Jonathan Clements's Blog, page 351

Shame on Us

OVER 600 YEARS ago, Geoffrey Chaucer gave the world The Canterbury Tales, a caustic look at a cross-section of English society. While all the stories are still worth reading, one tale is especially relevant to today���s consumer.

For those who don���t remember The Canterbury Tales, it���s a story about a group of pilgrims traveling from London to Canterbury. They pass the time on the road by having a contest to see who can tell the best tale.

One of the travelers is a ���pardoner��� by profession. He describes how he goes from town to town, delivering a pat speech against greed. He then finishes by brandishing supposed holy ���relics��� of bones and clothing, including a mitten. These relics can purportedly absolve sins, solve problems and cure ailments.

The Pardoner invites all to pay a fee to interact with the relics and be publicly relieved of their troubles. But he also issues a dire public warning: Those whose sins are too great cannot be absolved by these relics, so they should remain in their seats and not even attempt to pay. The Pardoner then gleefully watches as most come forward, even those who doubt his authenticity, lest they be suspected by their peers of secret horrible sins.

Most people today don���t seek absolution, least of all by paying to put on a holy mitten. Still, Chaucer���s tale encapsulates a contemporary sales technique. The Pardoner is knowingly tapping into our nonrational, but very common, fear of public shame, or what we’ll call��FOPS.

Paying for doubtful absolution is not based on rational factors, like cost or quality, but on concern that not��utilizing the product will invoke social ostracism. It���s somewhat similar to the bandwagon effect or FOMO (fear of missing out) nudge, where people spend because they���re afraid of missing a good deal. But with FOPS, consumers know it���s a bad deal and yet they still waste money because, if they don���t participate, they might invite social backlash.

FOPS is very much a nudge for today���s world. Many a wise consumer will tell you how he or she felt something was a bad deal from the beginning, but couldn���t resist buying because of tacit pressure from friends or societal expectations. Salespeople can often close a deal with a hesitant buyer by saying, ���Of course, if you need to see something less expensive���.��� Millennials may not know Chaucer���s Pardoner, but most can explain the context and meaning of, ���On Wednesdays, we��wear pink.���

Phone shaming is one example. When one of our sons wanted his own cellphone in middle school, we bought him a Firefly, which was a sort of starter cellphone, where parents could limit calls. Initially ecstatic, our son quickly lost enthusiasm and begged us for an ���adult��� cellphone, not because he needed it, but because his friends said he had a ���baby��� phone. Even among adults, my iPhone 5S today invokes sneers of, ���You still use that?��� Yet it serves my needs���and at a much lower cost.

People aspiring to executive positions are often told what are the right neighborhoods to live in, the right country clubs to join and the right cars to have in the parking lot. These people, who have worked their way up to this rarified level, are money smart, yet even they knowingly squander money on non-necessities ���because that���s what���s done.���

FOPS is a waste of both personal budgets and community resources. It perpetuates non-inclusive, non-innovative, inner circle thinking. At its worst, anyone who dares to act differently is seen as a threat to the system and ���not one of us.��� You even hear that millennials are wreaking havoc or killing industries by abstaining from certain products���as if consumers are meant to serve industries and their products, not the other way around.

Wasting money for fear of social repercussions? That sounds to me like a relic of the past.

Jim Wasserman is a former business litigation attorney who taught��economics and humanities for 20 years. His previous articles include Under Attack,��Terms of the Trade��and��When in Rome. Jim���s three-book series on teaching behavioral economics and media literacy,���� Media, Marketing, and Me , ��is ��being published in 2019.��Jim lives in Granada, Spain, with his wife and fellow HumbleDollar contributor, Jiab. Together, they write a blog on retirement, finance and living abroad at�� YourThirdLife.com.

HumbleDollar makes money in three ways: We accept��donations,��run advertisements served up by Google AdSense and participate in��Amazon‘s Associates Program, an affiliate marketing program. If you click on this site’s Amazon links and purchase books or other merchandise, you don’t pay anything extra, but we make a little money.

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What Number?

A DECADE AGO, a large financial firm ran a clever advertising campaign that showed people going about their everyday lives carrying a bright orange six- or seven-figure sum that represented their number���how much money they needed to retire. It was clever because we humans like to simplify���and sometimes oversimplify���complicated issues. It���s one of our cognitive biases.

I spent almost 40 years in aerospace engineering. I did a lot of detailed engineering analyses, calculating expected performance numbers, which could then be compared to a particular project���s requirements. Government agencies frequently provide guidance on how to perform these analyses and what results are acceptable. Even though this was ���rocket science��� in the popular sense, the process was���in many ways���straightforward. The physics were well understood and, more important, we had a good grasp of the problems we were trying to solve.

My love of analysis is one of the things that attracted me to financial planning. My engineering expertise seemed like a great fit for doing complex retirement projections. I could even use my background in so-called Monte Carlo analysis. At work, we used Monte Carlo techniques to analyze complex thermal radiation problems, but in finance it���s used to look at how a portfolio might fare in countless market scenarios.

Indeed, I was sufficiently jazzed about financial planning that, several years ago, I purchased sophisticated commercial planning software. I was excited to build a ���professional��� grade model to assess our retirement readiness and evaluate alternative scenarios. In preparation, my wife and I discussed our vision for retirement. I used that information to build a matrix of scenarios, varying a large number of parameters like inflation, retirement dates, vacation budgets, Social Security claiming strategies and long-term-care options.

Housing in retirement was a key subject. We own our primary home, plus a vacation home at the New Jersey shore that we rent out each summer. I analyzed a variety of scenarios, including keeping both homes and renting out the shore house, keeping both homes and not renting, and selling our primary home and moving to the shore. To look at long-term-care needs, I ran scenarios where we sold all real estate at age 80 and moved into assisted living. To account for variations in portfolio performance, I used Monte Carlo analysis.

Needless to say, this generated a wide array of outcomes, but generally the results looked great. There was a little less margin for error in the fancier lifestyle cases���my term for owning two homes���but it still wasn���t bad. I felt good about our retirement plan.

But when I sat down with my wife to deliver this news, it did not go well. I presented an overly complicated and confusing set of results that muddied the picture. There were myriad charts showing income and spending profiles. I presented Monte Carlo results with 1,000 different portfolio trajectories. The message got so garbled that she ended up in tears. I had so overwhelmed her with data, scenarios and assumptions that she had no idea if we had reached our number or not.

In retrospect, I learned that the idea of a single number is compelling, even if it isn���t realistic. After my initial failure at communicating the results, I tried a different tack. I took a narrative approach. I explained to my wife that we were on track for a comfortable retirement. At some point, we would probably downsize to one home. Where that home would be, and when we���ll downsize, wasn���t certain. It depended to a large degree on our children and grandchildren. The large number of scenarios I looked at indicated we had some time and flexibility to make those decisions. We also should have enough funds to cover quality senior living. We���d continue to review and discuss our plan, I told her. I expect we���ll do that throughout retirement. I also learned that her concerns were less financial and more about staying vital, active and healthy.�� She trusted me with the numbers and didn���t need to understand every calculation.

What did I learn? By all means calculate your number. But when you think about that number, recognize that it represents the sum of your hopes and wishes for a happy and healthy retirement. With that in mind, try to build a plan that includes some margin of safety, so you have the flexibility to deal with the inevitable���and often unexpected���changes to come.

Richard Connor is�� a semi-retired aerospace engineer with a keen interest in finance. Rick enjoys a wide variety of other interests, including chasing grandkids, space, sports, travel, winemaking and reading. His previous articles were Taking Your Lumps,��Quiet Heroism and��Think Bigger. Follow Rick on Twitter��@RConnor609.

Do enjoy articles by Rick and HumbleDollar’s other contributors? Please support our work with a donation.

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Educated Consumers

COLLEGE STUDENTS who borrow graduate with an average $37,000��in loans. While many people believe loans are the only way to finance a college education, that���s simply not the case. Here are five ways to get an advanced education while minimizing debt:

1. Stay close to home.��Sure, it���s fun to think about moving across the country to go to school. But staying close to home after high school comes with several benefits. In-state tuition rates at public universities are typically discounted at least 50% compared to rates for out-of-state students. Some states have even larger discounts. Florida, for example, offers a nearly 70% discount to residents. Want to save even more? Skip the high cost of room and board by continuing to live at home.

Can���t stomach the thought of being with or near family for four more years? Several public schools offer waivers of��out-of-state fees. You���ll likely need to write an essay���and be a top-tier student���to qualify for these programs, but the cost savings are significant.

2. Comparison shop.��On paper, private schools typically appear to cost more than public institutions, but it���s worth digging into the details. Private colleges and universities often have larger endowments than their public counterparts. This allows them to offer significant need- and merit-based aid packages, consisting primarily of scholarships and grants, rather than loans. It pays to apply to a wide variety of schools, so you can compare aid packages.

3. Scholarships.��When paying for college, nothing beats free money. Billions of dollars in scholarships are given to college students every year. Awards may be made based on academic performance, sports participation or any number of��other criteria. Churches, 4-H clubs and other groups often offer awards to young adults who are affiliated with their organizations.

Don���t overlook smaller scholarships, which may have fewer applicants. My advice: Treat applying for scholarships like a fulltime job. Forty hours spent filling out applications, which ultimately results in $10,000 of awards, equates to a tax-free income of $250 per hour.

4. Condensed degree programs.��As college costs soar, some institutions are offering condensed degree��programs, allowing students to graduate in less time than normally required. Students can also ���fast track��� their degree by forgoing part of their college social life and, instead, maximizing the number of credits they take each semester. In addition, many colleges offer accelerated courses in the summer, allowing students to rack up a number of prerequisite courses in a single six- or eight-week period.

5. Tap your employer.��Some employers offer tuition reimbursement programs as part of their employee benefits package. If you���re interested in working in a field where the number of jobs exceeds the available workers, you may find employers are willing to pay all or part of your tuition bill in return for agreeing to work for them after graduation.

Many hospitals offer these types of programs for students interested in nursing. It���s even possible to attend medical school for free. Kaiser Permanente recently announced that the first five cohorts of students to attend its new medical school will pay��no tuition. With medical doctors typically graduating with nearly $200,000��in debt, Kaiser���s program will no doubt generate significant interest.

Kristine Hayes is a departmental manager at a small, liberal arts college. Her previous articles include Nervous Bride,��Prime of Life��and��School’s Out. Kristine��enjoys competitive pistol shooting and hanging out with her husband and their three dogs.

Do you enjoy articles by Kristine and HumbleDollar’s other writers? Please support our work with a��donation.

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Where to Begin

WHEN I STARTED working fulltime in 1980, there were very few retirement savings vehicles available to the average worker. I remember setting up my IRA and contributing the $2,000 annual maximum���at the time the only retirement account I could fund.

Today, by contrast, there���s a slew of retirement choices on offer. Where should those new to the workforce focus their dollars? If you have access to a 401(k) or similar retirement plan with an employer matching contribution, that���s the first place to stash your retirement savings. The match is free money and you don���t want to miss out.

If the company offers a Roth 401(k) account, put your money there���up to the level of the match���so you get the Roth���s tax-free growth. The company���s match, meanwhile, will go into the traditional 401(k), which means the money will be taxable when withdrawn. By saving in the Roth 401(k) and getting matched in the traditional 401(k), you���ll be diversifying across tax-free and tax-deferred accounts. In 2019, the maximum you can save in a 401(k) is $19,000 if you���re younger than age 50. The employer match doesn���t count toward this limit. There are no income restrictions on contributing to a 401(k).

If there���s no employer match in your employer���s plan, instead make funding a Roth IRA your top priority. You���ll have to set up the Roth IRA at a brokerage firm or mutual fund company. There are income limits that could potentially prevent you from funding a Roth IRA. But you can sidestep those limits with the so-called backdoor Roth: You establish a traditional IRA and then immediately convert it to a Roth.

In 2019, you can contribute $6,000 to all IRAs combined if you���re younger than age 50. Any contribution to a Roth IRA can be removed at any time, with no taxes or penalties owed, making it perfect for a backup emergency fund. This flexibility makes it more attractive than a Roth 401(k), unless your 401(k) contributions are earning you an employer match.

In addition to the Roth 401(k) and Roth IRA, you may have a high-deductible health insurance plan through your employer. That brings us to the third account that a new worker might establish: a health savings account, or HSA. If you���re under age 55, you can contribute $3,500���and that sum is tax-deductible, thus reducing the income taxes owed on your salary. On top of that, the money grows tax-deferred and���if it���s spent on medical expenses���will never be taxed. The super-saver will keep his or her medical receipts and not tap into the HSA for many years, and instead let the account continue to grow. When money is needed for any reason, the account holder can offset the amount withdrawn with those saved medical receipts, leaving him or her with tax-free money that can be used for any purpose.

If we ignore any employer match, the employee utilizing the above three accounts would be able to save $28,500 annually���and all the accounts might never be taxed. Realistically, few young adults who are just starting out will be saving at this level. After all, to hit that $28,500, you���d need to be earning $142,500 and saving 20% of income.

These various savings opportunities make my first annual $2,000 tax-deductible IRA contribution look small. Today, there are so many tax-free savings vehicles available to those who want to start saving early. Eventually, as you get into higher tax brackets, you might direct savings to tax-deductible 401(k) and IRA accounts, so you get the immediate tax break. But for most young adults, forgoing the tax deduction���and going for the tax-free growth���will be the way to go.

James McGlynn CFA, RICP, is chief executive of Next Quarter Century LLC��in Fort Worth, Texas, a firm focused on helping clients make smarter decisions about long-term-care insurance, Social Security and other retirement planning issues. He was a mutual fund manager for 30 years. James is the author of��Retirement Planning Tips for Baby Boomers. His previous articles were As the Years Go By,��Package Deals and��Last Call.

HumbleDollar makes money in three ways: We accept��donations,��run advertisements served up by Google AdSense and participate in��Amazon‘s Associates Program, an affiliate marketing program. If you click on this site’s Amazon links and purchase books or other merchandise, you don’t pay anything extra, but we make a little money.

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Creeping Costs

WE ARE ALL victims of continually rising costs. Here���s the oft-repeated drill: The service provider sends the yearly renewal bill by mail or email, or the new annual cost is simply posted to our credit card account or deducted from our bank account.

Assuming we even notice the charge, the head-scratching starts. What the heck was the cost last year anyway? The new fee may have increased just 3% or 5%, which doesn���t seem like a lot. This scenario may continue for a few years running, until either the service provider tries to sneak in an even larger increase or we wake up to the cost creep.

Now, we have to deal with a bill that���s got out of hand, especially when you consider that U.S. annual inflation has averaged less than 2% over the last 10 years. The next steps are almost always the same. We have to investigate whether the increased cost is reasonable. We have to determine if alternative service providers are available. We have to call the service provider, asking for a lower fee or perhaps dropping options. Finally, we may have to switch to an alternative provider or simply go without the service.

If you haven���t recently checked the cost of the following services, you might want to comb through your credit card and bank statements, and check out all recurring expenses. Chances are these costs have crept upward:

Cellphone, including the related cloud backup service
Cable, landline and internet
Insurance for everything from cars to boats to pets
Subscriptions for magazines, newspapers, websites, apps and more
Memberships for gyms, clubs and professional organizations
Home security services
Fees for advisors and financial accounts
Regular charges for lawn care, pool maintenance, pest control and house cleaning

In some cases, you may find you���re paying for services you���ve forgotten about or failed to cancel after the free trial period ended.

Many of us constantly monitor, assess and rebalance our portfolios. We would likely benefit from similar diligence on the spending side. I suspect most of us are thoughtful when deciding which services to sign up for���but, once we���re signed up, we tend to retain such services and ignore the constant cost creep.

What if costs have increased too much? A quick phone call will often get the service provider to back off. With such complaints, my wife and I have regularly been able to hold the line on the cost of cable, phone, magazine subscriptions, insurance and more. What if that doesn���t work? Nothing lowers costs faster than simply terminating the service.

John Yeigh is an engineer with an MBA in finance. He retired in 2017 after 40 years in the oil industry, where he helped negotiate financial details for multi-billion-dollar international projects. ��His previous articles include Cashing In,��Take It or Leave It�� and Got You Covered.

Do you enjoy articles by John and HumbleDollar’s other writers? Please support our work with a donation.

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Need to Know

A DOZEN YEARS ago, on my first day of business school, the professor stood at the board and illustrated a concept called ���present value.��� Truth be told, over my remaining time in school, I don���t think I learned anything more important than I learned in that first hour. It is, in my view, the single most useful tool in all of personal finance. Below, I���ll walk you through the concept and then illustrate some ways it can help you make better financial decisions.

Let���s look at a simple example. Suppose you were presented with this choice: You could receive $90 today or $100 a year from now. Which would you choose? The question is tricky because it���s asking you to compare apples to oranges���a certain number of dollars today vs. a different number of dollars next year. But this is where present value is so incredibly useful. Here���s how it works:

Step 1:��Estimate how much you could earn if you invested for one year. Let���s assume just 2%, because the time horizon is short and you can���t take a lot of risk. If it were a longer period, you might assume a higher rate of return.

Step 2:��Calculate the present value of the future $100, assuming that 2% rate of return. In other words, determine the value to you today of the $100 you could receive next year. If you were to do this math on a calculator, it would be $100 divided by 1.02. That works out to $98.04. (In reality, you would use Microsoft Excel or another spreadsheet program to make the math easy. Look for the PV function.)

Step 3:��Now you���re in a position to do an apples-to-apples comparison. Again, the choice is between $90 today or $100 next year. The first part is easy: The value of $90 today is, of course, $90. And the value today of that $100 a year from now? In step 2, we calculated that to be $98.04. Clearly, $98.04 is preferable to $90, so in this case you would want to wait a year to receive the $100.

The above example is a little antiseptic. Let���s look at how you can use present value to make real financial decisions:

Pension benefits.��If your employer has a traditional pension plan, it���s possible you���ll be offered a buyout at some point. For example, if you���re entitled to $50,000 per year for life, your employer might offer $650,000 as a lump sum alternative. Should you take it?

Present value analysis would allow you to compare that lump sum to the present value of all those future annual payments. You could explore different rates of investment return���assuming you took the lump sum���as well as different potential life expectancies. Of course, those are both unknown, but present value calculations at least offer a logical framework for making your choice.

Whole life insurance.��If you���re like most people who own whole life insurance, you���ve considered liquidating the policy. But you might wonder whether, after all the premiums you���ve paid, it���s better to stick with it. If you use present value analysis, you can compare the value of the future death benefit to the cash value today (less taxes, if any).

Car leases.��If you need a new car, leases are enticing because they offer such low monthly payments. At the same time, you���ve probably heard that it makes more sense to buy. But like all rules of thumb, this isn���t ironclad. If you use present value analysis, you can compare the total cost of buying vs. leasing.

Extended warranties.��Before you leave the dealership, the salesperson will probably also offer you an extended warranty. Again, these have a reputation for being a bad deal, but it depends. Do a present value analysis based on expected future repairs, and then use the results to negotiate with the dealer.

Education.��For years, it���s been conventional wisdom that a college education is a good investment. But with the astronomical cost of tuition, room and board, many are starting to ask whether the conventional wisdom is still wise.

Again, I���d use present value analysis to help evaluate the choice. Compare the cost of college, plus financing costs, to the expected increase in lifetime wages. To be clear, I���m not advocating against college. Far from it. I���m only advocating against unjustifiably expensive schools that leave students and their families burdened by debt they���ll struggle to pay.

Adam M. Grossman���s previous articles��include Passive Stampede,��Adding Value,��Three Risks��and��Room to Disagree . Adam is the founder of�� Mayport Wealth Management , a fixed-fee financial planning firm in Boston. He���s an advocate of evidence-based investing and is on a mission to lower the cost of investment advice for consumers. Follow Adam on Twitter�� @AdamMGrossman .

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Declaring Victory

I OFTEN FEEL like the Grinch, who ���puzzled and puzzled ���till his puzzler was sore.��� One question I’ve puzzled over endlessly: If what I do barely matters in the greater scheme of things, why in the world do I keep doing it?

Here are four related thoughts that often crop up in my writing:

One of life���s great pleasures is working hard at something we care deeply about.
While striving toward our goals can bring great satisfaction, achieving them is often a letdown.
We should worry less about the praise of others and more about doing work we find personally meaningful, because only the latter will reliably deliver happiness.
Five or 10 years after we���re gone, most of us will be forgotten, except by friends and family.

We know why we keep pushing forward: It���s our hunter-gatherer instincts. We���re here today because our nomadic ancestors were never satisfied with what they had and instead���in their efforts to survive���strove relentlessly for more. The feeling of satisfaction we get when we make progress is a trick played on us by our genes, so we keep working hard.

But if we know this, why don���t we learn to chill out? Now that our daily existence isn���t a life-or-death struggle, doesn���t our relentless pursuit of progress start to seem like the frenzied activity of delusional men and women?

This bring us back to the old battle between ���more��� and ���enough.��� Somebody once joked to me that, no matter how much money folks have, their idea of being rich was having twice as much. But today, I���m not talking about more money or more possessions.

Instead, my focus is on more success���career or otherwise. We keep striving for one more big promotion or one last major achievement, so we can make our mark on the world, go out on a high note and thereafter rest on our laurels. But it almost never works out that way: We slip into retirement and what we achieved is reworked, abandoned, ruined or simply forgotten.

I try to comfort myself with the notion that we���re part of a conversation that stretches across the generations. We build on the work of folks who came before us and whose names we most likely don���t know. And our work will be built on by those who follow, and they most likely won���t know our names, either.

But I also think we should try to figure out what success looks like, so we can finish our life���s work with some sense of satisfaction. I���ve been endeavoring to do this myself. I think of HumbleDollar as my last big project���and I hope to keep it going for as long as possible.

At some point, however, I also want to feel like I���ve succeeded. But how will I know? I���m pondering what my goal should be���perhaps a target number of monthly website page views���so I���ll know when to declare victory and be satisfied with what I���ve achieved. Looking ahead to the end of your career or the end of the more active part of your retirement? I���d encourage you to engage in the same exercise.

Ponder what constitutes success and then write it down, so you don���t start moving the goal posts. To be honest, I���m not 100% sure this will work. But maybe, just maybe, if you achieve your written goal, you���ll have some peace of mind���and you won���t spend your remaining days wishing you had achieved more.

Follow Jonathan on Twitter�� @ClementsMoney ��and on Facebook .��His most recent articles include User’s Manual,��Just Asking��and��No Worries. Jonathan’s ��latest books:��From Here to��Financial��Happiness��and How to Think About Money.

HumbleDollar makes money in three ways: We accept��donations,��run advertisements served up by Google AdSense and participate in��Amazon‘s Associates Program, an affiliate marketing program. If you click on this site’s Amazon links and purchase books or other merchandise, you don’t pay anything extra, but we make a little money.

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Right Turn

MY HUSBAND is the consumer every company should fear. In my last post, I detailed his multi-month research that preceded our recent car purchase. This time, he decided to investigate auto insurance.

The Gecko���s promise to save 15% had hit a nerve. A savings of 15% on a $2,500 annual insurance bill for two cars would be worth the effort. But, of course, being the thorough person that he is, my husband had to check out every other insurance company on the planet.

What an eye-opening experience.

He started by getting online quotes. Then he called and asked for a hard copy confirmation. The initial online quotes looked amazing until he delved into the details. The coverage was minimal. When he asked the companies to replicate our current coverage, the quotes doubled.

Upon further inquiry, he found out it was partly due to a claim. That made sense. But what claim? We couldn���t think of any accidents or traffic tickets.

This is where it gets interesting.

The agent said there is a clearinghouse that tracks insurance claims. The Comprehensive Loss Underwriting Exchange, or CLUE, looks at ���incidents��� on your report. We had three claims.

In two instances, we had needed to jump start an antique car we own. These were incorrectly labelled as towing calls. My husband explained to the agent that we had a separate policy for the antique car and were not asking him to include it in the quote. It didn���t seem to matter.

The other claim was for a damaged windshield on a car we had since sold. We decided that, since we had insurance, we should put in the claim. Isn���t that why you have insurance? It turns out that, while the claim may not negatively affect your premium with your present insurer, it could add to the cost if you get a new policy.

After all the wrangling, we did change insurance companies. It was worth it. Here are five things we learned:

Get quotes regularly from other insurers. Even if yearly increases are small, they add up���and you could do better.
Keep the clearinghouse in mind if you plan to change policies. A new insurer may ding you for claims within the last five years or so. If the damage to your car isn���t too extensive, consider paying out of pocket.
Make sure the insurance quote you request is for the same coverage you currently have. That way, you can make an apples-to-apples comparison.
Newer cars have more safety features���and that can result in lower insurance premiums, even though you���re now driving a newer, more expensive car.
Don���t opt for the insurance company���s roadside assistance if you already have coverage through another source, such as AAA or your credit card.

How did we do? We have a new policy with an insurance company that���s saving us $1,300 a year. An added bonus: Unlike our old insurance company, the new insurer lets us pay by credit card, so we���re collecting points.

Sonja Haggert’s previous articles were Getting Used and��Check’s in the Mail. She’s the author of Invest, Reinvest, Rest. You can learn more at SonjaHaggert.com.

HumbleDollar makes money in three ways: We accept�� donations, ��run advertisements served up by Google AdSense and participate in�� Amazon ‘s Associates Program, an affiliate marketing program. If you click on this site’s Amazon links and purchase books or other merchandise, you don’t pay anything extra, but we make a little money.

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Are We There Yet?

SAVING, investing and planning for retirement is like running a marathon. It requires dedication, discipline and endurance.

But there���s also a crucial difference.

When you cross the finish line in a marathon, you know the race is over. But when you quit the workforce, it���s much harder to figure out whether you���ve successfully reached retirement.��Why? A happy and prosperous retirement is about money, but it���s also about so much more than money.��Here are 15 signs that a wonderful retirement likely lies ahead:

You don���t need an online calculator to tell you that you have enough money, because it���s so obvious you can do the math yourself.
Your Social Security benefit will cover your fixed living expenses���and you can afford to wait until age 70, so you get a larger check.
Your Social Security and required minimum distributions from retirement accounts will together cover all your expenses, discretionary and nondiscretionary.
You don���t pay attention to the stock market���s daily movements, because you���re confident you have enough, pretty much no matter what happens.
You decide to get a part-time job not because you have to, but because you want to.
You have a spouse or significant other who does little things, like straighten your shirt or hold your hand, to let you know that he or she will be there for you to the very end.
Your adult children visit you not to borrow money or drop off the grandkids, but to say ���hello��� and ask how you���re doing and if you need anything.
You wake up in the morning thinking it���s Thursday and you need to rush to meet Diane and Stan for breakfast. But a few seconds later, you realize it���s only Wednesday and you have a lunch engagement with Cindy and Steve.
You turn 65 and enroll in a Medicare prescription drug plan. You opt for the lower tier, less expensive plan, because you don���t take medication on a daily basis.
Your medical costs primarily consist of the Medicare and supplemental insurance premiums you pay each month.
You���re aware of how long-term care can adversely affect your life and your financial future. But you feel confident about your physical health, because you eat your salad and your grilled fish after another energetic workout at the gym.
You say to yourself: ���I can���t believe I���m xx years old. I don���t feel it.���
With more time on your hands, you discover new things about yourself���like a new talent you didn���t know you had.
You stop and look at the sunrise and sunset, because you now have time to notice such things���and you want to enjoy them to the fullest.
You have a reason to get up in the morning and a feeling of contentment when you lie down at night.

Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor’s degree in history and an MBA. A self-described “humble investor,” he likes reading historical novels and about personal finance. His previous articles include Healthy and Wealthy,��After You��and��Improving With Age. ��Follow Dennis on Twitter��@DMFrie.

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Mercedes and Me

MY FATHER was a car salesman. For the last 20 years of his career, he sold Mercedes and he was good at it. He even won a sales contest that included a trip to Germany to tour the factory.

Unfortunately, selling Mercedes does not mean you can afford one. But he did get to drive them. As a kid, I was also hooked. When I was 17, I was allowed to drive a 190SL in the local July 4th parade. Once, I even drove a 300SL. I was definitely hooked.

When I graduated high school in 1961, I promised my father that one day I would own a Mercedes. Looking back, I think my quest was more about being financially successful than the car itself. My father often told stories about the people who bought cars from him���doctors, a baseball player, owners of famous restaurants. Often, people paid cash. One story was particularly motivating. It was about a fellow who bought a 300SL for $11,000 in 1953. He reached into his top shirt pocket and pulled out the cash. That���s about $104,000 in 2019 money. Perhaps it���s telling that I still remember that story.

While I never really lost my desire for a Mercedes, life intervened, including four children, 16 years of college bills and saving for retirement. Around 1994, as my youngest entered college, my Mercedes yearnings began stirring. Was there light at the end of the college tunnel?

I opened a savings account and dubbed it my Mercedes fund.

Twenty years later, I had enough money���or close enough. In 2014, I bought a E350 for cash, more money than the cost of all my previous cars combined. At age 71, I fulfilled a dream and a promise. Two days after picking up the car, I fulfilled another promise. My wife and I took off across the U.S. so I could show her the national parks she���d always wanted to see���and I got to drive my Mercedes on the open roads of the west. I won���t admit to the speed I reached once, because my wife may read this and she was asleep at the time. I put 10,000 miles on the car in a few short weeks.

Just before the trip, when I drove the car off the lot, I welled up for a minute. Still, I didn���t feel the degree of satisfaction or pleasure I thought I would. It was, after all, just a car���which was now worth less than I���d paid. What I realized was that it wasn���t about the car, but about keeping a promise, about setting and achieving a goal, and about proving to myself I could do it.

That didn���t last long. I looked around and saw people half my age in better models. Did they pay for them? The salesman told me that, in his experience, over 70% of the cars are leased. If you lease a car, are you making a good financial decision���or is it that you really can���t afford the car and it���s more of a keeping-up-with-the-Joneses decision?

It���s the same with other spending, too. What���s the point of expensive trappings that can���t be paid for in full and that divert money from truly important financial goals? It���s like cheating on a test. You get an A, but you learn nothing and accomplish nothing.

My dream car is now five years older, and so am I. I���m getting those Mercedes stirrings again. What to do, what to do? Should a really old man take a chunk from the kids��� inheritance?

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include Leaves Me Cold,��Sharing the Wealth��and��Matter of Degree.��Follow Dick on Twitter��@QuinnsComments.

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