How I use Mutual Funds to Keep my Sanity

Ann and I both had been contributing to our company 401k plans for some time but really did not have a coherent plan to manage our retirement dollars. So we were anxious to have someone help us when I retired in 1998. Back then financial analysts seemed to come out of the woodwork. These folks tried to create an exotic mysticism around the way that a retirement portfolio should be developed and managed.

After interviewing several companies we settled on one small business, run by Christians, that was recommended by a friend. These guys came up with a plan encased in a nice binder and seemed really smart. We were gung ho on the plan until we began to scrutinize it and discovered that five annuities were buried in their recommendations. Annuities are great for the people who sell them but not so much for those who buy them.

Since that day I have been convinced that I do not need someone to manage my retirement portfolio. There is a lot of educational information out there and, if you use mutual funds in your 401k and IRA vehicles, it is possible to manage your own retirement portfolio. Here are a few general principles that I have developed over the years:

• From the image on the right (click to make larger) you can see that there are many types of portfolios out there. To discern my target I determined the amount of risk that I was comfortable taking which equated to a moderate to conservative portfolio.
• To keep my sanity I diversify not only across stock and bond funds but across mutual fund managers. That means that I will not entrust a lot of money to one mutual fund.
• I use analyst recommendations when I pick a fund. I like the Morningstar ratings and tend to stay away from low rated funds.
• I tend to favor value oriented funds over those of the growth variety. These tend to be a bit more stable over the long haul.
• I rarely pick a fund that has an expense ratio greater than 1%. 
• I never pick a fund that has any fees or are front loaded funds.
• I try to stay away from being over invested in one company or industry sector. Means I check mutual funds' top holdings.
• I like to have enough liquidity to sustain us for a few years. Advisers do not like it but it helps me sleep at night. :)

For me, the key has been to view my portfolio as an investment strategy rather than an opportunity to regularly buy and sell stocks and bonds. Consequentially I do not buy and sell very much. I tend to regularly (a few times a month) check my portfolio but actively manage it only it a few times a year. This seems to reduce my stress level a bit. :).

I'd be happy to share more. Feel free to comment below or send me an email if you have any questions.

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80 is the new 65? A New Retirement Paradigm

80 is the new 65? That is what this Christian Monitor post seems to say. The article makes a few points concerning retirement, Social Security and extended life spans.

Consider these points that they make about Social Security:

• In 1935, when the Social Security Act was passed by Congress and signed by President Roosevelt, the new law established a national retirement age of 65.
• In 1935, the average American lifespan was 61.7.
• The “retirement age” set by Social Security is still 65. However, today the average American lifespan is 78 years and continuing to rise.
• The national “retirement age” of 65 has remained unchanged for 75 years, but the lifespan of the average American has gone up by 16 years.
• This is an easy explanation for why Social Security is seeing financial problems.

They also make these points about what retirement looks like today:

• If you’re under 50 or so, you’re probably not going to be able to retire when you’re 65.
• Most people between the ages of 65 and, say, 80 are quite valuable and have a ton to offer in the workplace and in the marketplace.
• Don’t view retirement planning as saving for true retirement. Look at retirement planning as building a backbone for a second career.
• Retirement savings aren’t just for retirement; instead, they create possibilities for a second career or other opportunities later on during my healthy adult life.

Now that is certainly a different perspective on retirement than the one that my parents had - and it is different than mine as well. It reminds me of a friend who says that he will work until he dies. Also reminds me of the many times that I have seen a senior citizen busing tables at a fast food joint. So I do wonder what these new second careers will look like.

So I have to ask you: What does retirement mean to you? Does having a second career when you hit 65 sound like a good idea? When you are 65 do you think that you will feel like you are 45 like the article says? I'd give you my answers but don't want to depress you.

Geezer Jamboree

Saw this image on Eddie's blog today. I remember all but one of these TV shows.. don't really remember Corky.

And, when I was a kid, I was not interested in Tales of Wells Fargo or Wagon Train. I did so love Annie Oakley, Lassie, Rin-Tin-Tin, Howdy Doody, Lassie and all of those cartoon.. especially Mighty Mouse.

Are you old enough to remember any of these?

Are All Old Guys Wise?

So I am on my way to the place that works on my Ramp Van and I stop at Einstein Brothers to get a poppyseed bagel and a cup of their dark blend.. and the young guy at the checkout asks me if I am an "Old Wise Guy".. I replied yes because I wanted to get the ten percent discount. Yet it did get me to wondering this thought:

Are all old guys wise?

Of course the answer is "maybe not".. or is it "maybe so"? Without get into a long definition of wisdom and what it means to be wise I would like to say that I think part of what it means to be wise is to have experience - both the good and the bad sort. I would categorically say that I am wiser now then I was when I was younger.. hands down I have learned from both my successes and my failures. Who can say that they have not grown wiser with age?

So I begin to think about this whole thing of aging and how sometimes much younger people lead older folks. Perhaps this usually happens because the younger person has more expertise.. wisdom if you will.. than the older person in a specific trade.. or maybe the older person lacks leadership wisdom. Do you see where I am going? Not sure that I do yet. But it does lead me to another question:

Should Elders be elder?

Yes.. I am sorta speaking of church.. but I think the question is even broader than that. People seem to be preoccupied with youthful leaders - I think that one of the appeals of candidate Barack Obama was his youthful energy.. while candidate John McCain seemed old standing beside him.. even a Saturday Night Live skit played on McCain's elderlyness. And I have to admit that this seems to bleed over into the religious world as well.. I know church "Elders" who are in their 20s and 30s.. not too elderly for sure.

So what am I saying? Not sure I really have a point other than to say that I think that our culture does not really esteem the wisdom of elders or of being elderly. I think that we once did. I do remember a time when gray haired men mentored and taught me both in my professional and religious life. I had many uncles in the faith and teachers on my job.. especially in my 20s and 30s.

Getting back to the question - The answer is yes! I do think that all old guys are wise when compared with younger versions on themselves.. even if they do appear to be old fools at times - not that I can relate.

Put Out to Pasture

Found this article about a TV personality that was laid off at 40 and thought that I would opine a bit about it. Here is the way that the article begins:

Dr. Sean Kenniff has had quite a colorful life. He was one of the five finalists on season 1 of the CBS show Survivor, a respected neurologist, and best known to South Florida viewers as our medical reporter at CBS4 News. Until, like so many caught up in the result of a bad economy, Dr. Sean was laid off.

"On my way home that day, driving with my termination papers and of course reevaluating your life, I saw the cows and for the first time I understood them," 40-year-old Sean told CBS4's Lisa Petrillo.

"They were fenced in and powerless over every aspect of their life. That's just how I felt. I'd been pastured, fenced in and powerless over the circumstances."

I have several friends out of work.. the economy is kicking our collective butts these days.
I can resonate a bit with my unemployed friends. I remember the feelings I had when I was laid off in my early 50s.. got pretty hard on me after a while.. after 15 months I found work again.. it was a good feeling to work again.. but the process was really tough on me.. after a while I really did feel like I was put out to pasture. This instruction for 50+ job-seekers from Monster.com, the job-search website, gets me thinking:

The sad truth is, says Osborne, "in our youth culture, it doesn't hurt to appear younger." That means updating your wardrobe and, if you're overweight, shedding those extra pounds.

An interesting comment.. makes me want to go all Just for Men and do my hair dark brown.. and maybe go out and buy some pants-on-the-ground trousers. Actually it makes me a bit sad to think that "looking young" is an asset for some employers. Gotta wonder if this is just an American phenomenon or if these kinds of attitudes exist in other non-western parts of the world - I once heard that Asian cultures esteem older folks.. wonder if it is true?

What do you think? Is ageism a problem in all industries or just with some employers?

Are Geezers sleeping less than Whipper-Snappers?

According to an article titled Healthy Adults Can Get By With Less Sleep "older adults without sleep disorders can have a reduced “sleep need” and are less sleepy during the day than healthy young adults." Here are a few clips from the piece:

Researchers discovered that during a night of eight hours in bed, total sleep time decreased significantly and progressively with age.

Older adults slept about 20 minutes less than middle-aged adults, who slept 23 minutes less than young adults.


Doesn't it amaze you how many "studies" are going on these days? That said I don't know that I agree with the study. In my younger years I seem to remember staying up later and getting up way earlier than I do these days.. of course I am retired. What is your experience - are you sleeping less these days?

On Getting Older

I am dedicating this funny story by teacher David McClure (contributed to the Dallas News Community Opinion page) to my wife Ann who is one year older today.

$5.37. That's what the kid behind the counter at Taco Bueno said to me. I dug into my pocket and pulled out some lint and two dimes and something that used to be a Jolly Rancher. Having already handed the kid a five-spot, I started to head back out to the truck to grab some change when the kid with the Emo hairdo said the harshest thing anyone has ever said to me. He said, "It's OK. I'll just give you the senior citizen discount."

I turned to see who he was talking to and then heard the sound of change hitting the counter in front of me. "Only $4.68" he said cheerfully. I stood there stupefied. I am 48, not even 50 yet - a mere child! Senior citizen?

I took my burrito and walked out to the truck wondering what was wrong with Emo. Was he blind? As I sat in the truck, my blood began to boil. Old? Me?

I'll show him, I thought. I opened the door and headed back inside. I strode to the counter, and there he was waiting with a smile.

Before I could say a word, he held up something and jingled it in front of me, like I could be that easily distracted! What am I now? A toddler?

"Dude! Can't get too far without your car keys, eh?" I stared with utter disdain at the keys. I began to rationalize in my mind. "Leaving keys behind hardly makes a man elderly! It could happen to anyone!"

I turned and headed back to the truck. I slipped the key into the ignition, but it wouldn't turn. What now? I checked my keys and tried another. Still nothing. That's when I noticed the purple beads hanging from my rearview mirror. I had no purple beads hanging from my rearview mirror.

Then, a few other objects came into focus. The car seat in the back seat. Happy Meal toys spread all over the floorboard. A partially eaten doughnut on the dashboard.

Faster than you can say ginkgo biloba, I flew out of the alien vehicle. Moments later I was speeding out of the parking lot, relieved to finally be leaving this nightmarish stop in my life. That is when I felt it, deep in the bowels of my stomach: hunger! My stomach growled and churned, and I reached to grab my burrito, only it was nowhere to be found.

I swung the truck around, gathered my courage, and strode back into the restaurant one final time. There Emo stood, draped in youth and black nail polish. All I could think was, "What is the world coming to?" All I could say was, "Did I leave my food and drink in here?" At this point I was ready to ask a Boy Scout to help me back to my vehicle, and then go straight home and apply for Social Security benefits.

Emo had no clue. I walked back out to the truck, and suddenly a young lad came up and tugged on my jeans to get my attention. He was holding up a drink and a bag. His mother explained, "I think you left this in my truck by mistake." I took the food and drink from the little boy and sheepishly apologized.

She offered these kind words: "It's OK. My grandfather does stuff like this all the time."

All of this is to explain how I got a ticket doing 85 in a 40. Yes, I was racing some punk kid in a Toyota Prius. And no, I told the officer, I'm not too old to be driving this fast.

As I walked in the front door, my wife met me halfway down the hall. I handed her a bag of cold food and a $300 speeding ticket. I promptly sat in my rocking chair and covered up my legs with a blanky.

The good news was I had successfully found my way home.

Billy Cosby

Growing up in the 60s one of my favorite comedy albums was "Bill Cosby Is a Very Funny Fellow...Right!".. I loved his funny stories.. still remember the conversation that Noah had with God.. very funny. I also liked Cosby in I Spy and back in the 80s my family was addicted to The Cosby Show on Thursday nights. As of late the elder and wiser Cosby has opined a bit on life and culture.. here are a few things he has said:

Gray hair is God's graffiti. (my favorite)

Old is always fifteen years from now. (my second favorite)

I don't know the key to success, but the key to failure is trying to please everybody.

Like everyone else who makes the mistake of getting older, I begin each day with coffee and obituaries.

Men and women belong to different species and communications between them is still in its infancy.

Let us now set forth one of the fundamental truths about marriage: the wife is in charge.

Parents are not interested in justice, they're interested in peace and quiet.

The main goal of the future is to stop violence. The world is addicted to it.

In order to succeed, your desire for success should be greater than your fear of failure.

Nothing I've ever done has given me more joys and rewards than being a father to my children.

The Politics of Age

Last week the New Yorker magazine featured a controversial cartoon of the Obamas on their cover that they called The Politics of Fear. Vanity Fair magazine countered this week with a spoof of their own showing John McCain, using a walker, fist-bumping his wife Cindy holding RX drugs while the Constitution burns in the fireplace with a portrait of President Bush over the mantle.

Many may find this one more amusing than the Obama one but, frankly, this one hits a bit too close to home. I have seen age discrimination up close and think that, while it is not the issue that race discrimination is, age discrimination is a reality of life in America. Despite their superior qualifications older folks are often discrimnnated against in the job market. In truth, older people are not regarded in the same way that they once were.. maybe I just need to come to grips with this aging thing :)

Okay.. a bit of reality here.. how many of you.. when you vote.. will not consider Obama's race but will factor in McCain's age? I suspect that some will admit to the latter and might be offended that I even asked the former. Perhaps the question says a bit more about us than I am ready to deal with :(

Dementia Test

It's that time of year to take our annual senior citizen test. Exercise of the brain is as important as exercise of the muscles. As we grow older, it's important to keep mentally alert. If you don't use it, you lose it! Below is a very private way to gauge your loss or non-loss of intelligence.

There are only 5 questions, so don't get all excited and confused yet.

Take the test presented here to determine if you're losing it or not. The spaces between the question and answers below are there so you don't see the correct answers until you've made your answer.

OK, relax, clear your mind and begin.

1. What do you put in a toaster?
   
2. Say 'silk' five times. Now spell 'silk.' What do cows drink?
   
3. If a red house is made from red bricks, and a blue house is made from blue bricks, and a pink house is made from pink bricks, and a black house is made from black bricks, what is a green house made from?
   
4. It's twenty years ago, and a plane is flying at 20,000 feet over Germany (If you will recall , Germany at the time was politically divided into West Germany and East Germany ) Anyway, during the flight, TWO engines fail. The pilot, realizing that the last remaining engine is also failing, decides on a crash landing procedure. Unfortunately the engine fails before he can do so and the plane fatally crashes smack in the middle of 'no man's land' between East Germany and West Germany Where would you bury the survivors? East Germany, West Germany, or no man's land'?
   
5. Without using a calculator - You are driving a bus from London to Milford Haven in Wales. In London, 17 people get on the bus. In Reading, six people get off the bus and nine people get on. In Swindon , two people get off and four get on. In Cardiff, 11 people get off and 16 people get on. In Swansea , three people get off and five people get on. In Carmathen, six people get off and three get on. You then arrive at Milford Haven. What was the name of the bus driver?

Here are the answers:

1. 'bread.' If you said 'toast,' maybe you should give up now and do something else. Try not to hurt yourself.
   
2. Cows drink water. If you said 'milk,' maybe you shouldn't even attempt to answer the next question. Your brain is apparently over-stressed and may even overheat. Content yourself with reading more appropriate literature such as Auto World.
   
3. Greenhouses are made from glass. If you said 'green bricks,' why are you still reading these???
   
4. You don't bury survivors.If you said ANYTHING else, you're in real bad shape and for your own sake you must stop. If you said, 'You don't bury survivors', proceed to the next question.
   
5. Oh, for crying out loud! Don't you remember your own name? Or have you forgotten it was YOU driving the BUS!!

Don't feel bad if you missed a few. 95% of people fail most of the questions :)

Bob Dole

Kansas' favorite political son has a great wit.. a few of his quotes:

We're trying to get good pictures. Don't worry very much about what I say.

You feel a little older in the morning. By noon I feel about 55.

The internet is a great way to get on the net.

If you're hanging around with nothing to do and the zoo is closed, come over to the Senate. You'll get the same kind of feeling and you won't have to pay.

History buffs probably noted the reunion at a Washington party a few weeks ago of three ex-presidents: Carter, Ford and Nixon - See No Evil, Hear No Evil and Evil.

Elizabeth's back at the red cross, and I'm walking the dog. At least she's the president of something, which is more than I can say.

Senatorial Geezers

80 year old Republican Senator John Warner of Virginia said Friday he will not seek a sixth term in 2008. Warner said he still feels spry enough for the "rigors" of the Senate, but he did not want to push it for another six years.

Ever wonder why so many politicians work well beyond retirement norms? Are they workaholics or are those jobs just easy ... or is it something a bit darker? How many of our 100 senators do you think are over 80? Over 65? You might be surprised.

This list says that 40 percent of these folks are retirement eligible (i.e. 65 or older) yet continue to "work". Ah, the sweet life in our nation's capitol must be good for these old folks J

George Burns

Growing up in NYC I came home from school and often watched the "Burns and Allen" show on TV. Even then I loved George Burns quick wit and dry humor. In remembrance of those days I submit these quotes to you as only he could deliver them:

Acting is all about honesty. If you can fake that, you've got it made.

Happiness is having a large, loving, caring, close-knit family in another city.

I look to the future because that's where I'm going to spend the rest of my life.

I was always taught to respect my elders and I've now reached the age when I don't have anybody to respect.

I'd rather be a failure at something I love than a success at something I hate.

If you live to be one hundred, you've got it made. Very few people die past that age.

The secret of a good sermon is to have a good beginning and a good ending, then having the two as close together as possible.

This is the sixth book I've written, which isn't bad for a guy who's only read two.

Too bad the only people who know how to run the country are busy driving cabs and cutting hair.

You can't help getting older, but you don't have to get old.

You know you're getting old when you stoop to tie your shoelaces and wonder what else you could do while you're down there.

Geezer Mouse

KB got tired of the pain in his right thumb wrist joint and bought this new-fangled pen-mouse. After the purchase I read that it helps ease old man pains. The 'old man' article continued to harrass me by calling me a wimp and calling the pen an example of ergonomic nonsense.

Why do I bother to surf the web? I'll keep you posted on its effectiveness in reducing my pain.

I have been Dilberted

I love Dilbert but sometimes his commenary is too close for comfort. This one reminded me of what it was like to do some contracting/consulting work for a large corporation after I took an early retirement package when I was 49. I felt young but worked around much younger people - I was the old guy. I am still one of the oldest people where I work now and sometimes get frustrated because of my physical limitations - I have ankle problems that sometimes keep me off my feet. I guess getting older isn't all that bad though when you consider the alternatives :)