Book Recommendations


Today will be the last post in our series about the book What Color Is Your Parachute? For Retirement by John E. Nelson and Richard N. Bolles. We’ll be discussing chapter nine: A New Chapter in Psychology and chapter ten: Happiness Is Only Real When Shared. These chapters deal with how to find happiness in your retirement.

Moving beyond simple enjoyment

Everyone has things they enjoy doing. Maybe it’s a hobby or maybe it’s finding some time to relax and read a book. Whatever you enjoy doing, can you really see yourself spending 20-30 years doing those enjoyable things every day, all day? Depending on your situation, that may actually sound great to you. But that’s a long time to fill.

We’re not saying you shouldn’t enjoy your retirement! Obviously you should, but as Nelson and Bolles recommend, you need to find something that will engage you. Even your favorite hobby may become boring if you have little engagement in the activity.

According to Nelson and Bolles, “Engagement is the missing ingredient in lasting retirement happiness. And the key to engagement is identifying our strengths—those talents and abilities that we receive great satisfaction in using” (190).

To explain the idea of engagement, Nelson and Bolles discuss the three approaches to happiness:

  • Pleasure – This is the enjoyment approach. It usually involves an activity or situation that will bring you positive feelings. However, this pleasure is usually short lived. While finding enjoyment should be an important part of everyone’s life, you have to keep going back to the activity that brings the enjoyment to find happiness, it’s not lasting.
  • Engagement – Also called involvement, engagement goes beyond pleasure. We’re sure you’ve been involved in an activity that you lose yourself in. Something that you start working on with the intention of spending the morning on, only to find out when you’ve stopped that hours have gone by and you’ve missed lunch without noticing. That’s what it is to be engaged. Nelson and Bolles recognize that you may not have even realized that you were happy until thinking back on it later. “Engagement involves a challenge, and it demands something from you, so it’s not as simple as pleasure. […] Over time, it can build up into a lasting satisfaction with life” (192).
  • Meaning – Also called purpose, Nelson and Bolles recommend that find something beyond yourself to find meaning in retirement. Most people find this by believing in something and then helping service that belief. It could be through your church, a charity, a political party, your community, etc. Meaning doesn’t have to derive from something grand either; it could be as simple as picking up litter in your community as you are on a walk.

Hopefully you will be able to find happiness using all three approaches in your retirement. However, keep in mind, engagement is the key!

Building Relationships

Prior to retirement, you more than likely were exposed to the “Automatic Relationship Generator.” In your younger life, you were in school. There were plenty of others around for you to be friends with. In your working life, you had your co-workers. Maybe you would consider some of them friends, but you had to have some sort of relationship with them to work with them every day. School and work “automatically” built your relationships for you.

You won’t have that in retirement. There is no “Automatic Relationship Generator” in retirement. You probably won’t be seeing the same people almost every day of the week. If you aren’t careful, your retirement may become lonely.

Nelson and Bolles make some great recommendations about how to ensure you don’t lack meaningful relationships in retirement:

  • Concentrate on your marriage – If you are married, retirement may put pressure on that marriage. If both spouses are at home together when previously time spent together was much more limited, this sudden overabundance of time may cause friction between the spouses. Don’t ignore the problem and hope it goes away. Try to be open with your spouse and work through whatever issues retirement may cause in your marriage. Also, try to find activities that you can both engaged in and share.
  • Reconnect with family and old friends – You may have let relationships with family and old friends suffer some while you were working and had less time to devote to them. Once you retire, work on building these relationships back up, especially if you have siblings.
  • Work on building relationships while still working – You can do this two ways. One would be to extend your work related relationships beyond the work day. If you have work friends that you could see being friends outside of work, invite them to spend some time together after work or on the weekends. The other option is, as you approach retirement, concentrate on building relationships outside of work. Maybe through your church, or other cl

Putting it all together

The last chapter in the book, chapter eleven: The New Retirement—an Undivided Life, helps you put everything together. We’re not going to talk about it here, but we hope that you’ve found something useful to your life during this series, and we hope we’ve encouraged you to pick up the book for yourself. (Just a note—we like the first edition better than the second!)

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.
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Destination Retirement

We’re continuing our series about the book What Color Is Your Parachute? For Retirement by John E. Nelson and Richard N. Bolles. Today we’ll be discussing chapter six: The Nature of Space and Time. This chapter deals with your destination in retirement, or in other words, where you’ll be living.

Many people would like to relocate once they retire, and there are many reasons to do so: warmer weather, lower cost of living, to be closer to family or friends, etc. Maybe you would like to downsize but stay in the same city you currently live in. Or maybe you plan on staying in your current home for the duration of your retirement.

Whatever you may be thinking, especially if you have plans to move away from where you are residing now, don’t jump in blindly. Take small steps until you are sure you know what you want, as Nelson and Bolles discuss in the chapter.

“SALE”

According to Nelson and Bolles, there are “four layers of retirement geography” – “SALE.” Each letter represents an element of where you will choose to live in your retirement. They go into quite a bit of detail in the book about each, but we’ll just give a quick overview here:

  • S – “Sense of Place” – The “inner layer of your geography,” this is your own connection to a particular place. Maybe you have emotional ties to it. Maybe it reminds you of your childhood, or is someplace you’ve always loved and wanted to live. Everyone is going to have their own unique “sense of place.”
  • A – “Aging in Place”- Even though you will hopefully have a long, healthy, and active retirement during your “Third Age,” you will eventually reach the “Fourth Age,” a time when you are physically worn out and unable to do all the daily activities you used to be able to handle. Most people prefer to “age in place,” in other words, stay in your own home as you age.
  • L – “Livable Community” – Not all homes are located within a community. A “livable community” is one where you are going to be spending most of your time. It’s where you’re going to travel for activities daily. Some homes are located where the sense of community strong (everything within short walking/driving distance, many activities to participate in, etc), other homes have very little sense of community around them (isolated, located far from stores and activities, etc).
  • E – “Essential Region” – Many people already have an idea of what region they would like to live in. Maybe it’s right where you are right now, but it might be on the other side of the country. This place you’ve decided on becomes your “essential region,” and once you narrow down where that is, it’s becomes a matter of finding the home that is right for you.

Staying Put

If you decide you don’t want to move elsewhere, that you love the city you live in now, there are still some things you might want to consider:

  • Downsizing – If you still live in the house you raised your family in, it might be too big for you and your spouse to live in alone during retirement. It may make sense for you to downsize to a smaller, potentially less expensive house within your own community.
  • Travel – Nelson and Bolles discuss using your “home as base of operations”—the place you come back to in between your travels to rest.
  • Buying a Vacation Home – Not everyone will have the financial ability to do so, but if you like the idea of living elsewhere part of the year, but also want to stay where you are now, buying a vacation home may be a good option. Many people do this in their retirement, especially those who currently live in a colder area. They may buy a second home in a warmer climate to stay in during the winter months.

Finding the Right Retirement Home

Moving can be a stressful time at any age. But when you are deciding that you want to move during retirement, it can become even more stressful. There are so many different issues to consider, and many people will not be financially able to move again if they don’t get it right the first time.

If you know moving is something that you want to do when you retire, especially if you will be moving to a different part of the country than you live now, Nelson and Bolles have some excellent recommendations for you to help you consider your options:

  • “Identify your essential region” – Again, this will likely be your first step. You have to know where you want to live before you can actually move there. Nelson and Bolles have seven important questions you should ask yourself to help find your essential region. Please check out the book for more detail on these questions.
  • Don’t be fooled by community labels – There are many sub-divisions that label themselves a community but really are nothing of the sort, especially those geared for people in retirement. Don’t assume that just because somewhere is labeled a community that it really is.
  • Consider a self-contained community – There are many communities that would be considered “self-contained,” everything you might need or even want—stores, restaurants, banks, doctors, etc.—are all located within your community. This eliminates the need to leave the community and spend a lot of time driving elsewhere to run your errands.
  • Try before you buy – Even if you love vacationing somewhere doesn’t mean you’ll love living there. It’s important that you know what you’ll be getting into before you buy your own home there. If you have friends there, ask to stay with them for a time to get a feel for what’s it’s like to live there. If not, spend some time getting to know some of the locals to get a better feel for the community. If you can afford it, look into renting somewhere short-term within the community.

Additional Thoughts

When you are first retiring, you may not want to consider your own future. As Nelson and Bolles discuss, many people have a hard time facing the fact that they will get older and at some point may not be able to take care of themselves. This “Fourth Age” can often be overlooked and under planned for.

When you are deciding on where you will live in your retirement, it’s very important to consider this time in your life. Your perfect home in your “Third Age” may not be perfect for your “Fourth Age.” Maybe it’s far from your children, has too many stairs, or is too far from medical assistance. There are a number of reasons a house or its location may make your “Fourth Age” uncomfortable.

Don’t let yourself become too distracted by your “Third Age” and forget about what you might need later in life.

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.

As we promised last week, we’re starting a series about the book What Color Is Your Parachute? For Retirement by John E. Nelson and Richard N. Bolles. Again, this book is an excellent resource for anyone considering their retirement. It can really help you to consider some things you may not have thought of before.

Just a few quick notes before we start. As with any book, there is too much information to cover completely. We’ll highlight some of the material, but we recommend you check the book out yourself. It’s an easy read and it includes some great additional resources, like worksheets and quizzes to help you make some decisions, and it’s full of excellent book and website recommendations. When possible, we’ll reference which chapter of the book we are discussing (starting with today’s introduction, which comes from chapter one).

Also, there are two editions of this book. Both are excellent, so if you can only find the first edition (maybe at the library), don’t worry. It’s just as helpful as the updated version.

The History of Retirement

Nelson and Bolles take some time to look at the history of retirement. Retirement really began with the Industrial Revolution, which not only sparked the concept of retirement, but also “standardized” it.

With the Industrial Revolution came standardized jobs. You worked the same job, likely in a factory, every day until you couldn’t work anymore. There was little to no variation, and no slowing down as you aged. So what happened when you were physically unable to do the work anymore? You retired.

Since companies could easily hire younger workers once older workers reached a certain age (“normal retirement age”), the older workers would be forced to retire. It was “standardized,” often by age instead of capability.

While many things about working and retirement have changed since the Industrial Revolution, the concepts of “standardized retirement” and “normal retirement age” have not.

“The Third Age”

Two of the main things that have changed about retirement since the Industrial Revolution are the health of the retirees and how long retirement lasts.

Since the health/life expectancy of the average “normal retirement age” person has gotten significantly better over the years, the length of retirement has grown longer. The physically worn out retiree of the past who may have had a few years of slow-paced life left to him has turned into potentially decades of retirement for a more physically sound, active retiree today.

Obviously the length of your retirement will have many different issues affecting it: your age when you retire, your heath, etc. However, as Nelson and Bolles discuss, the traditional concept of “standardized retirement” really no longer fits today. They propose using a concept that originated with the historian Peter Laslett, the “Third Age of Life.”

According to Laslett, life has four Ages. The first two essentially equate to growing up, becoming an adult, working, and raising your own kids. The “Fourth Age” equated to the old version of retirement, being physically worn out, unable to do much, waiting for death. However, with modern times, there is a new age to life, the “Third Age” where you have the freedom to choose what you want to do and are still physically able to do it.

This “Third Age” comes when your own kids have grown; you are hopefully in a financial position to have some freedom from a full time career. You are in a position to participate in the activities you love, to get involved with volunteering, or learn something new.

This “Third Age” doesn’t have to equate with traditional retirement. You don’t have to quit working, and you don’t have to do it any particular age. Maybe your 55 and still want to work, but you are in a position to have some flexibility with your time to enter your “Third Age.” Or maybe you’re 65 and your ideal “Third Age” is quitting your current job and starting your own business.

You can build a lifestyle completely suited to our own situation and personality. There are no rules—you have the freedom to do what you want (by the way, maybe your ideal “Third Age” is traditional retirement—slow-paced and leisurely. Nelson and Bolles stress this is fine too. Everyone has a different vision of what this Age should look like).

How to Get Started

If this concept appeals to you but you have no idea where to get started, that’s where What Color Is Your Parachute? For Retirement comes in. Don’t stress out if you have no idea what you’d like to do or where you’d like to live. Much of the rest of the book is designed to help you decide what your “Third Age” will look like.

We’ll pick up on this series two weeks from today (we’ll be on vacation next week). At this point, we’re not sure how many posts we’ll do in the series, but you can expect at least 3 more.

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.

One of our favorite thing to do here is dive into our favorite books. We are both avid readers and enjoy sharing the books we find worthwhile. In the past we’ve looked in detail at All Your Worth: The Ultimate Lifetime Money Plan and The Automatic Millionaire. For March, we were looking forward to doing the same thing. Unfortunately, we’re not quite ready yet.

Our goal was to have the first post ready for today, but instead we’ll have it ready for next Friday. So, today, please check out What Color is Your Parachute? for Retirement by Richard N. Bolles and John E. Nelson. The What Color is Your Parachute series includes a number of different books for different situations. The one geared for retirement is excellent. We look forward to getting into more detail about it next week.

It’s been awhile since we had a book recommendation here, but we’ll be looking to get back into it. Our recommendation today is The Hard Times Guide to Retirement Security by Mark Miller.

This book concentrates on three aspects of retirement and the years leading up to it: money, work, and living (the three sections of the book). Each section has great information about how to manage each aspect of your life.

In the “money” section, Miller concentrates on strategies to manage your retirement money: Social Security, pensions, annuities, 401(K)s, etc. He also talks about how to manage your increasing healthcare expenses (concentrating on Medicare) and taxes in retirement. This section is by far the most comprehensive.

The other two sections, while less comprehensive, provide ideas on managing working and living later in life. There are tips on how to find work ages 50+ and how volunteering to help others can really help enhance your retirement.

There are a few chapters in this book we think everyone approaching retirement should read.

  • Chapter 3: “Getting the Most from Social Security” – Social Security is complicated. Many Americans approaching retirement don’t think much about it. If they retire at age 65, the file for Social Security. They retire at 55 without thinking about the affect it will have on their future Social Security benefit.

Social Security is too important an asset to retirees for you to walk into it blindly. Doing so can cost you money, sometimes into the hundreds of thousands of dollars, over the years of your retirement.

We won’t go into too much detail here, but we can’t recommend in depth Social Security planning enough. According to Miller: “[…] most Americans will rely on Social Security as their most important source of support in retirement—39 percent of total income on average.”

 Much too significant to pay such little mind to!

  • Chapter 8: “Taxes and Retirement” – Taxes can become much more difficult in retirement. You’ll likely have numerous streams of income, which could be taxed differently (income tax, capital gains tax, etc.).

Do you understand what withdrawing from your IRA will do to the taxes you’ll owe? How about taxes on your Social Security? Do you know what accounts you are required to take a minimum distribution from annually and when they need to start (and how to figure out how much to take)?

We’ve recommended here before that if you are entering retirement, you may want to hire a tax professional to do your taxes, even if you are used to doing them yourself. Even if it’s just for a year or two, it can help you understand the ins and outs of taxes in retirement better.

Miller addresses some of the key components of retirement taxes in this chapter. While the detail is a little sparse, it’s a good jumping off point for understanding.

  • Chapter 16: “Making a Difference: Encore Careers” – “Retirement” doesn’t mean that you have to stop working all together. In fact, depending on what age you retire, you will hopefully have decades of life ahead of you. That’s a lot of free time. Starting an “encore career” will not only help you fill your time productively, but it can help ease your financial burden by providing income.

Retirement from your current career can be a great choice for many people. Maybe the job has gotten too stressful and is affecting your health. Maybe you’re just bored and can face another few years doing the same work. Or maybe it’s a forced retirement, something you have no control over. Whatever the case, there are still many options for you!

Miller does a good job discussing encore careers in this chapter. As the chapter title suggests, he concentrates on careers that have a positive impact: Not-For-Profit careers, teaching, etc.

 Why it’s Worth Reading

The Hard Times Guide to Retirement Security is a fast, easy read, with great ideas and good resources. We see so many people approaching retirement become stressed out about what comes next. How to make the transition, confused about finances, and overall uncertainty about taking that step. We’ve also seen people already in retirement floundering for something to do when they don’t have to get up and go to work every morning.

This book can give you a starting point; a way to start reviewing your situation and make some decisions. Make sure to check out the resources Miller provides at the end of every chapter, you may find something useful for your situation.

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.

Once again, we heard about this month’s book recommendation, Willpower: Rediscovering the Greatest Human Strength by Roy F. Baumeister and John Tierney over at The Simple Dollar. Willpower is an interesting look at psychological and physical aspects of self control, how and why it works the way it does, and what you may be able to do to strengthen it.

 

Willpower, also called self control, is not something that comes from a bottomless reservoir. It’s actual a physical attribute that can be overworked, affected by what you eat, and can be strengthened. These traits lead Baumeister and Tierney to liken willpower to a muscle.

 

According to the authors, willpower can be overworked through too much use, like a muscle. An example in the book is dieting. Those who diet and are consciously trying to avoid certain foods by using their self control can easily overwork their willpower. This may lead to making bad, uncontrolled decisions when put into tempting situations, like binge eating. It also explains why trying to make big, life changing resolutions is often unsuccessful. You are expending all of your willpower trying to change ten things at once, and then you just give up on all of them when your willpower is depleted.

 

Baumeister and Tierney also discuss how what you eat can affect your willpower. People who maintain a healthier diet may be able to maintain more of their willpower. Also, glucose has a big impact on your self control. If your body is glucose deprived, you may be much more like to lose self control than if your glucose level is at a normal range.

 

Also, like a muscle, willpower can be strengthened over time. Baumeister and Tierney discuss how practicing a small change to your habits daily, like repeatedly telling yourself to stand straight every time you notice you are slouching, can strengthen your willpower.

 

Willpower isn’t the most exciting book to read, but it is interesting. It gave us an idea of why a rational and self controlled person may make a terrible, unreasonable decision, especially when it come to their finances.

We’ve decided to switch our weekly post from Mondays to Fridays. We feel like posting on Friday will work better with our schedules and will allow us to spend more time preparing.

 

Here is February’s review of blog posts.  We hope you find something you enjoy!

 

Get Rich SlowlyHow to Spend a Tax Refund – If you’re getting a tax refund, especially if it’s a sizable one, be smart about what you do with the money.

 

Get Rich SlowlyFive Easiest Ways to Save Money – By just implementing a change to how you save your money, you can make putting that money aside easier.

 

The Simple Dollar The Different Meanings of Savings for Retirement – Everyone’s thoughts of the ideal retirement is different, so everyone plan for retirement should be different as well.

 

Please let us know if you have a favorite financial blog that you think we should be reading.

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