Financial Planning - Two Years into Retirement

I did not go back to work.  Some family and friends predicted that I would be so bored that I'd be doing some appraisal work by the time I reached my second year of retirement.  They do not know me as well as they thought.  Yes, some newly retired people they know did not plan well and are either choosing to work part-time to fill in gaps in their money and/or their life.  They may not have planned very well.  I did.  I am in a good place.  My choices were right for me.

If you have been a follower of my blog, you can see that I have varied interests and am open to new experiences.  These activities and lifestyle have always been a part of who I am.  I just have more time to explore my options and retirement has cleared out life's clutter that had kept me from seeing and making choices with my intuition.  I am a much happier person now than I ever have been.  Joy is a part of every day!  So filling in any gaps in my social and family life has not been difficult.  Yes, I would like to have more close friends and have family around more but I can only do the best I can in meeting people halfway.

So…financially things are not so bad.  On December 1, 2013, I will be two years into retirement.  I am as busy as I want to be and pretty much staying within my budget.  I have not saved money like I thought I would because I wanted to update my electronics and bought a TV, DVD player, printer/scanner and a MacBook Pro laptop last February. I bought most of what I wanted and using my savings to pay it off in a year.  I'm still on tract with that.  The only challenge was that I had unexpected dental and car needs that would have easily been paid straight up had I not bought the electronics.  So I will take out some profit from investments early next year to get caught up.  The Plan is to not to have any debts unpaid at the end of the year and that is my source if I cannot catch it with budget adjustments and savings during the year.  I also bought a kayak.  Keith kicked in about 40% of the cost as well as gave me use of an extra life jacket and paddle.  There's more than enough food in the house and all my bills were paid on time.  Life is good.

I still have a couple years to decide about taking Social Security at age 62.  That has been the plan as that is when the temporary payment portion with my pension ends.  There are two other options to consider between now and then.  The first one is to not take my Social Security until age 66 and live on my investments until then.  That would be stressful as it likely would reduce the basic amount I didn't want to use but the additional payment amount at age 66 would be tempting.

The other option is a new one that we just heard about from AARP that involves a marital strategy.  We would need to do further research before deciding.  We have already talked to a SS Agent in person who suggested that I would be best to take the SS at 62 as originally planned as I may not come out ahead should my spouse die early.  The plan is for my spouse to apply for his SS at his age 66 but suspend payments.  This allows it to grow at the estimated 8% until he takes it as planned at his age 70 with the highest payment.  If he does this, I can apply for my half of his payment at his age 66 instead of signing up for my SS payment at 62.  That way my SS can grow at 8% until I reach 66 when I take my full amount.  That would give me about half the amount of my SS at age 62.  The problem addressed by the SS Agent is that should my spouse die before he collects his full amount at age 70, I would only be entitled to his age 66 amount.  When I reach age 66, my full amount would be about the same no matter what.  Not sure if it is worth the hassle.  Will likely stay with the original plan and take my SS at age 62 which is still a couple hundred more than the temporary payment I have been getting.

There is a new law in 2014 that may make a difference for when my spouse takes his SS.  The original plan was for him to work at the job he likes until he is 70 then take the maximum SS.  The new law will allow full SS payment in addition to salary under $40K with no reduction.  Previously, one could only make about $15K at the same time collecting SS otherwise, the SS would be reduced $1 for every $2 in salary.  The tax issue needs to be researched further.  I think only 50% of SS is taxed.  We would need to figure out how much of a tax bite it would be in addition to his salary.  It likely would be worthwhile.  He would just need to decide what year he would collect instead of waiting until age 70.  

It appears that my Retirement Plan is working.  I am staying in my budget reasonably with my pension.  I must plan any new expenses carefully and not allow my base investment to drop below my desired amount.  I have not been as active as I thought I would be in making changes to my investments as the market has not shown the growth that allows me to take extra chances.  I like being at a safe 60/40 ratio right now.  Next year I hope to include one or two trips, a couple genealogy programs/memberships, and some education/license expenses to renew my appraisal certification.  I also hope to save more of my pension for unexpected expenses and not have to catch up again with investment profits.  Those profits from investments were basically planned to be for travel…hopefully Europe sooner than later!