This 72-Year-Old is Retiring the Right Way …

I'm in awe of my 72-year-old parents who completely succeeded in retiring the right way. They saved only for 20 years and travel around the globe now.

The coolest retirement everMy 72-year-old dad just announced that he’s learning to drive a stick-shift. Why? Because he wants to drive – instead of relying on taxis or buses – when he travels to countries that only have manual transmissions.

And he goes to a lot of other countries. Last year he and my 72-year-old mom flew to Russia. “Why Russia?,” I asked my parents. “Because we’ve never seen it,” they replied.

When they returned, they bought a ticket to Brazil. This year, they invited me to join them in Iceland.

My parents, in short, have the coolest retirement ever. And what’s crazy is that they didn’t start saving for retirement until their 40s. That flies in the face of conventional wisdom, which says that if you don’t start saving for retirement by age 25, you’re totally screwed.

Path to the Coolest Retirement Ever

My parents arrived penniless in the United States when they were in their mid-30s. They came from Nepal, a country where plenty of people make less than $1 a day, and a “good salary” is the equivalent of $200 – $500 U.S. dollars per month. That money stretches a lot further in Nepal, to be fair, but it certainly didn’t help them out when they landed on the “shores” (the tarmac) of Pennsylvania.

My dad got his first “real” job at age 40, earning $20,000 per year, living in Ohio. His car broke down as he drove to his first day on the job. My mom worked in the Sears credit department for two years, then stayed at home to raise me.

Neither of them knew much about stocks or investing. They stuck with mutual funds. They tried managing a 4-unit apartment building, but sold it when they realized they didn’t want to call plumbers and install doors. They didn’t flip houses during the bubble or cash out in some tech-startup IPO.

Yet by the time they both turned 60, only 20 years after they began working, they were ready to retire. They probably could have done it sooner if they weren’t raising little ol’ me.

And they don’t have some meager eating-TV-dinners type of retirement. They have a lets-fly-to-Bali type of retirement.

“Have you tried the eye tracking on the new Samsung Galaxy S4?,” my dad asked me the last time I went to his house.

“What’s eye tracking?” I replied.

He shook his head woefully. “You’re so behind the times.” Then he showed me his new MacBook Air.

They have zero personal debt. They paid off their mortgage within 7 or 8 years. They’ve never taken out a car loan and they’ve never carried a credit card balance.

When I called them a few months ago to see if they wanted to meet for dinner, they replied, “Sorry, we have concert tickets for tonight.”

Concert tickets? Granted, it was for a classical Indian musician, which makes it a little more normal. I guess. At least they’re not partying with Pink Floyd.

“How about tomorrow?” I asked.

“We’re having dinner with the neighbors.”

“Day after tomorrow?”

“We’re busy.”

I finally managed to get them to pencil me in for a Tuesday night. My parents have a social life that could put any twentysomething to shame.

They visited Bali a few months ago. They traveled alone to Myanmar (Burma) after I raved about how much I loved it. They visited me in Spain, Cambodia, Vietnam and New Zealand during my two-year backpacking stint.

Just Begin

There are two points I want to make with this story. The first is a message of hope to all of you who didn’t start saving for retirement in your early twenties. Most financial advice says that Armageddon will fall upon you if you get a late start. Don’t panic. You still have time. You’ll still be okay.

Yes, it’s true: The younger you are when you start saving for retirement, the better. And you’ll never be younger than you are today. That’s why you should start now.

But don’t beat yourself up if you didn’t start early. Just begin.

Two Decades of Work, Lifetime of Leisure

My second message is that conventional wisdom, which states that it takes 40+ years to adequately save for retirement, might be overblown. My parents retired after only 20 years while operating a one-income household (working dad, stay-at-home mom).

As you might guess, they weren’t buying tech gadgets and flying to Iceland during those years. Their 40s were much more frugal. We shopped at TJ Maxx, avoided restaurants, and drove a 15-year-old car.

“Why would I want to live like that, just so I can have a bunch of money when I’m 70?”

First, because 70 is the new 50. (Yeah, I said it.) When you’re 70, you’re still pretty darn young. You’re young enough to download video game apps onto your new iPad, stay out late at concerts and drive a stick-shift. You’re probably not chugging beer out of a funnel anymore, but otherwise you’re still raging strong.

Second, because peace-of-mind is worth a lot. You don’t want to be a 70-year-old stress case.

Finally, because we never felt deprived. We went to sleep every night with full bellies and a warm house. I went to a good school. What else did we need?

Yes, you should still enjoy today. Don’t get so obsessed with retirement that you forget the present moment. Travel when you’re young AND when you’re old. The world will change a lot in the next few decades. You’ll get to watch it happen.

But don’t forget that packing your lunch to work, brewing your own coffee, driving an old car – that’s not really a sacrifice, is it? Not compared to what you’ll gain.

The Joneses Strike Again (Here’s How I Handled Them!)

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I’m sitting at Starbucks, facing a window that overlooks the parking lot.

I see an attractive girl who seems to be about my age, late twenties. Her outfit is awesome. She’s wearing my winter style: skinny jeans, boots, puffy vest, ponytail. We have the same taste. I wear that exact outfit every day from November through February.

The Joneses Strike Again

But her outfit blows mine out of the water. My clothes are generic and well-worn. Hers are designer and crisp. She’s accessorized with a Louis Vuitton handbag, which adds panache and polish to her casual-chic appearance.

I watch her climb into her car. It’s a Lexus, of course. And it’s not just any Lexus: it’s high-gloss white, like an iPad on wheels. It looks new, it’s spotless, and it features a sunroof.

The Joneses strike again.

For a brief moment, I wonder what she does for a living. “How does she afford this?,” I think.

Then I consider how much money I’ve poured into investments throughout my early-to-mid- twenties. And I consider how much I’ve spent on world travel, my Achilles’ heel.

No wonder I still drive a beater car. I’m spending every dime fattening my 401k. Whatever money is leftover buys my plane ticket to Malaysia.

Then I realize I’m leaping to conclusions. I can’t make any assumptions about this girl. I don’t know jack squat about her. Her retirement account might be in the seven figures. Or it might be zero.

Her outfit might represent one week’s pay, one day’s pay, or one hour’s pay. She might have paid cash for her car, or she might have a six-year loan. I have no clue.

Is she spending every dime she earns? Or is she a budding female Warren Buffet whose discretionary spending represents only 1 percent of her income? Anything is possible.

Unless I see an audited financial statement of her personal accounts, I’ll never know. I can’t make any assumptions by looking at her.

Which is why it’s silly to compare myself to her – regardless of whether I’m lamenting my beater car or postulating that I’m more prepared for retirement.

She drove away an hour ago. A jet-black VW Jetta rolls into her empty spot. The car’s chrome rims momentarily blind me as the driver pulls in.

He also seems to be in his late twenties. Sandy blonde hair. Aviator sunglasses. He’s wearing a sharp, well-tailored suit. Polished shoes. The perfect tie. I wonder what he does for a living.

And the Joneses strike again.

Book Review: The Retirement Maze

The Retirement Maze

I retired at age 24. Kinda.

I voluntarily choose not to work for two-and-a-half years, from age 24 to 26, while I traveled the globe.

This was a two-year mini-retirement, something I sprinkle throughout my life.

But during those two-and-a-half years globetrotting, I experienced something unexpected: boredom.

The first few months were like a honeymoon, brimming with excitement and euphoria. After that, I grew restless.

I’d stand at the base of an ancient temple in Burma and think, “Now what?” I’d fly to a pristine beach in Indonesia and think, “Is this all there is?”

My physical self would sit on a tropical beach in Malaysia while my mind daydreamed about the contributions I’d make when I rejoined society: I’d launch a website! I’d write a book! I’d start a company!

I’m not complaining; I loved those two years and I’d travel again in a heartbeat. But finding purpose and direction OUTSIDE of a traditional career or childrearing requires incredible mental strength.

So I was immediately intrigued when I saw this book teaser, promoting a new book called The Retirement Maze:

“If you were to ask our opinion about retirement, the answer might surprise you: ‘Be careful what you ask for.’ Retirement is a full-time job: it demands constant attention and a great deal of effort to do it well. If you’re not up to the challenge, stay at work.”

“I know exactly what they mean,” I thought. “I have to read this book.”

“I Am Nobody.”

One of the book’s authors, Rob Pascale, thought he loved to paint. He imagined devoting his retirement years to art.

But after he retired, he discovered he didn’t enjoy painting as much as he thought. Painting had been a distraction from work-related pressures. Without those pressures, his interest in art waned.

His life took on a sense of drifting, without purpose or direction. He started feeling bored, anxious and, ironically, stressed.

“At some point, I had to come to terms with the fact that I am nobody,” he said. “Whatever I accomplished before had no relevance to my life going forward.”

Sweating the Small Stuff

When Anne, an education administrator, was busy balancing work and family, she didn’t have time to let the “small stuff” bother her. Her brain was jam-packed with schedules, emails, conference calls, and memos.

Once she retired, though, she had plenty of mental space to wallow in minor irritations.

“The smallest issue could become a major tragedy – like a broken fingernail … I had no time for the small issues when I was working; now, unstructured time allows you to waste time on insignificant issues.”

She also found herself squandering time more:

“The five-minute breakfast that I used to eat became the two-hour coffee break. I was up at 7:00, but by the time I looked at the clock, it was 10:30. How could that be? Time flies when you’re not doing anything.

As Anne learned firsthand, retirement can lead to boredom, irritation, and inefficiency.

Data, I Want Data

Still not convinced that retirement can be psychologically troublesome? Consider these facts reported in the book:

* Only 47 percent of retirees achieved the retirement goals they set at the start of their retirement. The majority, 53 percent, did not.

Retirement Maze - Book Review

* Non-retirees spend about 30 hours per month with friends. Retirees spend an average of only 17 hours per month with friends.

* A 2009 study found that retirees who move to a scenic area with warmer climate reported less happiness than expected. Retirees who moved to areas with greater access to medical care reported higher happiness levels. Maybe practicality wins the day?

* If you MUST retire, it may be better to wait until you’re older. Among people who retire between the ages of 45 to 59, only 37 percent report feeling satisfied with retirement six years into it. In contrast, 57 percent of those who retired in their 60’s or later say they’re satisfied.

* Twenty-nine percent of people who retired between age 45 to 59 take antidepressants, and roughly half of those (44 percent) started taking antidepressants after their retirement. Only 17 percent of people who retired in their 60’s or later take antidepressants.

Should I Read It

Most people – especially those who read Afford Anything — know they need to financially prepare for retirement (or for their mid-career mini-retirement).

But that’s only one piece of the puzzle. Retirement demands tremendous mental, emotional and spiritual preparation.

This book helps readers grapple with the psychological factors that can disrupt your retirement (or your mini-retirement). The first two sections explain the mental/emotional risks and dangers. The final section offers pointers on how to steel your mind for it.

The book also discusses how stay-at-home spouses cope with the retiree being home all day. (Hint: not well.)

This Book Is For You If: You’re interested in an academic and research-driven analysis of the psychological and emotional factors surrounding retirement.

This Book Is NOT For You If: You want to focus on the financial-planning aspects of retirement.

Important note: This book is written in academic-speak. The authors, for instance, say “subjective well-being” instead of saying “happiness.” ONLY read this book if you can jive with that.

Check out more reviews of The Retirement Maze: What You Should Know Before and After You Retire.

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Two Yale Professors Recommend Borrowing Money to Invest. Should YOU??

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Two Yale professors say young people should borrow money to invest in the stock market.

Sounds crazy, I know. Here’s their rationale:

Borrow Money to Invest

Traditional retirement advice says you should invest 10 to 15 percent of your income.

That money should be divided between stock funds and bond funds according to your age. A 25-year-old might want to be 90 percent in stocks, 10 percent in bonds, for example. A 60-year-old might decide to be 50/50 in stock and bond funds.

The problem with this advice, say Yale business and law professors Ian Ayres and Barry Nalebuff, is that 20-year-olds haven’t saved much yet. Fifty- and 60-year-olds have a higher net worth.

So what?

Although a 60-year-old has reduced the percentage of his portfolio exposed to stocks, he has more money exposed to risk – exactly when he’s least able to recover from a wipe-out.

Conversely, the 25-year-old may have 90 or 100 percent of her portfolio in stock funds. But that’s only a couple thousand bucks.

Jill is 25. She has $2,500 saved for retirement. Ninety percent of that, or $2,250, is invested in stock funds.

Wendy is 60. During the past 40 years, she’s amassed a retirement portfolio of $680,000. Half of that, or $340,000, is invested in stock funds.

When the market drops 3 percent, Jill loses $67. Wendy loses $10,200.

The solution? According to Ayres and Nalebuff, twentysomethings should borrow money to invest in their retirement account.

“It is obvious that you’re not well diversified if you invest $100 in one stock, $200 in another and $300 in a third. You’d have less risk investing $200 in each of the three stocks,” they co-wrote in a column in Forbes Magazine. (They’re assuming each stock is equally desirable).

“The same idea of equal investments applies to investments across time,” they say. “If you have $100 invested in year one, $200 invested in year two, and $300 invested in year three, you have too much exposure to year three and not enough to year one …”

They argue that people borrow money to buy houses, so why not stocks? (Of course, they neglect to mention that you can LIVE in a house, regardless of its market value. You can’t live in a stock portfolio.)

Regardless, the two professors offer an interesting theory. What do you think? Could twentysomethings – counter-intuitively – reduce their risk by borrowing money to invest for retirement?

You Can’t Take It With You: In Memory of Wendy Kale

Yesterday I learned a colleague from my newspaper was found dead in her Colorado apartment.

I learned the news, ironically, by stumbling across her obituary while I was reading the same newspaper for which she and I both wrote. It struck me, for the first time, that the final consequence of working at a newspaper is that your colleagues – the people you see everyday — are the ones who write your obituary.
what if you die before retirement
Your co-workers also decide how much prominence your death gets in the news. Hers made the front page. Several other papers across Colorado, including the Denver Post, also ran stories about her sudden death.

Wendy Kale was only 58 when she died. No one can explain – or even guess – her cause of death. She seemed to be in fantastic health. The coroner is conducting an autopsy. Police are saying it’s probably “not suspicious.”

Wendy weighed on my mind as I contemplated what to write for today’s Afford Anything post. Wendy lived a more frugal life than almost anyone I know. She lived in a small apartment. She didn’t own a car. She bicycled to work each day wearing the same baggy jeans and sweatshirt, which was acceptable in her role as the newspaper’s music writer. She packed her lunches, never took vacations, never styled her hair. In the three years she and I worked together, I only saw her wear makeup once.

She didn’t earn much money, and neither did I. Yet even I – a generally frugal person – drove a car, ate at restaurants, and enjoyed snowboarding in the Rockies during those lean years working at the paper.

I don’t know what Wendy did with whatever money was left over from each paycheck, but I imagine someone as responsible as she was prepared for retirement.

Her sudden death makes me face an uncomfortable question – a question so uncomfortable I’m afraid I won’t be able to express it in a tasteful manner. But — deep breath — here it goes:

What if we never make it to retirement day? Financial planning focuses on delaying gratification in order to make our grey-haired years even sweeter. We’re taught to defer life experiences – trips to Italy, designer handbags – for the sake of our future. So how can we come to grips with the fact that our future isn’t guaranteed?


About a month ago, long before Wendy’s death, I scanned the Web for articles and blog posts that touch on the intersection of financial planning and early mortality. I saw hints of this everywhere, usually expressed with truisms like “I want to die broke” or “You can’t take it with you.”

Some articles explicitly asked these questions; some just brushed on the idea. Here are a few examples:

#1) Money Magazine ran a profile of a couple who – although now prolific savers – had to overcome the wife’s initial anti-saving attitude: “I’d say, ‘We could die in a car crash tomorrow, so let’s enjoy ourselves now!’”

#2) The blog MoneyNing touches on this topic in the post, “Money Isn’t Just for Hoarding”: “Neither of us care about leaving a fat inheritance for our son … Instead, we want to be able to enjoy a few things now …. what good is having all that money later if we never actually use it?”

#3) The blog Get Rich Slowly featured a letter from a reader who struggles to balance saving for the future with enjoying her money while she still can: “As we watch friends and relatives succumb to cancer (mostly) in their late sixties, I wonder about our financial goals. … When I look at our retirement accounts, it never looks like enough … If we reach 70, I don’t want to do so without having traveled to places we’ve talked about seeing.”

#4) An annuity website, in a post “Die Rich or Die Happy,” touches on this question: “the best time for consumption is during youth … Dying on retirement day would be less than a grand tragedy because life’s principal purpose would already have been fulfilled.”

#5) The blogger Marianna writes with emotion about her father: “One thing I learned about my father’s passing is that no matter how much we accumulate here on this earth … it’s the memories we take with us … Plan for your future (retirement, paying off the bills) but at the same time remember to simply enjoy life.”

#6) There’s even a quote about it on The Simpsons:
Financial planner: It doesn’t look like you’ve been saving anything for the future!
Police Chief Wiggum: Well, you know how it is with cops. I’ll be shot three days before retirement. In the business, we call it retirony.
Planner: Well, what if you don’t get shot?
Police Chief Wiggum: What a terrible thing to say! Oh, look! You made my wife cry!
—The Simpsons

In Tribute

I searched for answers to that uncomfortable question by reminding myself of other truisms: “Live for today, plan for tomorrow.”

But feeling unsatisfied with clichéd expressions, I hunted through Wendy’s obituary for more answers.

What if I die young?Obituaries, by the way, are one of the most challenging pieces for any journalist to write. Obit writers must conjure the best tone and depth to describe a person whom they’ve never met. The Society of Professional Obituary Writers – whose tagline is “Writing About the Dead for a Living” – hand out annual “Grimmie” awards to honor the best obituaries. The best obit writers even receive the ironically-named Lifetime Achievement Awards.

Writing an obituary for a close colleague is an entirely different challenge. Heck, just reading an obit of a colleague is tough enough.

Wendy’s obit was done beautifully – written so well that it laid my questions to rest. When you read the highlights, you’ll understand why:

Her years (as a music promoter in the 1970’s) allowed her to “live the life” of a music-scene insider, hanging out backstage with luminaries such as Jerry Garcia and B.B. King and dealing with disasters like equipment not showing up for sold-out shows or musicians getting falling-down drunk.

(Wendy) Kale held numerous jobs doing public relations and marketing for bands, concert companies and other local businesses. She continued to draw on those connections throughout her career as a writer for the Colorado Daily.

“Every show I brought to Colorado, she was the first call I made,” (prominent Los Angeles music producer Phil) Lobel said.”

She interviewed everyone …

She published thousands of interviews — with musical groups like Dave Matthews Band and Smashing Pumpkins and with New Age celebrities like Deepak Chopra.

She was a fixture on the scene …

“Wendy Kale may have gone to more concerts than any person in the state of Colorado in the last 20 years,” said Don Strasburg, vice president of Denver-based concert promoter AEG Live and co-founder of Boulder’s Fox Theatre.

You wouldn’t have guessed …

Colorado Daily Editor Dave Burdick said people who saw Kale riding around Boulder on her old bike might not have pegged her for a pop music writer.

“But she was one, and she was pretty amazing at talking to bands, no matter how unwilling they sounded,” he said.

Several times a week, “she’d get some newly successful … musician on the phone who’d just woken up or was heavily intoxicated or just otherwise a painfully difficult interview, and she’d just pry some kind of reasonable quotes out, against all odds,” Burdick said.

She worked her dream job …

“She was very much plugged into the after-hours entertainment scene in Boulder,” said Clint Talbott, who was editor at the Daily when Kale started there. “She got paid peanuts for doing this, but she seemed to really enjoy talking to people about who was coming and who was playing.”

And that’s when – mid-way through her obituary – it hit me: Wendy lived the life she wanted.

She lived frugally, this I know for sure. Even her obituary mentions her “old bike.” She saved for retirement (I assume). But she never sacrificed her dreams.

She didn’t suffer through a dull desk job because it paid the bills. She accepted getting “paid peanuts” – as her own editor admits – because she loved her job. She was passionate about her work. She surrounded herself with the things she loves most – music and writing – and dedicated every day of her life to these two arts.

That she lived frugally is besides the point. She lived a life she loved, filled with purpose and excitement. And in her passing, we remember a woman who found meaning in her work.

This post is dedicated to the memory of Wendy Kale, a dedicated music lover and a talented old-school journalist who loved getting the scoop. Read her full obituary and read some stirring words about her from our close friend, the features/layout editor, Christy Fantz.

The Surprising Reason I Read AARP Magazine … In My Twenties

What will you want to cultivate?

Guess what magazine I’m always reading?

If you guessed something targeted at 20-somethings or 30-somethings, you’re wrong. I love AARP magazine — the bimonthly publication of the American Association of Retired Persons.

It shows up in the mailbox at my 70-year-old parents suburban home, but I steal it away to my city apartment and devour it page-by-page. My parents never even get a chance.

But I’m 27 years old. Why the enthusiasm to read a magazine aimed at seniors?

Quite simply, its because AARP Magazine is a window into the future: it discusses the issues that we young ‘uns have in store for us, whether we realize it now or not.

By knowing what will weigh on our minds 50 years down the road, we can better prepare today.

What gets discussed about in every issue? Two main topics:

  • Health
  • Wealth

That’s it. Almost every article is devoted to one of these two topics: your health and your money. Which, by the way, are intricately related.

“Health” encompasses the broad spectrum of healthy living: from diet and exercise to living a purpose-driven, inspirational life.

This blog spends a lot of time talking about the similarities between managing weight and managing money: both are psychological. Both are avenues in which a little effort goes a long way. Both can get tougher as you get older.

“Wealth” encompasses your personal balance sheet: your assets, your liquid cash, your investments. On the surface, Afford Anything is centered around wealth creation. Beneath the surface, Afford Anything is really about living a life that’s financially free.

AARP is an association of “retired” persons, but we’re redefining retirement. It’s not a mode you slip into at age 62 or 65. Retirement happens on the day you no longer need to work for money. The day your passive income sets you free. The day you can live purely from your investment returns.

That might happen at age 30. Or age 40. Or age 72.

Work towards financial freedom. Redefine retirement, and experience financial freedom throughout your life. When you’re a senior, you won’t have regrets.

Oh yeah — and if AARP is any guide, we might want to be monitoring our blood pressure, too.

You Are Not Entitled to Retirement, Dude

Will you work during your sunset years?

If I had a dollar for every “retirement” book, article and website out there, I’d be a millionaire many times over.

Promoting the concept of “never work again!” has become a booming multi-million dollar industry, employing thousands of people (who are, no doubt, awaiting their own retirement).

Retirement is such a part of our cultural fabric that it’s viewed as a basic human right.

It’s the final chapter in the American Dream: a home, a family, a secure retirement.

But it hasn’t always been this way.

For much of American history, people simply worked until they were too sick to work anymore. The idea that a healthy person would voluntarily stop working — regardless of their age — was considered an extravagance privy only to the ultra-rich.

American culture changed after World War II. Retirement shifted from a luxury to a basic right, an entitlement of age. Corporate pensions, coupled with government Social Security, put retirement within reach of every American worker.

Now culture is shifting again.

Corporation pension funds shrink, Social Security bounces towards bankruptcy, life expectancy grows longer, and people in their 60’s and 70’s remain healthier and able to work.

Retirement is no longer an”entitlement.” It’s a “luxury.”

And it’s one that you might not get …

 … unless you grab it by the reins.

This is at the core of the Afford Anything Philosophy: freedom is yours, but ONLY if you’re a true rebelIf you’re part of the Conformist Masses, you’re out of luck. (Read that post to see what I’m talking about.)

Retirement is not a God-given right. With Social Security in question, pensions disappearing, and your own life expectancy growing, you cannot expect retirement on a silver platter. If you wait even to age 30 before you start planning for it, you’re behind the game.

You can’t depend on Social Security to be there for you. Hope for the best; plan for the worst.

Want to ditch the cubicle and live in financial freedom? Join the revolution.