Getting busier and better

kw: retirement

A number of retirees have said they have so much to do they don't know how they ever had time to work. I think I understand. My last in-office day is at the end of this week, and the carried-over vacation days will then fill out my tenure. I have already been in contact with a couple organizations at which I hope to volunteer. I also plan to take the real estate course, not necessarily to become a realtor (though a lot of retirees do so), but so I'll be a much more knowledgeable seller whenever we decide to move elsewhere. Then there is the growing "honey-do list". A friend was told by his wife, "I married you for better or for worse, but not for lunch." My wife doesn't mind having lunch with me, as long as I have been knocking off items in the job jar. But I do plan to get out of the house a few days a week.

At the retiree reception earlier today I was one of 14 leaving the company. From the announcements that were e-mailed out yesterday, I count a total of 483 years of service at this company; some folks had a prior career as I did. The average is 483/14 = 34.5. I've been here nearly the shortest at 27 years, and one man has 24. One woman worked here 50 years, and is retiring only reluctantly! That isn't a record; a colleague retired a few years ago after 60 years with the company. He started as a groundskeeper at age 18, and likes to tell the story of nearly getting fired his first day for driving his mower over a shrub and whacking it to the ground.

One transition I will not make is to end this blog. I am as interested as ever in all kinds of things, and continue to read voraciously. My continuing readership of about 150 daily "hits" indicates that at least a few people share some of my interests. That probably makes me something like the two-millionth most popular blog. That's OK. I write this for myself, and you are welcome to eavesdrop on this ongoing conversation among me, myself and I. I am reading an enigmatic space opera just now, so stay tuned!

Running out

kw: inflation, retirement, finance, analysis

My wife and I are at such an age that we think about retirement a lot. Can we afford to retire yet? Will our IRA's and other funds last long enough? Will there be anything left for our heirs?

We have reached one milestone I had set for myself: The sum of my company pension and the Social Security for the two of us will match our expected needs when my next birthday arrives. That's a good place to be, because it means that at least for a few years we won't need to touch the tax-deferred funds. How soon will we need them?

Inflation has been about 2.5% on average for a few years, but it has ranged between 1% and 4% in various months just in the past two years. Longer term it is more stable, averaged over a year at a time. While I hope it stays at 2.5% or less, it is wiser to plan for at least some periods of higher inflation rates, such as one caused by a real hit to energy prices (such as war with Iran).

Here are two measures that help my planning, without revealing specifics. Firstly, the doubling period. When prices double, the buying power of money has been cut in half. Secondly, we have a joint life expectancy of about thirty more years, so the 30^th power of one minus the inflation rate (e.g., 0.975 for 2.5% inflation) yields the amount of buying power left in your fixed income. Of course, Social Security presently has COLA adjustments, but there is no guarantee that these will continue. These two measures produce this table:

Rate, 30y, Dbl
2.5% 0.468 28y
3.0% 0.401 23½y
3.5% 0.343 20y
4.0% 0.294 17½y

While it would be nice if the inflation-based doubling rate really lasted 28 years, I think it wisest to plan for 20 years or less.