/javascript" src="static/js/analytics.js"> Financial concerns for all eager to enjoy a Super Second Life
Chapter 7
Money and Your Super Second Life

 

from How to Create Your Own Super Second Life, by Gordon Burgett

(Please endure the HTML formatting. Actual book has limited artwork, related quotes, and topic headers in a column to the left.
Copyright 1999. You may download this for your personal use, but no commercial productions are permitted.) 

If the retirement financial gurus are to be believed, a chunk of our first dollar (or new-born rattle)—and every cent since—should be immediately banked so it can compound for our assuredly shaky and most likely disastrous economic future!

Their claims are mostly overblown and their predictions far too dire, but there are sensible reasons why the young should start thinking about and saving for their later years, so it isn’t a heavy pecuniary burden while they are young nor are there any needs or options unmeetable when they age. Reasons too why we should get our present spending and saving under better control.

This chapter looks realistically at money and the Super Second Life. Its purpose is to help us best use our available budget to achieve the most satisfying and rewarding Super Second Life. It will send us to other books listed at the end of the chapter for their expert formulae, strategies, and techniques designed to help us create the kind of savings and growth investments needed to free us up from second life financial concerns.

Here we are far more interested in what we want to do with that money. How it will help us realize our second life dreams. Otherwise, we’re all madly gathering goods, instead of living now, without any idea of why we want them or what they are for.

We need to take a hard look at where our present assets are and what they amount to, plus what those might be worth in coming times. As well, we need to see how we create our income and how we spend it. And we need a flexible Money Worksheet that we can use later (and throughout our life) to see how and when we can finance our future dreams. So charts we will see—and use.

Four components of our overall financial plan deserve comment too: the basics, emergencies, how long we plan to work, and our will. Then 26 guidelines plucked from the best financial planning minds, distilled, and offered to help create a fully affordable Super Second Life.
 
 

Money is also important to a Super Second Life.
The old system doesn’t make much sense
 
 

The conventional money approach to “getting ready for the future” or “saving up for our old age” doesn’t make much sense—work like maniacs in our big-bucks years, save a bundle, retire, spend it as slowly as possible, hope to die instantly and painlessly, then leave a pile (plus our old clothes) to our kids.

What’s missing from that picture? Us, humans with hearts. And real lives—but only one life per person, at least in this world, and if there’s a later world all that money is irrelevant, if not a black mark.

Somewhere the purpose of life gets lost in the conventional approach. Without a larger purpose to all that working, saving, pinching, and willing, we become automatons going through the paces, ciphers adding and subtracting ciphers.

Breathtaking sunsets, hearing your first song performed, dropping a birdie on the third hole, selling buildings or bread, watching your kids (or kids’ kids) hook a bluegill, and helping Habitat for Humanity roof a home—or reading, running, designing a patio, or ushering at church—all disappear unless we have a grander vision of why we are here and what the human miracle is all about.
 

At 40 or 50, the real issue isn’t whether we have amassed enough money to live as we wish, but whether we know what we need the money for, have enough to realize our dreams (plus enough in reserve for unexpected surprises), and know how much we want left when we die.

It’s drawing up a plan for the rest of our life, then matching our present and future resources to it and making it come true.

Drawing up that grander plan, mainly defining and accomplishing the dreams, is what this book is about.

Looking at the major financial concerns is the purpose of this chapter.
 

These pages don’t tell you how to make money, save, buy stocks or bonds, invest, or even spend, although they may touch on most of those. There are scores of other books by financial experts that dwell on each topic. Here we focus on a second life plan and how money fits in.

The two are distinct. We will all have a second life, unless fate ordains otherwise. That much is free. It comes with the human territory. But we won’t all have the same amount of money, and some of us will have very, very little. Wherever we are on the resources scale, a Super Second Life nonetheless involves living our latter days as fully and enjoyably as possible.

Rich or poor, we all get to look at and enjoy the same lush meadows and midday sun. We can dream, of jousting, juggling, or talking with kings. We can pray and sing and construct. We can read and write and compose. We can invent, share, and teach.

And, as noted, we all get second lives. We don’t need to plan or save to have Super Second Lives, but it sure helps. The planning lets us do more things at appropriate times. And having some dispensable cash, plus some fall-back reserves, gives us many more choices.
 

In Part Two of this book we will design the kind of Super Second Life we want, and create an Action Plan broken into time-pegs so we will have a rough idea of when we will need specific inputs of money to make our dreams come true.

Here we must discuss, in broad terms, the basics we need to live a decent life: shelter, food, clothing, transportation, medical expenses, and so on. Plus an emergency contingency to weather extraordinary costs or just to dip into in hard times.

We must also look at how long we intend to create income. Will we flee the work force the moment we qualify for retirement? Fold our tent at 65? Work whenever we want spot cash? Or keep our foot in the employment camp almost forever?

And what is our post-life goal? Are we gathering it all up just so we can have it distributed (after taxes) to our children who outlive us? Or would we rather spend and distribute it before the harps start strumming?
 

A final thought before we look at the particulars.

There can be a strong argument in favor of “working like a maniac and saving up a bundle in our first life,” if we substitute “hard” for “like a maniac.” But only if that earning fervor is matched by other, equally important concerns: getting a solid education, having as many quality growth and vocational experiences as possible, building a corps of supportive friends, and creating a rich personal life. All while identifying those characteristics you want to exemplify and have associated with your name, like honesty, integrity, dependability, perseverance, and trust.

Only a minute, enlightened few have an overriding life plan when we’re young. Most of us barely have a plan for next Tuesday. We’re creatures of nature, as we saw in Chapter 4. We’re finding out who we are and what’s important. Hard work can be a valuable component of that search, and saving is a huge plus, in part because of what it says about our ability to know, prioritize, and discipline our desires. It also gives us choices later on, when our working vigor may be less. And it moves us from having to rely on fate, by putting our future as well as the present more into our own economic hands.

So if we’ve been working and saving and are now thinking about the coming years, we simply have more beans to count, shuffle, and spend. How many beans? Let’s see.
 

What we have now and may have later

There’s something ethereal about discussing finances without knowing what we have in the coffers. So now’s the time to do a tally, then some projections so we can guesstimate where we will be at some arbitrarily critical points in our future.

First we must see what we have available in income, then what our expenditures are. From that we can create a Super Second Life Money Worksheet. All can be done annually or for specific time periods.

Completing each now serves as a baseline for our calculations both in Part Two of this book and to use in seeing how much separates us, financially, now from where we’d like to be at certain points in the future. Past income tax forms are helpful in making these calculations. (To produce your own forms, simply copy these.)
 
 

Super Second Life Money Worksheet: Year or Age _____
 
Annual basic living expenses    (A) $ 
Annual basic income:     
   Annual Social Security income $  
   Annual pension income $  
   Other annual income: Royalties $  
   Other annual income:  $  
   Other annual income:  $  
Total income (add totals above)
(add totals above)
(B) $
Annual basic income deficit/surplus
(A) - (B)
(C) $
Monthly supplemental income needed
(divide by 12)
      $
Special super life expenses this year
(from Action Plan)
(D) $
Total money desired for this year
(A) + (D)
      $
Maximum income deficit/surplus
if C is -, (C) + (D) 
if C is +, (C) - (D)
(E) $
Monthly supplemental income needed
(divide by 12)
      $
Additional income source(s): 
Amount 
 
   Income source: $  
   Income source: $  
   Income source: $  
   Income source: $  
   Income source: $  
   Income source: $  
Additional income available this year $ (F)
Total income deficit/surplus for this year
C + F 
      $ 

 
Super Second Life Income Worksheet: Year or Age ____
 

INCOME
Annual
Monthly
Begins 
in Year
Ends 
in Year
Reserve
Social Security  $ $     $
   Retirement benefits           
   Disability benefits           
   Survivor’s benefits           
Pension plans          
   Employer          
   Voluntary (IRA, Roth, 401[k], Keogh)           
   Veteran’s benefits          
Interest           
Dividends          
Early retirement bonus          
Insurance payments          
   Life insurance           
   Health insurance          
   Long-term care insurance          
   Disability insurance          
Conversion of personal investments          
   Retirement savings          
   General savings          
   Property and goods          
   Mutual funds          
   Treasury bills          
   Stocks          
   Bonds          
   Certificates          
   Annuities           
   Loans receivable           
Inheritances          
   After-death inheritance          
Living inheritance (cash gift transfers)          
Working Income          
   Full-time employment           
   Part-time job:           
   Part-time job:           
   Self-employment income          
   Residual income (royalties)          
   In-kind income (companion, house tender)          
Home income          
   Rental income          
   Sale income          
   Reverse mortgage          
Rental / sale of other real estate          
Gift income          
Personal holdings          
   Sale of personal possessions          
   Sale of collectibles          
   Sale of car, boat, trailer, camper, etc.           
   Other sales           
Use of emergency fund          
TOTAL INCOME $ $     $

 
Super Second Life Expense Worksheet: Year or Age ____
 

EXPENSES
Annual 
Monthly
Begins 
in Year
Ends 
in Year
Reserve
House payment or rent $ $     $
   Maintenance           
   Furnishing          
   Improvements          
   Property tax          
Food          
Utilities           
   Water          
   Electricity           
   Gas          
   Oil          
   Trash / Sewage          
   Other:           
Inflation (2-3% a year)          
Phone           
Computer costs          
Clothing           
   Purchases           
   Cleaning          
Health costs          
   Care          
   Medicine          
Taxes          
   Federal          
   State          
   Local          
   Self-employment          
Transportation          
   Car payments          
   Gas, oil, repairs          
   Parking          
   Commuting / public transportation          
Professional fees          
Gifts and donations          
Loan repayments          
Loan debts          
Personal care          
Care of family members or dependents          
Education          
Exercise / Fitness           
Travel / Vacation           
Savings investment          
Emergency fund          
Hobby costs          
Pets           
Entertainment          
Divorce costs (alimony, child support)          
Interest: credit card and other           
Assumed debts: children/others           
Insurance: Health           
   Auto          
   Property          
   Life          
   Disability          
   Liability          
TOTAL EXPENSES $ $     $

 

Super Second Life Net Worth Worksheet: Year or Age____
 
NET WORTH
  Now 
 1 Year 
5 Years
10 Years
15 Years
Assets
$ $
Checking account(s)           
Savings account(s)          
Bond(s)          
Certificate(s)           
Market value of home/apartment           
Market value of other real estate           
IRA and Keogh plans           
Cash value of life insurance          
Surrender value of annuities          
Equity in profit-sharing / pension plans           
Market value of stocks          
Market value of bonds          
Market value of mutual funds          
Current value of car(s)          
Current value of household furnishings and appliances           
Current value of furs and jewelry          
Loans receivable          
Other assets          
Total Assets (A)
$ $ $ $ $
Liabilities 
         
Mortgage balance $ $ $ $ $
Loans: auto          
Loans: student           
Loans: home equity          
Current bills          
Credit card balance          
Other debts:           
Total Liabilities (B)
$ $ $ $ $
CURRENT NET WORTH             (A) minus (B) $ $ $ $ $
How much should we have saved?

Who knows? If we need a heart attack, simply do the calculations in most of the books cited at the end of this chapter. It’s seldom under $1,000,000, often two or three times that. And if you didn’t start saving at seven, you’d better clone a second you earning full income to catch up!

Don’t panic. We all agree that a regular savings program begun early makes huge sense later on. That 401(k) and similar programs are super. Pensions are a blessing. Even IRAs are fine. That what might save our bacon is compounded interest, the longer to compound the better.

If we had just been as brilliant in our wild days as we are now, reading this book, we’d know why we want this windfall and it would be a lot easier to make modest sacrifices to make those future dreams come true. But we didn’t, and even if we had read these words at 25, or maybe even 40, we would probably have laughed our immortal laugh and said, “Later, I’m too busy living now.”

We won’t starve to death. We won’t have to live under bridges. But we may have to trim our dream sails to match a lesser wind.

It’s never too late to lead a Super Second Life, and if our lack of savings means that we have to keep working a bit longer or settle for a trip to Tulsa instead of Tahiti, there we are. (Too humid in Tahiti anyway.) What’s most important now is when we’ll need special jets of money to brighten up our later days.
 

Super Second Life money

In Part Two we will define the dreams that will highlight our second life. Most of them cost money, so we will use the numbers in the Super Second Life Money Worksheet, estimate the cost of  those second life dreams, and plug them all into the appropriate time pegs in our Action Plan.

How do we know now how much money we must save and earn to do what we want with at least some comfort and security? We don’t, and we won’t really know until then. For one thing, we may die first. (That’s a tough way to save money.) Or what costs a dollar now may cost ten then (or 40 cents). Or we may have a vastly different concept of that dream then than now. So putting future price tags on dreams is very hard.

There’s another point, too. If we don’t have the funds at that time, we just won’t do it, or we’ll do the part of the dream we can afford, or we’ll do it vicariously (which should be free). Or we may come out of “retirement” (again) and work long enough to muster up the mammon.

What’s more vexing than trying to financially plan without numbers? Have patience. There’s no rush. Some of these activities are 20 or 30 years away.
 

The basics

Alas, the basics aren’t 20 or 30 years off. They are here and now, and will be every day of our lives. So they must be factored in at each step. Shelter, food, clothing, transportation, medical expenses, and so on.

Until we hit our second life, say at 55, figure that what we are spending now for everyday living (setting emergencies aside) is what we will need in the bridge years, plus a bit more for inflation. If we upgrade our life style, up goes the cost of basics.

But we get a break later. It costs less to be a senior. Figure our needs at that time at from 60-75% of our present costs, with 70% the number usually given.

Why does it cost less? We will eat a bit less, entertain less and less grandly, probably quit smoking, drink less and less often, drive older cars longer, get discounts almost everywhere, buy fewer new clothes, have fewer high-priced toys, and—hear a huge sigh of relief—no longer have to feed, clothe, medicate, and in general support kids!
 

Emergencies

At any stage of our adult lives it is prudent to have at least six months of full earning set aside in a compounding emergency fund. That is no less important as we age.

The fund can cover a dozen calamities in our youth, and is a substitute bread winner should we become disabled, to tide us over until disability insurance or other forms of back-up support kick in. It also pays the bills between jobs, relieving the panic of having to accept any job at any rate just to feed mouths and pay rent.

But as we enter our second life, an emergency fund often meets two key needs: loss from job income and to pay non-insured medical expenses, including nursing home costs. In later years, we can also supplement Social Security income from the interest it earns.
 

How long do we plan to work?

When almost all work was back-breaking and only the hardy survived to 65, retirement was a blessed goal. But in today’s economy, the Social Security one can earn at 65 (or a few years later as the collection year is moved up) can pay for about 40% of our needs. (For the rich, this may be as low as 25%. For those with a very modest income, it can be as much as 70%.) The age that we stop working may largely be dependent upon whether we have been able to gather the remaining percent of our current income needed to fill the gap to the 70% or so we will later require.

Add to that 70% any expensive desires in our Super Second Life, or any grand leap in the cost of the basics, and our choice of leaving some tangent of the work world may not be ours at all.

There are also those who simply enjoy working—it’s called “play for pay.” Some of us will want to be fully employed until they bronze us and put us in the hall. Others will seek part-time employment, and still others, as-needed jobs.

And how many are gnawing at the bit to leave the conventional workforce to start our own latter-life company? Or become consultants? Or work-at-home spot job independents? Or supertemps? Or authors in print?

Not included in the above are the thousands of volunteer positions, some of which have perks with economic value, like special discounts and free meals.

So when we stop working is based on many factors, not the least of which is how we see working as part of our Super Second Lives. For some of us, it will be an integral element that we will plan around. It may be the vehicle that will get us abroad, after which we will attach a month of leave to enjoy the locale. Or we may work in the summer when the tourists come calling, and go visit them the rest of the year. We may work the ski season or when the ponies are trotting or for one semester each academic year.

Employment in our second life becomes another tool of opportunity. If we keep our skills sharp and current, our teeth in, and our antennae up to job availabilities, it allows us to afford to expand the number of things we can do with the earnings.

There are some tricks to happiness in post-retirement jobs, too. One is to pick a field you love, usually one you’ve explored on your own (or wanted to) while you were working. Hobbies or special skills are a place to start. Then thoroughly research the job market, and if you find something, go right for it. But if there’s little available, become a volunteer in the field: they are the first to hear when spots open. Finally, just be yourself, buoying your maturity and experience with a youthful enthusiasm.
 

Our will

How we plan this life is directly influenced by which or how many of our goods we want to—or think we should—leave behind.

Are our kids dragging out their lives until they get our inheritance? Do they grow pale at the prospect of us finally visiting Greece “on their money”? Are they living in cardboard shacks until they get the plantation? Is there an “ex” waiting to sue for the booty? Should we think about getting a direct-feed resuscitator so nobody can find the plug?

Or are we hoping to spend every last dime?
 

If it’s the latter, then Stephen Pollan and Mark Levine’s book, Die Broke, provides a step-by-step process so we can live this life fully while creating the needed security and income flow to make that happen.

Or we can take a modified road between leaving a bundle or nothing by cutting it as close as possible and leaving, by default, anything that’s still unspent.
 

The Die Broke approach has much to commend it for any Super Second Lifer, even if leaving an intended or accidental inheritance isn’t important. It is based on four key points: (1) quit our job today, (2) pay almost everything with cash, using credit only in emergency and for things that are too expensive, like homes and cars, (3) don’t retire, and (4) die broke.

Quitting our job today means quitting mentally. Forget corporate loyalty—the corporations have forgotten us. Don’t use our jobs to define who we are. Simply sell our services to the highest bidder, then give that lucky boss the kind of work they are paying for. Become a free agent, and always keep our eyes open. Don’t confuse emotional wealth with financial wealth; that is, don’t expect the job to feed us emotionally. Look for that elsewhere. Then if the job does provide emotional support, all the better.

Paying cash makes us more aware of what we’re spending by slowing the whole process down. We see the actual money leaving our hands. We write ourselves one check a week for all the expenses.

Don’t retire—always keep working. We’ll probably need the income, we’ll stay better informed, and we’ll have fresh money to finance our dreams. Say Pollan and Levine, “Look at your working life as a lifelong journey up and down hills rather than a single climb up a steep cliff that ends with a fatal step off the edge (and into the abyss) at the arbitrary age of sixty five.” The idea is as much to stay active as earning: going to school, working part-time, starting a business. But always earning or learning.

And die broke. They cite four reasons why it no longer makes sense to leave inheritances: (1) Creating and maintaining an estate does damage to the person doing the hoarding—the problem of whether to spend for yourself or leave it to the kids, (2) It hurts society; the frozen investments contribute little to the productivity of the economy, (3) It hurts families because the dynamics of the relationships suffer, and (4) It hurts the recipient. It erodes their motivation and drive to work.

If we want to share our wealth with our kids, or others, why let the state dilute it through taxation? Why not just give gifts (up to the $10,000 annual tax-free maximum) when they most need it and we can most afford it?

How would Pollan and Levine have us spend our money, after meeting obligations? On experiences and education.

Die Broke gives the details and the order, including excellent advice about annuities, reverse mortgages, various forms of insurance, and serial investing (for a home, college, then retirement).
 

Some additional, important thoughts

Let’s share some particularly appropriate second life financial guidelines, plucked from the best current financial planning books, compressed into 26 action steps, and divided into two categories: (1) income and assets and (2) expenses.

These make particular sense if you have a financial feel for where you are now and a rough notion for where you might be at key stages in the future. You can get that by completing the worksheets a few pages back—or you may wish to use the tables in Daniel Kehrer’s Kiplinger’s 12 Steps to a Worry-Free Retirement (pages 20-3) or Ralph Warner’s Get a Life: You Don’t Need a Million to Retire Well (pages 170 and 200), both widely found in local libraries. See the source list at the end of this chapter.
 

Income and Assets

1. Plan on receiving Social Security (or the equivalent). As we said earlier, it may provide about 40% of our needs. Most seniors need from 60-75% of their pre-retirement income to live modestly in retirement. Figure 70%. Social Security will also continue to pay after we die, helping provide for our latter-life children (until 16, longer if in college), our spouse (even ex-spouses, sometimes), and dependent parents. Doomsayers notwithstanding, Social Security may look a bit different but it will still be around. (Want to know how much you will receive? Call [800] 772-1213.)

2. Most of the rest of our retirement income will probably come from our pension at work, similar programs if we are self-employed (like Keogh and SEP-IRAs), and from any IRA money we slipped out annually before filing taxes. If we lucked into some form of “golden parachute” for early retirement, that can be a big help too. For most, pensions and savings are what later provide that needed 30% of our present income for a more comfortable second life.

3. Add to that any additional savings or personal investments (like money market stocks, bonds, property, collectibles, or annuities) and we may already have more than we need to do as we wish later.

4. If we do, bingo—because the moment our second life starts that money isn't going to simply fall in our hands! We will extract it in planned portions, with the principal continuing to earn compound interest as long as it lasts, which may be long after we are using the bank eternal!

5. Not planing to retire? All the better. Any income we continue to earn once we are at the comfort stage keeps adding up and compiling more interest, which earns even more interest. We can even delay drawing Social Security for a few more years, earning an additional 8%, inflation adjusted.

6. If our folks or kin were kind enough to leave us some form of inheritance, that could proportionally increase our financial freedom. (Alas, if that kind soul had gifted it instead during their life, they would have probably saved in taxes and we could have been investing that too, compounded, to free us up even more. But we don't want to sound ungrateful.)

7. Sometimes, sadly, somebody dies and we are the beneficiary of their life insurance. But we can't depend on this—and it's imprudent to speed it up. Still, it means more funds, which means more choices.

8. While not income per se, if we have insured ourselves for disability and that occurs, that may help keep us solvent in our later years.

9. And we will have access to Medicare and Medicaid (or whatever they are called) to help offset our main health costs. Like Social Security, some sort of net will be there.

10. Most people enter their second lives with a home mortgage substantially or totally paid. (The happiest retirees are those without house payments at all. Many of them got there—and saved as much as $150,000 or more in interest—by fattening up their monthly mortgage payments. They probably paid their credit cards first, then slipped in a few extra bucks on the mortgage principal each time.) If we subtract the house payments, we also need less income. And kids gone can reduce our annual expenses as much as $15,000 each.

11. Having a low or paid mortgage can be a financial boon if we down-scale and sell the big house, which is easier to do if the kids are gone and we tell freeloaders that we have become deranged. Or we can simply live there forever and either will it to our heir(s), Pollan and Levine be damned, or we can use it as a new source of steady income through reverse mortgaging, should our health or other expenses outpace our savings—or we live far too long!

12. Another way to “find” income is to take any savings we make by not having to pay credit card interest or not having car payments and put that amount either into the bank to compound or to add it to the mortgage payment. When we make the last house payment, we might take a victory trip on what we would have had to pay the next month or two, then put the subsequent monthly non-payments into our own account. Since we're used to spending that money anyway, why not give it to ourselves to grow on our own behalf?

13. When we sell off the toys—the boat, the snowmobile, the trailer, etc.—we not only get a boost in bucks, we no longer have to pay for their upkeep, license, or storage.

14. There's another win-win that, if done right, can bring as much joy as income: if single, marry again, pool your combined retirement holdings, and cuddle into the twilight! Prenuptial agreements are in order here, even if we’re Willard Scott regulars in the centenary club.
 

Expenses

15. The main idea in our second life is to not let our expenses get ahead of our budgeted reserves and income.

16. But life isn't always that kind; the two are seldom in perfect balance. We can’t just keep making soup of our pets or lowering the winter heat. When or if it gets out of balance, we must get some advice, cut back on the excessive spending, or find some new income, like reverse mortgaging or taking on a part-time job.

17. While we won't spend nearly as much in retirement as we did before (unless we go batty), we will continue to have bills that must be paid: maybe a house payment or rent, utilities, phone, doctor, and food. Those are the core costs that our savings should meet.

18. Physical and mental health are more important than money, it’s said, so if we are blessed with good health, we should spend to keep it so. If not, we must get it as good as possible, then sustain or improve it. That means that the costs for treatment, medicine, fitness or exercise, transportation, education, and some entertainment have high priority. Also long-term insurance, which should be considered and probably begun when we are young and healthy.

19. The happiest retirees are the most active, so other elements of that high quality of life might be travel, hobbies, public service, even pets. Volunteering and personal growth aren't free either, but those expenditures can be especially valuable.

20. The biggest fear of most retirees is that the moment they leave a secure job they will catch or suffer some disastrous malady and be consigned to a full-care facility for their last 30 years! A foolish fear, numbers tell us, since the percentage of people in a nursing home at any one time is 5.2%. (Most of those spend less than a year there, often their last.) So the million-dollar reserve nest egg for that "certainty" probably costs ten times its worth in ulcers, overtime, and exhausted spouses during our prime earning years.

21. But we will have health costs, so an important budget item is insurance, then Medicare supplements, and finally per-sonal money for co-payments, full payments, and prescriptions. This usually stabilizes and the cost is manageable. Often it goes down in the final years.

22. One expense that can put a big dent in our budget is a car. If we’re used to buying a new car every 40 minutes (worse yet, leasing one), we must think twice or thrice. It's best to wait to buy until we have the cash, or get a car that’s a year or two older, or keep our current clunker rolling.

23. Divorce is a real second life bummer. It can reduce a well-financed couple to two marginal survivors. One solution? Strengthen the marriage earlier so at retirement it is intact. One way to do that is to actively collaborate to make Super Second Lives a dual reality.

24. If we’re still using credit cards with abandon, we’ve simply got to get our expenses on a tighter budget. Unless our cards have no or a low fee, the 18-24% interest can quickly undermine years of sensible saving. Reduce the cards to one, then limit its use to emergencies or big-ticket items.

25. We may still have lingering obligations into our retirement years, like assumed debts for our kids' schooling. It’s best to pay them off as soon as possible, to lower our monthly outflow.

26. The hardest financial burden is when we are entering our own second lives with dependent parents, bless them. But it may not be nearly as bad as it appears. We must sit down and figure out their income or support sources—like pensions, savings, and Medicare—before assuming that their entire support will all have to come from our savings.
 

This information should help us better prep for a freer future. But what do we do with the four model worksheets?

We will need at least the Money Worksheet for Chapter 13, “Financial Resources Must Now be Added to the Action Plan,” and Chapter 14, “The Final Action Plan.” The Net Worth Worksheet tells both where we are now and where we will be financially.

We can create a worksheet for each year or for coming time-pegs, usually at the start or end of five- or ten-year time periods based on age, i.e., 60. While the basic income and expenditures may vary some annually, the key item is (E), the maximum income deficit or surplus. If a surplus, that’s what we have to finance our dreams. If a deficit, attention may be needed to keep the ship afloat!
 

Financial or Investment Sources

* Gerber, Michael E., The E-Myth Revisited. (Harper Business, 1995). If you’re going to start a business, this is must reading.
* Godin, Seith, If You’re Clueless about Retirement Planning and Want to Know More. (Dearborn, 1997).
* Holzer, Bambi, Retire Rich: The Baby Boomer’s Guide to a Secure Future. (Wiley, 1998).
* Keefe, Carol, How to Get What You Want in Life With the Money You Already Have. (Little, Brown, 1995).
* Kehrer, Daniel, Kiplinger’s 12 Steps to a Worry-Free Retirement, 2nd ed., revised and updated (Random House, 1995). Has excellent charts to see where you are and what you need, though the figures are getting dated and you’d have to save millions, using their formula, to retire worry-free.
* Keithley, M.C., Retire Early Retire Well. (Invesmart Publications, 1997).
* Parrott, William W. and John L. Parrott, You Can Afford to Retire! A No-Nonsense Guide to Pre-Retirement Financial Planning (N.Y. Institute of Finance, 1992). Also dated.
* Patterson, Martha Priddy, The Working Woman’s Guide to Retirement Planning: Saving and Investing Now for a Secure Future. (Prentice Hall, 1993). Getting dated.
* Petras, Kathryn and Ross, The Only Retirement Guide You’ll Ever Need. (Poseidon Press, 1991). Not exactly, but it does cover a lot of ground.
* Pollan, Stephen and Mark Levine, Die Broke. (HarperBusiness, 1997). Clear, usable process that shows how to spend and give all your money in this life. Other practical advice for second lifers too.
* Scholen, Ken, Your New Retirement Nest Egg: A Consumer Guide to New Reverse Mortgages. (NCHEC Press, 1995). Last resort financing, but an excellent guide.
* Wall, Ginita and Victoria F. Collins, Your Next Fifty Years: A Completely New Way to Look at How, When, and If You Should Retire. (Henry Holt, 1998). Retire? they ask. Solid, straightforward thinking.
* Warner, Ralph, Get a Life: You Don’t Need a Million to Retire Well. (Nolo Press, 1996). Realistic, easy to read with interesting interviews with second lifers. Promises you won’t end up a bag person, unless of course bags are your thing.
 

For a list of aging-related financial or investment organizations, please link here.
 
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Gordon Burgett
gordon@super-second-life.com
(800) 563-1454