Why to Not Work in Retirement

Last week, I wrote Why Work in Retirement. This week I offer some reasons on why to not work in retirement.

Earnings not needed. In retirement, living expenses are covered by income from pensions, savings or Social Security. Income from work isn't required. Why do something that is not needed?

More personal time. Work interferes with personal time. Work requires commitment to deadlines, schedules and work shifts. Days off need to be requested. Time flexibility is reduced. Working hours become the priority in the retiree's schedule.

Less stress. Work can create unwanted stress. Poor supervisors, demanding schedules, incompatible colleagues, and poor working conditions can create higher stress. These types of stress can be avoided by not work.

For me, the most compelling reason not to work during retirement is the increase in personal time which I can invest in personal development and more family activities.

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

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

Copyright © 2010 Achievement Catalyst, LLC

Timeless Articles from the Archives #4

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I am starting a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

For the week in 2006, I wrote How Much is Needed to Be Wealthy - THE NUMBER . In this post, I determined that 20 times my salary was the number.

For the week in 2007, I wrote about Business Week - Retiring Early Strategies: The Twenties. In this post, I evaluated the strategies shared and added perspective based on my experience.

For the week in 2009, in Successfully Reduced Property Taxes , I wrote how I took advantage of the real estate crash to reduce our property taxes by over 16%. Given the slow recovery of the housing market, there is still time to use the lower housing values to reduce property taxes.

To me, the content of these posts are still relevant today and were worth reading again.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial, saving, retirement, or tax advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Links To Carnivals From August 31 to September 6, 2010

Here are the links to the Carnivals in which My Wealth Builder participated from August 31 to September 6, 2010:

The Wealth Builder Carnival #4

Baby Boomers Blog Carnival #55

Carnival of Financial Planning #156

Tax Carnival #74

Real Estate Investing Carnival

Carnival of Money Stories

For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

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

Copyright © 2010 Achievement Catalyst, LLC

The Wealth Builder Carnival #5

Welcome to fifth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building. As a result, this carnival did not include submissions that were off topic, e.g. those about debt, debt management, debt reduction, credit scores, credit monitoring, credit card evaluations, or account opening bonuses.

For this carnival, I have organized the posts into seven categories: Earning, Investing, Insuring and Protecting, Living Frugally, Retiring, Saving and Taxes. I have acknowledged bloggers who are in Technorati's Top 100 Finance blogs by showing their 9/7/2010 rank in parentheses. Finally, for some submissions, I have added my perspective and comments relative to the post topic.

And now onto the Carnival:

Earning

Kai S. presents Make Residual Income, posted at Internet Business Tactics, saying, "Earning residual income should be one of your main focuses if you ever wish to retire any time soon." However, this approach also has disadvantages which the author points out in the article.

Super Saver (#13) presents Our Journey to Financial Freedom #3 -Making The Most Of My Job, posted at My Wealth Builder, saying, "Exceptional work was needed to be compensated above average." For us, my job was our main source of income. Focusing on significantly increasing my salary turned out to be a good wealth building strategy for us.

Investing

Mike Piper (#5) presents Hedge Fund Expenses: They’re Not Cheap, posted at The Oblivious Investor, saying, "Even relatively low-cost hedge funds have expenses several times those of a good index fund." High fees are a good reason to avoid using hedge funds. The poor returns in 2010 are another reason.

FMF (#17) presents Understanding Investment Risks, posted at Free Money Finance, saying, "One key to successful investing is understanding the various risks you take when you make a particular investment." A great summary on the risks involved with investing.

Dividends4Life presents 9 Stocks Raising The Dividend Growth Bar posted at Dividends Value, saying, "Have you ever noticed those that most vehemently attack a buy-and-hold strategy really don’t understand how the strategy works? They confuse a buy-and-hold strategy with day-trading with a longer duration. A true implementation of buy-and-hold includes a focus on blue-chip stocks with a sustainable advantage, along with a reasonable asset allocation framework."

Frank Knight presents Asset Allocation Strategy posted at Best Personal Financial Planning Software, saying, "When you are already there and invested in an asset class, you are following a passive asset allocation strategy. Tactical asset allocation strategy advocates suggest that you can anticipate the crowd, but flow-of-funds studies show that almost all tactical asset allocation fund flows are late money flows that chase performance after valuations have already moved."

Arjun Rudra presents Investing In The Markets With The Threat Of A Double Dip Recession posted at Investing Thesis, saying, "Is the economy going to fall back into a recession or not? Not, at least not in the near term says Lee W. Appleton, portfolio manager at Matco Financial. Lee points to the steepness of the U.S. yield curve as having been a historically accurate precursor of recessions, with nine yield curve inversions followed by nine recessions. With the current yield curve being as steep as it’s been in 45 years, if one were to make an inference it would be that a recession is not on the horizon." This argument was made at different financial presentation I attended. To me, the data was very compelling that the economy will continue to recover.

freefrombroke (#1) presents Why Invest In Mutual Funds, posted at Free From Broke, saying, "Mutual funds are a great way to invest in a great number of stocks at once and can be an integral piece of a portfolio." Mutual funds are a great way to broad exposure to the stock market. No fee ETFs are another option I like. The main drawback for no-fee ETFs is there are fewer choices and having an account at a particular brokerage is usually required.

Ken presents How Money Works: The Magic of Compound Interest, posted at Spruce Up Your Finances, saying, "Understand how your money can grow faster because of the magic of compound interest." To me, compound interest is one good reason to save early and often.

MoneyNing presents Second Recession: Don’t Let Fear Take Over, posted at Money Ning, saying, "Whatever the circumstances, allowing fear to creep in will only make the situation worst." In my opinion, fear is causing many investors to buy treasuries, meaning this may be a good time to invest in stocks.

Insuring and Protecting

Miranda Marquit presents 5 insurance policies you shouldn't be caught without at Insure.com saying, "Insurance is a necessary expense if you want to protect your assets in the event of an unexpected catastrophe. "

Living Frugally

Silicon Valley Blogger (#11) presents No Fee Money Market Funds, Savings and Cash Accounts, posted at The Digerati Life, saying "Here is a list of no fee cash accounts and best high yield savings accounts."

PT presents Free Online Checking Accounts, posted at Prime Time Money, saying, "Don't pay for fees that aren't necessary. Find a free checking account!"

Free is good:-) Many of the banks in my area also offer no fee accounts which is the option I like to use. I still prefer a local bricks and mortar bank over an online one.

Taxes

David de Souza presents Landlords: 3 Ways To Reduce Your Tax Bill posted at UK Tax Blog, saying, "If you are a landlord, you may be paying too much tax on your rental income. Our guide explains how to pay less property tax." For us, reducing taxes and keeping more of our money is always a good strategy.

That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: the wealth builder carnival, blog carnival.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or wealth building advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

My Rewards from Teaching

Two of my part time jobs involve teaching. For one, I teach an after school science program to K-2 students. For the other, I tutor high schools students for the SAT/ACT college entrance tests. Although coaching was not one of my strengths as a manager, I have enjoyed being a teacher. Here are some reasons:

Personal Learning - Although I am knowledgeable about the topics I teach, I find there are elements that are new to me. Some of the elements I've forgotten, or may have never learned. Others elements are new since I've finished my formal education. What ever the reason, the new found knowledge is helping me improve my skills, both in teaching and in other areas.

When I was coaching others at work, I didn't feel that I learned anything new that would directly help me.

Making a Difference - I'm helping students. For K-2, I have a lot of students interested in becoming a scientist. I help make learning science fun and keep them interested. For the high school students, I enjoy helping them understand concepts which have been difficult for them to learn in class. In addition, I find great satisfaction is identifying opportunities that help them improve their test scores.

At work, I found many employees were unwilling to use and benefit from the coaching tips that I provided.

While I have no interest in becoming a certified teacher, I plan to continue doing these teaching jobs for personal development and personal satisfaction reasons. In addition, I've volunteered to teach a personal finance seminar at my church this fall.

For more on New Beginnings, check back every Sunday for a new segment.

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

Copyright © 2010 Achievement Catalyst, LLC

How Managers Differentiate Employee Performance

During my career, I had the responsibility of rating and ranking employee performance for 30 to 50 person organizations. In my role, I felt it was important to clearly explain how managers recognized various levels of performance even when the outcome appeared to be similar. Over time, I developed the following analogy to help employees visualize the differences.

First, I put the employee in the position of a homeowner hiring someone to care for their lawn. Then, I then provided three example employees and asked them which they would like to hire. Here were the examples:

Employee #1. This employee works hard on maintaining the lawn. However, he requires a high level of supervision by the homeowner. The homeowner gives specific direction every time the employee works on the lawn. Occasionally, this employee works on other landscaping projects without the authorization of the homeowner. At the end of the season, the lawn is in very good condition.

Employee #2. This employee also works hard on maintaining the lawn. Periodically, the employee needs direction from the homeowner, but most of the time he works independently. He focuses primarily on the lawn. He gets the homeowner's permission before working on other landscape elements. At the end of the season, the lawn is in very good condition.

Employee #3. This employee reviews with the homeowner what needs to be done to lawn. The plan includes good ideas that hadn't been considered by the homeowner. The homeowner approves of the plan with a some changes. The employees modifies his plan and the works hard on the agreed plan. He requires little supervision from the homeowner. After starting work on the lawn, the employee proposes a plan for improving the rest of the landscaping, which the homeowner approves. At the end of the season, the lawn is in very good condition and the other landscaped areas are improving.

In all three examples, the lawn care was done well. However, the level of supervisor involvement needed and the approval process for additional work were also factors in determining performance level. While these examples were not perfect, everyone with whom I had the discussion understood that the performance levels of these three employees were different even though each delivered the same good result.

For more on Reflections and Musings, check back every Saturday for a new segment.

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

Copyright © 2010 Achievement Catalyst, LLC

Why Work in Retirement

Since retiring in October 2007, I've worked at seven different part time jobs. Four of the jobs were seasonal. Three jobs were year round, but intermittent. While working in retirement may sound like a contradiction of terms, I have found it beneficial to do so. Here are some of the reasons that I will continue to do part time work while in retirement.

To learn. All my part time jobs are in fields outside of the career from which I retired. In most of my part time jobs, I'm learning a lot and getting paid while doing it. For two of the part time jobs, the learning curve plateaued quickly. I will not be reapplying for these seasonal positions again in the future.

For perks. Most of my part time jobs offer free or discounted use of company services or products. Over the course of a year, the savings can add up to a few hundred dollars.

To earn. Of course, earning a little extra money is nice, especially since our investments are not growing as fast anymore. To note, most of my part time jobs pay slightly above minimum wage with a few paying significantly higher.

For social diversity. Across my part time jobs, I work with a wide range of people across different ages, socioeconomic classes, and levels of education. I regularly interact with 5 to 80 year olds, poor and wealthy, and kindergartners to PhD's.

To broaden my network. Having contacts can be helpful. When I requested donations for a silent auction, almost every business for which I worked contributed. If I need to return to full time work, I'm sure I can leverage my contacts at these businesses.

Overall, I've found enough benefits to continue working at four of the part time jobs. For me, the most important benefits are learning and getting perks, in that order. As the level of learning declines, I will consider dropping that part time job. Finally, I will plan my workload better to avoid being over committed as I was in June 2010.

Next Friday: Reasons not to work in retirement.

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 © 2010 Achievement Catalyst, LLC

Remembering Dad's Generosity

Even though we were far from wealthy, Dad always seemed to have enough money for activities and education for the kids.

While browsing in a sporting goods store for our daughter's soccer equipment, I had a flashback to when my Dad was outfitting me to play little league football. Based on today's equipment, I estimate it costs between $200 to $300 for the basic equipment (pants/pads, shoulder pads, helmet, and shoes). That's before the extras such as gloves, arm pads, and undergarments. My dad never seemed to worry about cost when choosing equipment. I still recall him evaluating shoulder pads and helmets for sturdiness instead of price. He always wanted to get the best protection for me. So while it cost much less forty years ago, it was still a financial sacrifice for my parents purchase sports equipment and enroll me in sports teams.

Thinking back, I don't remember not being able to do an activity or sport because of insufficient funds.

Dad had the same attitude when it came to college. He wanted me to attend the best school that accepted me. He didn't ask me to apply to the state college as a lower cost option. When I was offered admission to Harvard, Princeton, Duke, Johns Hopkins and Northwestern, there was no concern about costs. Dad planned to finance attending the college that I chose, which helped me minimize the amount of student loans needed.

Dad has been gone for almost four years, but I haven't forgotten the value of his generosity. Even during this recession, we've maintained the spending level for our daughter's activities. We also have continued making contributions to college savings accounts which will hopefully cover all the expenses of higher education when needed.

Hopefully, our daughter will have the same appreciation for us when she reaches adulthood.

For more on Crossing Generations, check back every Thursday for a new segment.

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

Copyright © 2010 Achievement Catalyst, LLC

Choosing Data Analysis over Emotion

Recently, I attended a presentation in which the speaker showed about two dozen different graphs and charts that indicated the economy was coming out of recession. Being an engineer, I appreciated the level of rigor that was evident in each analysis. He analysis included treasury spreads, housing starts, housing inventory, non-farm payrolls and many other common used indicators. From an objective point of view, the evidence was compelling that investing in stocks was good idea.

However, having experienced significant investment losses in 2008, many of the attendees were skeptical of the conclusion. On participant asked, " Could it be different this time?" The speaker answered that yes, there was no guarantee they would be right and they could be wrong. However, that would be going against years of data that showed otherwise.

So what's an investor to do? Data or gut?

Generally I like discipline of relying on the data which shows a high probability of a continued economic recovery. That can be difficult when the conclusion is contrary to my gut. However, this time the data agrees with personal perception of how businesses and the economy is doing.

Over the next few months, I plan to significantly increase our investments in the stock market in anticipation of a continued recovery. However, we won't make the entire addition at once, just in case there are still some market declines on the way to recovery :-)


For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

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

Copyright © 2010 Achievement Catalyst, LLC

Timeless Articles from the Archives #3

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I am starting a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

For the week in 2006, I wrote Building Wealth on Only $1 per Day. This post shared how compound interest can make even small amounts become large over time. In Cash or Credit, I wrote about why we choose to pay cash even for large purchases.

For the week in 2007, I wrote about Net Unrealized Appreciation - A Great Tax Benefit for Retirees. Net Unrealized Appreciate (NUA) is a way to significantly reduce the tax owed from a employer retirement account. In Renting versus Owning, I explain why we choose to rent low use items such as vacation homes or recreation vehicles.

For the week in 2008, I wrote about Non-Financial Events that Could Negatively Affect my Retirement. Death covered most of the events and living past 100 covered the last one.

For the week in 2009, How Much to Pay for a Business, I revisited how to value a small business. I concluded I would be better off financially to work for someone than to make the same amount after buying a business.

To me, the content of these posts are still relevant today and were worth reading again.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial, saving, retirement, or business advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC