I have great respect for my parents.  Every time I’ve observed them undertake a new challenge or a transition in life they have always put great thought into how they should proceed.  Now that my Dad has been retired for a bit he sent me ten tips for making every penny count in retirement.  It’s going to be quite a while before I retire but I thought I’d share his thoughts so that others could benefit from his wisdom.

1. Be debt free.

As a retiree you do have a limited and fixed income that comes in on a monthly basis. Having a mortgage, car payment and credit card debt will drag you down financially. I have read numerous books on money and retirement and one common denominator they all speak about is being debt free. A book that I recommend reading and has helped me the most is “The Total Money Makeover” by Dave Ramsey. Bottom Line: If you are not debt free don’t retire.

2. Federal & State taxes from your retirement check.

Make sure you are deducting the right amount of taxes. I followed the NYS Retirement calculator for federal tax deduction and fell short on the amount needed to deduct. So I did pay a tax penalty and increased my Federal deduction.

Bottom Line: Check with your accountant for how much you need to deduct from you monthly allotment.

3. Living in a State with no income taxes.

States with no Income Taxes: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Many people believe that no state income tax means lower overall taxes, but this is not necessarily true. “In several cases, research shows that the states without an income tax make up the difference with higher rates for property taxes, sales taxes and other tax categories.

Bottom Line: Do your homework; check on your property and local taxes before pulling the trigger and move.

4. Dealing with deferred compensation.

Deferred Comp (403B): If you take any money out of Deferred Comp they withhold 15% up front for Federal Taxes. Keep in mind that additional income will put you in a higher tax bracket. I purchased a new car and did some remodeling in our house; it was more like 20%.

Bottom Line: Put an additional 5%-10% away an anticipation being in a higher tax bracket.

5. When to collect Social security benefits.

I know that I have discussed this issue to death. As far as I am concerned, if your family genes have longevity, you are better off waiting. For example: If you wait until you are 66 will increase the size of your check by one third. A one third increase makes a significant difference in monthly budgeting.  However if you need the cash another option is to have your spouse take it at 62 you wait till you are at least 66.

Bottom Line: If you have a serious illness or family history of short life expectancies taking the benefits as soon as you can does make sense.

6. Hotel rooms.

Best time to book a room is 4pm on Sunday. Call the hotel’s local direct line not the 800 number. Don’t ask for reservations speak to the manger on duty directly. He has the authority to negotiate rates.

Bottom Line: Be courteous. I think of myself as a valuable commodity. After all you want to take an unsold room out of inventory.

7. Air Travel.

The perfect way to shop for cheap air fare is 3pm Eastern time on a Tuesday says Rick Seaney, CEO of www.FareCompare.com. Monday nights is when the major airlines announce sales. This triggers other airlines to match that sale on Tuesday. Keep in mind luggage fees can be $15-25 for your 1st bag.

Bottom Line: The earlier you can book your travel the better and flexibility with travel days always will work in your favor when exploring prices.

8. Spending more than you earn: This may seem like an obvious error to avoid, but with U.S. consumer debt reaching $2.45 trillion at the end of 2009, according to the Federal Reserve, it may not be obvious enough. Keeping an ongoing personal budget will help you to track what’s coming in and what’s going out.

Bottom Line: Make sure the amount coming in is higher than the amount going out.

9. Which is the cheaper climate.

Where is it cheaper to live, a warm or cold climate? Experts say, is that both heating and cooling your home take large amounts of energy, more than we use for any other appliance. But according to researchers at National Geographic’s The Green Guide, you will probably consume more energy heating your home than cooling it. Think about it. When it’s 0 degrees outside, you’ve got to raise the indoor thermometer to 70 degrees. In 110-degree weather, you need to change the temperature by only 40 degrees to achieve the same comfort level. Since air-conditioning is inherently more efficient than heating, it is a little cheaper to live in a warmer climate.

Bottom Line: It takes less energy to cool a given space by 1 degree than to heat it by the same amount.

10. Long Term Care Insurance

I struggled with this one. You think Long Term Care Insurance is prepaid hell? See what it does to a parent or loved one’s life savings and assets if they don’t have it. So do I need Long term care insurance? After doing a lot of home work approx. 70% of us will be in a Long Term Care Facility unless you plan on moving in with your children.

All depending what level of care that is needed it can cost between $50,000 – $75,000 and more a year. O.K. some of you are saying I will go to a State run Facility and pay nothing. One thing that I am sure about is that with some extra money, things can go a little smother for you. Medicare coverage of skilled nursing care is limited to 100-day benefit periods and requires at least three days of hospitalization before being admitted to a home.

Cost: At age 60 the approx. cost of LTC insurance is appox. $3,000.00 per couple at age 70 the cost is double.

Do the math, if you purchase a policy at $1500 per year at 60 yrs. old X 30 years = $45,000. The policy I have will provide 50,000 per year for 5 yrs. = $250,000 with a built in inflation.

Bottom Line: It made sense to me purchase a policy sooner rather than later.

If you have any other thoughts or tips feel free to leave them here, I’m sure my dad would like to know what you think!

YOU CAN DO LESS AND BE HAPPY.

Here is the myth I bought into.  In order to be happy I had to stay busy.  Constantly on the go with things.  Busy with work, busy with projects, busy with life.  Constantly asking myself what’s next instead of taking quiet time and enjoying my kids and making sure that regularly get out with my wife.  I get so much gratification by working my way through lists and my love for my job that I forget to slow down.  This time off has been great and I have had the chance to enjoy my family, recharge and remember that balance in life is important.

Swimming with Michael at Mom and Dad's

Playing cars with AJ

It took us a full two days but we made it to Florida!  Unbelievable with two toddlers.  The boys were so good through the whole trip.  We kept their bellies full with McD’s and The Cracker Barrel and that seemed to keep them pretty happy.  The postcard at the top of the post is an old one from Weeki Wachie, Florida.  My parent’s new home, in the quite rural suburbs way outside of Tampa.  Just so you know how rural… the 2000 census recorded only 12 people living here and the big attraction is a state park with mermaids??? I’m sure there are a few more people here now but not many. 

While its quiet, I think this is exactly what we need.  My parents have a beautiful house with a nice pool that is sooooo peaceful.  I love their house and the fact that it is out of the hustle and bustle of town.  I’m sure the kids will love it here and I’m looking forward to some reading, swimming, and family time.  I’ll post some pictures with the kids soon.

Update: I fixed the video link if it didn’t work on your last visit!

Michael – “Where’s daddy going?”

Me – “He’s going out to pull the car up for ya.”

Michael – “Daddy no do that.”

Me – “Why?”

Michael – “Car too big for daddy pull.” (While he’s saying this he is motioning as if he’s pulling his wagon.)

Me – “Oh, you’re right. I meant that he’s driving it up to get ya.”

Michael – “Up?” (As he’s pointing up…)

Me – “No, I guess that doesn’t make sense either. He is driving the car over to us.” (I then grabbed him and his bags, quickly brought him downstairs and passed him off to Frank as I was laughing.)

I was so bummed to hear about missing out on that one, I think I would have laughed so hard that we would have been late for school!

I love my wife, and on days like this one where I am a bit more solo with the boys I love her even more. She is a great mom and has tremendous patience. After I fed the boys lunch she put them to bed for a nap while I went out to get some writing done. After I came back we had one of those moments with our kids that makes all the stress of parenting worth it. We sang and danced with our little guys to a Disney show called Choo Choo Soul. My kids laughed and loved the silliness of it all, while I laughed and loved them.

If you are on the hunt for something fun for your toddler you can pick it up on DVD by clicking here. Here is a bit of Choo Choo Soul: