My experiences with the challenges of early retirement may be atypical but then again, I am not aware of that many people who escaped employment before they were close to 50, so for what it is worth, I present to you the three biggest challenges following early retirement.
These have, perhaps surprisingly nothing to do with being bored or worrying about running out of money. They have mostly to do with explaining the hows and whys and dealing with other people’s prejudices; yes, I care. If you don’t, power to you!
Not having a job title
This is something I have discussed several times before. It is very easy to be a specialist in a culture of specialization. State your job title and everybody, including oneself, will have a mental image of what this means. It is a convenient sound-byte. Retiree even exists.
My father suggested rentier, which is pretty descriptive although I would put it in other and more flattering terms than the wiki-page, but I doubt many people know what the term means. Maybe I should just use capitalist. Problem solved: It is a job.
Perceived standard of living
Show me one person who is excited about extreme early retirement and I will show you five that thinks it is all about sacrifice and making your own toilet paper, something which they are not particularly excited about and even fairly judgmental about. To avoid this it is prudent to pick up something which is highly visible and desirable to Joe Average. Traveling is a sure hit.
Not contributing to society
There is this collectivist belief shared by many(*) that capable persons should contribute to society (Being a rentier capitalist, see above, I contribute my fortune to productive assets instead of suburban real estate and SUVs). An alternative belief is that as long as one can support oneself, that is good enough: This is the individualistic approach. The antidote would be to reflect on how much more participating in a system that pushes paper around between desks contributes compares to playing football all day(**).
Retirement Income: Stretching Your Savings and Then Some
How to help make your money go the distance with you.
There are quite a few challenges facing retirees today: employer pensions are disappearing, the cost of living is on the rise and life expectancies are increasing too. It’s no wonder many of us are nervous about our income in retirement. But there’s good news. If you’re resourceful, there are ways to stretch your savings as much as possible.
So you’ve crunched the retirement numbers and they aren’t quite working.
What’s next? If your income is falling short of your expenses or you’re nervous about your long-term financial situation, there are several options you can consider for maximizing your retirement income.
- Work longer. And not necessarily at your old job, though that may be an option. Many retirees get satisfaction from moving into new lines of work or starting their own business. It can augment income, provide structure and allow for new opportunities.
- Delay collecting Social Security. If you’re eligible for Social Security, you can start collecting benefits at age 62. But if you start taking benefits before you’ve reached your full retirement age, your monthly benefit check will be 25% to 30% less. In terms of getting the most out of Social Security, waiting longer means your monthly checks will be larger for the rest of your life.
- Manage expenses. Create a budget so you can track expenses and if need be work with a financial professional to calculate how much of your retirement income is taxable, partially taxable and income tax free. This will help you avoid overspending early in retirement, which could put you in a bind later on.
- Create a withdrawal strategy. Decide how much you can withdraw from your savings each year and prioritize withdrawals from taxable, and tax-deferred accounts.
- Be tax savvy. Combining withdrawals from tax-deferred accounts like 401(k)s and traditional IRAs with tax-advantaged accounts like Roth IRAs (in which contributions are made with after-tax money) can help you to manage your taxable income.
- Diversify. Retirement doesn’t mean you’re at the end of the line – far from it, in fact. It’s still important to make sure your investment portfolio provides the potential for some long-term growth along with seeking stability of principal.
- Tap into your nest egg. But as you start selling off investments and reinvesting, be sure to rebalance your account regularly so that it stays in line with your long-term financial goals. Remember to talk with a legal advisor and tax consultant before making investment-related decisions.
- Evaluate the cost of your home. You might have paid off your mortgage. But have you thought about how much it costs to maintain your home? How much are your property taxes? What about major repairs like a new roof or replacing the furnace? If your retirement income is falling short, maybe now’s the time to consider downsizing to a more manageable home.
Consult with a financial professional to help keep you on track, and continue to refine your goals and make adjustments to your retirement income strategy as the years go on. The above are just some of the ways to help your money go the distance with you.
How to generate additional income via stock trading from home
Struggling to make money in the financial markets now that the pandemic has taken you away from the buzzing arena of the trading floor? Try talking to yourself. Adopt a kitten. And don’t just review your trades, profitable or otherwise, take the time to re-view them.
That’s the advice of Brett Steenbarger, a clinical associate professor of psychiatry and behavioral sciences at SUNY Upstate Medical University in Syracuse, New York. Steenbarger specializes in trader psychology. Legendary investor Paul Tudor Jones employed him from 2010 to 2014 as the director of trader development at his global macro fund, Tudor Investment Corp. Since 2003, Steenbarger has published five books on the psychology of successful trading.
I caught up with him by telephone on Wednesday, soon after he’d finished feeding his four rescue cats. “I’m a firm believer that we set the tone for our day by what we do at the start of the day,” he’s written. “I don’t start by looking at market quotes, news, emails, or chats. I start by loving and serving those I love. Actions, repeated, transform us: We become what we do.” Below is a lightly edited transcript of our conversation.
Mark Gilbert: On your blog, you talk about re-viewing trades, by going back through charts showing things like price action and volumes minute-by-minute, rather than just reviewing them. What do you mean by that distinction?
Brett Steenbarger: What we’re doing is not just looking them over, we are re-experiencing them. What we experience is what we internalize. Traders I worked with in Chicago some years ago, they had a recording, they would replay the markets they had traded and literally re-experience what had happened, what they had been thinking, but now in the context of being an observer and being able to see the opportunities that they perhaps missed, correct the mistakes that they made. That re-viewing accelerated their learning curves and was probably the number one thing they did that was most effective in spurring their development.
MG: You’ve written about the benefits of talking through trading ideas out loud to yourself. How does that work?
BS: Any time we talk aloud, we become the listener as well as the speaker. It gives our ideas a greater objectivity. We become more aware of those ideas, it adds a layer of mindfulness to what we’re doing. Let’s say I have an impulse to buy or sell an asset, maybe because it’s moving a particular way and I don’t want it to move against me. If I say out loud what I’m thinking and what I’m about to do, immediately I can recognize if it sounds ridiculous: “This is not how I do my best money management, I’m being completely reactive.” I would be embarrassed to speak it out loud to a valued colleague. We get a layer of self-observation when we talk out loud that can be really useful. It makes us in a certain sense accountable.
How to generate additional income via stock trading from home How are the most successful traders dealing with lockdown?
BS: That is the top question I’ve been dealing with in talking with portfolio managers, team members at hedge funds and individual traders. Being in this lockdown mode, working from home, they don’t have the same level of stimulation that they had when they were in the regular working world and they don’t have the same level of stimulation in their personal lives. They are overwhelmed because they have no balance between the work and the responsibilities. All those things that would normally be balancing factors, that produce the positives, they have less access to.
Positive emotional experiences really provide us with a buffer against stress. We can deal with a lot of pressure, a lot of uncertainty, if we have positive experiences to balance that, so the stress doesn’t become distress. So many people I work with are lacking those positives.
MG: How important is teamwork and staying connected?
BS: There are two forms of teamwork. One is the teamwork that goes on purely professionally when money managers are generating ideas, sharing information. Staying connected to others is an important source of stimulation intellectually. I’ve done some research on what makes portfolio managers and traders successful, and the number one factor has been intellectual curiosity. Really successful money managers love generating ideas, they love the hunt for new opportunities. And so by connecting via teamwork they’re able to feed that curiosity that keeps them stimulated even when they’re working from home.
Then there’s the other kind of teamwork. Working together closely in our social lives, with friends, with extended family, with the family we’re living with, but using the time creatively to get that stimulation that we might not be getting because we’re not doing the same travel, going to clubs and so forth. Interaction is not just inspiring, it gives us energy.
MG: Finally, going back to your blog, you’ve written about a trader who adopted a kitten during lockdown and found that it’s helped him cope with frustrations during the trading day. What’s going on there?
BS: What the cat provides, or any pet or even a small child, is it takes us out of ourselves. In the case of this trader, having this little one is a way of cultivating emotions that otherwise might be difficult to access, such as caring emotions or loving emotions. It’s easy for even the best traders to become quite hard on themselves, to become perfectionists. When we have a little kitten, it takes us to a different emotional place that we reinforce, and we can recruit in dealing with ourselves.
Fall seven times and stand up eight.
Courage doesn’t always roar. Sometimes courage is the quiet voice at the end of the day saying ‘I will try again tomorrow.’
–Mary Anne Radmacher, American author and artist
It’s not that I’m so smart, it’s just that I stay with problems longer.
–Albert Einstein (1879-1955), physicist and developer of the theory of relativity
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