Sunday, July 31, 2011

10 Things Nana Did Right to Prepare for Retirement

The list of things that I should have done to prepare for a comfortable retirement is long, but today I'm writing about the few things that I did do right, not because of good planning but mostly by luck.

1. Pay off your mortgage:  When I retired we had no mortgage.  I had read once somewhere about the cost of mortgages and how much you can save if they are paid off early.  The last time we moved we got a 15 year mortgage rather than a 30.  Occasionally, when we could afford it, we paid an additional sum on the principal.  Once our children graduated from college we had more disposable income and we accelerated our payments. Once our mortgage was gone, we didn’t increase our spending, but rather increased the amount we saved each month.  (Well, we did spend a little more on upgraded vacations!)  Owning our home allows us to maintain our lifestyle at a lower total monthly cost.

2. Pay off outstanding debts:  We are debt free.  If we use a credit card, we pay off the balance every month.  Our cars, our boat, our toys are all paid for.  When we bought our RV a few months ago, we paid cash.  Even with low interest rates, there is a cost to using credit.  I prefer to use that money to enhance my lifestyle rather than provide profits for a credit card company.  Because we are debt free, it is easy for us to manage our monthly bills.  Our monthly living costs are pretty low.

3. Live below your income:  We have always lived within our income.  When we were first married and had entry level jobs, we lived paycheck to paycheck…but we did not rack up credit card debt.  Our credit cards were really a safety net, used only in an emergency when we didn’t have money to pay for an unforeseen event.  If we had to use them, we made paying off the balance a priority in our budget.  We have never lived large.  Once we started earning more than subsistence level salaries, we started saving.  We spend less each month than we take in.  We don’t buy anything until we have the money to pay for it or until our monthly income is large enough to absorb payments. 

4. Try living on your retirement income before you take the plunge:  My husband has not yet retired.  He would like to retire in the near future.  He does not have as generous a pension plan as I do, so we know his retirement will reduce our total income.  Since I retired we have lived on his income only and banked my pension checks each month.  This has provided us with some insights into living on a reduced income, and safely allowed us to explore if total retirement at a reduced income is comfortable for us.  It has also been a good transition period for me.  We have not dramatically changed our lifestyle, but I am not as free-wheeling at spending as I used to be when I worked.   I know that it takes much longer to rebuild our checking account balance at our reduced monthly income level.  If my husband were to retire now, we know we would have to change our spending habits to live below our income.  It’s a balancing act and we’re trying to find the perfect tipping point for us.

5. Have a back-up plan for increasing income:  A part-time job is a good financial safety net for retirees.  I am fortunate to have a teaching license that allows me to substitute in our local schools.  Because substitutes are in high demand in our area, I can work as much or as little as I like.  I use the money I earn substituting to pay for vacations and flights to see my grandchildren.  I substitute one or two days a week.  If I don’t feel like working, I don’t have to accept a job.   For me, a recluse by nature, it forces me get out of the house and interact with people…and I’ve taken quite a few vacations on the money I earned without diminishing my account balance.

6. Start saving early: When my children were toddlers I purchased US savings bonds every month by having the cost deducted automatically from our checking account. After a few months, we didn’t miss the money.  Every month those bonds came in the mail, one for each of my two children and one for my husband and me, until the bank ended the program.  The children used their bonds to help pay college costs and we still have our stack of bonds to use in retirement.  Both my husband and I took advantage of retirement saving programs offered by our employers.  It is surprising how that money has grown over the years.  I do regret that we didn’t save more aggressively, but I am thankful that we took the small steps that we did.

7. Have a plan for medical insurance: I could retire early because my employer pays the majority of the cost of my and my spouse’s medical insurance until I am eligible for medicare.  Cost of private insurance with my pre-existing conditions would be prohibitive.  When I started working for my former employer, I didn’t pay a lot of attention to the early retirement options in my contract because retirement seemed a long way off.  I was fortunate to be able to take advantage of this benefit.  As you approach eligibility for retirement it is smart to review your employment contract so you know if keeping your employer's medical plan is an option. 

8. Get familiar with your employer’s retirement qualifications and benefits:   Many retirement benefits are being renegotiated in light of the current financial crisis.  It is important to keep on top of changes.  I retired before changes in actuarial tables would have reduced my benefits.  A good friend of mine retired this year from the Oregon education system because a change in her negotiated contract would end her entitlement to seven years of district paid medical insurance.  She decided to retire before the new provisions took effect and that allowed her to keep a benefit that is worth well over $100,000.00 to her over the next seven years.

9. Walk away: Emotionally it was difficult for me to let go of my work life, perhaps because I made the decision to retire only a month before my final day of work.  I didn’t try to hang on to elements of my former life.  No lunches with former coworkers and/or dropping by to say hello. After Christmas when everyone went back to work, I went to Hawaii.  I wasn’t available for questions because I wasn’t at home.  It helped me to make a clean break.

10.  Enjoy

My next post I’ll tell you about the things that I should have done before retiring.

Saturday, July 30, 2011

Nana Ponders Chicken Little, the Boy Who Cried Wolf, the Debt Crisis and Retirement

I retired two and a half years ago.  I am one of the fortunate ones who had an excellent pension plan.  The spouse is still working, but looking toward retirement in the next few years.  His pension plan is not as generous as mine.  Since I have retired I have spent more time reading about retirement issues.  I’ve read enough to make me nervous.  There are a lot of horror stories about seniors who are reduced to eating cat food because their retirement income is not sufficient to pay for the ever increasing cost of living.  I’ve done the math and my pension is adequate to maintain a reasonable lifestyle, but is my pension secure?  As our government gets closer and closer to default, I worry about the security of my pension.  Will my state government continue to keep the commitment they made to me when I started working over thirty years ago in public education? 

I’ve watched a little of the coverage of the debt ceiling “negotiations” on television.  If it wasn’t such a serious issue, it would be comical.  

When my children were small I read to them every night before they went to bed.  We read all the classic fairy tales and stories.  As I watch the news I am reminded of Chicken Little who ran around warning people that the sky was falling.  There are many people in Washington who have joined him in this chant.  Then there is the Boy Who Cried Wolf who gave the warning so frequently that everyone stopped listening…and then the wolf showed up.   As we wait for Congress to act, I don’t know which story I’m listening to.  Is the sky falling?  Is there really a wolf?

I’m too old for fairy tales.  It is time for Congress to stop grandstanding and get to work to preserve our economy and our future…and my retirement!

Sunday, July 24, 2011

Why Nana Hasn't Posted For a Few Weeks

This is the reason that I haven't posted for the past few weeks.  I'm in Austin, Texas with my granddaughters.  I borrowed my five year old granddaughter's laptop to write this.  I'm in Austin because we wanted the girls to have swimming lessons and since both their parents work, the only way that was going to happen was if Nana drove them back and forth each day.

For the past few weeks I have been the director of Camp Nana.  My sole responsibility is to keep my granddaughters, ages four and five, constructively occupied.  They have kept me running from morning to night.

Every morning we go to swimming lessons.  The girls have back to back lessons and I sit under the canopy with the parents and grandparents and cheer every accomplishment of  our respective charges. 

After swimming lessons we go home for lunch and then to the neighborhood pool for more swimming.  Despite gallons of sun screen, all three of us are quite tan.  The girls practice swimming and are dangerously confident in the water.

Late afternoon we go home to work on projects.  We have painted sun catchers and wooden princesses, done paper mosaics, and decorated cards with glitter.  Despite numerous cleanings it is still impossible to cross the kitchen floor barefoot without getting sparkly feet.  When the creative juices are flowing the glitter seems to just fly!

We don't ignore the culinary arts at Camp Nana.  Faithful readers will recall that Nana isn't especially skilled in this area.  Fortunately four and five year olds do not have discriminating palates.  We successfully made scrambled eggs and instant chocolate pudding, but not at the same meal!

We've taken field trips at Camp Nana, mostly to local play areas.  It has been over 100 every day in Austin, so last Thursday we went to the play area at the mall.  When it's 103 if Nana isn't sitting in a cool pool of water, it better be some place air conditioned.  The girls enjoyed the play area and Nana enjoyed sitting on an upholstered bench in a fully climate controlled area.

Last week one of the girls asked "Nana, tomorrow can we stop at the blow up kitty and take pictures?  So, the next day I pulled into the parking lot of the cat hospital and we all piled out of the car and took the picture above.  The blow up kitty is a lot bigger in person than it appears when you drive by it on the way to swimming lessons.  Tomorrow we're going to take pictures with the giant wild animals at the dental office.  It's true that everything is big in Austin it's giant animal yard art!

So, that's why I haven't posted.  I am at the mercy of two little girls.  There are only so many summers in a childhood, and Nana doesn't want to miss any of them.

I'll be back to my regular posting schedule next week.

Jann aka Nana

Tuesday, July 5, 2011

Nana Crosses State Lines on an RV Adventure

We have been members of the RV community for just a few weeks and are still trying to figure out how to fit in.  We seem to be in the correct age range, but we don't have a small yappy dog.  The spouse is sporting shorts and wearing socks with his sandals which passes for native dress in an RV park.  I think we're going to fit in with this crowd.

Since purchasing the RV we have been attending garage sales to find the essential RV lifestyle  items.  I was thrilled to find a small electric coffee pot for only $2.00, but still have had no luck finding a few sets of unbreakable dishes that can also go in the microwave.  We may not have dishes, but I do have a string of fish lights to hang on the awning.  

Last weekend we thought we had sufficiently provisioned the RV to go on a shake down trip.  We loaded up with food and beverages, made the beds, and filled the storage compartments with everything we thought we would need.  At the last minute we remembered to get a pad of sticky notes and a pen to keep notes of all the forgotten items.  We probably used that pad more than any other item on the trip.

We headed across the river to Washington state and learned our first lesson in RVing:  make a reservation!  The park at Plymouth was full, as was the next park 20 miles to the west.  At that point we headed back to Oregon and decided we would just camp at Umatilla, a mere 5 miles from home.  Unfortunately, Umatilla was celebrating Umatilla Landing Days and not only was the RV park full, but we got to practice driving our RV among hundreds of cars parked askew and wandering crowds of people looking for the festivities.  We ended up spending the night at the RV park at Hat Rock.

Sunday morning Paul got up and made coffee and then said to me "I hate to ask, but did you pack coffee cups?" We added coffee cups to the list of things we needed, along with a fly swatter and bug repellent.

This weekend we learned how to make a reservation on-line and we purchased an America the Beautiful Senior pass that gives us 50% off the park fees.  We stayed at Plymouth Park, just across the river in Washington state. 

We are starting to get familiar with how everything works in the RV, although I'm still a little frightened of the toilet flushing!  This morning I took my first RV shower, which reminded me of my showering experiences in England...a tiny little bathroom, odd plumbing, and low water pressure. 

I drove the RV for the first time...only a few feet in the RV park, but it's a start.  I think I'm going to like our little house on wheels. 

Saturday, July 2, 2011

A Proud American by Choice

I wasn't born in the United States.  My family immigrated to the US in 1955.  My mother, brother, Auntie Pam and I sailed from England on the Ile de France to New York.  From there we flew to Los Angeles to join my father and Uncle Colin.  I have an alien registration card, also know as a green card, that documents my legal admission to the United States in May, 1955.  My alien registration card is so old that it is actually green.  The newer ones are blue, but are still called green cards.

I am an American by choice, not by birth and I am grateful for the blessings that this country has given me and my family.  Both of my parents went through the naturalization process to become American citizens.  I claimed US citizenship based on their status as citizens.  I didn't have to take the citizenship test.

Generally people applying for US citizenship must take a 10 question test to demonstrate their knowledge across five categories: American government, systems of government, rights and responsibilities, American history, and integrated civics.   The test questions are drawn from a list of 100 questions and the applicant must correctly answer six of the ten questions to pass.

Here is a sample test of 10 questions.  See how many you can get right.

1.  Name 3 rights of freedom guaranteed by the Bill of Rights.

2.  Who has the power to declare war?

3.  What kind of government does the United States have?

4.  Which President freed the slaves?

5. In what year was the Constitution written?

6. What are the first 10 amendments to the Constitution called?

7. Name one purpose of the United Nations?

8. Where does Congress meet?
9. Whose rights are guaranteed by the Constitution and the Bill of Rights?

10. What is the introduction to the Constitution called?

Remember you need to get  six out of 10 questions correct.  Here are the answers. 

1.   Name 3 rights of freedom guaranteed by the Bill of Rights.

The right of freedom of speech, press, religion, peaceable assembly, and requesting change of government.

The right to bear arms (the right to have weapons or own a gun, though subject to certain regulations).
The government may not quarter, or house, soldiers in the people's homes during peacetime without the people's consent.
The government may not search or take a person's property without a warrant.
A person may not be tried twice for the same crime and does not have to testify against him/herself.
A person charged with a crime still has some rights, such as the right to a trial and to have a lawyer.
The right to trial by jury in most cases.
Protects people against excessive or unreasonable fines or cruel and unusual punishment.
The people have rights other than those mentioned in the Constitution.
Any power not given to the federal government by the Constitution is a power of either the state or the people.
2.  Who has the power to declare  war?

The Congress

3.  What kind of government does the United States have?

4. Which President freed the slaves?

Abraham Lincoln
5.  In what year was the Constitution written?

6. What are the first 10 amendments to the Constitution called?

The Bill of Rights
7. Name one purpose of the United Nations?

For countries to discuss and try to resolve world problems, to provide economic aid to many countries.
8. Where does Congress meet?

In the Capitol in Washington, D.C.
9. Whose rights are guaranteed by the Constitution and the Bill of Rights?

Everyone (citizens and non-citizens) living in U.S.
10. What is the introduction to the Constitution called?

The Preamble
Regardless of how you gained your citizenship status, take a few moments this 4th of July to celebrate the birth of our country.  I am grateful to my adopted home for the opportunities that were available to me because I am a citizen of this great nation.
Happy 4th of July!
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