New Favorite Retirement Calculator

I have a new favorite retirement calculator. It's from an independent, Bud Hebeler. That's in contrast to an investment or brokerage house. Hebeler is a former president of Boeing and an all-around smart person on the subject of personal finance.

His web site is Analyze Now! (the exclamation mark is part of the name but the URL is just www.analyzenow.com] It has a lot of explanations, and a fair number of FAQs, but its real strength is in the calculation programs. The programming is presented in Excel spreadsheets. Don't worry that the programs require knowledge of Excel; they don't. When a spreadsheet opens, you just follow the instructions and plug in numbers in the highlighted cells. Results will appear near the top of the screen, with explanation if it's needed.

Hebeler's guided tour of retirement doesn't have the 4-color pizzazz of the commercial web sites. But in its quieter way, with no sales pitches, it inspires confidence in the major source of information, the user. After all, if I can follow the steps to analysis, surely I can follow the steps to action.

© 2010 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (http://www.marybold.com/, http://www.boldproductions.com/, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Personal Finance: Moving it to the Cell Phone

Mashable's link to free finance apps (for the iPhone) leads us to two major considerations for the near future:

1 - Conducting our finances online will be routine. I do not mind confessing that it took me years to move my mortgage payment online. I did not know if I would be able to make extra principle payments. There were no screenshots to allow me to preview the system. I obviously didn't feel comfortable asking. (Logic need not apply.) I finally took the big step after deciding that I would just mail in the additional check, if necessary. (Again, logic need not apply.) Of course, I found a multiple-option screen that allowed me to make any kind of payment I wanted to. (Even extra interest payments. Yep, logic need not apply.)

2 - Computing in general is shifting to the ultra portable. I remember when laptops started proliferating. They were heavy little things (mainly the battery, I think). Then they got lighter and bigger. And now they're getting smaller and more powerful. And now there's a computer in my cell phone.

While the boomer in me cries out that I would never conduct financial business on a cell phone, I remember the shifts I have already made (1 and 2 above). So, I'm going to work up to actually banking on the phone. A nifty calculator or two to start. Perhaps my trust will build before the dome is paid off. Or I could use the cell phone for the last payment. Yes, I like the lack of logic in that idea.

© 2009 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Our Egalitarian Society & the Economic Down-turn

No, I'm not going to propose that we are all equal in our circumstances caused by the economic down-turn (AKA recession). But our egalitarian society is at play in responsibility for certain next choices.

In the olden days (I am certain this was as short as a decade ago), we were assured that financial advisers could guide us well and that we were not expected to be able to analyze markets, project long-term needs, and so forth. So, regardless of whether you took that to mean you should follow advice to invest in stocks, buy bonds, or buy an annuity, you probably nodded agreeably to other (sure) things: your employer's retirement plan and the offer of a long-term care insurance policy.

Well, times have changed.

This week, a Wall Street Journal article* reported on a change in Conseco's long-term care insurance policies that may increase premiums for the customers and even reduce their benefits in the future. The change is intended to "cast off" a losing proposition for the company as the policies are transferred to an independent trust that will handle claims as it can based on $175 million current capital. The 140,000 policy holders may or may not be well served—only time will tell. But the fact that new policies haven't been sold since 2003 suggests that Conseco predicted bad times ahead for long-term care policies.

Here's my point on our egalitarian society: the WSJ article advises that new buyers should "take particular care in picking out a financially stable insurer."

A recent conversation with a friend in Colorado underscores the power of that advisory: "Our financial guy says we need to decide about keeping Jeffrey's retirement account with the company or cashing out now. He said we have to think about whether the company will be around in 8 years to pay out the money. I told him I thought he was supposed to know. And he said, no, it's up to us to make that assessment."

Well, as I said, times have changed. Experts aren't even claiming their expert status anymore, or at least they don't want to shoulder the responsibility of analysis. And in an egalitarian society, after all, we are all equally able to make the analysis. There's the rub. It just may be that we really are equally able.

* McQueen, M. P., (2008, December 3). "Insurer Casts Off Long-Term-Care Policies," Wall Street Journal.

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Boomers on a Budget: Household Measures

There's nothing like a Wall Street meltdown to put the family budget in perspective. While a Boomer Budget could easily center on investment strategy, I'm going to assume that you are already losing enough sleep over that. I'm going to cover more mundane aspects of the household budget.

1 - Buy my large DietCoke with extra ice at Sonic only between 2pm and 4pm, when drinks are half price and therefore less than $1. I continue to tip with whatever coins are in my car (50¢ - $1, usually).

2 - Attend movies only during early-bird hours, worth a $2 discount in my town. When I go to Harkins, I carry in my "loyalty cup," through which a purchase of soda is a mere $1. (I have found myself staring at the Senior Discount lately. I'm shy a few years.)

3 - Learn to love whatever's on sale at the grocery store. Today, Kix cereal was on sale for $1.88 (as opposed to $3-something), so that was my choice instead of Rice Chex. (When I was a child, Kix was a rare treat. I expect to feel young while eating the cereal over the next several weeks.)

4 - Reduce reliance on brand names. In our household, this means letting Tom Bold do most of the shopping for staples. He moves through the grocery store quickly, focused on low prices and blind to advertising.

5 - Resist the urge to pay off the mortgage. (Well, keep making payments, please; we're all counting on that.) I'm referring to the boomer tendency to pay off the house as quickly as possible for psychological comfort. Our last mortage was by choice a 15-year commitment, and pay-off is running ahead of schedule. But the budget-conscious choice for the next couple of years is to slow payment to the actual amount due. That will make the most use of the tax deduction that the mortgage interest permits.

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Boomers on a Budget: Lowering Expectations

Unrealistic expectation. Boomers of any age , but especially those on the leading edge*, have some adjustments to make in the coming lean years. That's because we thought we had already given up one luxury: retirement at age 55. Regardless of the statistics that assure that not so many people actually retire at age 55, boomers grew up with that thought in mind. People could retire at 55. It was within the realm of possibility.

But it wasn't: For most Americans, very early retirement was not a possibility. Even if a neighbor was in that happy number, we saw that person (almost always a man) "double-dipping" in a second career while drawing retirement from the military or some other "lifer" commitment; clearly, he still wasn't retired. Most Americans could not really retire at 55. We accepted that. But the damage was done: we were exposed to an idea that now makes delayed retirement in our 60s a very unhappy prospect. Whatever we expected to happen in the next 5 to 10 years is probably now not possible. The financial crisis promises lean years ahead, and that's the optimistic view.

Lowering expectations: Boomers will be budgeting and probably delaying retirement—or some aspect of it. For example, the year to sell the family home and use the proceeds for a retirement community may need to be selected very carefully. Most retirees will need to wait for the market to recover before attempting a sale. Even then, the house may not bring the profit once anticipated. Can you start imagining a different retirement?

Live like a New Yorker: I'm thinking about Manhattan, where people routinely pare belongings to the minimum in order to fit into small and shared housing. Where public transportation is the norm and private car is the anomaly. Where high costs of everything drive ingenuity and resourcefulness. Well, that's where the rest of America will turn: budgeting with ingenuity and resourcefulness.

On a personal note: The irony is not lost on me: just a few months ago, Tom and I made the decision to not move to New York due to the housing market and the many trade-offs we would have to make. We were not prepared to live like New Yorkers. Now, we're getting prepared...but we'll be living it in Texas. — Lida

*Boomers on the leading edge versus trailing edge:
Leading Edge = birth years 1946 to 1954
Trailing edge = birth years 1955 to 1964

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Response to Financial News

I spent yesterday in Fort Worth. I went to a hearing on higher ed legislation (my primary lesson: hearings are for access and when no one signs up to speak in the afternoon session, then the hearing setting is just for reading newspapers).

The more interesting part of the day was a young woman's comments to me about our country's financial crisis. I didn't mean to probe but I did remark on something that I had heard on a talk show, that by November the American voters may conclude that they are picking up the tab. The woman was quick to respond, "I know that now. I can tell you what my husband and I did. We picked up the phone and changed our 401Ks from 15% to 5%. At least we'll have control over our own money."

OK. Got my attention. This is a couple in their mid 30s. I was impressed at their commitment to savings—well, up until this week. I was also surprised that they made an immediate decision about their finances based on the week's events. It's not what I would have suggested but I kept that to myself.

My own response to money management has turned to color scheme. (See my advisor's blog about this.) I won't be happy about investments for a while. But at least I'll have a pleasant palette for the report on them.

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Boomers and Their Finance Advisers

What our financial adviser said (continued from yesterday's blog). When I disclosed that I was retiring from a public university and not seeking a similar position anywhere, our adviser said, "You'll never make it!" She knew that my early-retiring husband's salary would end in 2008, and that the expected course was to rely on my income for the next 11 years. (That means pushing off any withdrawals from 401K and IRAs in order to protect them for the long term, that span of retirement that will be 25 to 30 years.)

Who is this nervy adviser? Well, it's a family member. The professional advisers at the investment companies were quietly respectful and merely said, "What accounts do you want to move where?" The in-family adviser fretted a little and fumed a little and finally started to make the projections I needed to justify this change in career. (I'll still be in education, just not on a campus.)

How many advisers does a boomer woman need? Obviously, I need more than one. (Itemization is below.) What I've determined from this recent round of career decision-making is that I like having one in the family. An in-family adviser knows my real habits, not the ones I posture for the outside-adviser. She also knows when I'm serious ("I can stop buying clothes") and when I'm not ("I can give up travel"). Most important, she is my most-motivated adviser. If my career and investments fail, she'll have to support me. Fidelity hasn't made that promise to me.

Advisers of everything. Under one big umbrella of "finance adviser," we variously mean financial planner, investment adviser, stock broker, and maybe even retirement counselor. The terms become crucial if we intend to talk to an adviser who is certified, registered, or somehow regulated. A good online resource to check is the Certified Financial Planner Board of Standards; the site has a concise list of descriptions of Financial Professionals.

Being assigned an adviser. Most of us don't select an adviser. We are assigned one by the firm we contract with. I've had two personal bankers, two personal stock brokers (before switching to discount brokers), and three investment advisers. Of that number, three have visited my home and a fourth even visited my classroom (to give a lecture, not to consult with me). That's a lot of personal contact, so you would think that I would put more effort into the choice of adviser. But my association with them has been accidental. Of course, the in-family adviser might make the same argument.

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Retirement: When Minimum Wage is Maximum Wage

U.S. minimum wage going up: As of this week the minimum wage in the U.S. will be $6.55/hour. And for retirees between 62 and 66 who are already drawing Social Security, that will be (just about) their maximum earnings limit without offsetting some of their retirement check. Rounding the figures for convenience:

Minimum wage of $6.55 = $13K per year income
Maximum "extra" wages for boomer on Social Security = $13K

Early retirees draw a percentage of "full retirement." Leaving the workforce early (for the current crop of leading boomers, that's before age 66) is allowed but the Social Security benefit is reduced by up to 30%, with the reduction running 5-7% per year of age. I'm referring to retirees at the start of the baby boom, meaning birth year 1946 and later. For a full breakdown on percents and year of birth, see Full Retirement Age at Social Security Online (www.socialsecurity.gov, a site that is sure to need no SEO* in the coming years).

What's wage got to do with it? Age 62 retiring boomers have an earnings limit of about $13,000 after which Social Security benefits are effectively "reduced" by about a third. So, if your Social Security benefit is $12,000, you can earn $13,000 from a job with no penalty. But if your total income goes above $25,000 for the year, your "extra income" will be offset by a reduction in SS benefit. Fancy math and a consult with the folks at Social Security may assure you that upon "full retirement" age, an "early" penalty may work in your favor eventually. The point is, you'll need to do some figuring. (After full retirement age, no figuring is needed as there is no limit on earnings from that point onward.)

The comparison between minimum and maximum wages: Just by coincidence, the 2008 increased minimum wage is approximately the same amount as the early retirees' maximum extra wage. $6.55/hour for 40 hrs/week for 52 weeks/year = $13,624. The earnings limit under Social Security was $12,960 for 2007; it will be $13,560 for 2008.

A handy formula that's realistic for converting hourly wage to annual income is to multiple $6.50 times 2000, because that's very close to a full year's work with a couple of weeks off. This formula permits you to quickly inform your threatening-to-drop-out adolescent relative that the outstanding job paying $7 an hour is actually only $14K a year. And the even more outstanding wage of $8 comes to only $16K a year. It's amazing how many adolescents marvel at the arithmetic. Eventually, they realize it was simple multiplication. (Or maybe if they drop out, they won't.)

*SEO: Search engine optimization, or processes whereby Internet publishers increase the volume of "traffic" to web sites. ~ Lida

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Personal Finance and Prius MPG

Prius miles per gallon. When you fill up your Prius (or anytime, really) you have opportunity to start anew in measuring your miles per gallon. Tom Bold does his own calculation and tells me that I'm not really getting 48 to 50 mpg—more like 44 or 45. I prefer the car's report, of course, and aim for that magical 50.

Blissful beginning. Anyway, in those first few miles of re-setting, you can report extremely high values. It's not unusual for a Prius owner to claim 80 mpg before sheepishly admitting that the figure was achieved on the drive home from the gas station. My own recent record (OK, today) is 61.7, and that's almost 100 miles into the drive.

Hypermiling, Ecodriving, and Nempimania: Real words with the meaning being to maximize gas mileage through driving technique. The last term (from Japanese for craze for fuel economy) takes maximizing to the level of obsession. On American streets we're pretty much protected from the extremes: do too much to protect your MPG and you'll find yourself honked at or, worse, rear-ended. So, aside from the occasional stubborn coasting to a stoplight that is clearly not going to turn green in the next 10 seconds, the smart hybrid owner aims for low-traffic times of day and, of course, chooses the least hilly route to anywhere.

Competitive urges: Hybrid drivers fall in love with bettering their gas mileage. If everyone drove a hybrid, traffic would slow in a new kind of competition. That competitive urge would still be mixed with ecological and personal finance concerns. But it would also be about capturing your latest MPG on your cell phone camera. YMMV.

On a personal note: I rarely make political jokes (classroom etiquette) but I do find humor in a tactic I used Monday night when driving across North Dallas. I was determined to protect that MPG, so I exited the President George Bush Turnpike and drove at a slower speed on a city boulevard. It took me about 20 hours to realize the irony. ~ Lida

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Online Banking

Growing accustomed to not seeing the teller. ATMs prepared boomers well for the shift to online banking. We learned our account numbers. We memorized a few keystrokes. And we found our own heuristics for getting cash: use the ATM in the grocery story in the morning, use a drive-through ATM only in mid-afternoon, avoid the costly withdrawals of non-member machines. We saw that ATMs didn't make errors and rarely ran out of cash. And we definitely noticed the convenience of hours (27/4, after all) and the lack of lines (assuming you developed the right heuristics for your town).

The next step: Online banking was the natural next step, with automatic payroll deposit leading us. And it developed with a high level of standardization among employers and banking institutions. That standardization permitted fast adoption, not just because it was efficient but because large segments of the work force began at the same time. If the other 600 people in your workplace were getting their paychecks the same way, you didn't have to make much of a decision. And, in fact, employers quickly shifted from offering choice in how you received your pay to mandatory automatic payment. In my last employment (2001 to 2008), that was the case as a state university cut checks upon request and then eliminated that choice. Among the folks I knew, the greatest impact was on graduate assistants who never got around to providing the bank routing number—until there was no option and they had to in order to get paid.

E-bills: Online bill paying has not taken hold as successfully. That may be because of the differences among banks. Frankly, some banks set up more user-friendly systems. My first experience was clunky and writing/mailing checks was definitely a better use of my time. But my current bank is better and is gradually introducing improvements (and "gradual" helps me to adapt to the improvements without too many differences month to month). In this happier experience, it still has taken more than 4 years for me to transfer everything to either automatic withdrawal or online e-bill.

On a personal note: I still walk into the brick-and-mortar investment company. (And it really is made of brick and mortar, perhaps to communicate strength and stability.) But that's only once every few years. Otherwise, I log onto fidelity.com for the very occasional check on changes. I also log onto Vanguard a couple of times a year to look at a smallish lifestyle fund; its monthly contribution is accomplished through automatic transfer from the household account. That household account is with a local bank that I can drive-through to deposit the occasional rebate check but otherwise manage completely online, covering automatic and directed transfers for utilities, a car payment, and mortgage. A second account with the same bank serves as my business account: linked but with my bookkeeping very separate. I have another banking location—but I have no idea where. Where in the world is ING? For me, it's strictly that very orange webpage to which I can move money from the household account in order to earn a little more interest. I segregate cash into two accounts there: Cash Reserve and Saving for Taxes. This particular bank lets me name the accounts myself. If I count PayPal, too, because it performs a banking function for me, I'm up to 7 accounts where I track money. And that reminds of George Miller's research into the magical properties of 7. Of greatest pertinence: we humans can handle 7 anythings pretty well. When the number climbs to 8 and beyond, we can't.

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Clothes and the Economy

Boomers impacting an industry. We've predicted for years that retiring baby boomers will influence housing costs, health care costs, travel, luxury purchases, and so on. But clothing hasn't been much mentioned. Of course, we all know the logic: when you stop going to work every day, you end certain expenses or greatly reduce them. Lunch expense, solved. Gasoline or subway fare, much reduced. Clothing and shoes, drastically cut. Those are some of the considerations that boomer women used to take into account if they had the option of choosing when to work outside the home. Whole books and women's magazines were devoted to calculating the cost of "going to work." Sometimes, the calculations justified staying in the home for a while longer, or encouraged women to go back to school for the degree that would boost salary to put them on the winning side of the equation.

The same women are now forecasting personal finances in terms of retiring from that calculation. And for every personal finance concern, there's a market concern. In this case, how will boomer retirement impact the clothing industry? Textiles are measured mainly in global terms today, so it's not just a question about the U.S. economy. The whole of the concern is too large for this blog. So, we'll take it back down to the personal finance level.

Observation #1: Weekly trips to dry cleaners are over. Tom Bold was never accused of sartorial splendor at the technology firms he served but he did wear pressed shirts and trousers. They were tended by the neighborhood cleaner, with barely a break in almost 30 years. (Grad school years before that did not involve pressed clothing.) And as I have shifted activity from campus hallways to working at a distance, I have dropped dry cleaning needs from daily to just a couple of articles a month. This has meant a drop from $213.95/month to $28.27/month.

Observation #2: Sometimes we replace one expense with another. Now, I didn't say I was giving up clothes entirely. As I have aged I have become quite attached to the concept of being comfortable in clothing and currently seek to make a presentable appearance with as little fuss as possible. Enter Allie Coosh. That's not actually a name but a phonetic spelling of the French phrase, "to the bed," which is fitting because the designer started out in pajamas. In Dallas, Paulette Martsolf designs for comfort in, happily, mostly washable fabrics. (My dry cleaning dollars simply shifted to a new location: Allie Coosh.)

Retirement clothing: So, what clothing is actually required for retirement? Will we buy fewer clothes, or just different clothes? Will we clean them ourselves? Will we ever press a shirt again?

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold is not under any circumstances to be regarded as professional, legal, or medical advice. Or education advice. Or marital advice. Or even a tip.