September 2003 Newsletter

Ready to Retire?

A recent survey conducted by Harris Interactive in conjunction with Ken Dychtwald (author of Age Wave, a book on demographic trends) provides extensive data on retirees' attitudes, lifestyles and financial preparedness. Increasingly, retirees and pre-retirees are no longer regarding retirement as a time of rest and relaxation, but rather as a new and active stage of life.

Among the results found by the survey, as reported by Journal of Financial Planning in their September 2002 issue:

Dychtwald categorizes retirees into four types, each with different ideals and goals for retirement.

Ageless Explorers (27% of retirees) exemplify the new retirement model with their desire to be active, productive and independent in retirement, and to reinvent themselves. Generally, they have planned well financially for their retirement.

Comfortably Contents (19% of total) put less emphasis on personal growth and work and more on relaxation and enjoyment through travel and recreation. They have planned well for retirement.

Live for Todays (22%) aspire to many of the same ideals as the Ageless Explorers, but are financially unprepared, making them anxious in retirement.

Sick and Tireds (at 32%, the largest group) are characterized by being inactive, unfulfilled and resigned to a less-than-satisfying future. A significant portion of this segment are widowed and in poor health, with significantly fewer financial resources.

After the last three years of negative stock market returns, the number of retirees without sufficient financial resources may be growing. Since the stock market peaked in early 2000, many pre-retirees have gone from thinking they were in great financial shape — and might even retire earlier than expected — to downsizing their dreams and facing the reality that they may have to work beyond the age of 62.

According to AARP surveys, in 1999 67% of survey respondents believed they could retire by age 62; by 2002 that number had dropped to only 25%. "In any context, going from two out of three to one out of four is a dramatic and anxiety-producing change," say Hanna Shaw Grove and Russ Alan Prince.

What can you do to better prepare for your retirement? One exercise that can be very useful is to spend a year living on your planned retirement income (before you retire). If your projections assume you will need $60,000 a year after taxes to support your lifestyle, try it out and see. As with all estimates, you may find that the actual number is higher or lower than you thought.

It is also critical to seriously contemplate the lifestyle you want for your retirement. As noted above, almost all pre-retirees expect to continue working at least part-time, either for pay or as a volunteer. What will you do with the rest of your time? Too many people are so focused on getting to the retirement party that they neglect to develop hobbies and interests that will keep them active and engaged during this new phase of life. It is important to have both active hobbies like golf or tennis as well as interests that can be enjoyed even if you have a health set-back.

And be sure to include a plan for something charitable. New, unpublished research by Jonathan Haidt, PhD, an associate professor of psychology at the University of Virginia, confirms that there are positive physical and emotional benefits of kindness. When people watching a video of an 11-year-old boy who helps the homeless said they felt a warm glow in the chest, there was a corresponding change in heart rhythms, in a way that has been associated with good health. "Anytime you make an effort to do something good, you may benefit not just the person you help but also those who witness your act. We don't feel elevation from thinking about charity," Haidt emphasizes, "we feel it from seeing someone do something charitable."

Upcoming "Boot Camp" Dates

September 6th - full
October 11th, 9:30-11:30 am
November 15th, 9:30-11:30 am

Call to register, space is limited to 10 people.


In the May 2003 issue of this newsletter, we referred to a "Directive to Physicians" document. Thanks to Tim Nay, Esq., we now know the proper name: "Advance Directive for Health Care." This allows you to appoint a health care representative to direct your health care when you cannot, and allows you to give instructions for health care providers to follow. It is a statutory form in Oregon.

Year to Date Returns

Here are some investment returns for the year through 6/30/03:

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