Still Clickin

Everyone who has entered the realms of retirement has to answer a question, “What do I do about money?” An annuity is often a simple answer, but not necessarily the best.

If you happened to buy a fixed annuity in 2006, you are feeling pretty good right now. With 2010 interest rates almost non-existent, a 6% fixed annuity can make you feel both relieved and smug at the moment. You should feel good, because you have a great deal . . . at least for the moment.

In principle, annuities should be a simple investment. Their basic purpose is to give you a monthly flow of income after you hand over to the company (typically an insurance company) a large chunk of your money. Insurance companies are professional investors. They are sufficiently confident in their management of money to offer either -

• fixed annuities, which pay a set amount per month, or
• variable annuities, whose payments can vary within a set of parameters.

The downside for annuities is twofold.

1. Your money is committed and no longer accessible to you, and
2. The rates of return for annuities are invariably lower, over time, than other investments available at the time of purchase.

As a result, you should be very careful when investing in annuities.

• They are usually a good deal for the salespeople who befriend the senior to whom that are selling, but often may not be a good deal for the senior.
• Annuities can be sold with some very complicated features. If it is too complicated, back off. Especially be wary of any fees that can be added.
• Do not put all your savings into annuities. At most, they should only be one component of your savings.
• If you are considering any annuity from any company, have at least one objective, knowledgeable person look it over carefully.
• Consider other alternatives. Typically, you can set this up yourself by investing the money in a safe fund and pulling a set amount out every month. Usually, this approach will allow you to control your own money and typically cost you less.

For further information, try -

• New Retirement.com
• CSMonitor.com
• Money Magazine

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Ever since the passage of the Health Care Reform Act on April 23rd, I’ve been looking for a good summary of its components. Of course, any legislation with that many pages will be difficult to summarize, but someone had to take a swing at it. I guess no one will be surprised that it was the AARP that took up the challenge.

At the link, AARP User’s Guide to Health Care Reform, you will find a summary that doesn’t take that long to read. It does, however, have a sufficient sweep and level of detail, that you can develop a sense of the legislation.

Three things to note -

1. Medicare will finally start to cover its most foolish lack, i.e. some preventative services. Catching conditions sooner rather than later should always reduce the cost of their care.
2. The Part-D Donut Hole will be phased out over the next decade.
3. The overpayments for Medicare Advantage Plans will be phased out.

Every senior should read this summary. Thanks AARP, you did a good job!

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Don’t you just love all of the “Best Places” listings. It’s like a reality show about geography. The “Best Here” and the “Best There” always seem to be someplace else other than where you are at. (Since our own little burg was recently listed within the Top Ten by one national magazine, I’ve really started to wonder. It can be nice, but . . . Top Ten?)

There doesn’t seem to be any listing that incorporates and prioritizes all the criteria that you would like to see. However, what they do show can be interesting. Take a sampling of the many listings, and you will invariably learn something new. For example, look at -

• Money Magazine Best to Retire
• Money Magazine Best to Live
• US News & World Report
• AARP Best Destination Choices
• Forbes Magazine
• Wikipedia Best in World
• Sperling’s Best Places
• Business Week Best for Kids
• Kiplinger Best for Taxes
• Weather Statistics

The criteria used by any of these listings seem to be those that appeal to their editors. For example, weather and climate patterns, population size and growth, recreation opportunities, arts and culture organizations, cost of living comparisons, housing costs, job opportunities, colleges and universities, health care facilities, crime statistics, and libraries. But every senior considering a change of location must evaluate these criteria in the light of “How will you spend your time?” From that perspective, the various criteria can be organized into an order that best fits each person’s needs and aspirations. Your “best place” make not make anyone’s else Top Ten List except your own, but that is the only one that matters.

To find your own Best Place -

1. Really decide how you want to spend your time.
2. Reorder the various ranking criteria into a priority list that makes sense to you.
3. Using that list, reevaluate locations based upon your personal aims.
4. If your can, visit your top one or two location choices to get a reality check on how your criteria selection actually feels to you.
5. Once you have decided upon an area, rent there for a year to validate your choice and learn more about the nuances of the location.

The conclusion of all this research may well be that your Best Nest is located right were you are sitting. But “just looking”, never hurts, and you might be surprised at what you find.

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The vast majority of retirees spend their ‘golden’ years not only in the same town, but often in the same house. My wife and I, who spent practically all of our adult lives within seagull distance of the Atlantic, now find ourselves watching seagulls from the Pacific. We’ve not only changed houses; we’ve changed oceans.

Our first choice for our retiree home was a house on the East Coast that we thought would act as a magnetic and encourage visits from our three children. Unfortunately, the magnet had the wrong polarity. All three of our children landed in Seattle. Rather than live with phones and planes, we chose to pick up and engage the experience of West Coast living. After nearly five years of building a new nest and settling in, we still exchange glances at odd moments that say, “We did the right thing.”

What have we learned in the process?

1. The most important question every retiree must answer is not “Where will you be?” Instead, the real question is “How will you spend your time?” Activities of your choosing will define how live the rest of your life. Any destination you consider should be particularly suited to supporting how you want to spend your time. If alpine skiing tops your list of things you want to do, it is unlikely that Florida would be a good choice for you.
2. Location is the second most important choice for a retiree since it can enable or delimit so many other opportunities you will have. Make certain you are both comfortable with your reasons for changing your location. You both don’t have to have the same reasons, but you should understand what each other is expecting from the move.
3. Communication is key to this decision process. Some of you may be thirsting to try something new or to pursue a passion that has long festered. Others may want to get to, or return to, remote family or friends. You may find that some reasons may surprise you. But the only way to discover them is to talk a lot about it.
4. Once your general objectives for activities are clear, use them to build a balanced set of criteria for your new destination. Even if you already know the general area of your new location, you also have to decide on what are you looking for in any new home. Evaluating destinations seems to work best as an iterative process. Expect a few cycles of reevaluation before you start to feel comfortable with the ideas of both your choices. Obviously, there is no perfect home or place, but careful planning and discussion can increase your odds for success.
5. If possible, visit the new area a few times and talk to as many locals as you can. You want to find a place where people are quite willing to share their positive views. Each slice of geography and neighborhood has its own particular quirks. Use the time you have to learn as much as you can before you put the house on the market.
6. Once you are both comfortable with your decision, you must face the ugly realities of listing, selling, packing, and moving out. Home Buying and Selling can vary by market location, and the financial factors involved may influence some of your other choices. The only good thing about this process is that ultimately it has an end. The other side benefit is that you do get rid of a lot of ‘stuff’ that you have been meaning to discard for a long, long time.
7. The best advise we received for a major move was to rent for awhile before you buy any real estate. We thought we would avoid this step, but did not. In hindsight, we learned an awful lot during our rental period and made different purchase decisions as a consequence. For example, one of the first challenges in any new location is to [[find doctors, services]], and other resources to replace the familiar ones left behind. However, that search process can reveal a lot of subtleties about your new location that are impossible to detect otherwise.
8. Finding new friends can be the toughest challenge for seniors in any new setting. Since the kids have long flown the nest, the common meeting places of schools and youth activities no longer act as the common infrastructure for meeting and sharing with new friends. But friends are a critical component to any new location. Give yourself time, but fight any natural tendency you may have toward shyness. Prior to your move, research any local chapters of organizations or groups that you have belonged to in the past.
9. After you have learned the area and know what kind of home you are looking for, start your search and take your time. This may be your last nest, so make sure it has the features that are most important to you. Once you find it, you will both ‘know’, and the final stage of your relocation, ‘moving in’, can begin.

Some additional insights on relocation by seniors can be found in the Ohio State Senior Series.

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Most senior citizens simply stay put right where they are when they retire. They cherish the friendships they have established, the history they have lived, and their familiar grocers, doctors, druggists, etc. However, staying in the same town doesn’t necessarily mean staying in the same house. Downsizing is one trend that many active seniors embrace as a way of simplifying their lives and prolonging their independence.

The ties of family and grandchildren may pull others to unfamiliar locations where their children have become entrenched. Selecting new doctors, finding new dentists, and coping with this change can be a stiff challenge for any senior.

Others, especially those who have had to face frequent moves during their working lives, like the idea of a new place to retire. They are enticed by the latest “Best Places to Retire” article and the challenge of a new adventure.

On any “Now that I’ve Retired List”, location is placed first because it influences so many other choices. For example, telephones, taxes, insurance, legal, and caregiving all have rules that vary by state.

What’s a person to do??

Whichever you choose, re-evaluating your location is a healthy exercise . . . even if it is the old homestead. Your location can determine -

• to which hospital a call to 911 will deliver you,
• the range of community support services that are available to you,
• the types of activities that are readily available to you as well as,
• the amount of snow that will have to be shoveled to get you out of the house.

Some people make this choice quickly. Others spend time and consider the wide range of choices available, i.e.

1. Staying Put Keeping the same, familiar roof, where the pencil marks of the children’s heights on the door jam still mark the progress of their growth. Here, the support of old friends, the history with known doctors, and the connections developed over the years provide a personalized support network that is impossible to duplicate elsewhere.
2. Moving locally - Changing to another nest and neighborhood within the same community might offer a better fit for the needs of your newly evolving senior lifestyle while maintaining your lifelong network of friends and community around you.
3. Downsizing - Simplifying your life and reducing the demands required for the upkeep and care of your nest, a move to a smaller structure can prolong your ability to stay there as the clock keeps ticking.
4. Relocating farther away - Making a move to another community, state, ocean, or country is for the brave of heart. You can’t wait too long to make this move since the effort involved can be taxing. Evaluating destinations, together with its weather patterns, safety concerns, theater offerings, and recreation, can become a major project in and of itself. Once you decide on a place, those with wisdom advise renting for a year while you discover the innuendoes of the locale and its neighborhoods. During that time, you can address the challenges of a new place, e.g. to Find doctors, services as well as Finding new friends.
5. Retirement communities - For those that prefer the amenities of a planned community, developments designed for the 55+ crowd offer an alternative that many people find very attractive. It’s like moving into a neighborhood with an established network. Many people make this choice because the want to follow friends who are already there.
6. Active/Assisted living facilities - If one member of a couple has an emerging health issue, these facilities with built-in medical services can provide a support structure that tiers the living accommodations to the health of the individuals,where care is provided with housing
7. Living abroad - This move can scratch a lifelong itch of an adventurous soul. However, if adaptability is your strong suit, there are many locations in the world where you can stretch your dollar.

Of course, once you make your decision, then the financial issues, Renting versus Home Buying and Selling, must be considered. These are quickly followed by the practical issues of Moving and Home Maintenance.

For further reading, try the AARP Article on Housing Choices.

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Although some individuals are still covered by company and union health plans once they start Turning Age 65, fewer and fewer people have that opportunity. By far, Most US citizens discover that they have come under the Medicare umbrella. Whatever other insurance they may consider, it is all influenced by Medicare. Or, if your income level provides that alternative, Medicaid. (A few qualify for both.)

What do these choices mean?

Original Medicare Part-A provides hospitalization coverage for no charge. It doesn’t cover everything, but it does cover a lot. The key words for coverage are “medically necessary” procedures, i.e. those required to keep you alive and functioning. Once you get in to “elective” or “experimental” procedures, you are no longer covered. For example, it does not cover private rooms, private nurses, or even TV and phones in the room because they are not “medically necessary”. Basically, during each year it covers hospital stays for -

• days 1 - 60 after $1,068 deductible,
• days 61 - 90 at $267/day,
• days over 90 at $534/day, which are deducted from a 60-day pool of “lifetime reserve days”, and
• days beyond the pool of “lifetime reserve days” at full coverage.
• Charges for blood as well as home, hospice, of skilled nursing facility care are determined separately.

Original Medicare Part-B provides coverage for doctors, lab work and other medical services. There is a monthly charge for this coverage which amounts to $96.40 during 2010. The coverage is limited to the Medicare-approved amount for the Medicare-approved services. For example, a colonoscopy is limited to once every ten years, or two years for high-risk patients. Basically, after an annual deductible of $135, Part-B covers -

• 80% of doctors services and medical devices,
• 100% of clinical lab and home health services, and
• other “medically necessary” services after a co-pay or co-insurance deductible.

Original Medicare Supplement policies, Medigap fill in some of the gaps left by deductibles and co-pays. The coverage offered by these policies is strictly formulated by Medicare and specified by the letters A through N. (Plans E, H, I, and J are being phased out.) Until now, F has been the most popular. Although the coverage of each lettered plan is specific, the companies and charges vary by state.

Medicare Advantage, i.e. Part C plans, are privately run HMO alternatives to Original Medicare. Your care is generally restricted to the doctors and facilities that are members of that organization. Essentially, the government pays your Medicare allocation directly to these plans. The plans then set up their own internal rules for coverage as well as any additional charges that may apply. These plans vary on a state-by-state basis, and must be reviewed in that context.

Medicare Part-D Drug Plans, which also vary state-by-state, provide coverage for prescription drugs. Unless you have other drug insurance, you must sign up for one of these plans within four months of turning 65 to avoid being charged a late penalty.

Medicaid programs offer more extensive coverage to people with limited income and resources. This program is jointly funded by both federal and state governments, so it also varies state-by-state.

Go to the government’s Medicare Web Site for more information and for links to individual state programs.

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Recently, one member of our family had a Zero Birthday. The family all gathered, and we had a wonderful evening to celebrate this special event. It wasn’t just another birthday, it was a Zero Birthday. It deserved special treatment.

We all seem to measure our lives by Zero Birthdays.

• At One and Zero, you’ve made it to the fifth grade and you’re not a baby anymore. You’ve become more confident of your likes and dislikes. You have friends, and you have fun. You’re doing more important chores that really help at home. Sometimes, the stories you imagine yourself are better than to ones you see on TV. You’re starting to learn that you are better at some things and worse at others.

• At Two and Zero, you’re not quite legal, but almost. The trauma of teenage years seem a distant memory, and you’ve developed a much better sense of yourself. You’ve moved away from home and consider yourself independent. You’re starting to realize that you might not have all the answers. You’ve just noticed that your parents suddenly seem to be getting a lot smarter.

• At Three and Zero, you know you’re a real adult, whatever that is. You’ve faced, made, and are making a number of life-defining choices, e.g. marriage, parenthood, education, career, location, and friends. You’ve got more choices to make, but you are comfortable making them. You know that there are people that really count on you. Life is very engaging, but can be very frenetic.

• At Four and Zero, you wonder if you’re starting to get ‘old’ because you’re no longer thirty-something. You’ve gotten to know yourself pretty well and are becoming comfortable with that picture. If you have teenagers, you are learning what wallpaper feels like, ever present but ignored. Your career is now defined, and you have achieved a few distinctions and bruises in the process. You are making more than you had planned, but you wonder if you are peaking. You measure yourself, probably too harshly, and wished you had attained more. Some friends always seem to be able to be doing more. Other friends have fallen away, but you know a select few will hang with you forever.

• At Five and Zero, the wrinkles in the mirror are sending you the message that the clock keeps ticking. You really don’t feel ‘old’, but you know that the jump in your step isn’t quite as bouncy. You’ve felt the sting of college tuitions, and the shock that your former teenagers are talking to, rather than at, you and are listening for your answer. Your kids act like they are adults, even though you picture them at age ten, or two. You’re ‘established’ in your community and have felt the joys of many achievements. You are reaping the fruits of your career, both positive and negative.

• At Six and Zero, you’re worried about this looming specter called retirement. Have you saved enough, and more importantly, what will you DO? You’re very engaged in a number of activities, and your daily schedule has many facets to it. You can’t imagine loosing that diversity, so you push it out of your mind. Your greatest delight is the arrival of grandchildren. You notice that the wrinkles have become deeper, and a couple of gray hairs have appeared in your eyebrows. You’ve decided to ignore the latest technical gizmo and have dismissed it as trivial. You’re learning the first names of a few new doctors.

• At Seven and Zero, you assume you’ll be offered the senior discount without asking for it. You’re not an ‘elder’, but you’re definitely a ‘senior’. You’ve begun to notice that younger people dismiss you, with kindness, or simply ignore you. You’re starting to think more and more about the big questions of life and living, and suddenly the questions seem to have become simpler, the answers more obvious. You know you are now officially ‘old’, and you know that your bones get stiff and creak where they never did. Your memory skills may not have ebbed, but you treat them as if they did. You hear the clock ticking more loudly in your mind.

• At Eight and Zero, you celebrate having made this milestone. Haven’t had the experience, so only conjecture is possible, but you must start hearing the word ‘elderly’ more and more. If you’re not committed to a certain amount of regular physical exercise, you’ll start overhearing the word, ‘frail’, when others nearby are conversing. Time for health maintenance activities has to take up more of your day.

• At Nine and Zero, ????

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Surrounded by the Familiar

“Should I stay or should I go?” That’s not only the line from a song, it is a question many seniors ask of themselves. The majority of seniors stay put and live through their senior years at the old homestead. They have their friends near. They know their merchants. They are familiar with every curve in the local roads. They are surrounded by the comfort of their own history.

That does not mean, however, that it is wise for any of us to attempt to steer through this new phase of life using cruise control. They need to look at their surroundings with “new eyes” and assess whatever adjustments may be possible to enhance this next phase of their life. For example -

• Removing clutter
• Decide to spend some time upon a few “New Things to Try”
• Rearranging space for new usage
• Retrofitting the home for safety and ease
• Researching opportunities to reduce expenditures
• Discovering local senior activities and opportunities

Rather than ruminate, it is always better to do something. For example -

1. As suggested in Downsizing, identify a place for disposable items and start moving things to it. This “way station” approach allows you time to reassess and reverse your decision if necessary.
2. Rearrange the children’s bedrooms for space to accommodate your new activities.
3. Consider creating a master bedroom on the main floor if you do not already have that arrangement.
4. Secure scatter rugs, install some lever door knobs, add grab bars to the shower, and perform all the other modifications mentioned in Accident Prevention before you have the immediate need for them.
5. Investigate local property tax relief or caps that may be available in your area.
6. Audit your home for safety and make the necessary changes before they are necessary.

The important thing is to recognize that this is a new time in your life, and it is best to prepare carefully for it. Before health becomes more of an issue, it is smart to retrofit your nest for independent living. You might be surprised by how much you enjoy the changes.

When dealing with the first layer of the retirement lifecycle, the big issues, i.e. finances, health, real estate, etc., all seem to take center stage. Change forces us to re-evaluate prior assumptions and make suitable adjustments. But once those adaptations have been made, the more subtle aspects of retirement seep into our daily rhythms, i.e. limitations, loneliness, and purpose.

Living life with a clear sense of purpose is always a challenge at any age. Defining careers, embracing families, and giving back can stretch anyone to the point that they can lose the sense of purpose. Learning Selfless Love, that ultimate purpose of life, can take a back seat to the urgent, the critical, and the just-a-sec of daily survival.

But in retirement, purpose can become an even more elusive goal. If much of your everyday world was focused upon the daily challenges of family and work, then living with fewer demands from both of these sectors can leave you with an unwelcome sense of emptiness.

Retirement gifts you with that rare gift of Time. The basic question returns, “What are you going to do with your time?” To any intelligent person, it quickly becomes obvious that drifting is not an acceptable answer. But the right answer for one particular person, a.k.a. you, can be elusive. The blunt reality is that you are demanding a better answer for yourself than you have accepted in the past. You can have grown to become very comfortable with the big picture of your life, but stymied by some of the everyday details. It takes some work to figure it all out.

The details are not trivial.

• Family - Your role as a grandparent is simply not as demanding as that of a parent. Once the grandchildren are in school, their schedules don’t permit as much “together time” with grandparents.
• Work - Because of the “age hurdle”, the choices for an engagement in some productive work activity seem to be segmented into (1) unimaginative, low-scale paid work, or (2) potentially more creative, challenging, and satisfying, but unpaid, volunteer work.
• Travel - Can be a very meaningful activity if it is a learning experience as well as a shared moment that can be a gift to that special someone. The erosion of the financial markets, however, may now constrain your range of choices.
• Social Activities - For example, golf, tennis, or bridge, can be pleasant activities for sharing time with family and friends. In and of themselves, however, these pursuits can lack staying power and purpose for many people.

What to do?

1. Identify the top five things you love to do.
2. Identify the top five things in which you excel.
3. If the “top five” approach doesn’t reveal a direction for you, talk with friends and relatives who know you and may have heard of something you might find interesting.
4. If you still are debating with yourself, look for something in which you can get engaged quickly. Try it, and see what you learn. If it doesn’t work, try a different option. It may take a few tries, but it is better than procrastinating.
5. Good luck with your efforts!

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Instinctively, we all measure time. We measure it by the sun. We measure it by the moon. We measure it by the seasons. We measure it by the holidays.

As we get older, we also seem to measure it by more personal memories, e.g. when Charlotte was in middle school or when George worked at ABC Company.

Lately, I had a laugh when I noticed myself using a new time measurement, Costco Time. Warehouse stores sell LARGE packages. Once those packages reach home, we downsize the packaging to a smaller container and slowly use the contents. But after awhile, even those LARGE packages dwindle. It becomes time for a return trip to stock up on the inventory.

I have never really focused too carefully upon the intervals of paper towels (c. six weeks) or tooth paste (c. six months), but coffee filters caught my attention. The smallest container of coffee filters that I have ever found at Costco contains 700 individual filters. For our homestead, that means that two years have passed since we last purchased that item. That is quite an interval of time, and I started to review all of the things that have happened since the Costco Time of our last coffee filter purchase.

A new granddaughter, the loss of some dear friends, a new car, a new house, a new website, a new blog, a few tests, a few operations, a few trips, many wonderful times with family and friends, and hopefully, a bit of ruminating wisdom gained while sipping a couple thousand cups of warm, comforting coffee. That’s just the tip of the iceberg. I won’t get more personal, but the coffee filter interval of Costco Time made me sit up and take notice.

I’m now questioning what I will achieve during this next package of filters. I do know that I will think about it every time I make a new pot of coffee. I like the fact that the coffee filter interval of Costco Time is sufficiently long to negate excuses. It will challenge me to set new goals and benchmarks. Who knows what those goals will bring, but each cup will remind me of my commitment.

Costco Time. Who would have thought???

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