four key goals that I will be working on over the next four weeks. That sits on my desk each day as a reminder of the key things that I should be working on.
That’s it. Pretty simple really, but don’t underestimate the importance of planning. 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. Intentional Retirement is here to help, but as the old saying goes, “If it’s going to be, it’s up to me.”
A few more 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. One of the coolest things that happened to me this year was not a part of my plan and I initially turned it down. The Financial Planning Association asked me to write a monthly retirement column for them and I said no because it didn’t fit into my schedule. Luckily I changed my mind and that opportunity grew into not only a column for them, but a column for the Omaha World Herald and a broader platform for my ideas on retirement. 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 23, 2011 | Pursuits, Retirement
“In preparing for battle, I have always found that plans are useless, but planning is indispensable.” ~Dwight Eisenhower
Reading that quote, you might think that Eisenhower didn’t have much use for plans. In reality, though, he was both a meticulous planner and brilliant strategist. I doubt he ever entered a battle without some sort of detailed plan.
I think his point wasn’t “Don’t plan” but rather “Things rarely go according to plan.” It’s impossible to prepare for every conceivable contingency and variable. Rather than trying, he relied heavily on a concept called Commander’s Intent.
Commander’s intent (or CI) is the end goal of the operation. It is the final objective or desired outcome. For all practical purposes, it is unchanging. Subordinates, staff and soldiers can modify tactics and strategies to fit the realities on the ground, but the commander’s intent is the driving force behind every decision.
Why am I talking about old generals and battle plans? Because there’s a lot we can learn from the parallels between planning for battle and planning for retirement.
With any major undertaking (like retirement), it’s impossible to think through every possible contingency. That’s especially true the further out you try to plan. Raise your hand if ten years ago you predicted the housing bubble, the failure of Lehman/Merrill/et al, or the European debt crisis. There are plenty of retirements smoldering at the foot of that wreckage.
Rather than trying to predict the future twenty years hence and then rigidly adhering to an obsolete plan, it’s better to have a plan that can adapt and evolve. That way, you can change tactics, while keeping your overall mission intact.
Key to having a flexible plan is having a deep understanding of your end goal (your personal CI, if you will). Be as specific as possible. Really think through things like where you want to live, what you want to do, and whom you want to do it with. Once you know what you really want out of life, you can get up each day and make logical choices that get you closer to that goal.
If you fail to really understand your retirement goals, two things will happen. First, you’ll find yourself copying other peoples’ tactics without fully understanding the strategy. You’ll quit your job at 65 because that’s what your friends are doing. You’ll take up golf or move to a warmer climate because that’s what they do on TV. Rather than blazing your own trail with a plan that works for you, you’ll follow someone else down his or her road. Inevitably you’ll look up one day feeling lost and asking yourself “How did I get here?”
Second, when uncertainty comes—a health scare, job change, or investment volatility—you won’t know how to react because you don’t have a clear understanding of the final objective. Any action you do take will likely make things worse, because it’s not made in support of any overarching goal. Without a clearly defined commander’s intent, the uncertain and unexpected will leave you feeling rudderless.
Unfortunately, I talk to people all the time who made this mistake. What can you do to avoid the same fate?
The year-end plan
Circling back to Eisenhower, planning is indispensable. At the end of each year, I spend time over several weeks thinking about life, reviewing the past year and planning for the next. It’s a time where I can think about big goals and major priorities. I have always found it valuable, because it not only helps me to be more intentional with life, but also ensures that each year is spent in support of the overall plan.
I’ll write more about my process in a future post, with the hope that you can adapt it to your own circumstances. For now, I just wanted to encourage you to start thinking about what you really want out of life so you can build your plan around that. It’s time to begin taking your plans very seriously.
Have a great Thanksgiving. Thanks for reading.
Joe
by Joe Hearn | Nov 15, 2011 | Investing, Medicare, Retirement
As 2011 draws to a close, there are several financial moves that you should consider. Below are 10 steps that could help reduce your tax bill, solidify your investment strategy and ensure that your retirement planning is on track.
Review beneficiary designations
Many accounts, such as Individual Retirement Accounts (IRAs), 401(k)s, annuities, and insurance policies allow you to name a beneficiary who will receive those assets when you die. Many people don’t realize that those designations take precedence over their will, even if the will is more accurate and up to date. Because of this, it is important to review the beneficiary designations on all your accounts annually to make sure that they accurately reflect your wishes. Meet with your financial adviser and estate planning attorney to ensure that your designations not only pass property to the correct people, but also minimize expense and taxes.
Take required minimum distributions
If you turned (or will turn) 70 ½ during 2011 then it’s time to start taking required minimum distributions (RMDs) from IRAs and other tax deferred accounts like your 401(k). RMDs don’t apply to Roth IRAs. Your financial adviser can help you calculate your RMD based on IRS guidelines. You are required to take the distribution by December 31st of each year with one exception. If you turned 70 ½ during 2011 you can delay your distribution until April 1, 2012. If you do that, remember you will need to take two distributions next year—one for 2011 and one for 2012.
IRA charitable exclusion
The government extended the IRA charitable exclusion for 2011. Basically this exclusion allows you to distribute (tax-free) up to $100,000 from your IRA and direct it to a charitable organization. If you are charitably minded and don’t need the income from your distribution, then this could be a good way to avoid the tax bite on your RMD.
Medicare open enrollment
The Medicare open enrollment period is the time each year when those on Medicare can make changes to their existing plans to better suit their needs. If you are on Medicare, then you should review your health and prescription drug plans and decide if you want to stick with them or if you would be better served by switching to another plan. The open enrollment period typically runs from November 15 to December 31, but it has been moved up this year to October 15 through December 7. Visit www.medicare.gov for more information.
Year-end charitable contributions
One way to reduce your tax liability in a given year is to make charitable contributions. If you are considering making charitable contributions prior to year-end, consider using appreciated stock rather than cash. Not only will you benefit from the charitable deduction, but you could also avoid paying the built in capital gains tax on the stock.
Year-end gains and losses
Capital gains and losses can be used to offset each other. If you took profits in some of your investment positions this year, look to see if you have any positions that could be sold for a loss to offset the gain and minimize your taxes. Excess losses can be used to offset up to $3,000 in ordinary income taxes. Losses beyond that can be carried forward indefinitely to offset future gains.
Maximize retirement contributions
For 2011, you can contribute a maximum of $5,000 to your IRA and $16,500 to your 401(k). If you are over 50, you can contribute an additional $1,000 to your IRA and $5,500 to your 401(k) per year. By maximizing your contributions each year, you greatly increase your chances of being able to adequately fund your retirement.
Review your asset allocation
The market upheaval of the last several years and investors’ response to that upheaval has wreaked havoc on many people’s asset allocations. Rather than having a balanced, diversified portfolio, many have sought safety by moving everything to cash or bonds. That could cause serious problems in the future if inflation picks up or the bond market stumbles. To protect your assets and maximize your returns, you should meet with a trusted adviser and make sure the investments you hold are appropriate based on your risk tolerance, goals and time frame.
Review your estate plan
Your estate plan should not be a static document. As your life changes, your planning must change with it. Getting married or divorced would likely change how you want to distribute your property; likewise if there is a death in the family. Each year you should review your documents, including your will, trust, and powers of attorney to make sure that they still reflect your wishes and have the correct people taking charge if you were to die or become incapacitated. Also, if you move to another state when you retire, meet with your attorney to make sure that your documents will be valid in your new state of residence. Make revisions as necessary.
Shred unnecessary paperwork
Much of the paperwork you have can be purged once a year. For example, if your December investment statements summarize the year’s activity, you can shred the statements for the previous 11 months. Likewise, any bills, credit card statements, and receipts that you are not using as supporting documentation for your taxes can go.
According to the IRS, you should keep your tax records for “the period of time during which you can amend your tax return to claim a credit or refund, or that the IRS can assess more tax.” Seven years should do the trick for most tax documents, such as returns and any supporting documentation like cancelled checks, receipts, or credit card statements. Identity theft is on the rise, so always remember to shred documents before discarding them.
As you can see, by taking a few simple steps before year-end you can enter 2012 organized and on a firm financial footing.
Note: I first published this article at www.fpanet.org and the Omaha World Herald.
by Joe Hearn | Nov 7, 2011 | Pursuits, Retirement
In the recent media coverage surrounding the death of Steve Jobs I read a quote from Walter Isaacson (Jobs’ biographer) about how mortality motivated Jobs:
“He talked a lot to me about what happened when he got sick and how it focused him. He said he no longer wanted to go out, no longer wanted to travel the world. He would focus on the products. He knew the couple of things he wanted to do, which was the iPhone and then the iPad.”
My question for you is this:
Why wait?
Why does it so often take a terrible tragedy, a frightening diagnosis or a certain life stage (e.g. retirement) before we begin to take our dreams and plans seriously? Shouldn’t all of our years be devoted to doing the things that we really care about?
In all fairness, Steve Jobs was a pretty focused person even before his illness, but facing death seems to have resulted in an even more drastic re-ordering of his priorities. We all know our days are limited, so why not be more intentional with the time we have?
Jobs alluded to this idea in his 2005 commencement address to Stanford University students:
“For the past 33 years, I have looked in the mirror every morning and asked myself: ‘If today were the last day of my life, would I want to do what I am about to do today?’ And whenever the answer has been ‘No’ for too many days in a row, I know I need to change something.”
As you start your day today, think about that quote. Think about what you really want out of life. What will fill you with a sense of purpose? What will make you happy and provide meaning? Whatever your dreams (retirement or otherwise), start taking them seriously. As Jobs so eloquently said:
“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma, which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”
Thanks for reading. Have a great week.
Joe
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