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BY WARREN BOROSON
NEWJERSEYNEWSROOM.COM
BOROSON ON MONEY
I've been sort of retired for three years now, and I confess that I'm a bit embarrassed when people ask me what I do.
My usual answer: "I'm between jobs. Very far between jobs."
Or: "I freelance." That's true, but all that I make is chickenfeed. (Very few freelancers make a good living.)
So, do I withdraw exactly 4 percent a year from my nest egg, the way I'm supposed to?
No. I don't withdraw anything. (Some other retirees tell me the same thing.) With the paltry income my family earns, plus my microscopic pension income (from The Bergen Record, from Medical Economics), plus decent Social Security checks, I don't have to disturb my nest egg. And I do want to leave my offspring a respectable inheritance.
True, my medical expenses are sky-high – especially dentistry. You think doctors are money-grubbing and greedy? Dentists make them look like saints. You remember what Ambrose Bierce said? Dentists are magicians who put metal into your mouth and withdraw coins from your pocket.Yes, I have Medicare coverage, plus Part D for drugs, a Medicare supplement, and long-term health care insurance. All that insurance, plus all the doctor and dentist bills that aren't covered, plus all the drugs I take (statins, for example) easily surpass 7.5 percent of my adjusted gross income, so at least I enjoy a nice tax deduction.
As for my investments, I'm around 30 percent in the stock market, mostly via solid mutual funds. (Vanguard Health Care, Fidelity Asset Manager 20, Fairholme, Dodge & Cox Balanced, and so forth.) I have a few stocks, too – like Johnson & Johnson, which, alas, has been misbehaving of late.
I sold my house in Bergen County just before the market crashed (thanks to advice from my CFP), and I now live in an apartment - with a small house in New York State that I visit on weekends.
In short, I'm financially comfortable. I can buy most of the stuff I really want. I subscribe to too-many magazines (it takes forever to plough through The New Yorker); I eat high on the hog. Occasionally I even buy new books – something I never did when I was a kid. Recently I spent all of $27 for "The Girl Who Kicked the Hornet's Nest."
How come I'm doing so well?
I've never been unemployed for a long period of time.
I have resisted any impulse to regularly buy new cars. I suspect that one reason why some retirees are in financial hot water is that they bought new car after new car. New cars are expensive, and my older cars usually held up nicely.
I sold my house at the right time.
I inherited a respectable sum from my parents.
Importantly, I'm a cheapskate. I grew up during the Depression, and at meals my grandmother would always tell me: "Eat with bread!" Meaning: Don't fill up on meat and chicken. Just today I felt a little ashamed when I bought Stewart's Diet Root beer for $3.49 a package when I know I could have bought it for $2.99 at another supermarket. (My excuse: The place was conveniently located.)
XXXX
I've been lucky, of course. But
what if you haven't been so lucky, and simply don't have enough money to retire comfortably? Keep working. Get a part-time job. Volunteer – you may find a paying job that way. Don't give up the search for a job. Remember: You can get 1,000 turndowns, but you're looking for only one job.
You might also cut back on your lifestyle: patronize diners when you eat out, skip going to stuff in New York City, see if your family can get by with one car instead of two.
One thing not to do is to make big bets. There's an old saw: Don't lose a lot of money after age 60. I always modify that to read: after age 2. The point is: If your nest egg is diminutive, don't bet the ranch.
Remain conservative. And stick with dividend-paying blue-chip stocks and mutual funds. Preferably mutual funds.
Also remember what Dr. Bernstein said: "Stockbrokers service their clients the way Bonnie and Clyde serviced banks."
Some more financial advice:
- If you own stocks, regularly consult The Value Line Investment Survey; if you own funds, regularly consult Morningstar Mutual Funds.
- Consider putting some of your nest egg into an income/immediate annuity. It will keep you from ever running out of money.
Some general advice:
- Accept the fact that young people will prefer to associate with other young people.
Hold onto your friends. For some reason, old friends tend to have fallings-out in their old age – perhaps because they become less tolerant of other people's faults. But you need friends (among other reasons) to buttress your favorable image of yourself, so be forbearing and forgiving. - Have goals. One of mine is: writing an elementary, readable book on investing.
- Keep busy. I read, freelance, watch movies, listen to music, workout and eat out. I eagerly go out to lunch with almost anybody at all. (OK, I might turn down Mahmoud Ahmadinejad.)
Any regrets?
One in particular.
I wish that I – like Paris Hilton – had inherited a fortune from my parents. I suspect that I would have led a far more enjoyable life had I had a lot more money at my disposal from the get-go.
Readers are invited to send financial questions to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
