Jonathan Clements's Blog, page 30

In retirement a pension is a advantage. Are two family incomes during working years an advantage as well?

My past writing on HD and numerous comments have made it clear my retirement is unique in that I have a good pension that together with our combined Social Security exceeds my working base salary the day before I retired. It also has been noted that my pension has given us a financial advantage by not being solely dependent on investments income. It’s all true.

But I have noticed that many people on HD are from couples with working spouses, two incomes, two sources of saving, two SS benefits, one possibly higher that a spouses 50% benefit. The opportunity in some cases to live on one income and save the other.

Money wise what Connie and I have after 56 years of marriage was the result of one income from July 1970 forward when our first child was born. Of course, that was our choice. Actually it wasn’t even that, Connie working after we had children was never discussed. We both assumed it would not happen. (Connie did work very part time in a doctors office for a short period - her doctor asked her to help out -  when our children were grown.) 

By default, our lifestyle was determined and limited by one income, an income that grew gradually over fifty years. 

We eventually reached our financial and retirement retirement goals. Our advantage is a pension. 

Was your advantage two incomes? How did (does) two incomes impact your financial situation? Necessity or advantage? 

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My favorite question.

It would be nice to hear more from HD readers who have been there and done that. And to answer the question, “Knowing what you know now, what would you have done differently?”

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Don’t worry, be happy: tripping through the go-go years

Glancing at the clock on the sunroom wall, I noticed it was 10:23, and the postman had just dropped a parcel at the door. I thought about going to investigate this mystery delivery but decided the second coffee was much more appealing. Anyway, my seat was comfy, the sun was kissing my skin and I didn't have anything pressing to do until playing tennis at one o'clock this afternoon. Plenty of time to make a light breakfast, get ready, and grab the parcel from the door.

My phone pinged with a message, and I glanced at the screen. Oh goodness, I noticed the time. I had 34 minutes to get organized and be on the tennis court! "Where in the name of all that's new and shiny has my morning gone?" I thought to myself as I quickly dashed out the kitchen door and up the staircase to get ready. Twenty minutes later I rush down the stairs two at a time and fly out the front door before literally flying as I trip over the parcel still sitting on the doorstep.

Wincing from the pain of a grazed and bloody knee, I had to laugh. I guessed this was the universe's little way of making me finally take notice of that mystery parcel, but through all my self-inflicted panic and a little hot under the collar I was chuffed to discover myself on the court for one o'clock, welcome once again I thought to myself to this recently discovered world of retirement time slip.

What a difference three months has made! When I was working with a regular, structured day, this would never have happened. Instead of an actual flying visit to the tennis courts by one o'clock courtesy of a parcel I'd be thinking about another six hours of work before heading for a tightly scheduled, but still enjoyable, 8pm game of tennis.

After a friendly 6-4 6-4 defeat my tennis buddy suggested a quick bite to eat in the clubhouse. Why not? I thought, I've stretched my morning to lunch time. I might as well stretch lunchtime until dinner time. I'm pushing the envelope of this wonky passage of the hours and it doesn't bother me. I still have structure. It might be looser but it comfortably drapes itself over my days.

Upon reflection, and with a sting from my scabby knee, I've come to a happy conclusion. For decades, I willingly and gladly endured the unrelenting straitjacket of a busy workday life. Now, I find contentment in a slightly time-stretched retirement. The only thing I haven't quite mastered is time itself—and that treacherous parcel on my doorstep. I know which life I prefer, and my only regret is not that I didn't work longer to feather my retirement nest egg, but that I didn't discover this beautiful, messy world of chaos and contentment sooner.

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Choosing Yes by Saying No

Are you definitely sure I can't tempt you?" my friend asked for the last time as we finished our phone conversation. Once again, I replied in the negative before a few pleasant closing words and then hanging up.

Thinking back on our chat, I realized this was the forth invitation to various activities I've turned down in the last few months. The invitations ranged from an opportunity to provide tax reporting services for an old friend at a decent billable rate to this most recent inquiry today to play doubles together in a badminton league come September.

The common thread running through all these rejections was a desire to protect and husband my most precious asset, my time. To an observer, this in some aspects could be seen as a worrying trend, possibly leading to social isolation. However, through my eyes, when I already have a large universe of diverse sporting and social activities, it's an essential filter to ensure maximum enjoyment from my current lifestyle without undue pressure.

I understand I'm fortunate in having the privilege of an already rounded social life, and I know this isn't a given for everyone. But if you are in my position, I think it's important to practice this mindful curation of your time.

In a world that often celebrates "busyness" as a sign of importance and meaningfulness, learning to say no is an act of self-care. It's an acknowledgment that our energy, like our time, is a finite resource. By carefully assessing what we commit to, we create space for what truly matters: deep connections, genuine engagement, and the necessary quiet time to recharge.

This isn't isolation; it's intentional living—a deliberate choice to build a life that is rich in quality, not just quantity. It allows me to enjoy considerable amounts of time on solitary activities like reading and pursuing other interests, such as spending time thinking and composing articles for this site.

Ultimately, the choice to say "no" is in my mind the choice to say "yes" to something else: yes to your well-being, yes to your existing connections, and yes to the quiet moments that make life meaningful. This isn't isolation; it's a quiet form of self-respect that allows you to build a life that is truly rich in quality. Be careful that the doors you open are the ones you want to step through.

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Get your head out of …. Creating problems that can be avoided.

Although I have been retired over 15 years, I still receive employee benefit questions from a few employees and retirees of my old company. Sadly, many of those questions reflect the person not paying attention to their own situation, not planning, and thus putting themselves and family at risk.

Here is an example of a message I received recently.

“I retired in 2011 after around 35 years in Operations and Maintenance. I still stand confused on two things, maybe you can help me.

1.  I receive a pension if and when I pass will my spouse still receive it?

2.  Same with health benefits. We both get money from the company for health plans. If I pass will my spouse still receive what she gets now?”

“if” ? This guy is an optimist😎

Can you imagine being retired fourteen years and not knowing if and how your spouse is protected as a surviving spouse? I can’t, but over my career I saw it all the time. On too many occasions the failure to consider this part of planning was intentional. The worker wanted to keep all the benefits-mostly “his.” 

When this person retired, he received written notice of the form of pension, his spouse had to agree to it in writing. After he retired he received a letter confirming the selection and the amount of the payments … and still, not a clue. Today, he can go to a company website and obtain all his information - but that requires awareness and initiative. 

The company never paid health benefits for a surviving spouse and just three years ago this was explained in a extensive communication campaign for retirees - but it apparently didn’t make an impression. 

Has he planned for this new expense someday?

I’m pretty sure the HD community won’t fall into this head-in-the-sand trap, but trust me, this is the real world for many, I would venture most, Americans. I am convinced many of the financial/life problems people face are of their own doing. 

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Random Thoughts on the Passing Scene (With Apologies to Thomas Sowell)

-During a dinner a year or so ago with some of my recently-retired but still working friends, talk turned to what toys the fellas were buying with their “bonus” income. Most of the guys had big-ticket items to report: expensive new trucks, recreational vehicles, motorcycles…things like that. I didn’t have a lot to add to that conversation, but when I was pointedly asked what I’d bought for fun, the most extravagant item I could come up with was a new Trek bicycle that cost me a little under a thousand dollars—far more than I’d ever paid for a bike previously. Still, several other purchases in retirement have brought me significant satisfaction. I bought a standing desk, which almost miraculously cured the chronic neck pain I’d been experiencing. I purchased a Weber charcoal grill, which has taken our cookouts to the next level. I replaced three clunky older cordless drills that I had inherited with a brand new DeWalt drill. This exchange allowed me to complete some much-needed repairs on my mailbox without it becoming an all-day ordeal.  Finally, I bought several dozen interlocking, brightly-colored anti-fatigue foam pads and created a path around my concrete basement floor’s most trafficked areas. My back has thanked me ever since.  The total cost of these four purchases was around $500, hardly requiring me to continue working. Yet they really are the most significant lifestyle-enhancing purchases I’ve made since retiring.

-I’m less fascinated by my financial spreadsheets these days. Before I retired, they helped give me a sense of progress toward our retirement readiness. Today, the numbers seem increasingly meaningless. I’m convinced our combination of cash flow and assets is likely “enough” for our relatively modest lifestyle. Constantly sorting data to check our income or net worth now seems like a somewhat empty exercise, although I admit there is still a bit of residual satisfaction when I observe increases.

-Upon reflection, I realized I haven’t truly experienced retirement yet. I’ve been working part-time jobs since retiring from my 38-year career in 2023 and currently have two employers. My hours have actually increased this year as I’ve been supporting a project that’s particularly interesting to me. Although I work from home and have essentially unlimited autonomy, I’m still very much in the work world. LinkedIn continues to be one of my favorite internet sites to visit. Thus, it seems I’ve kicked the can down the road a few years when it comes to dealing with the identity issues that will inevitably come when I’m fully retired from paid employment.

-I continue to find the most satisfaction in simple, inexpensive pleasures of everyday life: a quick trip to historic Bethlehem, PA with my wife; an exquisite  steak from the local butcher cooked to perfection on my new Weber grill and enjoyed on our patio in pleasant weather; meeting with buddies at a local restaurant to share a tasty meal; making friends with my daughter’s delightful new tuxedo cat, Morgana, rescued from the parking lot of her workplace.

-We have a grandson due to arrive in September, our first grandchild. I enjoy children—I’m still a big kid in many ways—and am eagerly anticipating supporting my son and his wife as their family expands. I expect to experience significant shifts in my identity, priorities, and perhaps even daily routines after becoming G-pa to this precious new life.

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How I Use a Simple Analogy to Teach Investing

Jonathan Clements, through his decades of work and his recent "Getting Going on Savings Initiative," has inspired countless people—including me—to think about how to empower the next generation. The initiative's core mission is to give young adults a tangible head start by funding their Roth IRAs, a concept that perfectly aligns with the most important lesson I’ve ever learned about money: time is a young adult’s greatest asset.

For many years I've been that person who talks to younger people about saving for retirement and investing for their future. Through family, friends, church youth groups and my younger employees, I've developed a playbook that seems to work more often than not. I'm always thrilled with early success, as the younger someone starts, the better their future investment outcomes tend to be.

I feel an obligation to give advice and build trust with younger generations. Perhaps it's because of my difficult early financial background. I'm not entirely sure, but if you have ever considered giving financial encouragement about retirement planning, my approach might be helpful. My normal first play is based on this question, asked during an informal chat in a relaxed setting:

"What do you think of this? If I had a machine that let you feed in $1 bills and gave you $20 in exchange, would you be excited?" It's a no-brainer, and they might ask how it works. I keep it simple and light-hearted, with no details needed. "It's very simple; there's a magic spell within the machine called the index tracker investing spell." I then follow through with another question:

"What if I told you the machine had a timer and only dispensed the crisp $20 note 40 years later? Would you still be happy to swing by every day and pop a dollar in? It's definitely worth the effort, don't you think? Your $20 will still buy you the equivalent of $5 in this distant future, but hey, it's still a spectacular personal win for your wallet."

This nearly always sparks interest and a conversation about money. The idea is simple and intriguing, and I find it's a good way to capture young adults' imaginations. A common question I get asked is, "Is this real?" I normally fire up an online compound interest calculator and get them to play around with it. Finally, I would chat about setting up the right account to feed the money machine.

I would talk about a Roth IRA and the magic of paying no taxes while the money is inside the machine. The even better point is that when you pull out your dollar bills, now transformed into $20 bills, it's all yours with nothing going to the tax man. At home in the UK I would over time chat about other accounts with different rules and for different goals, unfortunately I'm not familiar enough with your US equivalents to illustrate my point further.

But I think this core principle remains universal: time is a young adult's greatest asset. It's the engine that powers the "magic machine. So my hope is that this simple analogy empowers you to spark these conversations yourself. Take a moment to chat with a young person in your life—a family member, a friend, or an employee—and see if you can light a similar spark of financial curiosity. After all, what better gift can we give than a head start on their future?

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Starting Over, if you can. Some decisions are subject to change (I apologize for its length)

AGING IN PLACE (So we thought)

Our journey started in the late 1980s with our first remodel. It was our second marriage, and rather than asking our teenage children to share a bedroom when it was “my weekend”, we created two bedrooms and a full bath on the lower level of our split-level. It was a suite with adjoining bedrooms and a private bath. That brought our bedroom count to six, making room for everyone. We also finished the small “basement” for the boys. We made our first step towards 'aging in place', a concept that involves making home modifications to allow us to live independently and comfortably as we grow older.

Seven years later, as the children grew older and went off to college, it was time to remodel for ourselves. We moved the kitchen to the back of the house, replacing the living and dining rooms. We converted the boys’ bedrooms to twin offices and expanded our master bedroom into the adjoining bedroom. We learned from our parents in wheelchairs that if we expected to age in place, the first floor needed double-wide doorways. The challenge was significant, as it required major structural changes and careful planning to ensure the new layout was both functional and aesthetically pleasing. 

The next remodel around 2013 focused primarily on the master bedroom’s closets and bath. Convinced we were aging the place, we added a full bath on the main floor off the kitchen, and finally built our screened-in porch and expanded the deck.

In 2019, the former kitchen, now the den, became my hospital room. We were grateful that we added that full bath next to the new kitchen. About a year later, we cleared out the den for my wife’s recovery from a fall.

We never expected to test the concept of aging in place while we were still in our 70s, but it worked perfectly.

WE CHANGED (Big surprise - life got in the way)

As time passed, we realized we were becoming socially isolated due to mobility issues in our perfectly comfortable single-family home. Our neighbors have either moved or passed away over the last four decades. We missed them, but were happy to see younger families bring the neighbor back to life. This sense of community and connection is something we cherish and strive to maintain. 

Having no intention of ever moving, we paid no attention to the new construction of a luxury CCRC  just 10 minutes from our home. We finally decided to check it out and immediately added our names to their wait list. We were very late to the party.

Like every other couple, one is reluctant to change, and the other looks forward to it. Time has a way of helping to change minds.

Being late on the list, we missed getting an apartment with a den, an extra room we wanted for our home aide. The apartment we selected has two large bedrooms and a great room that houses the kitchen, living, and dining areas. It's perfect for two, but tight for three. We’re not worried; it should work out to everyone’s satisfaction.

The next issue: The Move. Going into ½ the space means different things to different people. To me, it meant starting over. My wife liked many items and wanted to keep them. We needed a talented interior designer to use every trick to make a small space look spacious and comfortable. 

I think I won. Gradually, as we saw the designs, my wife realized it was the right thing to do, especially when I told her it wasn’t costing us a cent. “How’s that?” she asks. I convinced her that, with five children, none would miss their small contribution to our happiness.. The total is big, but divided by five, the resulting amount seems small.

Days are going by quickly. We cleaned out a few areas, but not enough. We have a difference of opinion as to what personal items we want to take. I admit it. I’m attached to my junk (her word, not mine). Then I came up with the perfect plan. She throws away my stuff, and I throw away hers. Problem solved. But it wasn't that simple. Parting with our possessions, even those we rarely used, was an emotional process that required us to reevaluate our attachment to material things and focus on what truly mattered to us. 

Simply put, we are moving ‘for community’. By not leaving the area, we get to keep our family and friends. We simplified our move with the help of Erickson Senior Living, which gives new residents a free bridge loan to allow them to sell their homes after moving. It is such a civilized approach for seniors. 

So we move in December or January. I hope it goes as planned. We hired a great agent to sell our home (my niece). We hired highly recommended senior moving and transition specialists to handle the details and provide the labor.  We can just guide them without doing any physical work. Walking with a cane makes carrying anything a bit difficult. 

NEW MISSION (Spread the word)

I am on a new mission with my children. At 55, they are thinking about just one aspect of retirement - the money. What they are not thinking about is housing. 

We watched our parents’ health decline, and now we are experiencing ours. We started planning the living portion of our retirement 30 years ago.

It was a great plan until it wasn’t. 

WHAT WE LEARNED (This is the important message)

I’ve researched living options for retirees and those needing more than just a physical place to live. I’ve learned one crucial thing. Senior housing supplies are going to be insufficient. 

I heard of one place in South Carolina where they have a seven-year wait list for one-bedroom apartments and fourteen years for two. Imagine what that will be like in 10-15 years. 

For people like us who don’t care to move to better climates or can no longer play sports or even walk well, we are not moving to faraway places. We want to stay with our family and friends, and, in our case, the same zip code.

The solution is to plan.  There is only one way: sign up for waitlists now. Planning is not optional. It's a crucial step that we've learned the importance of, and we encourage others to act on it. 

You have to be careful. Some waitlists are better than others - even ideal. For example, our assigned priority number is fixed based on the date. The refundable fee ($1000) is small.. Being on the list early or for a long time means, at some point, you’re in the top, number-one position, ahead of all others because they have made other plans, taken an apartment, or passed on. You can choose active or inactive. If you’re inactive, you will not receive contact when a unit becomes available. If you’re active, you receive a notification every time a unit matching your requirements comes up. Say “no” until you like the offer.

Consider this. You’ll have fewer options if you want to live in a particular place, like near your home or in the same town. It’s getting harder to find land in the most popular areas. For sure, it’s going to be expensive. 

In two words, RESERVE NOW. Protect yourselves. It’s inexpensive to add the appropriate housing options to your financial plan. 

Check out a Life Plan Community (CCRC). If you think you “might” need what they have to offer, now is the time to go on a wait list. 

We have our fingers crossed that we are making the right move.

 

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How to minimize the caregiving burden on our adult children when we need help?

 
I was reading an article focusing on the caregiving burden on adult children. 
 Shocking statistics: 63 million Americans — nearly 1 in 4 adults — now provide care to an adult with health or functional needs, or to a child with a serious medical condition or disability — a record high. 
 Nearly half of caregivers are struggling with finances.  More than 20% have taken on more debt, about a third have used up short-term savings, 30% have stopped saving, and roughly 20% are leaving bills unpaid or paying them late, according to the data. Return-to-office requirements are not helping. 
More than 60% of caregivers are balancing their caregiving responsibilities while still employed. And half report they reduced hours, have taken unpaid leave, or even quit their job entirely. See link below: 

https://finance.yahoo.com/news/63-million-adults-are-moonlighting-as-caregivers-with-little-support-130037767.html

 We can minimize the caregiving burden for our children by moving to CCRC or assisted living, providing for long term care, downsizing and relocating closer to them, preparing a robust estate plan, and saving enough to provide for all future expenses. Even if we do these, the stress and emotional toll on children or relatives will still be significant. Many of you have experienced this already. 

What should we do to make sure our children do not have to sacrifice so much when we need help due to our deteriorating health?  How are your family and friends managing to provide such help to their loved ones?  

 

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ROTH Conversions and Fixed Index Annuities

I am beginning to develop a ROTH conversion strategy. I am 65 and have 10 years before RMDs kick in.  I see various people/organizations talking about using Fixed Index Annuities as a vehicle for ROTH conversions.  As I understand it, the insurance company will give you an immediate cash bonus up front when you set up the annuity. This bonus could typically be 15-20% of the actual amount you set up to be rolled over.  The pitch is that the cash bonus will pay from the conversion taxes, so you do not have to pay for the taxes out of your capital. Has anyone looked into these and used this technique?

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