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For most of us, retirement means that we have to watch how quickly our nickels and dimes are flowing out the door. Pundits advise that you should decrease your assets by no more that 4% per year. Whether or not that is realistic for your situation, some form of budgeting makes common sense.

At the heart of any budget is the identification between essentials and accidentals, i.e. the “must haves” versus the “want to haves”. Most of us usually to blur this distinction and consider everything a “must have”. But that is not reality. The core idea behind a budget is the face up to what is really necessary and critically identify the “must haves”.

For example -

• Food is the fundamental must-have, but that doesn’t include Godiva.
• Water is another must, but does that mean Pellegrino?
• Shelter, clothing, heat, light, mobility, and communication also contain “must haves”, but they also have many optional components.
• Entertainment and travel may be considered optional by many, but a few optional items have to be included within any budget if it is going to work.

To approach budgeting -

1. Divide your expenditures into Household Budgets and Personal Budgets, which will help narrow the focus of your spending.
2. Most of your everyday expenditures will be assigned to the Household Budget.
3. Your Personal Budget will manage most optional expenditures, but medical and dental are also components of this account.
4. Organize a simple process for record keeping, so that effort will require minimal effort.

Some helpful references include - Lessons on Budgeting, and
Budget Guidelines for Seniors

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Our parents lived in a cash society. When you decided that you wanted or needed something, you first decided if you could afford it. If you did not have the money in the bank to pay for it now, you simply did not buy it. With the exception of home mortgages, with 50% down and 15 years to pay, debt was considered irresponsible. Store accounts were used, but were paid promptly and in full.

Enter the credit card and the “buy now pay later” mindset. Back in the 60’s, I remember my Dad shaking his head when he learned I had one. Having lived through the Depression, he was wary of such easy money. I, on the other hand, felt quite proud that I had qualified for a card because they were not readily available. How quickly that changed.

Now, in retirement, one of the core rules preached by every financial advisor is to eliminate all debt. No mortgage, no auto loans, no credit cards with unpaid balances. Essentially, we are told that - (1) the future is now, (2) interest deductions no longer are worth as much, and (3) interest payments have become too dear. In other words, we have come full circle and must now return to the mindset of the cash society.

What’s a person to do?

1. Start weaning yourself from the “buy now pay later” mindset. The bargain that seems too good to pass up actually can cost two or three times the bargain price if it is carried on a credit card for a few years. The interest rate on these debts can often exceed 20%.
2. At least five years before retirement, you should start to make a concerted effort to pay off all debt, with any balances you might be carrying on credit cards the first target.
3. Leasing autos can be wise when they can be expensed against a business, but that equation changes when deductions are no longer possible. Plan how you will select and pay for your “retirement car(s).
4. If you have been in your homestead for many years, the mortgage may be paid off. If not, however, it may be wise to sell you home and buy a smaller one for cash. Obviously, it makes no sense to sell in a down market. But you can invest the sweat equity now by preparing the home. Painting and cleaning can take a surprising amount of time.

Other information is available at
Bankrate’s Credit Cards for Seniors,
AARP Debt Reduction Calculator, and
CNN Money.

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There are three big questions about Social Security.

1. How long is the program expected to last?
Social Security started as a retirement program, but now includes payments for Medicare, disability, and survivor benefits. Via our FICA deduction, practically all US citizens, and their companies, have been paying into Social Security throughout their working lives. As of 2008, Social Security is currently funded through 2041. Although it is widely recognized that changes must be made to extend that date, no actual legislation has been passed.

2. How much money will I receive?
How large a payment you can expect to receive from Social Security depends upon -

• how much money (FICA) you have paid into the program over the years,
• if you are married, how much your spouse has paid into the program, and
• your age at the date that you start taking benefits.

The size of your benefit is based upon an actuarial formula used by Social Security that isn’t simple. This formula includes up to 35 or more years of earnings, the FICA payments made, changes in general wage levels, and your age at the time that benefit payments begin.

If you have your full earnings history, the calculator on the Social Security Website will provide you with an estimate of your projected benefit. If not, some general guidelines can be helpful.

• Social Security will send you a copy of their records of your earnings history before you eligibility date.
• The maximum benefit available to those reaching full retirement age in 2008, who have paid the maximum FICA for 35+ years, is $2,185 per month.
• Spouses with lower earnings are paid based upon their own earning level or one-half of their spouse’s benefit, whichever is greater.

3. When should I enroll?
This is the fundamental question. At this point, no one is going to change their work history. The gut issue is, “At what age should I start taking this benefit?” The real answer is, “It depends upon how long you are going to live.” Obviously, no one knows that answer, but you are the one that has to make the bet.

Although your birth year creates certain variations, if you and your family history indicate that you are going to live past your mid-80’s, you should delay your start date until full retirement age or later.

• The blunt reality is that we are all living longer and must support ourselves for many more years after our retirement.
• As of 2008, full retirement age is 66. You can start taking payments at age 62, but this will forever reduce the amount of your payments by 25%. While this will give you cash sooner, it will leave you to face the later years with lower payments.
• Although there are annual cost-of-living increases in Social Security payments, these never quite keep up with the cash register at the supermarket.

Although no one can predict the future, it is best to delay your start date as long as you can if you believe you will live past 83.

Some sites you may wish to visit for further information include -

• The Official Social Security Website
• Article on when to start
• Wikipedia article on Social Security
• WSJ - Baby Boomer’s Guide to Social Security
• National Committee to Preserve Social Security and Medicare

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Many folks who have moved to a new town have joined a Newcomers Club. This is a fairly informal organization that provides a structure for meeting other people that also are new to an area.

That same informal structure can work for seniors. Why not a New Retirees Club composed of people that have truly stopped working and are trying to adjust to this new senior lifestyle? Such a group could -

• pick a particular neighborhood or area on which to focus,
• publicize their existence through the Internet, local libraries and newspapers, and
• create a social network that could provide support to its members

Initially, the focus of such a group would primarily be social in nature. But as seniors in their 60’s and 70’s progress to elders in their 80’s and 90’s, more formal arrangements might be established. As a group, their purchasing power would exceed that of any individual. Pooling that power, they could retain the services of a social worker as well as a nurse to provide in-home services. These services could expand to include -

• Coordination Center - to answer any question and arrange services
• Daily phone calls - to monitor status
• Home Maintenance - repair, revisions, cleaning
• Local Transport - groceries, errands, appointments
• Meals - home delivery, dining groups
• Office - bill paying, computer problem solving
• Volunteer - opportunities with the group or in the area
• Exercise programs - group walks, sessions at local facilities
• Cultural - theater & museum trips
• Educational - classes at local organizations
• Assisted living - care offered in your home
• Nursing care - short term care arranged

Such a neighborhood network can permit people to stay in their homes and maintain their independence well beyond the norm. Aging can be celebrated as a shared adventure rather than feared in isolation.

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If ever there was a perennial New Year’s resolution, it is physical exercise. Whether you buy an exercise machine, join a gym, or make an embarrassing public proclamation (”This year is going to be different!”), the commitment to exercise typically doesn’t last through March. That fall off isn’t due to laziness or indifference. The real reasons seem to be time and boredom.

Time you can make happen. Boredom is the real issue. Gyms have TV screens mounted everywhere you look, but there is rarely anything of interest to watch. Books can be mounted on stands, but can you really concentrate while flexing? What I’m going to investigate are instructional and/or historical videos from the library.

Apparently, there are at least three types of exercise that should be performed -

• Cardio-vascular, aka walking,
• Strength, aka stress movements and weights, and
• Balance

Now, how are we to make it happen?

1. First, assess how you feel. Are you ready for an exercise program?
2. Next, start walking. Since variety is the spice, plan out at least 4 - 5 different routes of various lengths and try a few. A short route might take 20 minutes, a longer one, an hour. Ideally, your should walk at least 30 minutes. However, a short route is better than nothing if you are running short on time.
3. After a month of walking, you should be ready to add some strength training. The Strength Training Program designed by the Centers for Disease Control is a good, low-impact, place to start. It has three steps as well as some added challenges for those who choose to do more.
4. For balance, you may wish to try the toe-heel walking suggested by Jane E. Brody. There are also other exercises suggested by the International Council on Active Aging.
5. If you feel you are beyond the CDC strength training, you may wish to view a set of AARP videos that were developed by Dave Draper. These exercises involve more extensive weight training.

If all this seems a bit intimidating, and it does to me, the smart thing might be to take it one step at a time. The important thing is to start doing something. The visit to the library to check out their videos doesn’t count . . . unless you walk!

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Today, we have something that is relatively rare in Seattle, snow! Moving from the familiar East Coast, I thought we had a guarantee of a snow-free existence here in the Evergreen State. I should have read the fine print.

Last year, stepping on some black ice, I went airborne and had to get my head stapled back together. This year, I’m far more timorous. Two articles I read made me feel even more so.

• The Way We Age Now - by Atul Gawande in The New Yorker Magazine was the first article. Among other things, it discussed how geriatricans should always inspect a patients feet. The reason cited for this procedure is that falling is the most serious health threat faced by seniors. Specifically, it said - “Each year, about three hundred and fifty thousand Americans fall and break a hip. Of those, forty per cent end up in a nursing home, and twenty per cent are never able to walk again. The three primary risk factors for falling are poor balance, taking more than four prescription medications, and muscle weakness. Elderly people without these risk factors have a twelve-per-cent chance of falling in a year. Those with all three risk factors have almost a hundred-per-cent chance.”

Who knew that grab bars were so important!

• Preserving a Fundamental Sense : Balance - by Jane E. Brody in the New York Times was an article that just appeared during the past week. It presented a simple test for balance which I thought I would pass with flying colors. Basically, you cross your arms in front of you, lift one knee a bit, then close your eyes and time yourself. I thought I would be able to stand there for a minute. Instead, I only lasted ten seconds.

Deep down I suspect we all feel a bit immune. We weren’t in that fire. We weren’t on that plane. We may have been in that pileup, but just got a few scratches. We dodged another bullet. Most of us do feel fortunate because we are. But every once in a while, that uncomfortable sense of vulnerability creeps up on us.

Aging is one of those bullets we know we can’t dodge. Articles like these remind us of that reality. However, I am going for a recount on that balance test. And now I do intend to expand my exercise regimen to pulmonary, stress, and balance. I may not be able to dodge the aging bullet, but I can do my best to delay it!

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In today’s world of constantly changing technology, it is wise to develop a technology profile for yourself before you get lost in the maze. In other words, define your comfort level. Are you tech aggressive, tech aware, get tech ache, or are tech adverse?

• Tech Aggressive. These folks enjoy learning about the latest developments and may purchase something simply because it is new. They have some knowledge of computer programming, do much of their shopping and banking over the internet, and understand what most of the technical acronyms mean. They delight in spending a fair amount of time with technology on a daily basis.
• Tech Aware. Pragmatic users. They are not afraid of the latest toy, but don’t need to have it unless it provides a distinct improvement over their current stuff. They are not technicians, but they know how to talk to one in order to resolve a problem. They focus on what the technology does rather than how it does it. They might be blogging on the internet, texting on their cell phone, creating digital photo albums, and selling on eBay.
• Tech Ache. These individuals hate dealing with technology but will do what they must in order to get by. Technology is viewed more as an obstacle than an aid, but they recognize that it must be dealt with. They will use the basics of email, the internet, cell phones, and digital TV. They are wary of internet shopping, but have ordered from Amazon a couple of times.
• Tech Adverse. The are the people who abhor technology and would love to have it go away. Pen and pencil, network TV, and film cameras work just fine for them. They have adjusted to touch tone phones, but remember dial fondly.

Your approach to technology will vary considerable depending upon your comfort level. Specifically -

1. Honestly assess which technology profile best suites your outlook so that you don’t expect more from yourself than you should. However, with a positive attitude, many seniors can advance a level or two if they simply give it a try.
2. If you are Tech Aggressive, you can assist some of your fellow seniors that are looking for advise or have encountered a problem. You may want to re-think some purchases if you find you are straining your budget.
3. If Tech Aware, you may not have all the answers, but you can let others know what you have found that works for you. You may consider teaching an introductory course at the library to Tech Adverse seniors because you can understand their frustrations.
4. Those with Tech Ache, can get by with technology if they have a tech advisor. Grandchildren of age 10 or 12, either yours or someone else’s, can become your trusted consultants if they are asked. These young people adapt naturally to the technology and are often more adept than their parents. It can also be fun to learn from them.
5. Since technology is so prevalent, it may be wise for a Tech Adverse person to try an internet / email course at the local library. A computer purchase is probably unwise, but using the library computer and your own free email account may provide a new gateway to your grandchildren and to photos of them.

Recognizing where you currently fit as a user of technology will help you position your response to it. This article from the University of Houston may provide you with some further ideas.

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Cell phones have become quite fancy. There are now three types -

• smart phones, which try to act like full featured computers,
• media phones, which try to act like home entertainment centers, and
• vanilla phones, which provide basic telephone connectivity services.

Cell phones can seem like an unnecessary extravagance to a senior because most plans charge you for the service whether or not you use it. But since falling accidents are a major concern of seniors, having a device on your belt that can connect you to 911 may not be such an extravagance after all.

The good news is that ANY working cell phone, i.e. that has its battery charged and was once connected to a service, will connect you to 911. You do not have to pay anything for that service. You just have to be physically close enough to a working cell phone tower in order to transmit a signal. The call to 911 will be connected.

If you or your family wants to take the next step and acquire a minimal level of service, pre-paid plans are available from a number of carriers. However, don’t just buy a phone at the supermarket. Do a little homework first. Cnet is one resource that provides a number of reviews.

The plan of action is -

1. Network. Ask friends in your own neighborhood which service they use and how much they like it. No matter how fancy they may be, cell phones only will work if you are near a tower that links to their network. The major networks in the US are AT&T/Cingular, Sprint/Nextel, T-Mobile, and Verizon. Your neighbors have the best knowledge of which one works best in your neighborhood.
2. Cost per Month. Once you know what actually works, the next question to answer is how much it costs per MONTH. All their advertising promotes cost per minute of talking, ignoring the fact that these purchased minutes will automatically expire after 30 or 60 days. You want a service where the minutes last at least 90 days. $20 for 90 days translates to $6.67/month; $25 is $8.33/month.
3. Extra Charges. Some plans have extra charges, e.g. for roaming, i.e. talking outside of your home area, or other features. Avoid those plans.
4. Once you activate the service, remember you are charged for all time, whether you are making or receiving the call. Consequently, it is wise to register the number on the National Do Not Call Registry.
   

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Somehow, the people that praise the joys of home ownership forget what it’s like to have a new roof installed. But once the job is complete, the sense you feel of “shelter” is never so intense. Maintaining a home is like that, terrible to endure the process but delightful to enjoy the results.

Certainly, the adage “an ounce of prevention is worth a pound of cure” can be applied aptly to the challenge of maintaining a home. But the process does not have to be difficult if it is conducted with care. There are three facets that must be tailored to your home. They are -

• a regular schedule of monthly tasks
• seasonal inspections to uncover any unscheduled surprises
• a budget to anticipate necessary repairs, and
• a roster of trustworthy tradesmen to perform certain work.

The start of the New Year is a great time to budget repairs for the coming year as well as perform some routine tasks. Specifically -

Home Exterior:

1. Will this be the year for a new paint job or a roof?
2. What was the condition of the roof gutters when they were cleaned in the Fall?
3. Are there any landscaping changes needed? - trees, shrubs, gardens, lawn, or hedges?
4. Does any fencing need repair?
5. Are the decks and/or patios safe?
6. Will the driveway need resurfacing?
7. Is more insulation required? This is the time of year to check.

Home Interior:

1. Detectors - Time to change batteries in smoke and CO detectors?
2. Furnace - Time to change filters (depends upon filter type and furnace)?
3. Humidifier - Check to see that it is operating properly.
4. Interior paint - Time for a new coat on ceiling, walls, or trim?
5. Floors - Time to refinish?
6. Bathrooms and Kitchen - If it is time for an update, this can become a major expense.

Maintaining a home can seriously impact finances. Now that the new assessment of Net Worth is complete, a serious assessment of the homestead is imperative. The start of the New Year is a perfect time to make that evaluation. It definitely takes precedence over any travel plans, because you’ll want to feel good about coming home.

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I started getting more concerned about passwords when I began to read about a lawyer who was unable to settle an estate because the passwords of certain online accounts perished with their owner. A light bulb went on. I suddenly realized that I had some dormant online accounts whose passwords may have been remembered by an old computer but were no longer anywhere within my brain.

It was then that I began a Password Log. At the start of each new year, and occasionally through the year, I review and update the entries. Each entry includes the -

• site or computer name,
• email account used,
• User Name or ID,
• answers to any challenge questions, and
• password or PIN.

For my purposes, I group the various accounts into -

• Registration (e.g. Dell Computer, Google)
• Frequent Flyer (e.g. Delta, credit card)
• E-Commerce (e.g. eBay, Obitz)
• Financial (e.g. Bank, Schwab)

This Password Log has become a lifeline, but it also is an exposure. I keep a copy under lock and key with my records. For better online security and to force myself to be more cognizant of passwords, I now -

• never have the computer remember any passwords,
• clear private data, including session cookies, both before and after any secure transaction,
• have developed a suite of about a dozen passwords, from simple (4 positions) to complex (36 positions), using Choosing Pretty Good Passwords for ideas, and
• change this suite of passwords on a regular, e.g. quarterly, basis.

At this point, I can’t say that I feel completely safe in this online world. I can only say that I’ve made a reasonable effort. Sometimes, that’s the best you can do with this technology mayhem.

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