This is my retirement diary for 2012, which was our first full year of retirement life. Follow along as we navigate this new phase. My husband and I both retired from 20-plus year careers at ages 55 and 57.
Hopefully this won't be too boring for you. I'm trying to make it relevant to others who are planning or getting close to retirement. Just skip over any parts that seem irrelevant to your situation.
During 2011, we finalized the retirement budget, reviewed the retirement checklist, tested the budget, and then I quit work on November 30th.
We took our time figuring out the financial management plans for setting up my retirement income, and in January 2012, we're still working on setting up the first income stream.
On this page, after New Year's resolutions, you can follow our activities for January and February, then click over to the next page as we get into March and our springtime activities.
My resolutions for 2012, apart from getting healthy and losing weight (boring), are all about exploring my hobbies with more focus and spending quality time with family and friends.
My current hobbies are making pottery in my studio, possibly working with “warm glass” (basically melting glass into shapes), and we also plan to get gold pans and classifiers, and maybe even a sluice when the weather gets warm again.
These purchases are covered by our monthly budget category for hobbies.
Over the Christmas holiday, we found out that our son and his fiancee have plans for a beach wedding in July, and they are hoping their closest friends and family will be able to plan a week of vacation nearby.
This provides a specific goal and target date for losing weight and looking our best. We also will have the wedding week for spending time with family at the beach. We’ll be visiting the wedding couple sometime in the next few months at their home in Chicago. It’s so great to have this free time!
As I prepare to track our expenses for January, I reviewed the totals for December to see how we did. Even though there was a holiday that can be quite expensive, we came in slightly under budget, so I’m thrilled with that! I’m really looking forward to seeing how it goes in January.
Today I attended another phone meeting with the financial advisor on the topic of investment choices. Since annuity rates are so low right now, we decided against annuities at this time. If rates improve it might make more sense in the future. By continuing to invest in a mix of investments we get the benefit of future flexibility and the potential for higher gains than we would get with an annuity.
We previously determined that a moderate risk portfolio would be appropriate, so the next decision is whether to use a single fund with a mix of investment types (a fund of funds) or separate individual fund selections. I will study the options in preparation for our next meeting in a week or two.
Even though we are babysitting our grandson for a few days, I’m hoping to get a couple of hours in my pottery studio today. I want to push my throwing skills to make a large fruit bowl for my kitchen. This will be the largest bowl I’ve been able to throw so far, so it may require a few failed pots before I get there.
After tidying up my studio, I had a couple of throwing sessions focused on bowls. I haven’t yet worked up to fruit bowl size yet, but the practice will pay off eventually.
Another challenge that is taking up some of my hobby time is taking steps to prevent my studio from freezing since our temperatures are in the mid-20’s right now. I have to store the clay and green pieces where they won’t freeze overnight. Hopefully this year I can get my husband to add heat to my pottery studio.
One of the common complaints from couples in retirement is on the topic of togetherness. Husbands getting in the way of wives as they go about their days.
I was just a little concerned about this since I always have a lot going on and stay busy. I'm happy to say that it hasn't been an issue yet.
Sometimes I can do whatever I'm doing in the great room or kitchen and my husband can be nearby where we can chat. Other times he has his interests (music and guitar) and I'm free to pursue mine.
He is more prone to volunteering to babysit than I am, and when that happens I have less freedom to do what I want because I have to assist with cooking and playing.
Don't get me wrong, I adore our grandson, but taking care of the two of them for days at a time is like a full-time job. Even so, I'm happy to do it occasionally, just not every week.
Today I plan to meet a friend for lunch. It will be good to catch up on things with her. We worked together several years ago and have kept in touch.
She is younger than I am and still has young children. She can tell me about her kids and I can tell her about my grandson, so we still have things in common.
I'll be back in a day or two. Thanks for following!
This was our last meeting on the topic of setting up 401k withdrawals. I will receive my first retirement income check on February 1st in the form of an automatic bank deposit.
There is a mandatory withholding of taxes on 401k withdrawals, so we increased the withdrawal amount to cover those as well as about 5% for NC state taxes.
We also decided that each years income money will be moved to a fixed investment earning 3% interest to protect it from market downturns, and for peace of mind.
Next steps: My 401k advisor will be helping me transfer an IRA and 401k from previous jobs to a new IRA at this same institution. This will make it easier to keep track of my retirement investments in one place. But more importantly, I compared the fees on these older IRA and 401k accounts and found that they are too high compared to my larger 401k account.
The service center that processes withdrawal payments called to let me know I had overlooked a section on the form for automatic deposits.
My first withdrawal will be in the form of a check by mail, and I will need to send new instructions for the automatic bank deposit.
Also, the state doesn't require withholding on withdrawals this small, so the check could be slightly larger than expected.
No big deal, now I'll just watch my mailbox.
It's official! My first retirement check came yesterday. As expected, it was about $100 more than originally planned since the state didn't require any withholding. This is just fine, too. Since we've been under budget, this will just accumulate for those expenses that come once or twice a year, like insurance bills.
To keep it simple, I decided to transfer my smaller retirement accounts to the same institution that holds my 401K, so my assigned advisor and I worked on those forms today. These will go into a separate IRA which will be earmarked for special needs, yet to be determined. Could be for big vacation trips, a new car, or something else. I think we'll need to get comfortable with our new lifestyle and spending habits before we decide.
I'm still tracking our spending in detail, which I plan to do for at least 6 months to be sure we have a budget category for everything, and that the budget amounts are adequate. So far, so good.
One thing I'm thrilled about: I logged on to check my 401k balance to see if the check had been deducted. It had been, and big surprise!, not only did my account value increase to cover it, but it is even higher than it was before the withdrawal! That is so cool. But I realize, it could just as easily fall back again in a week or month from now if the markets drop. But maybe it won't :-)
Next week, I'll begin working on the 2011 income tax filings.
I haven't discussed my husband's situation very much so far because his plans have been sort of on hold. He has been on a leave of absence from his job for a few months, but finally he has made the move and officially retired, too, at age 57. YAY!!!
I'm so happy now that we are both FREE! Next, we will begin the process of setting up an income stream from his 401(k). Our account balances are roughly equal, so it should be easy to just duplicate what we just did with mine.
The biggest difference is that his accounts will remain with a different financial services company. We were tempted to move them all together in one company, but I think it is smart to be diversified and keep this separation for added safety.
Our health insurance coverage will be provided by his retirement benefits. We still need to review our life insurance needs since his benefits don't provide the same amount as when he was employed.
Before I can even start working on taxes, I need to spend some time organizing my office. It had been neglected over the past year or so because of work demands and my preference to spend any free time with our sweetheart of a grandson. It is so nice to just putter around and do it right.
We are finally getting serious about starting a fitness plan. We are going to the Greenway each day to walk a couple of miles. The Greenway we chose is about 2.2 miles and has lots of good hills. It starts at the YMCA and passes through quiet streets of town then circles back to the Y. Weather has been gorgeous and it is a delight to get outside in the sunshine in February!
No hot water! As I was getting ready for the day, I discovered we don't have hot water.
The plumber was called and after he checked it out, he suggested we replace our 37 year old water heater with a new one since it has serious leaks starting.
Luckily, we haven't been spending much this month and we have the $600 available. Even if we didn't, we have our emergency savings account for just this type of thing.
On the plus side, maybe our electric bill will go down with a new energy efficient water heater.
This week our focus is on getting familiar with hubby's 401(k) portfolio and studying the available investments. (I've been given the go-ahead to dig into the details since he doesn't like anything to do with money management)
My plan is to put down on paper the investments that match what we did with my 401(k) before I contact an advisor with this company. I'll find out how closely this advisor's advice matches the advice I got from mine.
A small chunk of the account is in company stock, so that's the first change I have in mind; to move it into a fund. I think keeping it in that stock is too much risk.
Next week I'll setup a meeting with the advisor and get to work on rebalancing and starting withdrawals. We'll also need an IRA to transfer his pension into.
We'll probably be planning a vacation for late March or early April, to help with the wedding plans and enjoy the spring weather in Chicago. That means I better get busy and finish the taxes soon!