Retirement 101

There are many strategies to accomplish the foregoing but I offer a few tips that worked for me. Use pay increases to retire debt rather than raise standard of living, which most often raises your debt level. One of the best strategies we employed was to each month make an extra payment on the principle of our home mortgage. This technique is very easy to follow, particularly in the early years of a mortgage, and may enable you to pay off a 30-year mortgage in ten or fifteen years.

Despite the fact that this worked well for Gladys and me, there are critics that say such a strategy is ridiculous. Their theory is that one should keep a high level of mortgage and invest the funds elsewhere, kind of a takeoff on buying a term and investing the difference. That may work for some people–but for most, a disciplined plan that you follow each month works best and is a sure thing rather than speculation. I have no real problem with speculation, but I do it with excess funds not household money.

I also believe one should purchase cash value life insurance as early in life as possible and keep it. It is the only insurance that satisfies the mandates of Mahatma Gandhi’s philosophy–the possibility of an early death coupled with the need to plan for a long life. If accumulated cash values were not used for emergencies, college education or opportunities, they will be available for retirement or long-term care. In my own case, the largest part of my income today comes from annuitized cash values of personal and pension life insurance. The one whole life policy left, with almost 80% cash value, is there for long-term care if needed. I love annuities–it is a great comfort to know that as you spend this month’s income, your checking account will refill next month and for the rest of your and your spouse’s life.

A few miscellaneous observations may also be in order. Most people who flunk Retirement 101 do so for one of two reasons (or both). Most commonly, they are broke, or badly bent, and have to go back to work to supplement their income. But almost as often they flunk because they are bored. Endless golf is paradise for some but not for all. I remember a conversation with one of my wartime buddies when he said, “When you are playing golf and you wish you were home mowing the lawn–it’s time to quit.” So it is important to develop other interests–community service, politics or a hobby that holds your interest. Travel is also great–but it takes dollars, which will only be available if you planned your “afford date” well.

One final observation that has been important to me–but again, not necessarily for everyone: Stay out of retirement communities. A recent newspaper article cited the fact that people whose friends were obese tended to become obese themselves. The conclusion–if you don’t want to be obese, quit hanging out with fat people. To some extent, I believe the same principle applies to hanging out with old people. We live in a wonderful neighborhood with lots of young couples and kids that are a constant source of joy and inspiration. Maybe when we are a bit older (I’m now 83) we will seek the quiet retirement community, but now–life is great and retirement is wonderful.