We talk a lot about planning for retirement and what decisions need to be made prior to doing so to have success.
But today I want to approach retirement decisions from a different perspective. I want to discuss moves we made after we retired that have improved our retirement lives.
As you’ll see, it’s not like you make a series of decisions before you retire and that’s it. Nothing is written in stone. Creating a great retirement is an on-going process and your post-retirement decisions can make your retirement better or worse than planned.
Fortunately we’ve had plenty of good decisions since retiring and I’ll share the top ones with you over the course of a couple posts. (FYI, just to get it out of the way, our worst decision by far was not retiring earlier — but that’s for a different post.)
FYI, I’ll say I/we interchangeably below but my wife and I are a team. I just run the finances and write these articles, so sometimes I’ll say “I”. But we make decisions jointly so this list is our list.
FWIW, some of these may apply to you and others may not. Just want to be sure you understand that I’m not saying these are universal good decisions for everyone, even though they have been for us. Some might be and even the ones that aren’t should give you some food for thought.
Five Categories of Retirement Success
Let’s begin by covering what I consider the five categories of retirement success that I shared in Huge List of Awesome Retirement Activities.
Here’s the summary:
After extensive reading, talking to retirees (in person), interviewing retirees, and living in retirement myself, I have created five categories that I believe make up the best retirement life for most people.
- Health and Fitness — Getting and keeping your body in good and healthy shape.
- Fun — Entertainment and enjoyment and relaxing.
- Work and Work-Like Activities — Work itself or activities that resemble work in form and function.
- Social Interaction — Regular connection with others.
- Mental Stimulation — Keeping our minds engaged and sharp.
I mention these because, as you’ll see, many of the decisions I’ve made make one of these five better. And the more of these categories you have firing on all cylinders, the better your retirement is bound to be.
BTW, these five categories cover the “life” side of retirement. The other side is (obviously) the financial side. I’ll include money-related decision in the list below as well.
With that said, here’s my list in no particular order…
Larger Focus on Income
When I retired, I would say we were at or close to FAT Fire (which seems to have a fluid definition depending on what you read) with a decent level of our retirement expenses covered by income and substantial assets to liquidate over time.
But soon after I retired we moved quickly to more of an income-focused retirement (with no need for asset withdrawal) where all of our expenses (and more) were covered by multiple sources of income. These days we generate roughly twice our annual expenses in income.
As I noted in Do Not Panic: Thoughts on Dealing with a Falling Market, High Inflation, Rising Interest Rates, and Other Financial Perils, this has been an especially good move in light of the economy the past year or so. It has turned what could be a stressful time into a “I’m not worried at all” time. And for the record, I haven’t been worried since I retired (except for the first few days when I thought the world would implode because I wasn’t working. Hahaha.)
This decision has also allowed my assets (mostly index funds) to appreciate to the point where my net worth is now almost double what it was when I retired (it was over double at one point.) That’s been very nice as well.
Again, as I noted in “Do Not Panic”:
Income is very, very nice when everything is going to pot (especially in retirement).
I get flack now and then when I suggest real estate syndications, dividend funds, etc. as someone will comment that “index funds are just as good for income — all you need to do is invest in them and sell when you need income.”
Well, that’s a great theory and works well when markets are going up, but the story is a lot different when the market is falling. For example, my dividend stocks lost a lot of value (they were up and down like everything else) in 2022, but they did not stopped paying dividends. As long as the income keeps flowing, the underlying asset value is immaterial since I don’t want to sell anyway.
Same thing with real estate (though probably better since rents are increasing). If your real estate is cash flowing, the value of that real estate doesn’t matter as long as you don’t need to sell. The income just keeps coming in.
I don’t have to worry about selling more shares in a down market, wonder if my source of funds will drop beyond its ability to provide what I need, and so on. So, having a solid income, in good times and (especially) in bad times, gives you an amazing peace of mind.
I’m not saying that dividend funds or real estate are better than index funds — any solid investment can be “better” than any other based on the circumstance. Personally, my point of view is that they work best together — helping you invest for both growth and income while also giving you diversity.
But…the income portion is very nice and handy when the market is in turmoil and/or dropping. That’s why I’ve been saying that I favor an income and asset withdrawal plan for retirement to a simply asset withdrawal plan alone. It’s just a softer landing in many cases (including when negative events occur) and income covers many, many issues.
Of course, you can lose income streams too. That’s why you want multiple streams of income. The more the streams and the larger they are, the better.
I’ll cover some of the specific moves I made to increase income in other points below, but for now I’d like to emphasize my move into dividend stocks.
Getting involved with dividend stocks was a combination of something I had been studying for many years and a big market drop (at the start of Covid). Many of the Millionaire Money Mentors are also dividend investors, so I took what I learned from them, saw an opportunity when the market plunged, and made the leap.
Since then the stocks have performed quite well on a total return basis (after a year they were doing better than my index funds — I haven’t looked since then but my guess is that they are still a bit ahead.)
Now and then someone will make a comment about buying dividend funds versus individual stocks.
For example, one person made the following comment on a dividend post:
Of course you can buy ETF’s like VIG and still collect dividends.
To which I responded:
Of course…especially if you are looking for very low levels of dividends.
Here’s Vanguard’s page for VIG.
The yield as I write this is 1.77%. Yikes!!!
VTSAX (stock index fund) is here.
It has a yield as of today of 1.38%. The “dividend fund” is barely better than that!
At the time of purchase, my dividend stocks were yielding 5.5%.
Let’s be clear: there’s a big difference between getting “any” dividends and a good level of dividends/income.
By buying dividend stocks I added a set of securities that churned off a good level of income AND grew in value. And even if they lose value at some point, as long as they still pay their dividends, I’m good with that.
And if it makes you feel better, you can look at these as an “enhanced bond” portion of your portfolio. Personally I dislike bonds, especially when interest rates are on the rise. So I don’t own any and haven’t for at least a decade. But these dividend stocks are like bonds and still grow, so if that helps you find a place for them in your portfolio, good for you. 😉
Exercising Much More
I have always exercised some, but not enough as I should have because work, family, and simply fatigue (probably stress-related) took up much of my time and energy.
That said, I did bike for many years in Michigan then switched to swimming as my main form of exercise — so it’s not like I was a slug.
But once we moved to Colorado, I joined my current gym and started working with a trainer.
That was good and my fitness improved quite a bit, but when I retired I went from good to great as follows:
- Spent more time with the trainer getting more routines/feedback
- Allocated more time to both weight and cardio training — I do each three times a week for six total days and spend 30-60 minutes on each depending on what I’m doing that day
- Started playing pickleball which adds 8-12 additional hours per week of mild exercise on top of my ramped-up “formal” exercise
- Began walking 20k steps per day as opposed to MAYBE 5k steps per day while working
I also have to mention that I’m eating better as well now that almost all my meals are at home and I’m not tempted by miscellaneous office food or lunches out.
Anyway, the result is that I feel better, sleep better, and simply enjoy life more now even though I’m six years older than I was when I retired. In fact, I would say I’m at or close to the best health of my life despite the fact that I’m as old as I’ve ever been. 😉
And now that we’re spending more time in The Villages each winter, my physical activity gets even more ramped up. I still work out but I play pickleball 5-7 times a week and we actively see the sights around The Villages and central Florida.
It’s all good…
Created Various Side Hustles
If you’ve been reading ESI Money for some time, you’ve seen me focus on a few side hustles (or businesses if you prefer calling them that since I don’t really have anything to be on the “side” of) including:
- ESI Money — I have now been blogging for almost 18 years (and writing on money for years before that). ESI Money is my latest “baby” (here’s my original baby — I don’t have the heart to take it down). It has been way more successful than I ever thought it would be (and I had high hopes) and has really been a retirement blessing in many ways.
- Rockstar Finance — I bought Rockstar Finance, grew it, then sold it for a good amount more than I bought it for. Unfortunately I sold it to someone who talked a great game, but she basically shut it down soon after buying it (which makes absolutely no sense at all), so I wish that had turned out better. I enjoyed my short time running it but the site eventually became more like a job and something I didn’t want to do any longer.
- Millionaire Money Mentors (MMM) — My latest creation which I am loving! I learn so much from the wise people in those forums and have made some great friendships to boot. FWIW, I spend about twice as much time on MMM as I do on ESI Money these days.
In addition to the added income (which is a nice side effect), these efforts challenge my mind (I’m writing posts and learning new things), give me a cause to work for (helping others improve their finances), and provide hours of enjoyment (I am really interested in the topic and enjoy covering it.) Some would even call these side hustles my “passions.” 😉
If you look at the five categories above, these efforts cover four of them: Fun, Work and Work-Like Activities, Social Interaction, and Mental Stimulation. They have really made retirement much better than I could have imagined.
And, FWIW, I have more/different side hustles coming — if I ever get to them! LOL. One downside of not needing extra income is not needing extra income…which greatly dampens your sense of urgency. Hahahaha.
To see the rest of the list, check out The Best Post-Retirement Decisions I Have Made, Part 2.
This is a very powerful statement “my dividend stocks lost a lot of value (they were up and down like everything else) in 2022, but they did not stopped paying dividends. As long as the income keeps flowing, the underlying asset value is immaterial since I don’t want to sell anyway.”
I’m currently reading “How to retire on dividends”, which presents a strategy to achieve upwards of 8% ROI. Meanwhile, I met with my FA who proposed a consolidated investment strategy, providing for both growth(appreciation) and dividends(income) through investing “SMA” funds, such as EARNEST Partners Smid Cap Core Fund. Basically, as I’m to understand, these are “actively managed” funds. The best dividend rate was about 3%, but again, the strategy was both growth and income.
The kicker, blended total load on a $1.5m portfolio…between 1.3% and 1.5% BTW – I always make my FA state the load in DOLLARS too, as it makes everything more real!
Where am I going with this comment? Well, often we hear the phrase, “After you have won the game, quit playing”.
As I think about my portfolio in retirement, while capital appreciation nice, steady rock solid dividends, which can cover annual expenses…sounds like a more solid approach. I’m not suggesting bonds, unless they are muni and come with the tax advantage. Even then, just a small percentage. But, in retirement, I think income takes a front seat.
“But, in retirement, I think income takes a front seat.”
It sure makes those market drops much easier to handle. 😉
Ted J. Rifkin Sr. says
You write occasionally that you get in 20k steps a day or with my gait about 8 miles. Does that include your pickleball steps?
Ted in Phoenix
Iron Sharpens Iron
It’s John. Sam is another site. 😉
20k includes everything — walks, pickleball, grocery shopping, hikes, etc.
Ted Rifkin says
Thanks for the correction.
No, I feel much better about how many regular steps on walking per day!
I’ve gotten so many guys to sign up for your site and appreciate your wisdom very much.
Keep walking!!!! 🙂
Thank you for mentioning the villages. We reached FI recently and are ready to leave the PNW. Scouting trip planned for April.
I’m of similar age and hope to get a lot more outdoor time and activities under my belt, though I’m a big fan of Assassin’s Creed too.
You are neck and neck with Jonathan Goldsmith as The Most Interesting Man in the World. Seriously, you rock at this game of life. I’m very happy with my fitness, weight, family, marriage, financial position, volunteer work, blogging, active hobbies and sports but I still feel like I’m on the bench and you are QB1. But that’s OK, it’s nice to know people you can admire and be inspired by and to have room to grow. You, sir, are a good animal.
Any thoughts on public REITs? To me, they exhibit similar characteristics to dividend stocks whereas they also have fairly high yields.
Some advocate using them. Personally they fit in my “real estate” mindset and I already have that bucket covered with syndications. 😉