These were the teasing words of my friend, LM, as a group of us rode to the Capitola Wine and Art Festival a few weekends ago. We were discussing retirement, a popular topic with my friends. Of the five of us on this excursion, four of us are retired. Three of the four, myself included, have continued to work part-time in our retirement. My friend, LM, is the exception and he likes to remind us he "knows how to do retirement." LM loves his leisurely lifestyle that includes playing golf three times a week, and he is fortunate to live in a 55+ community that has an 18-hole golf course among its many amenities.

On the other hand, I do not play golf nor does my dh, and although we have hobbies and interests, we also have ample time on our hands. So we chose to take part-time work, not just to keep busy but also to help the university fill a need. We will continue our jobs until mid-December of this year. Then we will begin some serious traveling that will take us far and away for months at a time. This is something we have planned and are looking forward to... new adventures exploring the big wide world.

The reality is that we Boomers are redefining what it means to be retired, and there is no set way to do it. I recently read an article,

"The End of Retirement?" in the AARP newsletter that discusses the increasing number of seniors who continue to work in their 70s, 80s, and 90s. Many of the folks in this article are working because they must "make ends meet." But for some, working after retirement is a choice. One woman was 101 (not a typo!) and still worked part-time.

For me, a "successful" retirement means having choices and more control over my life. One of the best payoffs of 30+ years of saving and planning for retirement is that I can live comfortably without HAVING to work. But I know I can choose to work if it is a mutually beneficial situation for me and for my employer. In fact, many of the adjunct faculty at my university are retired from administration or teaching and like me, are enjoying the opportunity to keep mentally active.

So, even though dh and I will not be working (for pay) after December, I have a feeling we will be working at something once we get the travel bug out of our system. And when we feel the need to get involved in something again, we know we can find a volunteer job that is a good fit for us. And who knows, maybe we will even find jobs that pay.

This brings me back to the importance of planning and saving for retirement. According to the AARP article mentioned above, more than half of the baby boomers are in peril of not being able to maintain their standard of living in retirement. Rising health costs and dwindling Social Security benefits will have a negative impact. We are living longer, so retiring later will become the new reality for many. So, if like me, your goal is to retire early (or even at age 66 or 67) and be able to sustain a comfortable lifestyle, then planning, saving, and becoming debt-free will be key to attaining that goal.

I've been reflecting about my SA blog and think perhaps I don't focus enough on "financial" topics, so I haven't posted for a while. I've always had an interest in personal finance and felt that by blogging here I could learn from others and also share the experiences that led to my "financial freedom." I was able to retire at age 58 (not really "early" but 8 years ahead of full Social Security retirement for my age group).

One of my goals has been to enjoy a comfortable retirement through the careful management of my financial resources. It's hard for me to separate living my life in retirement from the psychological and philosophical role that money plays in our lives.

After years and years of planning for my future retirement, the future is here. But it doesn't mean I can't continue to learn from others or that others can't learn from me. But still, I have to remember the focus of this forum is personal finance. I guess I will continue to post, although it probably will be less frequently. However, I will continue to enjoy the SA blogs.

When I decided to retire a year ago, I knew we could live more frugally in some ways but I also knew that travel would be a bigger expense, given that we'd have more time for it. And, after years of working hard and looking forward to retirement, it would be disappointing to have to limit travel due to lack of funds. So, to what extent would we be able to afford retirement travel? To figure this out, prior to retiring I analyzed our projected monthly expenses in relation to our retirement income. I included "travel" as a monthly expense.

For us, travel planning begins with reviewing our calendar and discussing where we'd like to go in the coming year. We take into account visits with family, work/volunteer schedules, other financial obligations, and timeshare options. In 2009, our travel plans have included Carmel, San Antonio, an Alaskan cruise, and a trip to Payette Lake in McCall, ID. Once we know when and where, I estimate expenses for airfare, hotels, meals, and excursions. That amount is prorated and I deposit a monthly amount to the savings account that holds travel funds.

Then I challenge myself to reduce the cost of our planned travel as much as possible. For example, our hotels in Carmel, San Antonio, and McCall were reserved through our timeshare, so aside from the annual dues, there was no hotel expense. The airfare for San Antonio was purchased with miles, so we paid only the airport taxes (~$20). The airfare to Seattle (departure port for cruise) was 50% off because I used my mileage card rewards.

For the Alaskan cruise, we received a "military discount" available to anyone who has ever served in the military, no matter when. We were eligible for the discount due to dh's service during the Vietnam War and this saved ~$500. A few days before the final payment was due, I called the cruise line and negotiated an additional savings of $240 plus $100 onboard credit. A few days before departure the cruise line called to see if we were interested in upgrading to a suite for a reasonable price and we did.

The effort to systematically save and reduce travel costs pays off because the travel fund is growing. I usually deposit any "windfalls" into this account. In 2010, we want to go to

Machu Picchu and take a Hawaiian cruise, so I'm starting to plan and save for those already. Retirement travel is possible because we live a simple life with no debt (except for a small mortgage) and we carefully plan and save for each trip. We've always said travel would be a priority in our retirement and we definitely want to make hay while the sun shines.

For the last two weeks, dh and I have been in Boise enjoying our second home. Most of the time the weather's been great but it's gotten very hot in the last few days. It hasn't stopped us from making some great summer memories, though.

Last week we spent two days in McCall, one of my favorite areas and about a two-hour drive from Boise. Payette Lake is in McCall and we found it to be very quiet and not at all crowded during the week.


For a reasonable fee, you can dock you boat at the marina. Payette Lake is popular for waterskiing, jet skiing, and fishing. There are abundant hiking and biking trails at the Ponderosa State Park.


Through our timeshare we were able to stay in a comfortable two-bedroom apartment with great amenities... we were able to cook some of our meals in the well-stocked kitchen.


We had fun watching the resident raccoon. I think he lives under the deck and comes out when he hears folks talking or grilling on the gas BBQ that is provided for guests. "Mmmm... can I have a piece of chicken, pleeeease?"


There was no cost to use the apartment, except for the annual fee that we pay. When you take into account these timeshare fees, it comes to ~$37 a day for accommodations. Not bad for a place that sleeps six.

We are finding that in Boise, most people are friendly and helpful. Life just seems slower-paced and simpler. We can go to the local theater complex and see a movie for $6.75 each (senior discount) and not worry about getting a seat. We went to see Harry Potter on the second day of its release. It was good... it was long and lacked the impact of the first movies, but still worth seeing.

Boise is a bike-friendly city. We've been riding our bikes quite a bit but since the heat wave started, we are riding less. The

Boise greenbelt provides about 25 miles of paved pathway. It's great!

We went to the Shakespeare Festival on Saturday to see Comedy of Errors... it was a lot of fun, especially because DD1 and SIL went with us. We enjoyed a nice picnic dinner, followed by DDs homemade strawberry shortcake... which was decadently good.

Even grocery shopping in Boise is more enjoyable for me... you can actually find parking at Costco on a Saturday. That's a big deal for me because, back in Silicon Valley, we NEVER go to Costco on a Saturday due to the crowds and difficult parking.

I'm finding that the cost of living is much less in Boise, especially food and gas. I used Sperling's calculator and found that it is 42% cheaper to live in Boise than in San Jose. Housing is 62% cheaper in Boise than San Jose. This is good news for us because our retirement dollar should go farther when we move here permanently next year as planned.

In our neighborhood, it seems that the real estate market is perking up. Last year in June there were 40+ properties for sale (newly-built homes and lots). Now there are about 12. With a few exceptions, the homes in our neighborhood are well-cared for, thanks in part to our HOA that is doing a better job of monitoring CCR enforcement.

Our Boise home has limited storage so we are getting bids for adding a large storage area in the attic space above the garage. We will be getting two or three bids and will make our decision after we analyze the proposals. It will be interesting to see how ID construction costs compare to CA.

My dh is retiring tomorrow, on July 1. Originally, once he officially retired, he was planning to participate in a program that allows tenured faculty to teach 50% for 5 years. He has decided that doing this for one or maybe two years may be enough. So he will teach in the fall and then may completely retire at the end of 2009. Although his decision is not set in stone, it surprised me. I will support him whatever he decides... working 50% for a few years or "completely" retiring. So, now we are facing some decisions.

We live in a condo in Silicon Valley and have a second home in ID, where my DDs live. Our plan was to eventually sell the CA condo and move to the ID home once dh was 100% retired. Until recently, I didn't think it would happen for at least five years, so we were just coasting along. But now I am facing the reality of moving from the area that has been my home for ~17 years.

I love the diversity of Silicon Valley and the excellent access to so many activities. But the biggest change will be moving away from family and friends. My only sibling and best friend, my sister, lives 45 minutes away. My niece and her children live 25 minutes away, and I am very close to them. Over the years, I've made good friends and will miss seeing them on a regular basis. My dh's children live in Fresno, ~4 hours away, so we will see them less often, too.

But ID is a beautiful state, made all the more special because my daughters live there. However, they have lives and careers of their own. Although it will be great to be minutes away from them, I can't and won't expect them to alter their lives for us. Once we are permanently living in our new city, dh and I will have to work on making new friends and getting involved in community activities. And while I don't think it will necessarily be an easy transition, it will be an exciting challenge.

Another issue is that real estate is extremely depressed in our area, and we may not be able to easily sell our condo. So, dh and I have been discussing the idea renting our condo, something we did for the first three years after we bought it. We can rent it for enough to cover the payment and a 10% management fee. And, we could rent it for up to three years and still get our capital gains exclusion. Not that it matters right now... I think the place is worth about the same as we paid for it in 2003, so there is really no gain to consider at the moment.

I have been reflecting about why I am leaning toward renting our condo. To be honest, I feel we can always move back to Silicon Valley if living in Idaho is not what we expected it to be. It's not that I think we won't enjoy living in Idaho, but I know it will be different to live there full-time instead of just spending a few weeks here and there. So, we'll see... time will tell and help us clarify our decisions.

Five days after returning from ~ a month of intense work in Guatemala, dh and I left on our long-planned cruise to Alaska. It was a wonderful experience, especially because we were joined by my DDs and SILs. It was great to see them every day for a whole week, enjoying meals and some excursions together.

Alaska is beautiful and we had clear but cool weather most days. Juneau was the exception, where it rained as we sailed away through the icy fjord. The wildlife is abundant... we saw seals, whales, dolphins, eagles, bears, and even some reindeer.

I photographed this eagle near the Ketchikan rain forest.


The Glacier Gardens in Juneau are alive with color and texture.


Here is a view of Mendenhall Glacier (Juneau) from the observation area... it is magnificent.


This is Dawes Glacier, seen as we sailed through Endicott Fjord.


We saw some beautiful, rugged country on the train excursion to White Pass in Skagway.


The view from our stateroom was amazing.


We had three adjoining staterooms and had fun visiting from our balconies. My DDs/SILs are enjoying the view as we leave Seattle.


Cheers!

The trip to Guatemala was very productive and culminated in success for our 18 students. Everyone completed the course requirements and we made it back safely to the USA. Our journey was not without some "problems," though.

While we were there, we experienced:
~ 3 earthquakes (1 strong, 2 mild)
~ two torrential downpours
~ the closing of one of our schools due to H1N1 flu outbreak
~ my dh sick enough to warrant going to the hospital (he recovered)

The day after we arrived back in the USA, all schools in Guatemala were closed until July 1 due to H1N1 flu. Unlike the USA, the Guatemalan school year is from January to October. Our timing was perfect because we finished the program the Friday before all the schools were closed by the government.

But, we're back, and eager to go again next year. Dh and I will rent an apartment and live there a few months, doing pro bono teacher training and just enjoying the beautiful city of Antigua. The schools want us to return and even went as far as helping us find an apartment we will be able to rent.

It was truly an amazing experience to wake up each day in this beautiful part of the world. The Guatemalan people are welcoming, and the city is a mecca for learning. Language schools abound and people from around the globe come here to learn Spanish or Kakchiquel (the Mayan language).

Apart from the cultural dynamic, the geography is breathtaking. I took the photos of these two volcanoes from the roof of our posada. This one is called "Agua," taken the day after a heavy rain when there was no cloud cover.


On the same day, I took this photo of "Fuego" which actively sputters all day long, sending sheets of lava down the mountain. You can see the lava if you look closely.

We arrived at Chichicastenango after breakfast Sunday morning, en route from a night at Lake Atitlan. The volcanoes that surround Lake Atitlan look like a watercolor backdrop at sunset.


We will be here just a couple of hours and there is much to see. The sights, smells, sounds, and colors of the marketplace at Chichicastenango fill the senses. Here in this bustling marketplace, I catch a glimpse of the lives of the locals, so different from my own. This is the area in the market where the locals come to buy and sell their produce.


Artisans proudly display their wares and eagerly tell you about the artist or the weaver and the region where an item was produced. Each village has its own unique weaving style, so it is easy to identify where people are from by the patterns on their huipiles (traditional woven top worn by the women). I wish I could buy a trunk full of items to bring back home, but alas, space is limited. But this visual treat, now digitally preserved, will be enjoyed again and again.


These are Nativity scenes (creches) made of clay and hand painted. Guatemala is predominantly Roman Catholic.


Although a stranger looking in, I am touched by the universal bond of motherhood. Guatemalan mothers, babies snugly strapped in their rebozo slings, are no different than mothers around the globe. They love and protect their children and it is joyful to see. But I cannot be obvious in taking photos... Americans have been warned... NO PHOTOS... because some Guatemalans believe babies might be kidnapped for adoption by foreigners. It is now very difficult to adopt Guatemalan babies, unlike a few years back when adoption was a booming, unregulated business.


"He's not heavy; he's my brother..." for 5 Quetzales (63 cents), though, I am allowed to take this picture.


Dare I try the freshly made blue corn tortillas or the luscious fresh fruit ready to be eaten? In my younger days, I would not hesitate to eat food sold on the street. But now I am more careful, knowing I cannot do my job if I were to get sick... I simply don't bounce back the way I used to. But I can still take in the wonderful aromas of the typical fare while I snack on my Trio bar and banana.

Yesterday's local paper had an

article about a 44-year-old man, Peter Lawrence, who retired early from his job as an HP manager... a very good thing. But what is different about this fellow is that he now lives a life of EXTREME minimalism. And I do mean extreme.

His condo is bare, except for a simple folding chair and an ironing board. He sleeps on the floor in a sleeping bag, uses the ironing board as his "desk," and owns very little clothing. His laptop is his photo album, electronic filing cabinet, TV, CD and DVD player. He says he can pack all his worldly possessions in one suitcase.

Lawrence self-published a book called The Happy Minimalist that describes his lifestyle and the philosophy that motivates him to live this way. According to Lawrence, his extreme lifestyle is not at all about frugality, being a cheapskate, or deprivation. It's about making calibrated choices, consuming less, and preserving resources. Lawrence says he lives "well below his means."

I don't know... this would be a very difficult lifestyle for most people, and certainly for me, but to each his own. However, I'd rather see someone living like this extreme (albeit eccentric) minimalist over someone living a life of extreme excess, well above their means. And I certainly know my share of people that fit into the latter category.

Yesterday I had lunch with a friend who is considering retiring in July. She is 62 and has worked as a teacher for over 30 years. My friend is widowed with a grown son and four grandchildren. (Thankfully, her son will not be a financial burden... he is a successful engineer). According to her retirement estimate, my friend's pension will be about 72% of her current working income. My DF wanted to "pick my brain" because I retired last August, and she's searching for other perspectives on anything and everything related to retiring, especially some of the financial aspects.

So we chatted about what she's done to prepare for retirement. My friend has a 403b account ("small" in her words... not sure what that means) and a savings CD with about "one year's gross salary." DF owns her home that is almost paid for and has no other debt. In talking to my friend, here are some things she DID NOT take into consideration:

1) Inflation: although the state teacher's retirement system guarantees an annual 2% COLA, inflation will likely be higher. DF said she would use her 403b funds as needed to keep pace with inflation.

2) Health insurance: she will not be eligible for Medicare until almost 3 years after her retirement, so she has to plan for health coverage once COBRA runs out. (She thought COBRA would go on until she is eligible for Medicare, but I think it is only 18 months.) She said she would substitute teach to help pay for her health insurance until age 65, or take money from her savings.

3) Paying for increased cost of travel: after retirement, DF will reduce some expenses, but she didn't take into account that travel, a priority for her, might incur more expenses. She said she would use her savings or take on part-time work to pay for travel. Fortunately travel is a "want" and not a "need."

All in all, it seems my friend is on track to retire. She shared that she currently lives on about 80% of her net income, so that is another big plus for her. DF will use her retirement benefit "lump sum" to pay off her small mortgage. And, since she will no longer have a mortgage payment, she will try to add to her savings each month.

I did advise my DF to meet with her HR department regarding COBRA, and a financial planner and/or accountant to get specific financial and tax advice. Taxes in retirement can be an unpleasant surprise if you're accustomed to sheltering income and then find you have few deductions. However, I was happy to share some of the steps I took in my own retirement planning. My DF is doing exactly what I did prior to making the decision to retire... talking to others who have been through the process and leaving no detail to chance.

for my dh! Yesterday we went to a meeting where dh filled out his retirement application. His last day of work will be June 30 and his official retirement date will be July 1. However, for up to five years thereafter he will be able to participate in a program offered by his employer that allows retired faculty to work 50% of their former assignment. So in reality, dh is transitioning into retirement. But this is good for him because, unlike me, he would keep working until the day he dies even though he has been teaching for 35 years.

And, this is not such a bad thing, to keep working. It's just that dh is in the season of life where IMHO work should be redefined to allow a few adventures here and there. We will have long stretches of time from December to August to travel, enjoy a slower pace, and do some of the things we've only talked and dreamed about... like living in another country instead of just visiting. Then in the fall for up to five years, dh will teach 3-4 classes and get working out of his system for a while.

In the financial area, dh will continue to have health benefits, so we were happy to have this verified. His benefits will complement those we receive from my former employer and we think they will be about the same as they are now. But we're checking into the dental coverage as we are not sure about this one. If we lose dental coverage, I will add dental to our monthly expenses and make necessary adjustments to the budget.

And, because dh will not be tax-sheltering any income and eliminating expenses like parking and union fees, his net pension amount will be higher than we previously estimated. Nonetheless, we are ready, willing, and able to live on less. Now, the application is complete, but we can't turn it in until after April 1. The pension plan won't accept applications for retirement unless retirement is within 90 days. So we made an appointment for April 2 and I'm counting the days.

Well, today is the 6-month anniversary of my retirement and I've been reflecting on whether it's been all that I expected it to be, all that I planned and dreamed for it to be. And the answer is not a simple "yes" or "no."

While I have yet to regret retiring, I have to admit there have been a few times I've wondered if I should have worked another year or two. These are the days when the economic news is so ugly (read: downright scary) that I wonder if I should have padded the retirement accounts a little more.

Then I begin to think about where I'd be if I were still working, and I remember why I retired: endless meetings, daily problems, too much stress, and long, long hours. I also remind myself that my pension income and retirement savings should be adequate if I manage my finances carefully and continue to live as frugally as I have done most of my adult life. Yep, I did the right thing.

But is it all I thought it would be? Actually, retirement has exceeded my expectations in many ways... having choice about how and where to focus my time and energy is great. Yet, the life I hypothetically imagined didn't just instantly materialize. I'm still learning how to better manage my time. There is such a thing as having too much choice and I now realize that some structure, such as that which defined my life when I worked, is necessary for me. But it is sometimes easier said than done.

So, retirement is a work in progress, and I am constantly tweaking the rhythm of my daily life, trying to find the balance that eluded me when I worked. Sometimes being able to simply relax and have fun has been a bit of a challenge because I can't shake the feeling that I should be doing "real" work. I am getting better at being OK with days that haven't resulted in the completion of an "important" task. Some days reading a good book, going for a bike ride or a long walk - activities that are self-focused - have been the accomplishment of my day.

What would I do differently? In retrospect, I'd probably pass on taking on as much part-time work as I did back in September, at least for the first few months. I was so used to being super-busy that I accepted consulting and part-time work at the university even before my retirement was official.

Don't get me wrong, the work is interesting and I'm grateful for the extra money, but I think I could have used a few months to just decompress. Then later, I could have taken on extra work if I felt the need to do so. I guess I was afraid to turn it down for fear it wouldn't be offered again and more so, I feared having nothing "important" to do. Ultimately, the part-time work has been rewarding even though it's kept me busier at times than I really want to be.

Despite the state of the economy, I am VERY happy I retired. Through the years, I've learned there is never a perfect time for anything, whether it's retiring, having children, or some other adventure. There will always be issues and challenges to face, but careful planning and a positive attitude go a long way to ensuring success.

Monday I received the annual statement for one of my retirement accounts, a 457 plan. In 2008, I received no interest... nothing, zip, zero, zilch, nada, not one red cent. So why am I grateful for this? Well, I did not lose any principal, either, and this is better than many others have fared.

I've heard of people whose retirement accounts have dropped anywhere from 25-40% including a loss of principal. Although my 457 account is tied to the S & P index, the principal is guaranteed to never decrease. But since the interest rate is keyed to the performance of the S & P, the account earned 0% in 2008. Yet, it could have been much worse.

Wednesday marked the start of the spring semester and with it, some changes. I accepted another part-time contract to supervise student teachers, an assignment that means working about one or two days a week but only a few hours each day. This assignment is special in that I might be able to follow the group for a whole year while they complete both semesters of student teaching. The fall 2009 term would be more intense. The job pays very little, but the extra money is appreciated and I plan to funnel most of it to the travel savings.

My dh, who works at the same university, has decided to retire in June of 2009 (he just turned 63). He plans to participate in a special "early retirement" program that would allow him to collect his pension but also teach one semester (for regular pay). He would be eligible to do this for up to five years although I am hoping he doesn't go that long as he would be 68!

Unlike me, who was very ready to retire last fall, my dh loves his job and seems to have very little stress. He is popular with students and his classes are always filled to capacity and beyond. Sometimes I worry he is retiring to please me. But after 30 years of teaching, he does agree it is time to slow down. We have had many talks... about choosing retirement because he is ready and not because I am already retired.

Well, this morning he told me he is submitting his paperwork next week, but I will believe it when I see it. If he retires, he would work the fall term (late August to early December), then we would be free for the next nine months. It would give us time to travel and just enjoy a more relaxed pace. One concern: once dh retires, will so much "together time" be as pleasant as it sounds? Hmmm...

Not too long ago BA

posted a graphic about savings buckets and it made me think about mine. "Pay myself first" has long been my motto and a deposit to my savings is always the first "bill" to get paid each month. Over the years, to manage my savings, I've experimented with different strategies and eventually settled on keeping separate accounts (buckets) for different purposes. Some people might think it's a lot to keep track of, but it works for me and that's what matters. To eliminate paper clutter, I access my statements online.

Here is the current situation with my savings buckets:

Reserve Account #1: Used for periodic expenses such as taxes, insurance, HOA and timeshare dues, ID home expenses, etc. I deposit a predetermined amount from our income (my pension and dh's job) to this account each month. I use a "moneylink" feature that enables easy transfers to and from my checking account.

Reserve Account #2: Used for rental property expenses. I deposit a small amount to this account monthly in addition to a small but consistent net rental income. The savings account is linked to a dedicated checking account used only for rental expenses. The purpose is to have a reserve to offset any vacancies and to pay for maintenance and repairs.

Emergency Fund: This account contains ~2 years of "no-frills" living expenses, to be used in the unlikely event that a major economic meltdown results in our state teachers' pension funds being frozen, reduced, or eliminated. In this economy, you just can't count on anything being constant, so I believe in being prepared. These funds are in staggered CDs earning 3.75-4.17%.

Tax Sheltered Retirement Accounts: Now that I'm retired I can no longer contribute to these accounts, but dh will contribute to his until he retires in June, 2009. I am not sure when we will draw from these, but we'd like to hold off until the mandatory age of 70 1/2. The financial planner I've used for many years has invested my 403b and IRA funds in various products that preserve the principal and earn a return of 2-5%. I have always opted for a "conservative" approach with my retirement funds, even when we've been in a bull market, something I'm now happy about given the state of the economy.

Personal Savings: Dh and I each have our own personal savings account that is our sole and separate property. Mine is with WAMU/Chase and his is with a credit union. We are free to use these funds as we please. For example, we draw from these accounts when we need to subsidize travel, a new laptop, or anything else. We each deposit equal amounts into these accounts each month, ~15-20% of our income.

My Fun Fund: Dh and I have a goal of traveling more in our retirement. So, I've decided to dedicate my small ING savings account for travel. The money saved in this travel account will include net earnings from consulting or part-time work and other misc. sources (e.g., recycling, rebates, etc.). Travel can be expensive, so having this dedicated account will motivated me to save in small ways that add up over time.

So, not including the retirement accounts, I have two "reserve" accounts, an emergency fund, our two personal savings accounts, and the ING Fun Fund, for a total of SIX accounts. It is a lot to track, but going online for balances and using a spreadsheet fore record-keeping makes the management easy. Especially now that I am retired, my savings gives me peace of mind, not to mention some welcome passive income.

Note: Stock dividends also provide passive income, but it is automatically reinvested. I don't consider the brokerage account as a "savings" account but rather an investment account that is liquid.

Once a year, I analyze our net worth to get a current picture of our financial position. To keep things simple, I don't include the value of autos or personal property. I use information from end-of-year statements and assessed values for real estate.

At the moment, fluctuations in our net worth do not have a significant impact on our lives. It helps that we live below our means and our income provides for our needs. In the future we will need to use assets to generate some income, but for now we are able to hold off. For example, we will draw from our assets if our pensions fail to keep pace with inflation (likely) or some other unexpected life event requires it. At 70 1/2 we will begin the mandatory Required Minimum Distributions from the tax-sheltered accounts.

Now that I've completed our net worth analysis for 2008, I know my goal of increasing our net worth by 5% in 2009 is very ambitious (see sidebar). Factors that could help: if real estate values bottom out and interest rates start to creep up... both possible, albeit not likely until the latter part of 2009, if at all. So we will see how things stand a year from now. Check out the page on my sidebar for my 2008 Net Worth Analysis if you are interested.

If you're curious how your own net worth stacks up against others your age and income bracket, use this

calculator to compare. I did, and I learned our net worth is above the median for people our age and income bracket... reassuring given that our net worth took a drop in 2008.

Here's another interesting idea: net worth vs. wealth. According to the calculator from The Millionaire Next Door, I am a PAW and my dh is an AAW. Authors Stanley and Danko argue that total net worth alone does not tell a good enough picture of one's wealth. What matters is how much worth you can accumulate on your income considering your own age. Therefore, a 30 year old making $25,000 who has a net worth of $80,000 has more relative wealth than a 50 year-old doctor making $200,000 a year who is only worth $500,000.

Both of the above calculators were borrowed from the Millionaire Mommy Next Door blog. She has a post with 110 calculators... a very handy resource.

This was the question a friend asked me recently, and I'm not surprised. Every day the media has commentary about the fate of those about to retire or recently retired. The calamitous state of the economy has ruined many a retirement plan and has had a negative impact on the quality of life of many retirees.

Well, I didn't even have to stop and think... my answer was a resounding "NO!!" Then I explained to my friend that my retirement was planned over a long period of time; it wasn't a decision made on the spur of the moment. But I've always believed that even the best-laid retirement plans have to take into account future economic challenges, and it is naive to think that situations like the current recession won't recur again in the future. Retirees have to be prepared for the best of times and the worst of times.

My friend asked what I'd done to help me prepare for retirement, so I shared some strategies that I think played a key role in helping me be ready to retire and that should help me weather fluctuations in the economy after retirement. And, while it is crucial to save money in one's retirement accounts, there is far more that can be done to be solidly prepared. So, what did I do that made possible my goal of early retirement?

1) I live below my means. When I worked, I lived below my means, and now in retirement, I will continue to live below my means. And while it's good to at least live within your means, living below your means will allow you to be more successful saving money. Another benefit of living below your means: you can more easily avoid debt.

2) Saving by "paying myself first" is a habit. Starting at 16 when I got my first job, I saved some money every month. It could be more or less depending on the circumstances, but I have to say that in the last 40+ years, it has been a rare month when I have not been able to save something, even if it was only $20.

3) Saving for retirement was a focused effort. From my early 20s, my savings included "untouchable" money: my retirement accounts. I opened my first IRA at age 22 and saved something for retirement every paycheck. As soon as I could, I would increase the contributions and in later years, it evolved to sheltering the maximum allowed in both my 403b and 457 Plan. And if eligible for a Roth IRA, I would contribute to that as well. (This is "doable" if you have mastered living below your means and do not have to use all your earnings to make ends meet).

4) I try to separate "wants vs. needs." From the time I was 19 and lived on my own, I learned to be a careful shopper and have always tried to avoid impulse purchases. Over the years I've had a few slip-ups, and though guilty of some regrettable impulse buys, I can honestly say these never prevented me from meeting my financial responsibilities (because I had savings...). As I've gotten older and wiser, I've gotten better at asking: "Is this a want or a need?" Other questions I ask when I see something I think I need: "Do I love it? Do I have something like it already?" It keeps me from buying things that I really can do without, like ANOTHER pair of black pants.

5) I educated my children about finances. My two DDs were raised frugally and were taught life lessons about money: people and experiences come before things. It was a necessity because I became a single mom when they were 7 and remained single until they started college. My DDs had no problem wearing hand-me-downs or bargain fashions. Both worked from age 16 on, saved money, and helped pay their college (along with scholarships, some student loans, and what I contributed). One DD has a BS in Nursing, the other a BS in Wildlife Biology. Now as adults, they are financially independent, frugal young women. And why is this important? Well, aside from my obvious pride, my DDs are not a financial burden on me, unlike the adult children of some of my friends.

So, do I regret retiring last August? Absolutely not, but it doesn't mean I don't worry about the economy or that I will not continue to live frugally. I do and I will. In fact, frugality is so ingrained in me that it's become a character trait, one that has helped get me where I am today and one that will help me survive in the current turbulent economy. As a retiree, I will not "live high off the hog," but instead will "live low off the bacon" *smile*... that is, I will live with the help of what I've systematically set aside for this season of my life... and it will be more likely to last because I have planned and prepared. And although I am careful with money, I do not live a deprived existence. On the contrary, my life is rich in terms of pursuing the interests that call to me and in traveling to continue life-long learning and seeking new adventures.

What a week it's been, especially on the historical front. The election is finally over, and the promise of change for a better America lingers. My wish for President Obama is that he will have the wisdom and the support necessary to lead our nation with distinction in the coming years. Obama's been called a transformational leader, and as such he has the power to make fundamental changes for the better. No one can argue he has inherited a clean up job of unprecedented proportion.

The stock market is back on its erratic track and most of us do not even want to check our accounts... it's too ugly. But life goes on, and the economy will recover, although not likely any time soon. To better monitor my 403b, IRA, and 457 retirement accounts, this week I set up a new spreadsheet that I'm very happy with. It projects growth based on guaranteed values until age 70 1/2, when I have to begin RMD. My 457 Plan administrator came to my house yesterday and we discussed the terms of the account. It's keyed to the S&P and guarantees a whopping 1.95% on 90% of the balance. This is better than the 0% I thought I was getting. We will make some changes in January after the annual interest is posted.

The week has been mostly very quiet and relaxing... I feel as if I'm on vacation. On Monday afternoon, I taught my seminar which I conduct every other Monday. It focuses on topics relevant to the student teachers I supervise and who are required to attend. Tuesday, Wednesday, Thursday (and possibly today) were NSDs and NDDs that I thoroughly enjoyed. One of the delights of being retired is having the freedom to enjoy leisurely days without a set agenda.

The weather has been getting colder and the leaves on most of the deciduous trees in the neighborhood have turned beautiful shades of gold and orange. I've been able to go on daily walks that have been good for my health and just plain fun. So far, DH and I have not turned on the heat but it's cold enough that we need to bundle up with sweaters in the morning. It has gotten as cold as 49 degrees at night, but our home is well-insulated and cozy. Our goal is to hold off turning on the heat until Thanksgiving.

I've had a chance to catch up on some projects I put on the back burner this summer. I pulled out my sewing machine and finished several "dish towel" aprons that I will use as hostess gifts over the holidays. These are easy to make and very inexpensive: Pre-wash two new dishtowels and iron. One is placed horizontally, the other vertically with a fold about 12 inches from the top that serves as a pocket. Stitch together and finish with twill tape. These can be made in about 30 minutes. The cost for one apron:
Dishtowels $2.49
Twill Tape $1.19
D-rings $ .39
Total $4.07 + tax


I also made several other aprons as "just because" gifts for my DDs, DS, and some DFs. These require a pattern and 1 5/8 yard of fabric, but are still easy to make and inexpensive at around $7-$12, depending on the fabric. Needless to say, I buy fabric only when it's on sale. Fabrics are chosen based on the interests of the recipients. For example, DD1 is an equestrian, so she gets a pattern with horses. DD2 is a wildlife biologist who works with fish populations, so she will get a fish pattern. The best part is that these projects are fun to make and are always appreciated by those who receive them.


And finally, a few weeks ago I signed up as a volunteer translator for

Kiva (Spanish to English). Yesterday they sent me their "translating test" which I completed in about 40 minutes (they said it should take about an hour). It was an easy piece and is supposed to be representative of future assignments. This will be a terrific way to volunteer without leaving the house. I also sent Kiva another $25 to invest in a Peruvian retail coop.

This was a question from someone I've known for years. He tends to be very negative and is not someone I'd frequently associate with if it were not for a circumstance of fate: he is the significant other of a good friend but I don't hold that against her. (Have you ever noticed how negative people suck the life out of you?) Well, I explained, yes, I do have a job but it is because I choose to do it. I do not HAVE TO work. So I leave it at that since I know it is useless to try to explain myself to someone who just doesn't "get it."

I choose to work because I've found job that feeds a passion, not my pocketbook. That, to me, is the big difference. In my previous job, if I did not feel like going to work, I could not easily call in sick. There is not such thing as a substitute principal, although we have individuals assigned to carry on while we are off campus. It's just not the same. Our presence is required 99% of the time.

Now, I get to choose the days and times I work. I have tremendous flexibility, with the exception of having to meet seven times between September and December 1st for a two-hour seminar. But then, I was the one who decided on the dates/times, so it's not that bad. On some weeks, I have no scheduled workdays'these are my "free" days. On other weeks, I may work a day or two.

And a bonus: I get paid! I plan to use this extra money to expand our travel plans and increase my contributions to

Heiffer International and Second Harvest Food Bank, two organizations I regularly support. Here's what my job commitment looks like for September:

~ 21 possible workdays (not counting Labor Day)
~ Of these, 11 days are completely free
~ My longest work day: 1 day @ 6 hours
~ On 7 work days, I have scheduled ~3 hours
~ 2 days will require working ~ 2 hours
~ My net pay estimate: ~ $34 an hour (after 33% withheld)

While the money is nice to have, it is not my reason working. My part-time work is a self-imposed experiment because, to confess, I was afraid of having way too much time in retirement. Back in May, when I decided to take the final step into retirement, I had some doubts... about having too much time on my hands, not enough to do, and well...I guess I just needed to be needed somewhere for something. And so, I applied for my PT job at a local university and also accepted a consulting contract with my former employer. When the academic year is over, I may choose to continue working... but then, maybe I won't. Gotta love having choices!

Retirement income update:
I’m still waiting for the final figures from my defined benefit pension plan, but so far estimates point to a monthly net pension @ ~ 99% of my working net pay. Although I’m pleased, it doesn’t mean I’m getting a huge pension.

When I worked, I lived on a pre-determined (by me) portion of my income. I sheltered the maximum ($41,000 a year in my 403b and 457 accounts) and 8% of my gross income was contributed to the state teachers retirement system as a mandatory deduction. With so much being sheltered, my take home pay was reduced to a level I became accustomed to living on.

When I receive the final adjustment I’ll see how accurate the estimate is, but I’m grateful no matter what. Not surprisingly, I’ve been told it will likely take several months for the state to process the final figures from my employer (final compensation and unused sick leave).

A concern at this point is whether I’m having enough federal and state taxes withheld. I can adjust withholdings if need be, but I’m inclined to wait until my 2008 taxes are figured. Since I had a fairly large amount withheld in the 8 months of 2008 that I worked, and my gross pension is only about 46% of my previous gross pay, I’m counting on having had enough taxes withheld for the year. I guess I’m just too much of a control freak to like paying more in taxes than I have to… and I want my $$ to work for me, not Uncle Sam. To be on the safe side, I’m reserving 33% of any consulting income for taxes.

Thoughts about inflation:
Another concern is the impact of inflation on my retirement income. I think this is an issue commonly overlooked in retirement planning. To illustrate, a hypothetical pension of $4,000 a month will need to be about $5,375 in 10 years to keep up with a 3% inflation rate.

My pension plan provides for a mandated 2% COLA each year, but I am planning for at least 3-4% inflation. If my retirement income cannot keep up with inflation, I’ll look for ways to make up the shortfall.

First line of defense will be to reduce expenses but not to the point of feeling deprived. And, reducing expenses is a challenge I’m planning to undertake, regardless of inflation. Next, I’ll tap my taxable accounts and draw from the tax-sheltered accounts last. Right now my plan is to leave my 403b and 457 funds intact until I am 70½, but it’s reassuring to have these funds as a backup.

Ideas to soften the impact of inflation:
• be more frugal/ reduce expenses
• rethink travel plans (get frugally creative)
• withdraw shortfall from taxable reserves
• increase part-time work

Any other ideas to offset inflation?

A friend from work called me tonight to see how I was doing. “How are you enjoying your retirement?” she asked. “Well, so far, I’ve been very busy,” I said. She wanted me to know that school opened as planned and all went fairly well, almost as well “as if you’d been here!” Well, surprise! The world didn’t end because I left. One thing I know and have known for quite a while: we are all replaceable and life goes on, as it should. But my life goes on, too, and it is evolving, and growing, and getting better.

My friend said, “We all miss you so much!! It’s just not the same!” “Oh, I miss you guys, too!” I say to be polite. The truth: I didn’t miss being there AT ALL, although this does not mean I don’t care about the people I worked with. I do care, but there is so much I do not miss and will not miss. Yet, I cannot say this without hurting feelings, so I am careful with my words.

I will not tell her that on Monday, the opening day of school, I woke up at 7:15 a.m., a time I normally would have been at school. I made a delicious pot of coffee and leisurely enjoyed it on the patio while I read. The morning air was clean and crisp, the birds at the feeder were flittering and chirping, and I reveled in the moment…. not having to be anywhere or do anything until I decide differently.

Yesterday was my first official day of retirement and it feels a little weird to not have a million problems to solve, meetings to attend, and tasks to complete… but it was a great day. In the morning, I spent two hours at a local spa, getting pampered. One great massage and deluxe pedicure later, I met DH for a romantic lunch at an Italian restaurant that we love. The best part is that I used gift cards that were given to me as retirement gifts, so I did not spend any money.

Today, I am looking forward to having lunch with a friend whom I’ve not been able to see for a while. She’s been asking to take me to lunch or dinner in honor of my retirement. Well, now that my “retirement” is finally here, I think the best part is that I have choices. I’ve heard said that change is hard, especially if like me, one is retiring from a position of great responsibility (I was the administrator at a large urban school with over 800 students and 75 employees).

For me the key will be to continue to be productive and to have a purpose greater than just “playing” all day long, although I do have to get better at playing, too. For so many years, my job took prominence in my life until I realized I did not have balance and my health was affected. All work, no play. So, in retirement I will strive to enjoy a life with more balance, a life that is simple but at the same time, rewarding. Next week I will begin to research volunteer opportunities.

To help me “transition” to retirement, and to give me the opportunity to continue working in my field, I have accepted a part-time job working at the local university (same one where DH works). My job will require working about 1 day a week, and on certain weeks, it will be about 1 ½ days if I have a meeting or training to attend. My PT job begins Thursday, but I am looking forward to it. I began my career in education as a teacher, and now I am back to being a teacher… a role that gives me great satisfaction.

Today DH and I went to a class offered by the public employee's retirement system he belongs to. It was very informative. One good thing we learned was that he can increase his pension by buying service time for the two years he served in the military during the Vietnam War. We are looking into how much it would cost and then we'll determine if it is financially sound to buy this extra service credit. We also found out that his employer will pay for our health benefits after he retires. This is a great benefit considering the high cost of health care today. DH is thinking about retiring at the end of the academic year in 2009 or 2010.

Since I am retiring later this month, yesterday I bought a new laptop for my personal use. The laptop I’ve been using for the last two years is very nice but it belongs to my employer and I will be returning it. My employer gives all administrators a new laptop about every three years and mine has gotten very heavy use. I knew the replacement laptop would have to be a Mac because it has been my preferred platform since 1986. The downside is that Macs tend to be pricier than many PCs, but my computer is one of my most important tools I use and I wanted one I know how to use well.

My new laptop is the same model as my old one… a MacBook Pro. It has an Intel Core 2 Duo Processor (it’s fast!!), and more memory than the old one (2 GB RAM and a HD w/ 200 GB). I can really tell the difference in how quickly it processes. The best deal I found was at the bookstore of DH’s university. They gave us an educator’s discount ($250 off the price), a free iPod Touch ($299), a free printer ($185), and 3 years of Apple Care for $183 (regular $349). I also bought the right to use MS Office for $25, so I am all set.

I had budgeted $2500 for the new laptop and came in well under... and I also now have a free printer and iPod. The iPod is going to be given to my DSS and the printer will be donated to my previous school as we do not need another one.

On another note, I am accepting a part-time job working for the university one day a week, just enough to keep me out of trouble. My job will be to supervise student teachers and I am delighted that I’ll stay connected to my field (education). The position is temporary, for the fall semester and possibly the spring. As long as DH continues to teach, it means we will have the same calendar so we will be able to coordinate all our days off.

10 things that helped me to decide about retiring:

1) I listened to my doctor who said stress was ruining my health;
2) I took a class offered by my retirement system to help me understand all options;
3) I learned by reading and researching information on all aspects of retirement (financial, emotional, health care, etc.);
4) I calculated my defined benefit pension amount plus income from other sources (TSA, 457, IRAs);
5) I developed a realistic retirement budget that includes saving at least 15%;
6) I "practiced" living on my retirement budget for six months, using my lower pension amount instead of my monthly pay;
7) I made a list of monthly "retirement enjoyment" activities and their cost (factored into #5) and estimated the cost of annual travel since this will be an important activity;
8) I got input from my family (encouragement), my accountant (tax consequences), and my financial planner (analysis of investments);
9) I talked to as many retired people as I could about life after retirement (the majority said they have no regrets);
10) I made a list of the "pros" and "cons" of retiring, and, the "pros" won by a huge margin.

While I won't be officially retired until late August, I look forward to retirement as a stage in my life where I have more time, less stress, and better health. After 30 years of working in education, I still feel the need to continue teaching and learning. So, I will definitely keep learning by participating in experiences such as those offered by Elderhostel or by taking or teaching classes. It will be interesting to see how I feel about retirement a year from now.

When I decided to retire, the hardest part was to tell my staff and my community. After 8 years as principal of a large, culturally and linguistically diverse urban school, I have made many wonderful friends, have had many challenges, and many successes. Over the years, my school has been the recipient of several national and state awards, in part because we are a community that has learned to work well together.

Some people may think that I chose to retire because I didn�t like my job, or my health was bad, or I was moving�. Actually, it was none of these. Even though I had a job I LOVED and that paid very well, its very nature created more stress in my life than I was willing to live with at this point in my life. With over 800 students and 65 staff members, the pace was fast, the problems and issues constant. I chose to leave on my terms: while my school was thriving and I still had enough energy to tackle other projects and plans.

So, in late-May, on the day I informed my staff of my retirement, there were many tears, good wishes, thanks, and laughter. I did not want a lot of fanfare � it is not my style. I just wanted to go quietly. Nonetheless, I agreed to a �dinner� in my honor, hosted by my staff at a local restaurant.

To my surprise, this dinner was actually an elaborate retirement party attended by about 85 people, friends and colleagues from the last 15 years. There were videos, surprise VIP guests, entertainment, memory books, great food, orchids galore, and more. It was a wonderful celebration that I will never forget. Some �regrets� I have: because the party was planned in less than two weeks, some people at previous schools were not invited (obviously, I did not control this), and I feel badly that there are some hurt feelings. Also, I would have insisted on NO GIFTS (had I known). All in all, it was a lovely and memorable evening and I feel honored to be recognized in this way.

was completed yesterday. Now I just have to take a form to HR to sign off on the information about the number of sick leave days I have accrued. I learned I have enough days that it gives me an additional year of credit. This is good because since I am taking early retirement, my defined benefit amount will be reduced by 33% of what it would have been in three years. Still, it is WORTH IT considering the amount of stress I am leaving behind. I have seen too many people work longer just to hold out for a higher pension, only to die within a year of retiring. Last year, two of my coworkers died before even being able to retire. By saving and planning in the early years of my career, I now have more choices.

I have three more paychecks before I retire: June, July, and a smaller one is August. Due to my retirement, I will not be able to contribute to my 457 or 403b after August, thus falling short of the maximum allowed contributions for the calendar year.

To remedy this, yesterday I arranged with the payroll department to deduct more from my last three paychecks so that I will meet the maximum allowances for the calendar year. This will result in much smaller paychecks but I will make up the shortfall by eliminating any deposits to my regular savings, and if need be, making withdrawals from my savings.

Most of my tax-sheltered accounts will earn interest until I am 70 ½ and then I will have to begin mandatory withdrawals. One investment is a Roth and another is a non-qualified annuity, and these can continue to earn interest without concern about mandatory withdrawals. One of my goals in retirement will be to monitor these accounts more closely to ensure I get the best interest rates available to me.

two years ago brought a lot of stress, the good, the bad, and the ugly. In anticipation of retirement, we sold our family home and moved into a smaller two-bedroom townhouse in the same city.

The good: it was a financially sound move because we cut our housing expenses in half. DH and I are a blended family… I have two daughters and he has a son and a daughter from previous marriages, all of them now grown and gone. We had bought the family home when we married (his children were still in school and mine were in college by then). Once the nest was empty, we wanted out of the expensive upkeep of a five-bedroom house with its large “high maintenance” back yard. Our timing was good because the house sold quickly, and currently homes are not selling at all in our area.

The bad: we had way too much stuff! Some people by nature can be packrats, but I could not believe what we had accumulated over the last 20+ years. I still had income tax returns from 1983 and cancelled checks from 1969! DD1 tipped us about using a professional shredding service (hospitals routinely use them), so for $5 per banker’s box, we safely got rid of obsolete financial and personal papers. Condensing 11 rooms into 5 smaller ones was a challenge. We gave away our extra furniture to friend who had just bought her first house in exchange for help with sorting and packing. We donated 25 boxes clothing and household items to Goodwill and our collection of children’s literature to the library. Although friends suggested a garage or yard sale, we simply did not have time because of the escrow deadline. A yard/garage sale would have been a moneymaker, though, and I would not hesitate to do it in the future.

The ugly: DH wanted to rent a moving van and move with the help of friends and family, but fearing for his back, I insisted on hiring professionals. The movers I found online, and who seemed very reputable, ended up charging us 50% more than the quote… they justified it by re-shrink wrapping all the furniture we had already prepared for moving. They charged an exorbitant amount for the materials and held our furniture hostage until we paid them. So, a move of less than 10-miles cost much more than it should have because I didn’t do my homework and didn’t ask the right questions. If we hadn’t already moved all the items we could transport by car, it would have cost even more.

Although I occasionally miss my roses (I had 50+ bushes that bloomed until November), my tiny patio is just the right size for me to easily maintain. MC, my 18-year- old kitty, formerly an indoor/outdoor cat, at first had some adjustment problems to an indoor-only life but he eventually settled in. We love living in our smaller, cozy townhouse that will give us the freedom to travel more in our retirement.


MC always finds the best seat in the house, er...patio.

Preparing for retirement required setting financial goals and monitoring them periodically. One of my goals was to have at least 80% of my net working income in retirement. Through careful planning this will be accomplished. Now as retirement gets closer, I decided to set new goals in retirement. These are not in any particular order:

1) Spend the equivalent of one day a week doing volunteer work;

2) Spend more “quality” time with family and friends;

3) Focus on getting healthier: lose 20 pounds and prepare more nutritious meals;

4) Continue to save 15-20% of my retirement income. This fund will be used for big-ticket items such as vacations, replacement car or appliances, etc. and would be used before the “Emergency Fund” is tapped;

5) Consider doing some part-time consultant work IF the work interests me AND I have too much time on my hands;

6) Continue learning… take classes, read more, get involved in causes;

7) Each year, travel to one of the places on my list of “Places to Visit Before I Die”;

8) Spend more time enjoying container gardening in my patio;

9) Get involved in online forums that appeal to me;

10) Write that mystery/suspense book that’s been lurking in the creative recesses of my mind for years.

For those of you already retired, do you have words of wisdom to share? What were some challenges? Any regrets or advice?