Living Well in Retirement

1. Living Well in Retirement By Teresa Germann Master Financial Volunteer

2. How Much Money Do You Need to Retire? • It depends… • On post-retirement goals & lifestyle decisions • On post-retirement work plans • On availability of employer benefits • On health and life expectancy • 70% to 90% of income- often recommended • 100% to 110% of income – some retirees’ reality, at least in the initial retirement years.

3. Steps to Successful Retirement Planning • Identify/set pre-retirement & post-retirement goals • Estimate length of retirement • Determine assets available • Estimate retirement expenses • Estimate retirement income • Balance expenses and income • Plan for the effects of inflation • Evaluate and revise your plan

4. Looking Ahead to Retirement • Where do you plan to live? • Will you work part-time? For how long? • What hobbies/activities will you spend free time on? • Will you be caring for family members? • Goals to accomplish before retiring • Goals to accomplish after retiring?

5. Spending Plan Changes at Retirement • Housing costs may decrease (paid off loans) • Work-related expenses will be lower • Home improvements, furnishings lower • No more deductions for SS and pension • Savings & investments may decrease • Disability insurance no longer needed • Life insurance may end • Federal/state income taxes may be lower

6. Likely to Increase Medical expenses Dental expenses Health insurance premiums (early retirement) Travel & entertainment (every day is Saturday!!) Likely to Decrease Clothing/commuting/other work-related costs Employment taxes Housing expenses (mortgage paid-off; fewer improvements) Income taxes (maybe) Spending Plan Changes

7. Average Retiree Spending by Expenditure Category Source: BLS 2016 Spending Survey of Older Households, Marketwatch Sept. 8, 2018

8. Age Banding Model of Retirement Spending Research into actual retirement trends over past 20 yrs reveals 3 distinct spending intervals.

9. Spending Patterns in RetirementOver Time

10. 4% Withdrawal Rule & Implications of Age Banding • Fin planners—long recommended a 4% annual withdrawal from 401k or other retirement accts to insure retirees don’t run out of money • Problem is that 4% rule is a very conservative • Assumes retiree lives till 95 yrs old • Many retirees are leaving a lot of retirement joy in the bank • Age banding suggests that withdrawal in early retirement yrs can be somewhat more than 4%

11. 4% Rule and Implications of Age Banding (Continued) • UPSHOT: 4% withdrawal rule is a decent starting point for retirement planning • However, if you don’t exactly hit it, or need somewhat more early in retirement to meet your goals, don’t beat yourself up. • Just be ready to adjust spending later, when you may not have energy/health to travel, incur loads of golfing fees, or for long, expensive nights at the opera.

12. How to Save on Housing Costs • Downsizing – many retirees find moving to a smaller place economical and liberating • Moving to less expensive area, including overseas • Co-housing with other seniors • Renting out rooms or accessory units: in-law suites in basement, apts over garage, cottages • Renting out property as a short-term rental (VRBO, Homeaway, Airbnb) or to military/fed • Retirement communities, senior affordable housing

13. Housing Cost Savings, cont. • Look into property tax breaks for seniors • ArlCty has a r.e. tax relief/deferral program • Energy utility programs for 65+ • Solar energy installation • Low cost mobile phone options • Consumer Cellular, Verizon/AT&T 65+ Plans • Negotiate with your cable/internet provider can yield 20% savings—don’t be afraid to switch for a better deal. Neflix, Hulu & Amazon make cord-cutting attractive. Stream for savings!

14. Transportation Savings Tricks • Buy used, rather than new, cars and SAVE • Metro—seniors ride for ½ peak fare on subway or $1 on any metrobus ($8.75/wkly) • Uber & Lyft make getting around without a car easier than ever before. UberX for more savings. • Check out bus svc like Megabus Bolt, and Vamoose for inter-city transportation. • Cabs can be cheaper than parking at sporting events or concert venues. • Gas affinity programs with your grocery store—Safeway/HT deals can save you 20 cents a gallon.

15. Creative Ways to Save on Food • Cooking at home is most economical • Shop strategically based on weekly circular & fill up the freezer when staples are on sale. • Check out the manager’s special bin for discounted meat, poultry, and fish. • Spices, sauces, some types of produce/seafood, & specialty items are far cheaper in ethnic mkts • Some people swear by couponing: great savings but a lot of work.

16. Food Savings, Continued • Frequent farmer’s markets for better quality and often cheaper produce. Go at the end of the day, vendors want to offload remainders & offer deals. • Go meatless at dinner for several meals a week. • Egg dishes for dinner like quiche and frittatas • Lentils, beans, quinoa are all high protein options • Frozen vegetables are less expensive than fresh and can be even more nutritious. • Shop the perimeter of your supermarket, not the center aisles. Staples are outside, processed in middle

17. Entertainment Deals (Dining Out) • Lunch is cheaper than dinner, & don’t forget early bird & pre-theater specials. • Happy hours are an economical way to eat before a show. • Restaurant guide websites: Eater, Thrillist, TC Ethnic Dining Guide. Washingtonian, NoVa & Arlington mags have cheap eats editions. ArlNow lists local dining deals. • Get on your favs restaurants’ email—private offers. • Ethnic restaurants are bargains & interesting. Eden Center for Vietnamese, Koreatown, Bolivian in FC. Explore! • For chain restaurants, Groupon can yield big savings.

18. Entertainment Deals (Plays, Music, Theater) • Washington has volumes of free & low cost ttds. Check WaPo Fri weekend section. Get on Culture Capital’s email for Wednesday weekly list of events. • Pay-what-you-can previews for plays (WM & Studio) Shakespeare Theater FFA in Sept & $25 rush tickets. • Free concerts at LOC, Lubber Run, DAR Schlesinger Hall. Festivals & Holiday events. Millenium stage at Kennedy Center. All fed museums are free & many have concerts: NGA summer jazz & winter classical. • Culture at the movies—Met Opera, National Theater, ballet. Check out Fathom Events.

19. Entertainment Savings (Movies) • Every theater chain has “deal nights” • AMC - $5 Tues; Regal Potomac Yd – Tues - $7. • Anjelika: +55 Thurs -$6, Couples Wed -$7. • If you go to movies a lot, memberships can be a money-saver (example—AMC Stubs costs $19.99/mo. for up to 15 movies). • Free Summer Outdoor Movies – Arl, FC, DC • AFI & museums have classic/foreign films • Recent Bergman film festival at NGA

20. General Tips on Travel • Flexibility is you’re the frugal traveler’s friend. Have a list of places you want to go, & pounce if a deal presents itself. • Consider longer stays (at least a week in large cities) in places that warrant it. Avoid “If its Tues, it must be Belgium” tours. • Dom travel to big cities like NY, LA, Chicago--best between Thanksgiving & Xmas, Jan-Mar (great hotel rates/no crowds). • Consider lower-cost destinations: Central & So America, Asia, Europe outside the main tourist hubs. 2nd US Cities: Austin, NO. • Travel offseason. The advantage of being retired is not having to travel when everyone else does. • Summer in Europe is by far the worst time. Travel during spring & fall. • Best time at the Atlantic beaches is right after Labor Day—the water is warmer, the weather temperate, & the rates significantly lower.

21. Travel Discounts & Deals • Best general travel sites: Travelzoo, ShermansTravel, TripAdvisor • Get to know the discount airlines like Norwegian Air, Primeria, Icelandic, Wow Allegiant, Spirit (if you dare). • Use aggregator sites like Kayak, Skyscanner & the new Momondo to ferret out the cheapest af. Must use Southwest site for its afs. • Become an Airfarewatchdog hound--it’s the web’s best list of cheap airfares. Updated hrly. Register to get lists of cheap domestic & international flights from yr local airport. • Eschew hotels for more spacious home/condo rentals on sites like VRBO, Homeaway, AirBnB, Booking.com, TripAdvisor. To search all: aggregator Hometogo.com. Negotiate rates! • Also check local rental agencies in popular resort areas, which can have specials or be cheaper.

22. Saving on Medical Costs: Prescription Medications • Aggressively compare prices on the meds you use daily • Excellent comparison tool is GoodRX • For Cymbalta, for example—prices range from $6.00 at Kroger to $46.57 at Walgreens & RiteAid • Savings tips tab is a very valuable resource • FamilyWize is another comparison tool & offers a discount card that reduces costs on a variety of me • Inquire about Patient Assistance programs for your particular medication. • Good listing of these is at NeedyMeds.org. • Call manufacturer of yr med for company-specific programs. • Ask dr for assistance--free samples or discount card

23. Sources of Retirement Income • Social Security • Employer pensions & tax-deferred savings plans • Personal savings and investments • Taxable accounts • Rental real estate • Tax-deferred accounts (e.g., IRAs) • Other assets (e.g., house, coins, antiques) • Employment earnings • Inheritance

24. Retirement Income Ideas • Part-time jobs--any money you make reduces your withdrawal from savings • Flexjobs.com, Flexforce.com have listings of professional jobs that are part-time or temporary • Seasonal jobs like tax-preparation or working in national parks as a guide/ranger for those who want part of the year off for snow-birding etc. • Consulting, freelance writing, teaching English, tutoring • Online sales on Amazon, Ebay, or Nextdoor

25. About Social Security • Based on lifetime earnings (35 years) • Must meet work requirement yourself or be married to eligible worker for 10 years • 36% of women get benefits on their own record • Benefit estimates available online www.ssa.gov/mystatement • Can claim at age 62 BUT reduced benefit and earnings limits • Full retirement age is increasing – 67 if born after 1959, 66+ for most people approaching retirement now • Can let benefit grow to age 70 (+8% per year)

26. The Ballpark Estimate™ • Can do online at www.asec.org • Six easy steps • Three key assumptions: • Percentage of current income to replace • Life expectancy • Inflation and return (pre and post retirement) • Use your green and white statement as guidance (but choose inflation-adjusted numbers) • Other calculators – www.troweprice.com & www.fidelity.com • Interesting video from LearnVesthttp://bcove.me/7la6kp5x

27. 10 Tips To Prepare For Retirement • Plan for inflation • Practice living on retirement income • Live beneath your means • “Pay yourself first” each payday • Start planning and preparing early • Save and invest wisely • Explore later life career possibilities • Mentally prepare yourself for retirement • Carefully analyze early retirement incentives • Stay invested

28. Class Wrap-Up Questions? Comments? Experiences?