Retirement: A Full-Time Job

Feminism is a Bad Word Again

All right.  I'm just going to say it, there IS gender discrimination in the workplace.  Most men I know like to think they are just so much more enlightened than men of earlier generations; they would NEVER discriminate based on the fact that someone is a woman.  Baloney!  Men are just too stupid to realize they are doing it!  When they welcome a man into the "club" over a woman, it's not because she's a woman, no, it's simply because the man is "more qualified" to be in that club.  Right.

I'll tell you why men don't realize they are discriminating.  Because it's so subtle, even they  don't recognize they are doing it.  Men are more comfortable with men in the workplace.  It's just that simple.  It's great to have a few women around to liven up the place a bit (and to handle the nitty-gritty work), but not for being part of the club, the management team.

This article in the Wall Street Journal yesterday really got my blood boiling.  And no, I didn't support Hillary in the primaries (actually came very close, though, just changing my vote the night before voting day).  It's perfectly ok not to support Hillary, and it doesn't mean you are a sexist pig.  There are plenty of reasons not to vote for her other than the fact that she's a woman (her vote helping to involve us in the Iraq war for one).  But it's the WAY that men don't support her that offends me.  Witness these examples in the WSJ article:

-First, by the telling of one woman's experience driving with a Hillary bumper sticker on her car.  "A man pulled up alongside and rolled down his window.  'You can be for Hillary all you want', he shouted, 'but there is no way that thing is going to become president'."  Wow.

-Or the other woman who, at lunch with "a group of male chief executives 'started talking about what an awful b---- Hillary was and how they'd never vote for her.'  She says she kept quiet.  'I didn't want to jeopardize my relationship with them,' she says.  'But their remarks were a clear reminder that although I could sit there eating and drinking with them, and work with them, instinctively their reaction to me isn't positive'."

-And apparently, among the 50 anti-Hillary sites on Facebook, one of them, called "Hillary Clinton Stop Running for President and Make me a Sandwich,"  has more than 38,000 members.  "What if one of these 38,000 guys is someone you, as a woman, have to go to and negotiate a raise?"  Yeah, you've really evolved.

-Another woman who recently helped a male colleague with a work-related issue began discussing politics with him.  "When talk turned to politics, she says, he denounced Sen. Clinton as a "lesbian" and used several slurs."  While she didn't make her feelings known, "she thought to herself, 'That's the last time I do you a favor'."

-I do agree with this woman's thoughts:  "No one can say that the male vote is all gender based . . .But it reinforces among women of my generation the feeling that every day we walk in the door (at work), we are walking into an environment that is still biased."

The article's concluding thoughts pointed out that many women don't feel comfortable being called "feminists."  There is a feeling by many women that identifying yourself as a feminist puts you in the "militant" camp, and makes you equally subject to the same venom Hillary has subjected herself to.

Better to play nice and just say that you agree, there's no workplace discrimination and everything is just hunky-dory with you.  No militant bitch sitting at this desk, thank you very much.

Retirement and the Magic Number

Today, Brip Blap posted some thoughts on establishing a "go to hell fund."  You know what this is, a stash of money in sufficient quantity such that in the event you wanted to leave your job (or your employer wanted you to leave), you would have the power not only to land on your feet, but take that opportunity to go off on a new direction if you wanted to.  If you found yourself without that job, you could take time off, start a business, or at the very least take time to decide what to do next.

My friends and I often played this game "how much would you need to have accumulated (or win from the lottery) for you to be able to walk from your job and never look back?"  You know what that's called--the "F"-you amount.  This differs from the "go to hell" fund in that it is the amount you need to never have to work again, not just the amount to bridge you to your next income-producing gig.  Everyone fantasizes about this to a certain extent, even if you love your job.  We all have things we would love to be doing if our day wasn't so consumed by the business of earning a living.

So, I had a magic number in mind and lusted after retirement in a very real way, not just as a fantasy, for many, many years.  When I reached this magic number (ok, well close enough), I decided that I needed to confirm that this is indeed, what I really wanted.  I think this is an important step for anyone considering retirement.  You spend so much time working for that goal, you need to step back and make sure it's what you really want, not just what you thought you wanted.

So, as a result of a New Year's resolution made on the beach in Mexico, I went back to work January 2, 2007, with a new tracking spreadsheet.  Each day, at the end of the day, I would put an "x" in the column representing what kind of day it was for me at work:  "plus," "minus," or "equals".  (I know, such an accountant!)  In six months, it was my intention to add up all the marks in each column and see where I stood.  I have a tendency to ruminate over the bad days at work more than remember the good days, so I though it was important to document, to get a real picture at the end of that six months.

Well, by the end of May, the picture was clear.  I had accumulated 10 positive days, 40 negative, and 30 so-so days.  I was ready to take my magic number nest egg and move on to the full-time job of retirement. As fate would have it an unrelated discussion with a partner in my firm resulted in my confession of my desire to retire.  The wheels were in motion!  But I had no regrets.  I knew it was not just a reaction to a bad day (or even 40); I really wanted to retire.  It wasn't just that I had the money, this is what I really wanted.

Ultimately, I worked for eight more months while we found my replacement and worked through the transition.  Despite the name of the "F-you" fund, I would never recommend burning your bridges by using it in that fashion.  It just represents the power to pursue whatever dream you have for yourself.  And as we all know, we should use that power for good, not evil.

Retirement and the Temptation to Get a Dog

Gosh, I can really see why it's a good idea for retired people to own a dog.  I just finished dog-sitting for this beautiful black Lab, Molly, an exceptionally good dog.  I definitely see the benefits that having her around brought to this retired gal.

Getting out of bed

Molly was pretty much ready for action at 7:00 am.  She wasn't obnoxious about it, she tried very hard not to be impatient, but she was definitely ready to get up as the sun rose, and by 7 wanted to get started with her day.  So, I got up at 7am too.  This is at least an hour before my normal retirement hour of rising.

Getting dressed

Since, when rising at 7am, I knew it was just a matter of time before we were going to go out for our walk, I got dressed as soon as I got out of bed.  For those of you who have been paying attention, this is several (and I mean several) hours before I have been getting dressed over these past three weeks of my retirement.

Getting out of your own head

Having Molly follow me around all day, I was often thinking about whether she needed anything; is she hungry, is she bored, does she need a walk, does she need to be let outside?  This certainly took my mind off of whatever I was thinking about, which was probably not very important anyway.  I can see how, an older person with possible aches and pains, could benefit.  Thinking about what your pet needs certainly takes your mind off of whatever is ailing you.  It's nice to be thinking about someone else, even if that someone else is an animal.

Getting some exercise

No excuses, she doesn't understand English.  She doesn't understand "I'm too tired. I don't feel like getting exercise today."  And when that leash comes out and she does the happy dance (which involves two twirls and a double-pawed high-five), I can't help but be excited to go on a walk too!  And once I'm out, I start noticing what she notices:  the birds, a pretty (for her fragrant) flower, a squirrel running across the street.  Not only is she getting me out for some fresh air and exercise, she's bringing me in the moment, which I'm not often in.

Relaxing

The health benefits of having a dog are well documented.  This New York Times Article discusses some of these benefits.

"A Melbourne study of 6,000 people showed that owners of dogs and other pets had lower cholesterol, blood pressure and heart attack risk compared with people who didn’t have pets."

Well I can understand why.  The truth is, just having her nap at my feet relaxed me.  There is something very comforting about having a dog just hang out with you.  I did feel like my blood pressure was down a few notches.

Now I have to remember, that for now, I want the freedom to travel without guilt.  So, I will have to be content with taking care of friends' dogs and will try and resist the temptation to get one of my own.

Retired: What Can I Complain About Now?

Now that I'm retired I have nothing to complain about.  And I'm not saying that as if it's a GOOD thing.  I have no "great" stories to tell about work anymore, since I don't actually have a job anymore.  (And by great story, I mean complaint.)  When people ask me how it's going in retirement, I have nothing to complain about so I think my answers will actually be really boring to people now.  I think I was a little addicted to complaining.  I think some of my friends were addicted to my complaining too, because I no longer have any great stories to tell.  No one really wants to hear about how great life is now, and they especially don't want to hear that the one thing about it that isn't as much fun is that I don't have anything to complain about anymore.

I was at a party last night and told a friend that I haven't seen in awhile that I retired three weeks ago.  He asked me what I have been doing.  Since I know all the good stuff wouldn't make for a very good story, I scanned my brain for a complaint, and told him how my biggest problem was getting out of my pajamas by 4pm.  His response was that I would be back working in a matter of months, because to him, this did indeed sound like a very bad thing.  But the truth is, I'm past thinking that is a bad thing, in fact, I admit now that it's kind of a fun thing.  But people mostly want to hear stories that sound like complaining, and it's good enough to deliver to them even when, secretly, I'm not really complaining.

I must admit, at various times during the day my brain does kind of an auto-scan looking for something wrong.  My brain has not gotten out of this habit yet simply because I'm retired.  It still keeps looking for that thing.  But since my brain is not finding anything it is also not craving alcohol very often either.  (There seems little risk of the worry "Am I Drinking My Retirement Savings Away.")  At first, I thought this was because I got sick the day after I retired, but even after I felt better, I still didn't think so much about drinking.  I'm not really in the mood to have a drink (or three) sitting at home on Friday night.  (The truth is, I'm not even sure which night is Friday--they all feel the same now).  I mostly only want to have a drink when out with friends.  Definitely I contemplate having a drink far less often.

The other thing I think about far less often is food.  By the time I remember to eat breakfast, it's 10:30 or so and at 2:00 my husband says "don't you think you better eat lunch?"  At work I thought about food ALL THE TIME.  Because when there wasn't something to complain about, I was actually kind of bored.  It's funny that people think you will be bored when you retire--the truth is I was kind of bored at work, so going to get a snack (or thinking about going to get a snack) was something I spent a lot of brain power on, when I wasn't scanning for something to complain about.

Oh!  I just thought of one:  rats in the attic and mice underneath the house!  But perhaps that's a subject for a future post.

Retirement Tax Tips-Part 3

Taking Advantage of Low (or Zero) Capital Gains Rates

In Retirement Tax Tips-Part 1 I recommended fully funding your 401(k) accounts before retiring from your job.  In Retirement Tax Tips-Part 2 I discussed how converting a traditional IRA into a Roth IRA might save you some tax dollars. 

In this post I want to talk about a temporary capital gains benefit you may be able to take advantage of if you are a pre-retirement-age retiree (or otherwise in a very low income tax bracket.)

I mentioned in my previous post that I would be converting my traditional IRA into a Roth IRA little by little over the next several years, managing my income within the zero or lowest tax bracket.  But, I will not begin doing this until 2011, because in the meantime, I am first going to take advantage of the ZERO long-term capital gains rate currently available only for tax years 2008-2010.

Currently, long-term capital gains (gains on assets held for at least one year) are taxed at a maximum rate of 15%.  For those taxpayers in the lowest two income tax brackets, however, the long-term capital gains rate is currently (for tax year 2008) ZERO.  This provides an excellent opportunity for those no longer working (retired) that haven't yet reached "normal" retirement age.  In these interim years without a salary keeping you in higher tax brackets (and before social security and retirement plan distributions push you back into higher tax brackets), you may be able to manage your taxable income (income less itemized deductions) within the range necessary to take advantage of these provisions.

For 2007, the cut-off for this favorable rate was $63,700 for married filing jointly ($31,850 for singles.)  The 2008 brackets will be adjusted for the cost of living and are expected to be approximately $65,000 for married filing jointly (and approximately $32,500 for singles.)

So, if you have stocks or mutual funds that you must liquidate anyway over your pre-retirement-age retirement years, you may want to sell just enough in 2008 through 2010 so that your taxable income stays below these cut-offs and you can enjoy a ZERO % tax rate on these sales.

Under the current tax law, for tax years after 2010, these favorable rates are scheduled to expire and go back to their pre-2003 levels of 20% (and 10% for those in the lowest bracket).  For a very good (and very detailed) resource on this and related tax rules, see this article in the CPA Journal.

Of course there is always the possibility of tax law changes after the 2008 elections and these favorable rates could be legislated away.  But barring any legislative changes before 2010 you may be able to take advantage of these ZERO capital gains rates for 2008-2010 and save some tax dollars.

(Next in Tax Planning Tips-Part 4-Saving Tax Dollars by Converting A Vacation Home to a Primary Residence)

Retirement Tax Tips-Part 2

Taking Advantage of Pre-Retirement Tax Brackets for the Early-Retiree

In Retirement Tax Tips-Part 1 I recommended fully funding your 401(k) account before retiring from your job (and making contributions to an IRA if you qualify).  In this post, I will talk about how to save retirement tax dollars by converting traditional IRAs into Roth IRAs.

If you are retiring before "normal" retirement age (I'll call that 59 1/2, when you can begin withdrawing assets from retirement accounts without penalty) and are not going to be tapping into your retirement assets for several years, you may well be in the situation that I find myself in, a low tax bracket!  While I was working, my income level was too high to take advantage of the IRA contribution provisions.  After I reach retirement age and start collecting (hopefully) Social Security and begin taking distributions from my traditional IRA, my taxable income will once again be higher than it is now, in my early-retirement-post-working years.  My income tax bracket will go up right along with it.

I have 15 years to go before I will begin taking distributions from my retirement accounts, so will be living off of my non-retirement portfolio until that time.  Since the only taxable income I will be receiving will be the earnings on these accounts (which will go down each year as we spend down these accounts during our early retirement years), our federal tax bracket will be zero after taking into account our itemized deductions.

During this period of time, we can take advantage of our low (or zero) marginal tax rate and convert a portion of our traditional IRAs to Roth IRAs.  When you convert a portion of a traditional IRA into a Roth, you must include the portion converted in your current year's taxable income.  If your income is low enough (and/or your deductions are high enough), you can manage the year-to-year conversion amount to be just enough to keep you out of tax (or just enough to keep you in a lower tax bracket than you project to be in during your "normal" retirement years.)

Why would you want to do this?  Because withdrawals from a Roth IRA are completely tax-free when you follow the appropriate distribution rules.  Conversely, distributions from a traditional IRA will be fully taxable since those dollars provided you a tax deduction in the year you contributed them (which Roth IRA contributions do not).  You can read a very good article about this distinction here.

For tax years 2008 and 2009, you must have "modified AGI" below $100,000 to take advantage of these conversion provisions.  As the tax law stands right now, however, this income limitation goes away for tax years beginning in 2010.

With the current political climate, and an almost certain change in our tax laws on the horizon, it is likely tax rates will go up.  So even if your expectation is not to have a far greater income in your retirement years, it is certainly possible your tax rate will be higher anyway.

(Next post in this series: Tax Tips for Retirees-Part 3-Taking advantage of low capital gains rates)

Easing into Retirement

OK, it’s 12:57 pm and I’m still in my pajamas.  Last night I read this post at Soul Shelter and am wondering if he is right, maybe I should get out of my pajamas before 1pm.  It’s not that I’m doing anything different than what I would be doing in my regular clothes:  eat breakfast, read the paper, scan blogs, begin writing a post on Roth IRA’s, and respond to emails.  But I am wondering whether I might feel differently about myself if I’m actually doing these things while fully dressed?

I’m definitely still in the “deworking” stage (a term I like from commenter Elizabeth, at Working for Rachel).  I appreciate her and Tim’s comments to basically cut myself some slack.  I need to hear that.  I guess when you spend so many years “producing” you’ve got to wean yourself off of the accomplishments-equals-self-worth type of thinking.  And the truth is, I have accomplished some of my “Lazy Person’s” list; I have ventured back into the garden, lost a couple pounds (yay!), almost kicked this cold, and rearranged my new office space with my desk overlooking the back yard.

I guess I’ll start slowly.  It’s 1:21 now.  I’ll get dressed, eat lunch, go for a walk and maybe go to the grocery store.  That sounds like about enough in the way of accomplishments for today.  Don't worry, I won't go cold turkey, I'll take it little by little.  Perhaps tomorrow I'll aim to get dressed by noon.

Tax Tips for Retirees-Part 1

Squeezing the Last Bit into Your Retirement Plan

In my previous life (2 weeks ago) I was a CPA who knew a thing or two about taxes.  Now I'm retired, so I can devote such brain power not to my employer but all to ME.  Now that I work for me, I can use this power full-time for myself (and for you, to the extent these ideas may apply to you).  This is the first in a series of brilliant tax ideas that will save me precious dollars in my retirement.

Whether you are leaving your job permanently or simply switching jobs, my number one tip is to front-load your 401(k) contribution before you leave that job!  Generally, for 2008, you can contribute up to $15,500  to your 401(k) and an additional $5,000 if you are 50 or older.  Most of us take a little out of each paycheck, so that by the end of the year we have contributed the full amount.  However, there is no IRS rule that says you have to stretch your payroll deductions out over the whole year.  While your employer may limit the percent you can contribute of each paycheck, I recommend that you contribute the most you can early in the year so that you max out as soon as possible. 

Is contributing the maximum amount into your 401(k) a good idea?  Yes!  If you are retiring, you get one more full year of tax-deferred savings.  If you are moving to a new job, it's probable that your new employer will have a waiting period before you can join their 401(k) plan.  If you accelerate your contribution before you leave your old job, you won't miss a year of tax-advantaged savings.  And if your employer matches your contribution, you get extra "free" dollars!

The other boondoggle for which I am now eligible this year for the first time is contributing to a Roth IRA.  Until now, my income was too high to qualify for a Roth IRA, but since I only earned two months' salary in 2008, I can make a $5,000 contribution in addition to having maxed out on my 401(k) contribution.  Plus, I can make a spousal contribution of $5,000 for my husband.

So, by front-loading my 401(k) contribution and making Roth IRA contributions, I am able to make a "last-hurrah" contribution of $25,500 into my retirement accounts.

(Next Post:  Tax Tips for Retirees-Part 2-Saving Tax Dollars by Converting Traditional IRAs to Roth IRAs)

Retirement: More Time than Money

Good thing I'm retired; I can spend DAYS chasing 300 bucks!  Little do they know, I will not give up, they don't know who they are up against.  I've got nothing but time baby.  Bring it on.

My husband paid our estimated taxes in January, but apparently, inadvertently neglected to sign the check.  (I hope not a sign of the retired brain turning to mush but simply a mistake.)  Yesterday, I received a notice from the taxing authority of this great state of California telling me that the check was dishonored.  (Frankly, I'm surprised they went ahead and deposited an unsigned check, perhaps to generate more revenue for the state by generating a bigger interest penalty?)

Since the payment is "dishonored," we obviously had to submit that payment again, but now it is late, so we will not be "safe" paid for the 2007 tax year and will owe an interest penalty when we file our return.  But to really pour salt into the wound, they also sent us a notice saying we owe them $300 for a "dishonored check" penalty.  Ouch!  I figured 15 maybe 20 bucks for the returned check charge, but THREE HUNDRED DOLLARS?  How can California's budget be in such crisis with this kind of revenue generation?

Well, I called and held for 20 minutes (I've got more time than money these days), and was told if I would like to request a waiver, I would have to write a letter (which I of course did; they have no idea how much time I've got on my hands now).  If this does not work, I can appeal to the Taxpayer Advocate (you bet I will).

I do think persistence will pay off.  I've learned from my already-retired husband that you really can save a bunch of money by devoting some time to things you might have blown off when you didn't have time because you were working.  He was able to remove a mystery monthly charge from our phone bill by calling and asking what it was ("if you don't want that service, we can certainly remove it"--we didn't even know we HAD whatever service it was).  Most working people don't have the time or inclination to look over all the pecuniary charges in the small print on their phone bills.  Or the time he called the cable company to complain about the service that month and we received free HBO for six months.  (And when he called to cancel that at the end of the six months, he was offered another six months at a very reduced price).  He was able to reduce bills for garbage, pest control, and the alarm service simply by picking up the phone and asking.  He's filled out surveys to earn discounted bills and always sends in those rebate coupons.

Yes, it is true, he has had to spend much of his time on hold, but it all adds up.  When he was working, he used to say he had more money than time, but now we've got more time than money and infinitely more minutes to sit on hold.

Lazy Person's Guide to Retirement

Things I have not yet managed to accomplish in my first six days of retirement:

1. Clean out closet of professional clothing to give away
2. Re-arrange office furniture and clean out file cabinets
3. Lose any amount of weight
4. Get rid of pesky cold
5. Post daily to my blog (or even weekly!)
6. Garden--AT ALL

So far, my life in retirement is not at all as I expected. All those visions I had of myself accomplishing all those things that I never got a chance to do while holding down a job, poof. I now have nothing but time and can't seem to get to any of them!

The thing I am appreciating, however, is the absence of hurrying. I went to lunch with a friend this week; we had terrible service and the lunch took over 2 hours, but I didn't care. I was spending time with one of my very favorite people and I had nothing to get to, nowhere else to be. I ran an errand afterward and, all told, was "gone for lunch" for over four hours.

At least I was able to get on that eliptical trainer before going to our friends' house for dinner. They, of course, asked me what I did with Day Two of my retirement--lunch and work out--pretty much what I did with Day One. No one can believe it takes the whole day to have lunch and work out!

The problem, I'm finding with the "to do" list, is it really doesn't matter at all if it doesn't get done. The big important thing are getting done, like writing thank-you notes for all the thoughtful gifts and kind words that friends and colleagues have sent my way. But with so many things to do, and only a mere 16 waking-hours a day, there's just no way to get them all done in one day, so why not spread the list out over several days, or rather, several years.

It is wonderful, really, this feeling of being totally unproductive. Surprising, but wonderful. I really do want to get to the zillions of things I want to get to, but it is quite a novelty to have no real reason to have to get to them just yet.