Friday, August 24, 2012

Character Building

"They say adversity builds character.  I'm working the Empire State Building of character." ~ Kevin Young, player for 2001 Pirates in its ninth out of nineteen losing season.

I've had a lot of opportunity to build character due to economic conditions since October 2007, when I retired at 49.   As I've noted previously, I'm glad that the Great Recession happened early in our retirement, giving us some time to recover. 

Here are the elements that didn't go as planned:
  • Company stock value.    When I retired, my company stock was at an all time high.  At 6% growth, the projected price in 2012 was 30% higher.  Instead, the stock is 11% lower today than in 2007.   At this point, the future growth of the stock price is uncertain as the company has struggled during the recession and post recession.

  • Home value.   The value of the house we purchased in 2003 has declined about 35% from the purchase price.   However, because we put down a 40% down payment, we were able to pay off the mortgage in 2009.

  • Part time jobs.  I envisioned getting paid well to do part time jobs that I loved.   While this situation happened two jobs, part time jobs paid between 1.2 and 3 times minimum wage for doing jobs that I liked.

  • The economic situation has caused me to rethink my plan of primarily living on capital gains income from our retirement account and part time jobs.   First, while long term returns on the stock market average 8%, short term returns can vary significantly for a long period.  Therefore, I have been considering plans that provide more stable income, e.g. dividend paying stocks.   Second, I realized that a $1 change in my company stock can more exceed or eliminate the annual earnings from a part time job. In the future,  I will no longer include part time jobs in our retirement planning, although I may occasionally work at one that I find interesting to try.

    For more on Reaping the Rewards, check back every Friday for a new segment.

    This is not financial advice. Please consult a professional advisor.

    Copyright © 2012 Achievement Catalyst, LLC

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