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Rule 6: Turn Your Monthly Bills into Income for Life

Asset based long-term care insurance as an alternative to traditional long-term care policies

Below is an excerpt from the book Downsize Sooner than Later – 18 Rules for Retirement Success available on Amazon.com.

In this rule, we discuss the first of the two baskets introduced in the last rule and how to create a sustainable retirement income for life.

What ultimately devastates those who run low on funds in retirement is the burden of paying ongoing bills.

This means covering the cost of things like housing, healthcare, insurance, transportation, groceries, and utilities, etc. Running out of income in late senior age is like running out of air. This is because there is very little a person can do to fix the problem. It is likely too late to dust off a resume, and even if you did, would you have enough years left to rebuild your financial well-being? Further, would you have the physical and mental horsepower to become substantially employable again? Would your spouse have such an ability?

Almost 2,000 years ago, the Roman Emperor Marcus Aurelius wrote, “The impediment to action advances action. What stands in the way becomes the way.” It is my belief when it comes to retirement, the same sentiment is true.

The first step to overcoming the worry of running out of income to pay bills in retirement begins with accepting the fact that you will always have bills to pay. The second step is realizing that, just as when you were younger, the best remedy for paying your bills is an ongoing and steady paycheck.

This leads us to the critical question: “What is the most cost-effective and sustainable way to establish a lifetime paycheck in retirement?”

The financial industry offers several possible solutions for deriving retirement income. Nearly all are “portfolio-based” in nature. As discussed in the last rule, this means core funds necessary for future income remain invested and exposed to risk over time. Popular portfolio-based income schemes include a mix of stocks and bonds for income, dividend investing, and the “4%” rule. After a review of a variety of these options, I have come to believe the safest, easiest, and most reliable way to create sustainable retirement income, especially for those who are in better-than-average health, is “pooled income.”

What is Pooled Income?

While this term may sound new to you at first, I can predict that you are already familiar with the concept, just under other names. Pooled income has existed in various forms for thousands of years – well before our modern stock and bond markets were ever conceived. It is the foundation upon which retirement income systems such as Social Security, pension plans, and fixed-rate income annuities function.

Structures vary, but in its essential form, participants contribute funds to a collective “pool.”

• Either immediately or later in life, participants withdraw income from the pool based on amount contributed, age, and life expectancy.
• Income from the pool is promised for life, regardless of how long a person lives.
• In exchange for this promise, there is generally no – or very limited – inheritance provisions for heirs. However, income provisions for surviving spouses are common.
• As individuals in the pool pass away – some earlier, some later – unused funds stay in the pool to support income for those who continue to live.

To assure proper function of the pool, funding levels and reserves are determined by precise actuarial formulas. Depending on the pool – and especially for insurance company annuities – funds are subject to strict government regulation and oversight.

Due to its underlying structure, pooled income generally provides more immediate income per dollar allocated, when compared to other similar sources (such as intermediate and long-term bonds). And, uniquely, it can guarantee an income for the lifetime of the participant.

It is likely you already have at least some pooled income with your name on it. This is from either having been sufficiently employed, as a spouse, or as a beneficiary of some kind.

Doing the Math

At this point, we can begin to bring together some of the ideas previously discussed with a simple assignment.

1. Make a list of your anticipated monthly expenses in retirement and add them together.
2. Make a list of the anticipated monthly pooled income you will receive from Social Security, pension plan income, and any annuities and add them together.
3. Subtract your expenses from your income.

Need help? Click here for a FREE retirement income planning worksheet. 

If your pooled income exceeds your total expenses, you have a surplus. Congratulations! You are well on your way to achieving retirement security and success.

If your pooled income is lower than your expenses, you have an income “gap” or deficit.

With an income gap, every month, for an unknown amount of time – potentially decades – you will have to break into your nest egg to pay bills or find some other way to make ends meet. If you pass away first, your surviving spouse will need to keep doing the same to keep his or her head above water.

Returning to the earlier analogy of setting off on a journey with holes in your boat, because certain bills never stop coming regardless of age, every month you will have to bail the excess water in order to stay afloat. This may not seem significant in the short-term, but can you imagine doing so for 20, 25, or 30 years or more?

If constantly feeding your income gap causes you to deplete your funds, it will likely deliver its hardest blow near the end of your journey – in late age. This is a time when you will be least able to protect yourself or your spouse from the resulting consequences.

Closing Your Income Gap

Imagine you discover that at age 70, you still need an additional $15,000 per year in income to cover your basic monthly bills. Mortality tables show your life expectancy to be roughly 15 more years. Let’s say you have $200,000 available to solve for your income needs. Which of the following options for solving your income gap would you choose?*

1. Put the money in a savings or checking account and withdraw what you need each year. At the end of 15 years, you get the income you need plus a little interest. You have total control. If you die early, your heirs get the remaining balance in your account. But, if you continue to live once the 15 years are up, in just three and a half more years, your funds will be depleted.

2. Invest the money. Use any portfolio-based approach you wish – mutual funds, individual holdings, dividend stocks, bond funds, a mix of all of these, etc. – and withdraw the income you need each year. The funds you don’t currently use for income stay invested. Maybe they boom, maybe they bust. Maybe a little of both. At the end of the 15-year ride, you either come out even, have a windfall, or fall short. No one knows for sure. Live longer than 15 years? Who can say where you’ll be? All bets are off.

3. Purchase a simple, fixed-rate immediate life annuity from a large, highly rated, insurance company. Perhaps choose an insurer old enough to have survived both World Wars, the Korean Conflict, the Vietnam War, the Gulf and Middle Eastern Wars and all the market corrections, depressions, recessions, and crashes over the last 100+ years. The annuity pays you the income you need every year. If you die early, your heirs may get little or none of the funds in return. But if you live 20, 25, 30 years, or more, even into your 100s, the $15,000 per year will continue to be paid to you regardless, effectively ensuring you income for the rest of your life.

Before you decide, a few additional facts to keep in mind:

1. Certain bills never stop coming, regardless of age.
2. No one knows for sure how long he or she will live.
3. Projected mortality is only an average. Half will live longer.
4. The long-term trend for those reaching retirement age is toward higher life-expectancy.

So, which would you choose?

One person I met who ran out of funds for income later in retirement told me she was unaware of the details behind option three altogether. At first, she told me she would “never buy an annuity.” Later, coming to understand what the security of a guaranteed income for life would mean for her peace of mind and security, she said, “I didn’t even know you could do this.”

That same person told me I should spend the rest of my career helping people secure their incomes in the same way that had been so helpful to her. I think about her words often, and it is because of her that I decided to write this blog.

Before our discussions together, I’m not sure what she thought or had been persuaded to believe a life income annuity was – a scam, a rip-off, a poor-performing, high-cost investment, a “Ponzi” scheme – but once explained in its proper capacity, a highly-regulated, safe, and time-tested way to insure income for life, she was a changed person. No longer comparing apples to oranges between investments and insurance, she realized that if she had pursued such an option years earlier, she would not be facing the difficult circumstances she found herself in now.

Even for a person with millions, carving out the $200,000 with the annuity in the above example to solve the $15,000 basic income need still makes sense. For a rich person, this is leverage. Why spend $200,000 of your own money on inevitable bills when you can transfer the long-term risk of your expenses to an insurance company? Especially since you are going to spend the money anyway and money spent on paying bills cannot be left to heirs. What’s more, if you live longer, the insurance company picks up the tab for life. For those in senior age, no other retirement income construct offers such a unique and powerful benefit.

Key Terms to Understand

I have tried to avoid financial jargon in the rules, but I think it is OK to introduce a few terms here. Given you have made it this far, you are ready. The following are terms economists use when discussing the inner workings of pooled income devices:

• A mortality credit is money left in the “pool” of a pooled income system by those who die early. This is where the funds come from, in part, to keep paying income for life to the remaining survivors.
• Longevity risk is the risk of running out of money because of living too long (i.e. ruin).
• Longevity yield is the rate of return generated by those who end up living longer.

Economist Moshe Milevsky, PhD. writes regarding the payouts of life income annuities to people living to older ages:

“…to replicate this enhanced yield by using conventional traded instruments (e.g. regular bonds) is virtually impossible. Moreover, for people at older ages, the implied longevity yield is almost impossible to beat.” (Life Annuities: An Optimal Product for Retirement Income, CFA Institute, 2013., pp 113.)

This quote points to the fact that for those who live longer, what they get back from owning the income annuity is an exceedingly favorable return. The same can be said for other pooled income constructs. I include this quote not to appeal to greed, but to highlight that protecting basic income security does not mean you must first agree to a bad deal. In fact, for those who end up living longer, quite the contrary.

At stake, however, is not the inclusion or lack thereof of a windfall. Aspirations for growth, compounding profits, and gains should be left to separate funds – which we will discuss regarding the “wealth basket” in the next rule. At issue here is solving for longevity risk, which is the risk of living too long and running out of income later in life.

To focus the point further, consider the following scenario:

Joey and Albert were the same age. Neither were ever married. Both worked in the same job. Both earned the same income. And both retired at age 70.

Joey and Albert contributed equally to ______. (Plug in interchangeably: Social Security, company pension, simple fixed-rate income annuity).

When they retired, both were given in exchange for their contributions the same size monthly check, and the promise that their monthly checks would continue for life.

Joey died five years later at the age of 75.

Albert lived for thirty more years and finally passed away at the ripe old age of 100.

Which of the two got the better deal?

Superficially, Albert appears to have had the upper hand. Look at all the extra income he received because he lived so long! But, the receipt of this income was indiscernible in advance because neither Joey nor Albert knew how long he was going to live. In reality, they both received the same deal. This is because, in exchange for their equal contributions, they both received the equal promise of income for life.

If you and I pay premiums for homeowners insurance, but only my house burns down, does that mean you should lose sleep thinking that somehow you got a bad deal? No. We both paid premiums to cover an identical and unpredictable future risk. By spreading the risk prudently, everyone receives an equal assurance of protection.

When does an income annuity not make sense?

There are always exceptions to any rule, but here are at least a few reasons – or sets of circumstances in which – either delaying or adding to an individual’s pooled income sources may not be the best solution.

If you have significantly impaired health, it may not make sense to delay the start of a pooled income benefit such as Social Security. If you only have a few years left to live, you may want to begin income payments earlier so that you will receive at least some income.

But even here, it depends. Say you are the major breadwinner in your family but are in deeply troubled health at age 68. If you don’t need the Social Security benefit now, it may make sense to attempt to delay it to age 70 to maximize the benefits for your surviving spouse.

In the case of an individual with significantly impaired health, purchasing a supplemental income annuity from an insurance company would rarely, if ever, make sense. An exception might be the purchase of a hybrid long-term care annuity, assuming he or she can qualify. Such annuities can be structured with a “rider” or policy endorsement to help cover long-term care expenses. If care ends up not being needed and the contract is never turned into an income stream, the unused principal and interest can be left to beneficiaries. For those who qualify, this is a unique and currently tax-favored way to cover long-term care risk and “get your premiums back” if you don’t end up needing the care – more on this in a later rule.

As stated earlier, for most people, it is exceedingly difficult to anticipate one’s mortality with regard to planning. I have seen some people who thought they were in bad health end up living a long time. I have also seen those who appeared to be in excellent health pass away early.

Ironically, some individuals with certain chronic health concerns often gain an unanticipated advantage that works in their favor. If their conditions are not immediately life threatening but require ongoing monitoring through regular visits to a healthcare practitioner, it can be life prolonging.

Take, for example, a man who occasionally sees a doctor to renew a prescription for erectile dysfunction drugs. At such visits, he will usually receive a routine health screen – heart rate, blood pressure, urinalysis, general wellness check, etc. Sometimes, these built-in screenings flag more serious issues that need attention. Does your dentist take your blood pressure? Do you wear glasses and regularly see an optometrist? Do you need minor surgery requiring pre-operative screening? All these instances provide hidden opportunities to bolster overall longevity.

Other times not to purchase an income annuity.

As mentioned above, individuals with serious health concerns should avoid purchasing income annuities and may be better off preserving their short-term capital. It is  possible that some individuals in excellent health should also steer clear of supplemental income annuities.

No one should buy an annuity if it would consume all or nearly all their liquid or nest egg funds. “Experts” will tell you that at least some funds should be kept aside for short-term cash needs and emergencies. Usually, they recommend emergency funds equaling three to six months of income or, in some cases, even a year’s worth.

I find this advice helpful, but I don’t think it goes far enough. In my opinion, a person must have at least two indispensable elements in place before purchasing a supplemental income annuity. These are:

1. A sufficient liquid emergency fund (at least six months to a year).
2. A sufficient wealth fund.

A “wealth fund” is money you set aside to invest undisturbed for the future. It is money that even after retirement, you do not touch or use to pay ongoing bills. It is money that stays invested and benefits from the power of compounding. In time, this money helps protect you from inflation risk, helps establish legacy, and provides you with an added layer of security in older age.

But what if you feel you haven’t saved enough in the first place?

Many who read this may feel they haven’t saved as well as they might have wished for retirement.

To you, I say, take comfort!

The feeling of wishing you had saved more is common. Asking people if they believe they have saved enough for retirement is like asking people if they think they could be in better shape or exercise more often. Most people say they could on both counts.

If you really feel you are behind, you should first focus on reducing your expenses (see Rules 2, 3, and 4) and optimizing your current pooled income – especially from sources like Social Security. If you still experience a shortfall, you may wish to continue working at least part-time. Do not view this as a defeat! As we will discuss in later rules, the virtues of staying economically productive extend even to those who are wealthy.

If you must continue to work, try to begin setting aside savings to begin building or rebuilding your nest egg as soon as possible. This is crucial! Setting aside savings for growth is important at all ages.

This critical topic is the subject of our next rule.

Questions or comments? 

I can be reached at this link – contact Ted Stevenot.

*Estimated rates were determined at the time of original writing in mid-2019.

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Rule 7: Plant a Money Tree

Below is an excerpt from the book Downsize Sooner than Later – 18 Rules for Retirement Success available on Amazon.com.

If you have done all the things discussed leading up to this rule, you will be in a unique position.

Accepting you will always have bills to pay (Rule 1) dispels any illusion that someday life gets “paid off”. It doesn’t. You may pay off a house or a car or other similar artifact but relentlessly, as the sun rises each morning, the bills keep coming.

So, what’s a person to do?

Walk away from the status quo.

Analyze your life and choose to live deliberately (Rules 2, 3, and 4). Define what matters most and set your sights on it. Clean up and remove costly mental, emotional, and financial clutter from your life. Doing so opens the door to more focused living and frees up space for the things that matter most. Such restructuring also gives you better control of your expenses.

From there, because no one knows how long he or she will live, arrange your affairs so that your most important ongoing bills will be paid with guaranteed income from pooled income sources (Rules 5 and 6). In this way, your fundamental security is protected regardless of how long you live and regardless of what happens in the investment markets.

After all this, then what? Once your core financial security is established, the next objective is growth. Consider the following metaphor that illustrates the power and importance of growth.

The Mighty Oak

People love oak trees. There’s nothing quite like a big sturdy oak in your yard. In the summer, it offers shade; in the fall, its leaves turn to beautiful colors. Oaks are robust, long-lived, and can bestow natural beauty for a lifetime.

If you planted an oak sapling today, how tall do you think it would grow in 25 years?

Assuming you take reasonable care of it – including not cutting it down, pulling it up by its roots, or carelessly trampling it over – it should grow roughly 80 feet tall with a trunk well in excess of two feet in diameter. By anyone’s estimation, a formidable tree.

By following the rules presented earlier in this book, your ability to increase your sense of financial wellbeing and grow your wealth can be just like growing that oak tree.

As mentioned earlier, after attacking your expenses, nest egg funds are separated into two parts. The first part, as discussed in the last rule, is used to solve for lifetime income. The second part is set aside as an investment and wealth fund. Your wealth fund, which henceforth, we’ll call a “money tree,” is planted just like the oak in our example above and left to grow.

Planting the sapling of a money tree at age 65 – 70 and leaving it to grow can allow your wealth to increase substantially even during your senior years.

But this means not recklessly cutting off its branches to pay monthly bills or tearing it up to “trade” for other trees in the hope of promoting faster growth or pulling it out of the ground in fear of future storms.

Left undisturbed, a money tree can be there for you and your spouse in later age:

    • A mature money tree offers protection from inflation. How? By your mid-to-upper-80s, money tree funds will have been positioned to benefit from decades of compounded growth. If you need to boost your income to offset rising prices, liquidating a small portion of funds from your money tree offers a solution. Where suitable, this can be used to purchase supplemental income in the form of a fixed life income annuity. As a bonus, such annuities are less expensive to purchase at older ages.
    • A money tree offers funds for legacy. This is money to leave to children and grandchildren, for education, for charity, and for cherished causes.
    • A money tree offers increased independence, dignity, and peace of mind in later age.
    • A money tree provides the opportunity to grow financially throughout your senior years. As a result, the psychological benefits it bestows are far reaching. Simply knowing that regardless of your age, you remain positioned to accumulate value and grow in wealth will make you feel more confident and secure.

The reality is, you have been working to grow your whole life. This includes growth in knowledge, wisdom, experiences, relationships – and yes, in finances. Just because you retire doesn’t mean this has to stop. If, with relative ease, you could maintain – or even increase – your capacity to grow financially into your late senior years, wouldn’t you want to?

If your answer is yes, the easiest and most reliable way to continue financial growth throughout retirement is to plant and grow a money tree.

How to Plant a Money Tree

The first step to planting a money tree is finding the “sapling” or the initial funds you’ll need for it. Here are a few possibilities:

1. IRA-based/pre-tax funds. It may be possible for you to sequester some portion of your IRA nest egg and allow it to grow. Complicating this are the required minimum distributions or “RMDs” from such accounts, as well as tax implications relating to IRAs that are left for inheritance or legacy. Depending on your circumstances, IRA funds may be better suited for focusing on income planning. Immediate fixed life annuities purchased to provide income with pre-tax IRA dollars are known as “qualified” annuities.
2. Non-IRA/taxable funds. These are dollars outside of an IRA or other pre-tax retirement vehicle. Taxable funds, when invested, generally incur ongoing tax liability due to interest, dividends, realized gains, and/or as a result of internal rebalancing of holdings. However, when structured properly, such expenses can be minimized. Sources for taxable funds may be personal non-IRA savings, severance funds, after-tax proceeds from the sale of a home, property, or business, received life insurance death benefits, and after-tax inherited funds.
3. Future income. If you stay economically productive during retirement – even on a part-time basis – this can be a great way to fund a money tree. For those who have not been able to save as they wished throughout their working years, this may be their primary option. Others may want to “split” the money they continue to earn between funding a money tree and paying for extra expenses, such as travel and recreation.

In my opinion, options 2 and 3 above are the best candidates for funding a money tree. I challenge you to find non-IRA funds to “plant.”* Such funds can be left to grow with minimal disruption and complication. Consider, as well, that while most wealthy people do have IRAs, the lion’s share of what actually makes them wealthy is generally held in other places.

Once you have decided on the funds that make the most sense for funding your money tree, the next consideration is where to plant it.

Countless books have been written about investing, but I’ll keep it extremely simple: For most people, investing money tree funds in “low-cost, broad-market stock index mutual funds” will offer the easiest and most cost-effective option.

    • A broad-market stock index fund is a fund that holds investments mirroring a large segment of the overall stock market. Participating stocks are generally determined by an independent index, such as the S&P 500Ⓡ, Russell 2000Ⓡ, Wilshire 5000Ⓡ, etc.
    • Index investments are available through fund companies like Vanguard, Inc., Charles Schwab, Inc. and Fidelity, Inc. or as stock exchange traded shares called ETFs (i.e. “exchange traded funds”). Two examples of broad-market stock index ETFs are “VOO,” which represents Vanguard’s S&P 500Ⓡ Index Fund and “VTI,” which represents Vanguard’s Total Market Index Fund.
    • Owning such investments does not require expensive management fees or high brokerage commission costs. Fund shares can be purchased and held either directly through a fund provider or as ETF shares through a reputable online broker such as E*TRADE, Inc., TD Ameritrade, Inc., Charles Schwab, Inc., etc.

Disclosure! I am not paid to mention any of the companies named above and, as of this writing, am personally a satisfied E*TRADE customer. My wife and I also own ETF shares of VTI and VOO, as well as direct index fund shares from Vanguard, Inc.

Broad-market index funds are as close to a “set it and forget it” investment as one can find.

They are low cost, easy to access, and incur minimal fees due to management. They are tax efficient because they experience less frequent trading over time. They are also easy to buy and sell, and they are diversified because they spread investment over a broad array of underlying stocks. If all that weren’t enough, low-cost broad-market index funds also have a strong track record of outperforming more costly “managed” mutual funds with much higher fees.

I once heard a former hedge-fund manager on a podcast say, “The only people who make money in the stock market are people who buy and hold forever.” Assuming this is true, if there were ever an ideal “buy and hold forever” investment instrument, broad-market stock index funds are it.

If you need even more proof on the virtues of index fund investing, take a moment to do a search online of “Warren Buffett quotes on index funds.” This search reveals a deluge of articles on the wholesome goodness of long-term, broad-market index fund investing.

Still, with the stock market, there are no guarantees. With any investment, risk is inevitable. Even in the best case, on its long-term trend toward going up, the market goes both up and down. To protect yourself, you must embrace the right mindset. What do you think the chances are that there will be a major market correction or significant downturn over a multi-decade retirement? It seems sure to happen at least once, if not several times.

When these moments occur, your outlook must be that you are an investor and are in it for the long haul. Would you tear a young tree out of the ground due to the threat of a coming storm? Of course not. To grow to its fullest potential, it must stay in place and fully weather future storms. It may survive; it may not. That is the way of life. One thing we know for sure, though, is that an unplanted or uprooted tree will never grow.

So, accept it and let go. Plant wisely and you can take comfort in knowing you have done the best you could.

Separate Income from Growth

By following the earlier rules, you will have separated your income from your wealth. This means that even if the market goes down, you will still get a check in the mail each month regardless. Your basic security remains intact. You can ride out market peaks and valleys with little or no disruption.

Some advisers will shudder at encouraging the continuance of growth-based investing for seniors. They will exclaim: “How can you suggest such ‘risky’ equity ownership for people at later ages? They may not have time to recover from downturns! They must actively manage! They must reallocate! They must fly to safety!”

Warnings such as these are the continued expression of weakness and anxiety embodied in the portfolio-based retirement income model. Downward pressure on either stocks or bonds are an ever-present danger in the portfolio-based income world. Palatable remedies for resolving such concerns – beyond retreating or cashing out – are few and far between.

The central flaw with the portfolio-based income model is that growth and income are incompatibly mixed.

As a result, increased exposure to stocks to achieve future growth – especially when times get tough – has the synchronous effect of increasing one’s overall risk of ruin. If markets crash, the foundation for future income and security crashes along with them.

These difficulties are made even worse, like pouring fuel on a fire, when you are forced to make income withdrawals from your portfolio to pay bills during times of market stress. Such withdrawals amplify a risk known as “Sequence of Returns,” which accelerates the path to catastrophe. 

Far too many retirees find themselves trapped in a portfolio-based income model with no escape when markets are in peril. Monthly bills continue to arrive and must be paid. These bills do not care if the market is up or down. Liquidating assets to pay expenses during a down market makes it more difficult to recover nest egg funds in the future. This is because the more your nest egg shrinks, the higher the returns you will need to get back to normal.

But it doesn’t have to be this way.

If you have ordered your life such that:

    • Your expenses are simplified and under control.
    • Your critical bills are covered by high-quality pooled income.
    • You have a sufficient liquid emergency fund (six months to a year of income in liquid savings).

…you will have built a firm foundation upon which to stand. From such a position, you can afford to put additional funds to work for growth in the form of a money tree which will expose you to far less personal and fundamental risk. It follows that, because you don’t need the funds from your money tree to pay ongoing bills, your investments can weather the ups and downs of future markets without negatively impacting your day-to-day security.

The Secret to Building Wealth

I own a company that invests in commercial real estate. You may be surprised to learn; I have never taken a single dime of spendable income from that business. Investing, reinvesting, and leaving investments to grow undisturbed in this manner, is how people build wealth.

Stated succinctly:

Wealth is created by owning assets that accrue value to you, that you do not simultaneously consume.

Like a snowball rolling down a hill, such investments are free to expand and grow. This is how wealth sparks to life and increases in size over time.

Much has been made in the media about those who have little or no retirement savings and who will be forced by necessity to live on Social Security alone. Implied is that these millions of individuals have lost financial hope and face irrevocably dark and distressing financial futures living on dreaded “fixed incomes.”

To this, I say, “Poppycock!”

For most people – especially Baby Boomers – there is still time to fight!

Given the length of modern retirements, the opportunity to build at least some wealth is open to just about anyone. All things are relative, but even a person with no retirement savings could follow the rules we have discussed so far and still accumulate significant value over time. The key is arranging your affairs such that you can safely invest funds that will be left alone to grow. The surest path to doing so is to control your expenses, cover your ongoing bills with pooled income, and plant a money tree that you do not disturb.

If you will do this, you can build equity and security for yourself and those you love.

Questions or comments? 

I can be reached at this link – contact Ted Stevenot.

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Rule 8: Leave a Trail of Breadcrumbs

Below is an excerpt from the book Downsize Sooner than Later – 18 Rules for Retirement Success available on Amazon.com.

Some days are surreal.

I never imagined that one day, I could go to the mailbox at the end of my driveway to find an envelope containing “updated certified death certificates” for one of my own children. But while writing the material presented on this blog (i.e. now a book on Amazon.com), it happened.

The day the certificates arrived, I knew they were coming – or, at least, I was expecting them. The first set we received from the funeral home had listed the manner of death as “Pending Investigation.” The new version listed manner of death as “Natural.”

In certain circumstances, such as when an otherwise healthy young person dies unexpectedly, the law requires an autopsy be performed to review the cause of death. This makes sense. It is intended to protect the rights of such individuals, and I am grateful for the professionals who stepped up and did their jobs on my son’s behalf.

Up until the Friday morning of October 5, 2018, my wife and I had led a relatively charmed life.

While we had recently experienced the loss of my wife’s father and older brother, these were the first closely related deaths we had seen in many years. But these losses were incomparable to losing our son. Losing John was a major shock. No advance warning. No indication of any serious problem. It still makes no sense and seems impossible. How could this have happened?

When I started writing the material presented here, it was in the summer of 2018, and John knew all about the project. He and I had both been involved in similar writing pursuits in the past and even co-authored a Kindle book together while working in politics. Separately, John wrote his own manuscript on lifestyle design and the benefits of working remotely. I am planning to publish John’s book around the same time the book based on this blog is released.

I love my son John.

Or is it more grammatically correct to write, “I loved my son John?”

I’ll stick with love, as I still feel the same about him as I always have. Not a day goes by that I do not think about him. What a beautiful and exemplary young man! Spirited and strong willed as a youth – at times, he was a handful to raise. But his color and rich vitality helped shape him into the person he ultimately became.

John was a masterwork chiseled from stone. A serious student of life, he was the archetypal “old soul.” Wise and discerning beyond his years, he possessed an inherent appreciation for life and a drive to live fully and do his best. In recent years, I was fortunate to spend many enjoyable days with him, working on various personal and professional projects.

John grew to become one of my closest friends, and I could not be prouder of him.

On the day he died, he was supposed to stop by the house in the early morning to record what would have been the 47th episode of our weekly podcast, Sales Prospecting School. My wife and I had seen him the prior evening, watching him and his girlfriend, Erika, play in a weekly sand volleyball league. One of the team members had to leave early, which allowed my wife to stand in and play a set with John.

Later that night, after texting “Good night!” to Erika, who was staying with her aunt to leave early the next day for an out-of-state wedding, he went online and played Fortnite with his brother Tom, who was then attending Brainstorm Concept Art School in Los Angeles, CA.

When John didn’t show up at our scheduled 7 a.m. time to meet, I thought, no worries.

Something must have come up, or perhaps he overslept. Unusual for him, but possible. A little after 7 a.m., I texted him, “Podcast today?” But there was no reply. A bit later, I texted, “Everything OK?”

Still no reply. I checked the Find My Friends app on my phone, and it indicated he was at home. I checked it again later, after he should have been at work, and it continued to show him at home.

I thought, this can’t be right.

I texted his girlfriend and discovered that she had not heard from him yet that morning either.

After several calls to his phone with no answer, my wife, who happened to be working from home that day, jumped in the car with me to go and see what was happening in person. After picking up keys from his girlfriend’s uncle, we started the drive to his condo.

On the way, we thought it might be a good idea to call the police. So we did, and an officer was dispatched and arrived ahead of us.

The officer banged on the door, but still there was no answer.

When we finally arrived with the keys, the officer and I went in together. I didn’t know what to think or expect. Would he be there? Should I hope he’d be there, after all the non-replies? If he was there, what could account for his lack of response? Any explanation that might result in a favorable outcome was becoming increasingly difficult to conceive.

His dog, Ares, was there and had been barking the whole time. When we opened the door, things looked normal, but there was no sign of John. We walked down the long central hallway toward his bedroom. I will never forget, for as long as I live, turning the corner and looking in the direction of his bed.

There he was.

Subconsciously, I felt a momentary flash of relief. He’s here. That’s supposed to be a good thing, right? But, how can he still be here and in bed? How can he not have woken up or replied to all the texts, phone calls, barking, and door knocking? A few steps more and the officer and I were by his bed.

When your child sleeps peacefully, you know what it looks like. Each kid is different. John used to curl up on his side into a partial fetal position and pull his arms in toward his chest. As a parent, you may not realize you know what your child looks like in this peaceful state, but you know it intuitively. Here was John. No sign of distress. His phone by his side. Looking completely normal. Blanket up to his shoulders. Partially curled up. Just how he always looked when peacefully and restfully asleep.

I reached to touch his arm, I guess thinking to check for a pulse. But, instead of a pulse, I felt cool temperature from his skin.

He was gone.

Jan had not come in with the officer and me. It was too much. She was sitting on the steps outside waiting. I had to go out and tell her. When I did, I helped her to her feet, held her in my arms and brought her eyes to mine. I said, “I’m sorry. He’s gone.”

After taking Jan to see John at his bedside, we went through the customary – but wholly unfamiliar to us – procedural routines required by the police in such situations. Once the required preliminaries were worked out, we had to call John’s brother and sister to let them know what had happened.

I guess I’ll stop this story here.

I share the background of what happened to John to set the stage for discussing the circumstances that occurred after his death. John was young, in exemplary physical shape, and seemingly healthier than just about everyone around him. Further, he was 28 years old, unmarried, and had no children.

Eventually, it was discovered that he suffered from an asymptomatic heart condition impacting the interior of his heart, which eventually caused it to stop functioning. The condition proved to be so rare, the county coroner said she had not seen anything like it in 10 years of service.

Given John’s circumstances, people might ask what need would he have for estate planning, a will, powers of attorney, or other similar effects? No wife, no kids, what difference does it make?

How complicated could it be?

You’ll note a common theme recurring with many of the rules presented here that orienting your affairs properly is not so much about you, but about the resulting impact that doing so has on those closest to you. In the case of John’s estate, the gauntlet that was required to be run after he died served to add more pain to an already inconceivably painful situation.

I don’t blame him. Neither he nor I had any idea this was coming, and, as I was in the position of wise parent and steward, it was as much my oversight as anyone’s that his estate issues occurred. Had I pressed John to plan for such a possibility, I am certain he would not have hesitated to do so.

After working with an attorney friend to become appointed as John’s executor, the operative element of picking up the pieces of his estate was an avalanche of calls in which I would repeat:

“My name is Ted Stevenot. My son John Stevenot passed away on October 5, 2018. I am the executor of his estate. I am calling to discuss the details of his account with you and to eventually close it in order to resolve his estate.”

Only to hear: “I’m sorry for your loss. Let me transfer you.” Then I would have to say it again, and again, and again. So many calls, so many transfers, so many times repeating those same lines over and over.

Have a customer service snafu occur after administrative fumbles and multiple calls trying to resolve an issue?

No problem. Say it again.

At one point, I needed the 12-31-2018 ending balance on John’s Roth 401(k) retirement account, but the famous investment company involved was such a tangle of administrative short circuits they could not get past their own internal obstacles to answer me directly.

“We don’t know you.”
“We can’t verify who you are.”
“This account is serviced by a third party.”
“The plan year is through November, so the statement doesn’t show the year end balance.”
“An employer match? That’s not Roth.”
“The statement doesn’t show a breakout of the two?”
“Can we get that?”
“Let me put you on hold.”

And on and on.

Finally, weeks later, after apologizing in advance to the unlucky service representative who happened to answer my call for what he was about to hear, I unloaded. F-bombs, shouting, swearing, threats to obtain court orders, legitimate threats of legal action, etc., etc.

“Let me put you on hold.”

This time, after only a five-minute wait, I finally got the answer that no one had been able or willing to give me for weeks.

There are many more stories like this I could tell, but here is the gist:

    • Even when things are arranged properly, dealing with the legal and administrative follow-up to an estate can be very challenging and emotionally costly for loved ones.
    • Arranging your affairs ahead of time prevents those closest to you from suffering needless additional expense and pain.
    • Because of these and other factors, carefully planning your estate is the right and responsible thing to do.
    • What’s more, having your estate plan put together will give you greater peace of mind.

I am as much a do-it-yourself guy as the next person, but in the estate planning realm, I incline toward getting professional help to be sure you cover all your bases correctly. Depending on your circumstances, there may be an upfront cost of anywhere from a few hundred to a few thousand dollars. The good news is, the cost of pre-planning your estate is generally much less than the cost of sorting things out after the fact.

Ten estate planning items to get in order NOW if you haven’t done so already.

1. Have a will. A will is a document prepared before your death to help manage the distribution of your assets after you die. A will is also important for appointing guardians to provide care for minor children. When someone dies, there is a legal process to distribute assets to heirs and pay debts to creditors. This process is called “probate.” Rules for probate are determined by state laws. The legal authority that enforces those rules is called “probate court.” To be valid, your will must follow the rules of the state in which you reside. If you die without a will, or if there are assets in your estate without designated beneficiaries, the probate court initiates a supervised process for distributing those assets and dealing with disputes. This supervised process is what people mean when they speak of “going through probate.” Having a valid will that specifies where assets should be distributed circumvents much of the hand-holding imposed by the court that occurs in the absence of a will. As a result, having a will generally makes settling your estate easier, less costly, and less emotionally stressful for loved ones.

2. Have a living will. Also sometimes called an “advance directive” or a “directive to physicians,” a living will is a document that expresses your wishes for end-of-life care. This is critical in the event you become unable to communicate those wishes yourself due to an accident or illness. Do you want to be sustained indefinitely by life-supporting machines? Or only supported by machines for a certain period? These can be difficult questions to answer. If you do not make your directives known in advance, you may leave loved ones guessing what you would have wanted during an unimaginably difficult and stressful time.

3. Appoint durable powers of attorney for finances and healthcare. A “power of attorney” is a legal document that gives authority to another person – also called an “agent” – to act on your behalf. Powers of attorney can be created for a single transaction, such as closing a real estate sale, or be comprehensive and allow another person to manage all your financial affairs. A power of attorney is “durable” when it remains in effect even if you become incapacitated and are unable to make decisions on your own. Powers of attorney only apply while a person is living. Once someone dies, the executor of the estate becomes the new authority.

A Durable Power of Attorney for Finances is a legal document that allows you to appoint another person to make financial decisions and administer financial transactions on your behalf. This person should be someone you trust who is proven to be reliable and responsible. Such an individual may pay bills for you, deposit checks, oversee investment accounts, file taxes, and help administer finances.

A Durable Power of Attorney for Healthcare is a legal document that allows you to appoint a person to help manage and make healthcare decisions on your behalf. Unless otherwise limited, a durable healthcare power of attorney has authority to make decisions about things like nutrition, hydration, medications, tests, surgeries, choice of doctors, hospitals, rehabilitation centers, and other elements of care.

Often a single person may be appointed to serve as both the financial and healthcare power of attorney. However, it is generally recommended to establish separate and distinct documents authorizing each of these authorities. This is done to provide greater clarity and offer a buffer of privacy between financial and healthcare-related concerns.

4. Have a folder with your passwords and logins. When John died, one of the added complications we had to face was not knowing his passwords or logins for his phone, email, computers, and other login-based accounts. As I write this, the only password we have been able to guess successfully is the login for his Xbox Live account. We had to spend hundreds of dollars to gain access to his principal computers so we could retrieve and preserve cherished writings and photos from him. At the time of writing, we still do not know the password to his phone or email. John and I worked together for years on digital projects. He knew many of my logins, but sadly, I never learned his. I thought I was respecting his privacy. It turns out, that was a ridiculous thing for a trusted family member to think. To solve this problem, establish a folder to be kept in a safe place for loved ones that includes logins and passwords for things like phones, computers, tablets, bank accounts, email, social media, and other password-protected items. A challenge is keeping the file updated over time, as passwords often change. There are online services that may be able to help manage this information for a small fee. Emerging in the category of digital planning is the “Durable Digital Power of Attorney.” This designation is intended to authorize access and control over person’s digital assets should he or she become incapacitated. See your state’s laws to review what options are available.

5. Properly designate beneficiaries on accounts, especially retirement accounts, IRAs, insurance policies, and trusts. Any account you have that can name a beneficiary – especially life insurance, trusts, IRAs, and retirement accounts – should be updated to reflect the current and appropriate beneficiaries. If you have an old will or trust, one of the most important reasons to keep it updated it is to be sure beneficiary designations are current and correct.

6. Where suitable, designate proper joint-ownership status for bank accounts and titled property. When certain assets are owned “jointly,” it can open the door to transferring the value of those assets to a surviving joint-owner upon death. Bank accounts that are owned jointly often include “rights of survivorship.” This means that when a co-owner dies, the remaining survivor becomes the sole owner of the account. Real estate can sometimes be titled jointly, such that a survivor becomes the owner of the deceased person’s share upon death. Check with the laws in your state and with a qualified legal adviser to determine whether designating joint ownership of certain accounts or assets makes sense for your situation.

7. Write down your final wishes. Over and above legal and financial issues, there are many additional questions that arise when someone dies. Any answers you can provide to such questions in advance means loved ones won’t be forced to guess what you want while they are already under stress. For example, do you want to be buried or cremated? If you wish to be cremated, what do you want done with your ashes? Would you prefer a formal church-based funeral or an informal “celebration of life”? Is there a funeral home you can recommend, so loved ones won’t have to scramble at the last minute to find one? Is there music you’d like played or pictures you’d like shown at your memorial service? While no one can anticipate every detail, any answers you provide to such questions in advance helps make things easier.

8. Consider a final-expense life insurance. Conventional wisdom for many decades has been to “buy term and invest the difference.” This idea became popular about the same time companies began to transition from lifetime pensions to personally directed retirement savings plans like the 401(k). The long-term viability of owning only term life insurance has become clouded by the modern reality of millions working and living much longer. The result is that a substantial population are entering their senior years with no life insurance in force. Hindsight is 20/20, but perhaps better advice would have been to buy “mostly” term and invest the difference. Though not as catchy, it would have encouraged individuals to secure at least some permanent life insurance to help protect themselves over the long-term. Today, one of the fastest growing segments of the insurance market is final-expense life insurance. Such policies have lower face amounts, offer affordability, and are generally easier for which to qualify. Even if you have a sizable estate, an extra $25,000 – $250,000 arriving soon after you pass away extends a simple kindness to loved ones.

9. Write your own obituary. This may seem a bit of a stretch to consider, but experience guides me to suggest it. When John died, one of the hardest things my wife and I had to do was write his obituary. It had to be completed within days after his death, while our ears were still ringing from the shock. It was also resentfully expensive. If you didn’t know it, obituaries published in local papers or online news sites generally aren’t free. John’s cost over $700, though it was only a few paragraphs long. If he had written something in advance, would it have really helped? Maybe. Maybe not. It could have at least given us a guideline. Many life planners suggest writing your own obituary as an exercise to help focus the overall direction of your life. It’s something to consider at least. If you do write one, include it in the folder with the rest of the documents we have discussed, so loved ones can find it when needed.

10. Don’t put it off. Don’t want to be a burden? Don’t want to leave a hot mess behind when you go? Don’t want the people who care about you to experience needless additional cost and suffering because you failed to plan? Then get the above list together NOW! The longer you wait, the harder it gets. Don’t wait until you become less capable of making decisions before putting your affairs in order. Waiting too long and failing to act forces others to meet what is your responsibility. Is this how you want to be remembered? Is this how you want to treat the people who love you the most? Because you’ve read the above, you can no longer say you didn’t know. Even if it costs some professional fees to cross the t’s and dot the i’s, so the hell what? Get it done.

Questions or comments? 

I can be reached at this link – contact Ted Stevenot.

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Rule 9: Get Your Insurance Premiums Back

Below is an excerpt from the book Downsize Sooner than Later – 18 Rules for Retirement Success available on Amazon.com.

One of the biggest risks to security in retirement is the cost of healthcare. Much has been said about this in the media, and projections for the future look daunting. The issue is compounded by the fact that by 2030, roughly one in five Americans will be of senior age. It follows that a surge of demand for healthcare is coming, and the cost to cover these services will be unparalleled.

There are two major categories of healthcare expenses that stand out as serious concerns for seniors. These are “health insurance” and “long-term care.”

    • Health insurance. Health insurance for seniors in the United States is called Medicare. It can be accessed in a variety of ways. Premiums for certain components of Medicare may vary, based on income. For those below certain income levels, states administer a program called Medicaid to provide additional help. An essential resource to learn about health insurance options for seniors is the medicare.gov website. Everyone approaching the age of 65 would benefit from downloading and reading the booklet, Medicare & You. This free resource outlines the basics of how Medicare works, important deadlines for signing up, and how to find help with questions on a state and federal level.
    • Long-term care. Long-term care expenses are costs associated with extended care that are generally not covered by health insurance. Many people hear the words “long-term care” and mistakenly think “nursing home” insurance, but the issue is much further reaching. Examples of long-term care expenses over and above nursing home care include costs associated with assisted living, home care, adult day care, respite care, and Alzheimer’s care. Other related costs include paying for modifications to a home, in home help, custodial services, housekeeping services, therapist visits, private nursing care services, and more.


The ins and outs of Medicare are beyond the scope of this book. Given that there can be penalties for failing to sign up by certain times or under certain circumstances, it is a good idea to visit the medicare.gov website and get to know the basics. Sometimes insurers or other organizations offer Medicare “educational events,” which provide free information about Medicare. Such events are helpful, and, by law, no one is permitted to try to sell you anything at a Medicare educational event.

The issue of long-term care is a separate concern.

Long-term care is a modern-era problem and the unintended consequence of the evolution of societal structures, as well as ongoing improvements in healthcare.

In the past, families often lived their entire lives in the same region of the country. In many instances, extended families even lived together in the same household. When an individual became old or infirm, the family took responsibility for providing needed care. Family-based care, as this is known, was more viable in the past because healthcare was less costly and more limited in scope. Together with this reality, people didn’t live as long, and they did not survive with many of the chronic conditions with which they can survive today.

In modern times, families are more geographically spread out and, in many ways, life has become more complicated. Frequently, in households of adult children, both spouses work and have children of their own to raise. Such demands make the logistics of reliable family-based care more difficult.

The overall cost of providing extended care has also increased dramatically. It used to be that spending hundreds of thousands of dollars caring for an elderly individual wasn’t possible. But those days are gone. It is a wonder and a blessing that people can live longer and more comfortably through many heretofore debilitating health concerns, but doing so comes with a price.

One solution to help defray the costs associated with long-term or “extended” care is insurance.

But there are several challenges with insuring this risk.

A few examples include:

    • Because long-term care expenses can be considerable and have a higher probability to manifest, premiums for long-term care insurance can be costly.
    • You can’t wait until you are already sick and in need of care to purchase long-term care insurance. Individual policies are medically underwritten and must be put in place before debilitating conditions occur.
    • Buying long-term care insurance requires the ability to anticipate far in advance of ever needing benefits. Many people – especially men – feel invincible and avoid such planning, believing, “It won’t happen to me!” Such feelings align well with human nature and survival instincts but are unreliable as a basis for predicting the future need for extended care.
    • A person buying long-term care insurance in their 50s may pay premiums for 30 years or more before ever seeing a benefit. This is a very long haul, and many are tempted to throw in the towel along the way.
    • Some end up shouldering the burden of costly long-term care insurance premiums through the whole of their senior years without ever needing to file a claim.

The good news is there are ways to protect yourself from the risk of extended care and avoid at least some of the above pitfalls. It may even be possible under certain circumstances to “get your premiums back” if you don’t end up needing care.

Before diving into the “how to’s,” one more important point.

The Hidden “Why” for Long-term Care Planning

You’ll note in our discussions of issues ranging from downsizing, to finances, to estate-related concerns, how often the question of planning – or failing to plan – results in a direct impact on the continued wellbeing of the surviving spouse after the first spouse is gone. The reality about extended care planning is similar. It turns out, people who get sick and need extended care generally end up getting the care they need, one way or another. The real concern is, as after a hurricane, the damage that providing such care leaves in its wake.

Take a moment and answer this question:

“Of course, it could never happen to you…but in the unlikely event you can no longer care for yourself, who in your life would be the first to drop everything to make sure that you receive the care you need?”

Well, who would it be? Your spouse? A partner? A sibling? A child? A lifelong friend? Name this person and call the image of him or her to mind.

Whoever the person is, he or she has the most to lose.

This individual – or sometimes, a combination of individuals – clearly cares about you deeply. But without an advance plan for the possibility of extended care, he or she will be the one boxed into figuring out what to do for you – essentially, shouldering a responsibility you have decided to look past or avoid. What’s more, as in many other areas we have discussed, he or she will be forced to deal with these issues under enormous stress, in the face of great cost, and with little time to lose.

You may try to tell this person, “Wait! Don’t do it. Leave me alone. Keep living your life. Don’t feel responsible for taking care of me!” It is wishful thinking to imagine that someone so close to you would abide by such words.

I once spoke to a multi-millionaire who had two adult daughters. In his late 60’s, he lived alone in a high-rise luxury condo. When I asked him about planning for long-term care – an issue he could have easily resolved in about 60 minutes and with a check he wouldn’t even miss – he said, “They can just push me off the balcony.”

As far as I know, that was the extent of his planning. The abdication of his responsibility to formulate a plan places the burden squarely on the shoulders of his daughters, who are living their own lives and surely have their own problems to worry about. If and when extended care is needed, solving for it will be necessarily more reactive, stressful, costly, and emotionally painful – especially for them.

In terms of my own planning, I know my wife would step up, but I also have a daughter who would insist I got the care I needed. When I think about it, the thought of my daughter’s involvement really stands out. I know her. She is a determined individual. Regardless of the personal cost, she would chew through a wall to be sure I was cared for. Denying this fact and the resulting consequences doesn’t help her or my wife. In truth, it only puts them at greater risk.

Consider the following progression of dealing with an extended care event:

    • As a long-term illness or extended impairment unfolds, the level of care required gradually increases. Sometimes it happens quickly, sometimes almost imperceptibly. If you have a surviving spouse, the weight will generally fall first on his or her shoulders.
    • Most spouses are not professional caregivers. Even if they were, a buffer is optimal for emotional and physical protection. This is why surgeons don’t generally operate on family members.
    • Without such a buffer, harmful consequences begin to arise. The physical and psychological stress of observing the slow degradation of the health of a partner, in the midst of increasing demands to provide round-the-clock care, compound. This often leads to unrecoverable damage. For example, a spouse attempts to lift a suffering partner for toileting and suffers a herniated disc of his or her own.
    • Frequently, in families with children, one or more of the children will attempt to step in to assist the struggling spouse, in the exhausting effort of providing ongoing care.
    • Because the need for care can be constant – every day, all day, and even through the night – meeting the demand for care requires great allocations of time and energy.
    • A child forced to step in to help carry the weight can experience fallout, affecting his or her relationships with spouse and children, relationships with friends, career, personal pursuits, avocations, individual health, involvement in the community, and more.
    • Frequently, the extensive financial drain for funding extended care leads to encroachment on nest egg funds earmarked for other purposes, such as future income. This can significantly threaten the financial security of a surviving spouse and extinguish any hope of legacy for heirs.

The key to success in extended care planning is to establish a plan in advance that provides a buffer for those closest to you.

    • Most people prefer to be cared for at home for as long as they can.
    • Ideally, the goal should be to empower loved ones to hire and organize professionals to provide care, rather than forcing them to provide care themselves. This is better for you and safer for them.
    • Finally, where suitable, seek to reduce or eliminate the cost of providing such care through the leverage of long-term care insurance.

How to Get Your Long-term Care Insurance Premiums Back

What if there were a way to secure long-term care insurance, but if you didn’t end up using it, your heirs could get the money you put into the policy back?

Over time, the shape and form of long-term care insurance has continued to evolve. When the first long-term care insurance policies were introduced decades ago, they were new to everyone, including insurers. Companies tested many different plan options and actuarial assumptions for pricing policies adequately. In some cases, insurers overestimated their future ability to meet expenses and ended up having to raise premiums.

On August 17, 2006, the Pension Protection Act (PPA)* went into effect and altered the long-term care insurance landscape even further. Importantly, the PPA opened the door for insurance companies to offer riders to qualifying life and annuity policies to provide tax-free withdrawals for the purpose of funding certain long-term care expenses. This set the stage for the introduction of new hybrid or asset-based long-term care policies. Under the right circumstances, such policies can serve as an alternative to traditional long-term care insurance.

*2006 PPA documentation link: https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/pension-protection-act

A few characteristics of hybrid or asset-based long-term care insurance:

    • Asset-based long-term care insurance is a life insurance policy or annuity that includes a rider (or riders) which expand coverage to help pay for qualifying long-term care expenses.
    • In general, if you don’t end up using the policy for long-term care services, you won’t “lose” the money you put into it. This is because the underlying policy will still carry out its primary function as either an annuity or a life insurance policy.
    • If benefits are never needed, either the death benefit of a life insurance policy or the accumulated funds of an annuity can be left to heirs (i.e. pre-tax accumulations from annuities are taxable to beneficiaries).
    • Insureds can live a long life with the peace of mind of having long-term care coverage, but without the anxiety of constantly paying premiums which they or their beneficiaries may never recover.
    • Most hybrid policies require a fixed, upfront premium to be paid, though some contracts may allow for ongoing contributions.
    • Internal funds grow on a tax-deferred basis and qualifying long-term care expenses are generally paid on a tax-advantaged basis (i.e. subject to state and federal rules).
    • At the time of writing, at least one insurer offers a policy that can be purchased jointly. This allows both individuals in a couple to benefit from coverage under a single policy.
    • Depending on the contract, additional riders may be available to provide protection for inflation as well as other extended benefits.
    • Asset-based policies are medically underwritten, but some individuals may find it easier to qualify for certain types of these policies.

When to Avoid Long-term Care Insurance

For some people, it doesn’t make economic sense to buy long-term care insurance because premiums will consume too much of their available savings or income. This is a big concern, as many traditional policies expect premiums to be paid for a lifetime. I have heard multiple seniors speak unhappily about bearing the weight of ongoing long-term care insurance premiums, especially in their later years.

Individuals below certain asset and income levels may qualify for state Medicaid programs that assist in paying for long-term care. However, qualifying for such help frequently requires an individual to “spin down” his or her assets to extremely low levels.

Spinning down assets is no fun.

Even after doing so, choices for care can still be limited. Individuals may “get what’s available, where its available,” with limited power to choose. Most will want to avoid this path, especially those with a surviving spouse who must live on after assets are spun down. There are provisions in Medicaid for some funds to remain with a surviving spouse, but the thresholds can be onerous.

Which Is Better, a Traditional or a Hybrid Policy?

As time goes by, I am less and less enamored with traditional long-term care insurance policies that expect premiums to be paid every year for a lifetime. Frequently, it seems, the older people get, the more fatigued they become with maintaining such policies. What a shame to face dropping or downsizing a policy after decades of payments because you became weary of or could no longer afford the premiums.

This will surely ruffle the feathers of a few advisers, but so be it. When suitable, I have come to believe that hybrid policies – either life insurance or annuity based – are the most preferable options for long-term care insurance. When paid for with an upfront single premium, such policies are as close as possible to “paying off” your risk and avoiding a lifetime of unending premiums. Add to this the not-insignificant detail that your heirs can get your money back if you don’t end up needing care, and these policies are hard to beat.

If you feel long-term care risk is something for which you need to solve, at least consider the possibility of assembling the funds – earn them, save them, allocate a portion of the after-tax sale of a home or business, use after-tax inheritance funds, or potentially roll over (i.e. 1035 exchange) unused cash value – only when suitable – from an old life policy or annuity, to help solve the problem.

It’s also worth noting, even if you have substantial assets, the hybrid approach still makes sense versus self-insuring your risk. This is because of the leverage of the insurance and the tax-favored treatment for covering the cost of care should it ever be required.

Saying all this, there is still no “one size fits all” solution for long-term care insurance. You’ll have to study the options, weigh the benefits, and decide what works best in your individual situation. An excellent additional resource is the National Association of Insurance Commissioners: A Shopper’s Guide to Long Term-Care Insurance.

It is available for free online at:

https://www.naic.org/documents/prod_serv_consumer_ltc_lp.pdf

Questions or comments? 

I can be reached at this link – contact Ted Stevenot.

Posted on

Rule 10: Set Your Own Retirement Date

Below is an excerpt from the book Downsize Sooner than Later – 18 Rules for Retirement Success available on Amazon.com.

On a bedrock level, retirement begins for anyone the day he or she becomes physically incapable of performing economically productive work. While this represents the far end of the retirement spectrum, it is important to pay attention to this fact. When the time eventually comes that you can no longer work – even if you want to – you must be ready.

Beyond a strict involuntary retirement, as alluded to above, there are several other potential retirement modes:

  • Voluntary Full Retirement: retired with full productive capacity intact.
  • Voluntary Partial Retirement: retired with full productive capacity intact, but only partially deployed (i.e. part-time work).
  • Involuntary Partial Retirement: retired with involuntarily reduced productive capacity (i.e. willing to work full-time but diminished physical ability to do so).
  • Involuntary Full Retirement: productive capacity fully depleted.

One conclusion to draw from this array is that – at least initially – the idea of retirement need not be a complete “on and off” switch. Depending on one’s circumstances, it may be favorable to transition into a partial mode of retirement and remain economically productive. Such a path can offer continued income, while simultaneously providing more time for enjoyable pursuits such as hobbies, travel, and time with grandchildren.

Partial retirement also opens the door to the continued growth of nest egg savings, reduced spending pressure on nest egg assets, increased social connections, and an overall boost in retirement security. We will be revisiting several of these benefits in later rules.

When Should You Retire?

Many people ask about the optimal time to begin retirement. The first part of answering this question is to understand the retirement system in which you are working. For some, the answer may be simply, “Retire on the date in which it no longer benefits you to continue working.” This can occur in certain retirement systems where benefits reach a maximum such that continuing work adds little additional value.

A friend of mine works in a system where, after a certain point, salaries and benefits essentially cap. As a result, he would make roughly as much choosing to retire as he would by continuing to work in his current job. It also happens that his occupation extracts a significant physical toll on his body. For him, retiring soon and switching to a “voluntary partial” work level in a less physically demanding industry may make sense.

Frequently, I recommend that people with above average health consider putting off the decision to begin Social Security benefits until age 70. Despite the political tumult kicked up in the media about the long-term prospects of Social Security, it remains a high-quality source of pooled income for retirees. Funded by beneficiaries, it pays benefits for the lifetime of the recipient, includes survivor benefits, and offers provisions to protect against inflation.

Sometimes, people have a hard time accepting age 70 as a potential retirement age. This stems in part from long-held conventional wisdom pointing to age 65 as the customary and expected time for retirement. Retiring later than 65 is viewed by many as somehow a disappointment, a loss, or a reflection of failure.

As we have already noted, be careful of conventional wisdom. In a simple and rather revealing thought experiment, take a moment to think of any older billionaire you can name. Nearly all are still working at least partially in endeavors they enjoy, regardless of their age and overall level of financial success.

What’s so special about age 65?

Have you ever wondered where the convention to retire at age 65 came from? How was this age chosen over others? How long has age 65 been popularly viewed as an optimal standard for retirement?

The original mass-market appeal for a standard retirement age dates back to the late 1800s.

  • The “Iron Chancellor” of Germany, Otto von Bismarck, is credited with advancing the idea of a social security system to offer benefits to the working class.
  • The target age for benefits adopted in the original German plan established in 1889 was age 70.
  • In 1916, 27 years later, the age was lowered to 65.

The Social Security Act was signed into law in the United States in August 1935. The decision to adopt age 65 as the target for benefits occurred through a combination of actuarial studies and surveys of the average ages used by existing retirement systems. At the time, “…roughly half of the 30 state pension systems used age 65 as the retirement age and half used age 70.”*

*Source: https://www.ssa.gov/history/age65.html

Since the early 1900s, a lot has changed.

Particularly revealing is to examine life expectancy at the time various target retirement ages were adopted. Statistics about life expectancy can be difficult to align with precision because they vary due to demographic factors such as gender, ethnicity, and country of origin. Here, however, are at least are a few ballpark approximations:

  • In 1891–1900, when the German plan began with a retirement age of 70, life expectancy from birth in Germany was roughly age 40.58 for a man and age 43.98 for a woman. (1)
  • In 1935, the Social Security Act specified a retirement age of 65. At the time, life expectancy from birth in the United States for a man was roughly age 59.42 and age 63.32 for a woman. (2)
  • In the United States, the “full benefit” retirement age for those born in 1955 is 66 years and 2 months. Life expectancy from birth in the U.S. today is roughly age 76.1 for a man and age 81.1 for a woman. (3)

Source (1): https://www.lifetable.de/cgi-bin/index.php
Source (2): https://www.cdc.gov/nchs/products/databriefs/db328.htm
Source (3): https://www.cdc.gov/nchs/data/nvsr/nvsr67/nvsr67_07-508.pdf

In the past, social insurance plans did not begin benefits until well after the average life expectancy from birth. 

Today they begin benefits well before the average life expectancy from birth.

Additionally, it is important to observe that life expectancy tends to increase based on higher attained age. This means the older you get, the longer you tend to live. This is so because as you age, you begin to bypass risks impacting mortality that are included in the “life expectancy from birth” averages. For example, when you are older, though you still face mortality risks related to your current age, you no longer face risk of death related to childhood diseases, uniquely youthful accidents, or death related to childbearing, which are included in the life expectancy from birth averages.

For persons reaching age 65 in the United States today, life expectancy now approaches age 83 for men and age 85.5 for women. These numbers are roughly 5–7 years longer than the average life expectancy from birth and 16–18 years longer than full-benefit starting dates for Social Security.

But it doesn’t end there.

Remember that these numbers are only averages – half will live even longer.

So, what does all this tell us?

First, when to retire is an individual choice and many factors are involved, including your health, finances, and your personal perspective. Don’t let conventional wisdom make you feel bad about choosing the retirement date that makes the most sense for you.

Second, retiring at age 65 is not a hard-and-fast rule. You can choose to follow this norm or walk right past it. Sometimes, you just need someone to tell you it’s OK to do so. For what it’s worth, I am happy to serve in that capacity.

For my part, I plan to delay Social Security benefits for as long as possible and to stay economically productive for as long as I can – more on that in the next rule.

For those who qualify, putting off Social Security benefits to age 70 can serve to significantly increase monthly lifetime income and overall financial security.

  • Delaying taking Social Security benefits – even by just a year or two – will increase your monthly benefits for the rest of your life.
  • Once the full benefit age transitions to age 67, a person can increase his or her benefits 24% as a result of delaying just three additional years (i.e. to age 70).
  • If you are the higher income earner in a couple, you have two lives for which to plan. Delaying benefits can mean increased survivor benefits for your spouse if he or she ends up outliving you.
  • In 2018, the maximum benefit for those delaying Social Security to age 70 was $3,698/month.

To learn more about what delaying Social Security benefits might mean for you and to access a retirement benefit estimator based on your actual earnings, visit the United States Social Security Administration website at: https://www.ssa.gov

Questions or comments? 

I can be reached at this link – contact Ted Stevenot.

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Rule 11: Stay Economically Productive

Below is an excerpt from the book Downsize Sooner than Later – 18 Rules for Retirement Success available on Amazon.com.

This rule expands upon the concept introduced in the last rule regarding the varying modes of retirement. – voluntary, partial voluntary, partial involuntary, and involuntary. What we observe from the retirement modes is that retirement is not necessarily a binary “all or nothing” decision.

What do you want most from retirement?

Do you want more freedom? Extra time? More say about what you will do with each day? More opportunity to do the things you truly enjoy? Time to travel? Time to volunteer? More time to spend with friends and family? Time for hobbies, recreation, reading, or other enjoyable pursuits?

You can surely have such things, but they do not necessarily presume or require that your economic productivity must drop to zero.

During working years, the most valuable asset most people have is their ability to earn an income. It is wise to proceed with caution before wholly discarding such a valuable resource in retirement.

Consider the story of Mary. Mary was a stay-at-home mom who relished volunteering at church on a part-time basis during her many years of raising a family. When she and her husband retired, they moved to an upscale area in a warmer climate. In time, she discovered a local church to her liking and resumed her long-enjoyed practice of volunteering.

As one might expect, given that Mary appreciated volunteering and without the demands of children to raise, her volunteer commitment began to expand.

Willingly, she took on many elements of running the church that customarily were the role of paid staff. In her well-to-do community, it would have been no trouble for the church to pay her a reasonable stipend for the performance of these services. However, she never thought to ask for this. Perhaps it seemed ignoble to do so. As such, she continued to offer more and more help for “free” as time went by.

Years later, she and her husband’s portfolio-based retirement income plan ran into trouble. Eventually, they were forced to downsize and move to an area far away from the church she had come to love and support so much as a retiree. As she was leaving, church members – particularly the pastor – were shocked. None had any suspicion of her financial difficulties. Yet, none could make up the lost time, undo the missing years of income, or repair the resulting damage.

Though Mary’s work possessed significant marketable value, it simply did not occur to her to consider being compensated for it. Had Mary made it a priority to more highly value her time and request compensation for that time, she may have been able to ease and perhaps even prevent some of her eventual financial difficulties.

There is no shame in asking to be compensated for doing valuable work.

This fact remains true, regardless of age. Yet, here again, we run up against conventional wisdom. Many say things like, “When I retire, I want to spend time volunteering.” This is a worthy goal. Like the wish to leave a legacy for children and grandchildren or to a favored charity. However, such desires must not supersede the necessity of maintaining one’s own personal and financial wellbeing.

Such circumstances can be likened to a flight attendant’s forewarning to secure your own oxygen mask before assisting children or others. 

If you let yourself pass out, not only will you be unavailable to help others, you may end up needing help yourself.

Consider also the story of Juan Carlos. Juan Carlos was a university professor who received a lifetime pension upon retirement. Many teachers and other public servants are exempt from individual and employer contributions to Social Security. This means they must rely on state or government employee-based pension systems to be their mainstays during retirement.

Juan Carlos, throughout his teaching career, developed a part-time consulting business related to his professorship in engineering. When he eventually retired, he continued this consulting practice. Though he could have devoted full-time attention to the business, he did not choose to do so. Instead, he used the extra time and income to fund travel and spending more time with family.

In the many years since his retirement from teaching, Juan Carlos’ side business has continued to grow. Today, it provides him with significantly more income than even his pension. He still uses this “extra” money for travel and to afford more time with friends and family. He also sets aside funds for a substantial legacy to leave for his children and grandchildren.

Both Mary and Juan Carlos developed marketable skills throughout their lifetimes. One chose to be recompensed for this value during retirement, while the other missed the opportunity.

In truth, just about everyone possesses some number of skills that are of marketable value.

The key to unlocking this value is to look for and become aware of these skills. Think back on your life. Beyond opportunities based on your prior career, consider activities that you love and enjoy, such as hobbies. This may include things like painting, reading, sewing, fishing, golfing, hunting, or restoring old cars. Almost any area of interest, from providing daycare for children – and, increasingly, daycare for adults – to giving folks a lift from time to time, to personal organization, to decorating, to pet sitting, etc. can be conceived of in an economically productive form.

• What if during retirement you could find fulfillment along with financial reward?

• What if you could build relationships while continuing to build your savings?

• What if you could strengthen your mental acuity while helping to ensure your overall security?

Even on a part-time basis, such opportunities are well within reach. The key is to establish a mindset that will reveal those opportunities. With the proper perspective, you can achieve the best of both worlds.

But what if you just don’t want to work?

I know people – whom I care for and respect – who say when they retire, they just want to be done. No more work. No more job. Not even part-time. Not even doing work they might “love.” Complete shutdown. I have even heard this from some planning to retire at younger ages, such as in their early 60s. Sometimes, I hear this said, regardless of my prior and impassioned attempts to eloquently articulate the benefits of the contrary.

I must admit, I have a hard time understanding this perspective.

I know individuals who have chosen the shutdown mode in retirement. I am suspicious of this course. For the most part, I wouldn’t change places with any of those I know who saw it through. It’s almost as if they are sitting around waiting for the end. One has turned her consciousness inward. She frets and complains constantly about her health and financial issues. It as is if her full-time job is rushing back and forth between doctor’s offices, and this has gone on for nearly two decades. Another I know has prematurely lost physical capacity due to too much time sitting in a chair. People say, “Keep your stride!” Well, he has lost his. Yet another suffers from a paralyzing predisposition to expand time. Having all day to do even the smallest things, the smallest things now take him all day to do.

Business philosopher Jim Rohn once postulated that “what most messes with the mind” is doing or being less than all you can become. 

Once, while walking along the beach, I observed a bottle-nosed dolphin swimming through the nearby waves. She was obviously old, and you could see nicks and cuts along her upper back and dorsal fin area. It occurred to me: there are no banks in the world of dolphins. No retirement funds. No pensions. No insurance companies. She must work to earn a living until the day she dies. A noble and majestic creature, yet she is compelled to show up for the fight every day until her last. Are we so different? Just because we may be able to sit aside idly, does it mean we should?

Everyone must decide.

For my part, at least, for as long as I can, I intend to stay engaged and spend at least some ongoing effort to strive, to grow, to achieve goals, and to build. When my capacity eventually depletes, as it someday surely will, I hope I can take some comfort in knowing I continued to fight the good fight.

Questions or comments? 

I can be reached at this link – contact Ted Stevenot.

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Rule 12: Clean out Your Glove Compartment

Below is an excerpt from the book Downsize Sooner than Later – 18 Rules for Retirement Success available on Amazon.com.

Imagine you go to your car and look in the glove compartment. Beyond a multi-tool, tire pressure gauge, owner’s manual, proof of insurance, first aid kit, and vehicle registration, what else really belongs there? It is a limited space, so you must decide.

But, have you decided?

When we look at what we have allowed to accumulate in this limited space, most of us observe a collection of clutter – gum wrappers, old receipts, obsolete cell phone chargers, barely functioning pens, pencils, expired warranty papers, an empty bottle of ibuprofen, expired sunscreen, and melty lip balm.

The glove compartment is an apt metaphor for life.

Try this exercise:

1. Take a box and remove everything from your primary car’s glove compartment.
2. Bring it inside and lay it all out on a table.
3. Decide what belongs and should go back in, and what doesn’t belong and should be put somewhere else or tossed.
4. If there are things missing – things that should be there but are not – a small first aid kit, multi-tool, proof of insurance, registration papers, etc., assemble these items and add them now. Take all the items you have decided that belong in your glove compartment and put them back in it in an organized fashion.
5. Now – and here’s the purpose of the whole exercise – stop and ask yourself how you feel.

If you’re like most people, the answer is: you feel better, happier, less burdened, more settled, more organized, more together.

If so, why? What difference does it make that clutter had accumulated in your glove compartment, and how does cleaning up that clutter elicit such positive feelings? What is the cause of this? Why are such feelings so common at the end of this exercise?

Some would suggest that the answer is you have reduced the volume of your overall “stuff” and, therefore, the prime lesson to be learned is, “Less stuff makes you feel better.”

Maybe that’s part of the reason, but I’m not so sure. Having less may make you feel better, but the degree of volume does not seem to explain what’s happening entirely. By extension, what if you got rid of everything? An empty glove compartment goes too far. Get pulled over and you will at least want your registration and proof of insurance. It doesn’t make sense that removing such essential items for the pure sake of achieving less will really make you happier.

So, if it’s not a question of the volume of stuff, what’s going on?

Why the good feelings?

In my opinion, the best answer seems to be related to establishing “order over chaos.” It begins with the fact that we are born into a world of difficulty and uncertainty. Most of our lives are spent improving our skills and ability to establish and maintain livable order in the face of preexisting chaos.

A few examples:

  • We raise children to be healthy and well socialized, so they will be stronger and better equipped to face the diverse physical and emotional demands of life. We want them to acquire the ability to endure, learn, adapt, and thrive in the face of whatever the world may throw in their direction. By all accounts, this is an effort to instill order over chaos.
  • As individuals, we sacrifice and save for tomorrow. We attempt to build a buffer to protect ourselves and those we love from the inherent dangers and unknowns that may occur in the future. This, again, is an effort to instill a measure of order over chaos.
  • We utilize norms of culture, society, law, and belief to imprint predictability and order on a constantly changing and frequently dangerous world. These exertions are all efforts to manifest habitable order in the face of preexisting and continuing uncertainty and chaos.

Do find yourself cheering for the underdog when you watch sports?

The innate call to do so seems to stem at least in part from an archetypal human desire for order over chaos. The team that’s behind is in disarray. They face odds that appear beyond their control and will be consumed if they cannot find a way to effectively respond. When they do prevail and win, people love it! This is because it is the underlying hope and desire of all people to do the same as they face existential and unrelenting chaos in their own lives each day.

Unlikely as it may seem, the complete drama of this reality is observable in something as simple as your glove compartment. Before you clean it out, it’s in chaos. You must first notice this state and give it your attention. From there, you must act to reduce the level of chaos and increase the level of order. After acting, you experience the satisfaction of having achieved greater order. Did you end up putting some things “away” in places where they better belong? Likely. Did you end up throwing some stuff out? Probably. But it’s not the summated state of “less” that has the greatest impact. It’s the underlying order.

Widening this concept is the fact that few things exist in a vacuum. As we discussed in earlier rules, a high-maintenance possession can create a domino effect of generating chaos. Things wear out and break down. There are payments, upkeep, and repairs. All this requires time, money, attention, and energy. If, suddenly, a high-maintenance item disappears, a ripple effect occurs. It’s not the reduction of the “stuff” per se. It’s the reduction in chaos that surrounds the stuff.

One of the many memorable quotes my son John shared with me was, “Dad, how you do anything is how you do everything.”

If my glove compartment is a mess, then what are the chances my trunk is a mess, my garage is a mess, underneath my kitchen sink is a mess, my closets are a mess, my cabinets are a mess, my drawers are a mess, my basement is a mess, and so on…?

In general, increased order yields increased feelings of peace and happiness. Of course, nothing stays fixed forever. Things fall apart even with our best efforts, and sometimes, it’s a wonder anything keeps working at all. But since we have limited time and limited space, it makes sense to ask: What are we filling our limited time and space with? Are we accumulating mindless clutter or are we living deliberately and intentionally?

A few “glove compartments” worth cleaning out:

  • What are you doing with your time? Your mornings, your evenings, your weekends? Do you waste them on sub-optimal activities such as watching mindless TV or reading psychologically damaging news?
  • Is your schedule a mess? Have you said “yes” to things that aren’t really a priority? Have you said “no” to things that should be a priority?
  • Is your health a mess? Do you eat right and have a routine for exercise? Do you have a snack drawer full of junk food versus convenient things to eat that are healthy?
  • Do you attend regular check-ups with a primary care physician, dentist, and eye doctor? Or do you wait for something to “break” and react to your health, rather than proactively caring for it?
  • Are your relationships a mess? Do you set aside time for children, spouse, and friends? Or do you only “catch up when you can” and find yourself losing valued connections?
  • Is your stuff a mess? Do you keep a bunch of possessions you don’t use, want, or love? Who will end up sorting through such items when you are gone – a grieving spouse or children? Is putting the burden of cleaning things up on them the most responsible and loving choice?
  • Are your finances a mess? Do you have a plan you can be proud of? Or are your finances a junk drawer filled with random debts, obligations, bills, insurance, old retirement accounts, and unaffiliated IRAs? Do your loved ones even have a list or means to locate your policies and accounts?
  •  Is your estate a mess? Do you have a will? Have you designated appropriate and updated beneficiaries on your insurance and retirement accounts? What about a healthcare power of attorney or a living will? Have you made your wishes known about what to do if something happens to you? Or will you leave loved ones guessing about what you want at an already difficult time?
  • Are your usernames and passwords a mess? If you were gone, would loved ones be able to access your phone, important accounts, computers, email, documents, and pictures?

Without deliberate attention, these things can accumulate disorder just like an ignored glove compartment. Once an area of chaos is identified, simply ask,

  • How can you arrange your affairs in a better way?
  • What belongs?
  • What needs to be removed?
  • What needs to be added?

After taking sensible action to restore and impress order, a surge of positive feelings is the most common and immediate result. Doing so opens the door to increased predictability, increased livability, and increased energy and space for the things that matter most.

Questions or comments? 

I can be reached at this link – contact Ted Stevenot.

Posted on

Rule 13: Eat Less Grass

Below is an excerpt from the book Downsize Sooner than Later – 18 Rules for Retirement Success available on Amazon.com.

Does it seem unusual for someone in their mid-50s to have six-pack abs?

As I write this, that is my current condition. Years ago, I would not have imagined this as likely. I remember thinking, when I first began to get wider around the middle in my 40s, “Well, I guess that’s just the way it is.” Have you ever had someone walk by you and bump into your stomach? That was me. I wasn’t technically overweight, but I was developing a typical middle-aged middle-section.

I have generally always been a person who exercised at least some. Currently, I have a routine that gets me to the gym four to five days a week for roughly 20- 25 minutes of moderate exercise per session. As for the abs, while exercise played a part, it was really a change in diet that made the difference. I know this to be true because for a long while I exercised, but did not have the abs. And my exercise routine was about the same before and after the six-pack so enchantingly appeared. One day, while brushing my teeth and not wearing a shirt, I happened to look in the mirror and noticed: “What the hell?”

The knowledge I acquired to make the change was stumbled upon by accident.

The root cause stemmed from a different approach to eating that was relatively easy to put in place and has been similarly easy to maintain. I stay on track about 85–90% of the time and don’t feel significantly restricted. This means I still have ice cream and cheesecake on occasion. But for the rest of the time – roughly 17 out of 20 meals in an average week – I have a routine and an “environment” for eating that keeps me on track.

Dispensing information about dieting is difficult because there have been so many fad diets over the years. Most seem great at the time but eventually fade from view. Compounding this challenge is the fact that people are different, and different approaches work better for some than they do for others. Additionally, sometimes people have legitimate medical issues such as autoimmune disorders or allergies that can affect how and what they can eat healthfully.

Understanding that diet is a tough space and can be bewildering, I would like to share with you one small idea related to dieting that I have found to be most useful. This idea has worked well for me and my wife for several years. Feel free to take it or leave it. If it works for you, great. If not, perhaps it will inspire you to seek out a diet that would work for you, if desired.

It started a few years ago when my wife came across a book in a dollar store called, Your Personal Paleo Code, by Chris Kresser. The title has since been changed to, The Paleo Cure. I had not heard of Chris before, but flipping through the pages, my first impression was, “Wow! Whoever this guy is, he worked his tail off to write this book!” So, I thought, for a dollar, I’d give it a whirl.

It’s funny how some of the most valuable things we discover in life are often stumbled upon. More than once, I have, by accident or luck, found something that later proved to be life changing. I suppose the lesson here is to always remain curious and on the lookout for hidden value.

I brought the book home and started reading it. Perhaps it was an example of the “teacher appears when the student is ready,” but it made a huge impact on me. I had heard of ancestral or “Paleo” dieting before in passing, but this was the first time I heard it presented as an evidence-based force-multiplier for improving diet and general health. One of the biggest takeaways I got from the book was the concept of “nutrient density” as relates to food.

The Magic of Nutrient Density

We hear endlessly about “junk food” and “empty calories,” but I never stopped to think what those words really mean. In the modern era of low sugar diets and “counting carbs,” it seemed all that mattered about most food was the “macro” or total calorie count. “Junk food” meant high sugar and/or high fat which, in turn, meant high calories. Conventional wisdom said that for a better diet, avoid such foods or consume them in moderation.

It turns out there is more to the story.

It begins with the fact that our bodies and digestive systems are monumentally complex. The digestive system consists of a vast universe of “microbiota” with an almost immeasurable number of agents working in concert to sustain our lives. Humans evolved these systems over millions of years, living as hunter gatherers and eating a diverse array of naturally occurring foods.

With the onset of the agricultural revolution, an unintended consequence was diets becoming substantially less diverse. This happened because only a relatively small number of plants and animals proved to be domesticable and cultivation friendly.* Some of these foods worked out well for our diets, while others were not always the best in terms of nutrient quality or digestibility.

*An excellent and fascinating resource that discusses the story of food domestication is Jared Diamond’s landmark book, Guns, Germs and Steel.

We arrive at today, dependent on diets with comparatively fewer food choices and with the widespread adoption of many foods – such as those that are grass-based like corn, rice, wheat, and refined sugar – that often conflict with our anciently evolved digestive systems.

So, what does it all mean?

Eat Food Your Body Will Recognize

Feeling hungry? This is your amazing body – literally developed over millions and millions of years – telling you it needs something. The question is: what? I know people who get very focused cravings for particular food items. Maybe it’s just me, but I have never experienced hunger with such focus. Instead, I seem to just get broadly hungry without much tilt toward specific foods.

Being “hungry” is, as it turns out, a generalized condition. Your body could be looking for some specific nutrient or fuel that you may not even be aware of (e.g. like sailors suffering from scurvy and having no clue what’s going on). One way to think of it is to imagine the body as having a limited vocabulary. It might need calcium, vitamin B12, citric acid, or some other nutrient, but because your body can’t directly ask for it, it just says, “I’m hungry!”

In the modern world, the cycle goes something like this:

1. Needing some combination of calories and nutrients, the body says, “I’m hungry!”
2. In response, I feed it high-calorie, low-nutrient junk food.
3. My stomach, now filled with calories but limited nutrients, provides me temporary relief. But it is a false summit.
4. Soon, my body, still lacking the nutrients it wanted in the first place and despite the fact it recently got a load of extra calories, repeats, “I’m hungry!”
5. Return to “2” above and repeat.

In such a cycle, I end up with an excess of calories and a deficiency in nutrients (i.e. overweight and less healthy). In truth, the body’s vocabulary is much more expansive. Yearning for what it wants, it may “speak” by saying things like: headaches, joint aches, depression, sleeplessness, digestive issues, cramping, pain, gas, various types of inflammation, and more.

Selecting a diet with diverse and nutrient-dense foods can alter the steps above to look more like this:

1. Needing some combination of calories and nutrients, the body says, “I’m hungry!”
2. Instead of giving it junk, I feed it nutrient-dense, real, whole, actual foods.
3. I get the calories I need and more of the nutrients my body wants. This gives me improved nourishment, greater energy, and relief from feeling hungry as often.
4. In time, I average toward a more stable diet, better nutrition, optimal body weight, and improved overall health.

Again, the body and digestive system are exceedingly complex. Knowing or attempting to predict what micronutrient the body might want at any time would be extremely difficult. By selecting in favor of more diverse and nutrient dense foods – as our ancient ancestors did – I increase the odds of giving my body the fuel it needs.

Below are some examples of foods I regularly eat.

  • Fruits (mandarins, grapes, strawberries, blueberries, kiwis, bananas, blackberries, plums, grapes, apples, cherries, occasionally melon).
  • Nuts (walnuts, pistachios, almonds).
  • Legit dark chocolate (60%+ cacao – small wrapped 3–4 per day, 8–12 dark chocolate chips).
  • Eggs, beef, chicken, pork, salmon, trout, tilapia, sardines, occasionally tuna.
  • Vegetables (avocados, artichokes, brussels sprouts, asparagus, cauliflower, broccoli).
  • Sweet potatoes (a mainstay and prime source of “good carbs”).
  • Carrots and celery with homemade ranch dip.
  • Cheese (occasionally, dairy for those who can tolerate it).
  • Coffee.
  • Almond milk.
  • Ice water with lemon.
  • Red wine (one glass per day, when indulged).

Note the commonality in the list above that just about any ancient ancestors would recognize most of these foods (i.e. less the almond milk, chocolate, coffee, and red wine). However, they would not recognize a loaf of bread, a bag of corn chips, candy bar, or a can of soda. Hence the epithets “ancestral” or “Paleo” (i.e. stone-age) eating.

Below are some examples of foods I try to avoid.

Note the two important commonalities of many of the foods avoided: grass-based and legume-based.

  1. Grass-based foods. Wheat, corn, rice, and sugar cane are all grass plants. It seems hard to imagine today, but for millions of years before the agricultural revolution – only around 10,000 years ago to the present – our ancient ancestors didn’t really eat much grass or foods derived from grass plants. For perspective, “humans” separated from chimpanzees around 7,000,000 years ago. Our more direct relatives, like homo erectus (upright man), first appeared about 2.5 million years ago. Our specific species, homo sapiens (wise man), has been around roughly 250,000 years. Animals that thrive on grass are called “ruminants” and have special digestive systems evolved to accommodate such eating. Humans are not ruminants. Grass-based foods, as we know them today, take on a variety of forms which are sweet, flavorful, and calorie dense. They are also inexpensive to produce and easy to ship and store. Unfortunately, however, they are light on nutrients and frequently misalign with our ancient digestive systems.

  2. Legumes and legume-based oils. Legumes are plants like beans, peas, peanuts, and lentils. Many of the cooking oils common today are derived from oils extracted from legumes. Again, wonderfully flavorful, cheap to produce, easy to store, and filled with calories, such foods and their derivatives often run afoul of our long-evolved digestive systems.

While I do eat many of the food items listed below on occasion, I try not to subsist on them as a major part of my diet. They are OK for the three meals a week or as an occasional side, but these are not foods I rely on to provide a significant source of nutrition.

Bread. (Wheat is a type of grass. Baked flour, while delicious and mouthwatering, is still essentially processed grass. If you must eat bread, bread made from almond flour or other nut flour may be much more recognizable to the body.)

  • Peas, beans, string beans, cut beans, lentils, baked beans (legumes).
  • Cereal (wheat-based, processed grass).
  • Soda (high-fructose corn syrup is highly refined corn – another type of grass), cane sugar (saccharum officinarum is perennial grass).
  • Cookies made with wheat flour and refined sugar (grass and grass).
  • Pasta (better than many other kinds of breads, but still bread).
  • Chips, cookies, pretzels, convenient “bagged” snacks (grass, grass, and more grass).
  • Fruit juice (fruit juices can be squeezed or juiced from a real fruit – but even then, you’re probably better off just eating the fruit).

It has been said: “People are hard to change, but environments are easy to change.”

When my wife and I wanted to change our eating habits, one of the biggest areas of impact we discovered was changing our food environment at home. We started with snacks. We got rid of all the snack foods we wanted to avoid and replaced them with fruits, nuts, and easy-to-grab veggies. From there, we did the same with bigger meals. Eventually, we solved for breakfasts, lunches, and dinners. We did not calorie count or starve ourselves through portion control. When hungry, if it was on the “good” list, we ate as much as we wanted.

In time, our bodies picked up on the micronutrients we had been missing and our appetites began to curb. No more ten o’clock at night, “OMG, I’m freaking starving!” followed by crushing two bowls of cereal before bed. It wasn’t a question of willpower; the intense crashes of hunger just stopped happening. Personally, I began to feel better physically with fewer aches and pains. Additionally, my general level of anxiety and propensity for over-worrying and stress dropped like a rock.

From there, we continued to look for more interesting ways to prepare the “real” food we were eating more of. We collected cookbooks and expanded our list of recipes. Now that we know what to eat and how to prepare it well, staying on track is easy.

Can you imagine?

  • Baked wild salmon with garlic and herbs, served with asparagus, diced sweet potatoes, and a glass of red wine followed by a dessert of strawberries smothered in dark chocolate.
  • Grilled filet mignon with sautéed mushrooms, steamed artichoke, baked sweet potato, Mediterranean side-salad sprinkled with feta cheese, followed by a small bowl of ice cream.
  • Chicken fajita with caramelized onions and green peppers served over steamed cauliflower rice and dark chocolate-covered almonds for dessert.

Does this really seem restrictive?

You be the judge.

But wait, didn’t our ancient ancestors live comparatively short lives?

Some people point to reduced life expectancy among our long-ago ancestors as a reason to avoid eating more in alignment with the way they ate. But this is a misreading of the facts. People had lower “average” life expectancy, due to the combination of untreatable infections, unrecoverable diseases, and extremely high infant mortality. Such factors pulled the overall numbers down drastically. By contrast, coupling modern medicine with ancestral eating opens the door to the best of both worlds.

As with any major life alteration, making positive changes in something as important as diet requires ongoing study and diligence. For my part, I am glad to be on the path. As with any system for healthful eating, no one size fits all. Consult with your physician or qualified health practitioner to be sure any diet you choose makes sense for your individual situation.

Questions or comments? 

I can be reached at this link – contact Ted Stevenot.

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Rule 14: Move Your Whole Body

Below is an excerpt from the book Downsize Sooner than Later – 18 Rules for Retirement Success available on Amazon.com.

With this rule, we enter a second challenging topical space like diet, due to its shifting, diverse, and volatile nature. This is the subject of exercise. Here again, my goal is to offer you the highest and most concentrated value possible. While, admittedly, I am an amateur on this subject, my reflections are based on years of study, experience, and observation. Just like with diets – no one size fits all. As always, consult with a physician or other qualified health professional before beginning any new exercise plan to be sure it is safe for you.

Here, I want to suggest a methodology for exercise that is both convenient and enduring. The goal is to accomplish:

  • More results with less time and effort.
  • The best version of you – whatever that is – not some conventional stereotype that may be a mismatch.
  • To exercise in a way that is sustainable. This means not hurting yourself and being forced to stop exercising.
  • To promote range of motion so that for as long as possible you can maintain your capacity to move and physically engage in life.

As mentioned in the last rule, I am a person who has exercised most of my life. I remember I used to do sit-ups while watching TV after middle-school in the late afternoons. At one point in my early teens, I could readily do a thousand sit-ups in a single session and over 130 sit-ups in under two minutes.

Those were the days…

Over the decades, just like with diets, I have seen exercise fads come and go. In recent years, my son John became deeply involved with an exercise system called CrossFitⓇ. John was an enthusiast and a serious student of health and exercise. I think he wanted me to get involved with CrossFitⓇ, but it never really came about. He joined me at my gym several times, though, and tweaked my usual routine with techniques he had learned.

One important addition he suggested was a movement known as a “thruster.” This is a type of squat exercise accompanied by light dumbbells held in each hand. In the motion, you bend your knees into squatting position with the dumbbells held at chest height. From there, the motion completes in a standing position and with arms fully extended overhead.

It is a simple exercise and moves the whole body. He added a twist by pairing this activity with another exercise. The second exercise was a series of machine assisted pull-ups. Altogether, and against the clock, the sets of exercises unfolded like this:

  1. 21 thrusters.
  2. 21 pull-ups.
  3. 15 thrusters.
  4. 15 pull-ups.
  5. 9 thrusters.
  6. 9 pull-ups.

CrossFitⓇ devotees will recognize this group of motions as like a workout called “Fran.” It is an old-fashioned butt-whooping to get through without stopping the first few times.

So, why tell this story?

It turns out, hidden in all this are two secrets to effective exercise that make a huge difference in the efficiency and overall value extracted from exercise.

Many types of exercise employ these secrets in one way or another. A few examples are burpees, aerobic-boxing, parkours, dance and ballet based exercise programs, and as mentioned, CrossFitⓇ.

The two secrets are:

1. Move your whole body – or most of it.

“Whole” or full-body exercise is any activity that requires coordinated motion from the knees to the shoulders. Such exercise requires diverse muscle groups to work together and, when done properly, can provide increased beneficial impact in reduced time. Whole body exercise promotes a healthy range of motion, muscle and tendon strength, and engages the lymph system, which acts as a type of pumpless filter for the body.

2. Where possible, “pair” or “weave” different exercises together in the same set.

In the example above, pull-ups – which engage lats, biceps, and back – are paired with thrusters – which engage legs, core, and shoulders. While there is some muscle overlap, these are very different exercises. It turns out, our bodies seem to like movements that occur in a successive, diverse, and coordinated range. Exercise “pairing” helps facilitate this diversity of motion. Some simple examples of pairing include push-ups with sit-ups, pull-ups with burpees, leg lifts with air squats, jumping rope and punching a heavy bag, etc.

I have searched for an origin story behind the rise of exercise systems that combine whole body motions with varying degrees of pairing. The closest I can find is in the forerunning history of parkour. Parkour originates from the French phrase parcours du combattant which translates to “obstacle course.”

French naval officer Georges Hebert, before World War I, conceived a system to promote athletic skill based on tribes he had observed in Africa. Hebert noted, “Their bodies were splendid, flexible, nimble, skillful, enduring, and resistant but yet they had no other tutor in gymnastics but their lives in nature.”(1)

The obstacle course training Hebert and subsequent others developed under the umbrella of parcours brings together a combined series of full body motion (e.g. running, vaulting, jumping, climbing, etc.) and pits these movements against the clock.

(1) https://en.wikipedia.org/wiki/Parkour

One could view many of the popular modern exercise systems as “parkour in place.” Sans the obstacle course.

Many such systems are enhanced by the addition of resistance equipment such as barbells, kettle bells, bungee cords, heavy ropes, pull-up bars, and other free weights. If you have ever run a traditional parkour trail (not the over-the-top acrobatic borderline insane viral video forms of parkour), you will know exactly what I am talking about. It is the mix of motions that hit you. All those body parts being called upon to respond make for a phenomenal overall workout.

I can remember years ago doing traditional workouts with weights at the gym, before adding the mix of full-body routines. The weekend would come, and I would have to do some demanding chores like heavy yard work or splitting wood. Afterward, I’d be sore for days. I remember thinking, “I thought I was supposed to be in good shape. What’s going on?” But since adding the mix of whole-body motions to my routine, I am now much better prepared to engage in such weekend activity without feeling like I have been thrown off a building in subsequent days.

If this all sounds difficult or extreme, it doesn’t have to be.

Consider the following list of motions that use either most or a substantial degree of full body engagement. Many are not traditional bodybuilding exercises. The point isn’t to build beach muscles – though you can still do that if you want – but rather to maintain range of motion and sustain general health. When weights are involved, these exercises favor lower, safer weight loads with higher repetitions (for example, 8–12 movements per set x 3 sets).

  • Walking, jogging, running.
  • Seated row.
  • Elliptical machine.
  • Stair machine.
  • Bike riding.
  • Sit-ups.
  • Crunches.
  • Leg-lifts.
  • Push-ups (more than just a chest workout, also a planking exercise).
  • Chin-ups (machine assisted).
  • Pull-ups (machine assisted).
  • Squat.
  • Deadlift.
  • Burpees. 
  • Jump rope.
  • Wall balls.
  • Air squats.
  • Thrusters.

In my experience, a variation of three to four of these motions in every workout session at moderate levels does the trick. This equates to four to five workouts per week of approximately 20–25 minutes in duration. No big deal. Supplementing these workouts by increasing the number of times you stand daily and by achieving manageable goal for tracking “daily steps” adds icing to the cake.

The hardest thing.

When John and I used to do our podcast together, one of the things we said all the time was that the hardest thing about doing anything was starting. From there, the key is to establish a routine. Do a little each day. Celebrate that you completed your routine. Simple. Light. Systematic. Take your time. This is where enduring results come from. Not from massive exhausting bursts (often injurious and dangerous, when it comes to exercise), but in steady consistent steps.

On days when I don’t feel like going to the gym, I think, “Just get there and do one thruster.” Of course, when I get there, I never do just one. All I really needed was the motivation to get through the door. Former Navy SEAL commander, author, business, and life coach Jocko Willink once commented on the importance of simply getting to the gym: “When you get there, what are you going to do? Lay on the floor?”

He is exactly right. Get there. Take the first step, and the subsequent steps will follow.
One thing I also do that helps is listen to podcasts and audiobooks while at the gym. In this way, I accomplish two major objectives at once – a workout for my body and a workout for my mind. Just like the body, the mind takes routine care and maintenance to stay in shape.

Caring for your mind is the topic of our next rule.

Questions or comments? 

I can be reached at this link – contact Ted Stevenot.

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Rule 15: Protect Your Mind

Below is an excerpt from the book Downsize Sooner than Later – 18 Rules for Retirement Success available on Amazon.com.

In our earlier discussion about the glove compartment, we noticed that even though we begin with limited space, without deliberate attention, it easily becomes a catch-all for unwanted and non-essential items. Like the way we allow things to accumulate in a glove compartment, it is worth considering what we allow to accumulate in our minds.

With the mind, rather than facing limitations on space, we face limits of time and energy.

What we allow into our minds creates a compound effect.

Will the input we allow into our minds move us in the direction of the things we want, or will it take us somewhere else? Will the input we feed into our minds be empowering or draining? Will it lead to a greater sense of fulfillment and purpose or a greater sense of frustration and anxiety?

I felt this rule was important to include because I have noticed how common it is for some seniors to allocate significant time daily to watching TV, and listening to, reading about, and ingesting local, national, and political news. Some leave this kind of programming running in the background all day like a form of white noise. Others spend time visiting news websites online or reading (…and forwarding) emails filled with manipulative, negative, and alarmist doom and gloom.

What do you imagine the accumulated impact of negative input has on quality of life over time?

  • Will feeding our minds such information lead to greater happiness?
  • Will it help improve our relationships with friends or family?
  • Will it increase our general wisdom or outlook on life?
  • Will it expand appreciation and meaning in our lives?
  • Will it improve our capacity to live more fully or become stronger?

The choice of whether to spend our remaining – and undetermined number of – days consuming a diet of mentally negative, counterproductive, anxiety-provoking, and sensational “junk” is up to each individual. An alternative course is to be deliberate and constructive about what we allow into our minds daily.

Jim Rohn once remarked about a seminar he regularly conducted on success habits. At the seminar, he would challenge participants to, “…find out what poor people read, and don’t read it.” This is sage advice.

Garbage in and garbage out.

Sadly, much of the media today is intentionally designed to overhype the worst of the worst stories and leverage the highest possible shock value. Such “clickbait” is aimed at getting attention and drawing viewers at any cost. It should come as no surprise that some media is specifically designed for the purpose of leveraging the fears and anxieties of seniors.

I say, “Turn it off!”

When John and I worked in politics, one of our goals was to inform as many people as we could about how ordinary citizens – regardless of party affiliation – could help improve the health of our political system through engagement in local party committees. However, we discovered that no matter how rationally or persuasively we made our case, there were some people who simply didn’t want a solution.

Why? Because they’d rather sit and complain. For such individuals, awfulizing and complaining became a reward in and of itself. John used to call these individuals “chronic bitchers!”

My advice here is: don’t fall into that trap. Don’t let that become you!

What if you turned off the negative input and oriented what you allow into your mind more deliberately and purposefully?

As I write this, I get up at 5 a.m. each weekday. I go downstairs, make a cup of coffee, and let out the dogs. I find my phone and select an educational podcast or audiobook to listen to. I press play and it runs from home to the gym and back. I also let it play while I start making breakfast for my wife and myself. Once she shows up, though, I turn it off and focus on her.

Instead of waking up to gloom-and-doom, manipulative, garbage-centered media, I average an hour to an hour and a half of constructive input every day. In a year, this is over 350 hours of productive and educational input.

A typical college class meets three hours a week for three months. In equivalent terms, the audio I listen to is like taking ten college courses a year.

Yet this costs me almost nothing and has an amazing impact on my life. Compare that to spending the same time listening to the news or muckraking political commentary. Most people have no idea the opportunities they miss by not more constructively using such time.

Jim Rohn tells another story in which he asks a man, “What did your television cost?” The person answers by stating the purchase price, “$400.” To this, Jim replies, “That’s not true! I think it’s costing you about $40,000 a year. Not to own it, but to watch it.”

Is junk TV programming and sensational online news really the best we can do with the precious time we have left? Is this responsible stewardship? Does this honor those we love who are now gone or those who sacrificed so much for us to be here? Would they be proud of us for allocating time in such a manner? Would they say the time that we have – that they no longer have – is being well spent? Tough questions, but they are worth asking.

Here are some alternatives to consider versus habitual daily ingestion of negative and mentally destructive media:

  • Learn or do something new each day – math problems, learn a foreign language, facts of history.
  • Meditate. Try a guided meditation app like Headspace.
  • Use mornings to get to the gym.
  • Give yoga a try. There are countless routines available for beginners to advanced practitioners on YouTube. Or sign up for a local yoga class.
  • Do you follow a spiritual or religious practice? Allocate time daily to studying, learning, praying, and practicing it.
  • Do something difficult each day like learning to play an instrument, engaging in challenging artwork (e.g. compose music, draw, paint, write, craft, sewing, needlepoint, knit, etc.).
  • Habitually spend time in nature. Take pictures of the best moments and keep a daily journal online or offline.
  • Get more wisdom. Read about aging well, better health, better exercise, better diet and nutrition, how to improve your relationships, deal with loss, philosophy, history, etc.
  • Read (or listen to) classics, poetry, or quality fiction to help maintain your imagination.
  • Write that book you have always wanted to write, keep a personal diary or journal.
  • Assemble and organize your photographs, home movies, and stories, so they can be handed down to the next generation.

Without deliberate intention and direction, it is easy to let autopilot take you to places that are both unproductive and in the opposite direction of your hopes and dreams.

In ten years, who would you rather be?

  • A person who has ingested 10,000 hours (20 hours a week) of manipulative, negative, and shocking media – bummed out, cynical, anxious, and pessimistic.
  • A person who has spent 10,000 hours acquiring new knowledge, wisdom and skills to put to work – wiser, stronger, better, more capable, and more fulfilled.

The choice is yours.

Become conscious of the inputs you are allowing into your mind. Make deliberate choices about what you will or won’t allow in. From there, build a daily routine to keep yourself on track.

Questions or comments? 

I can be reached at this link – contact Ted Stevenot.

Posted on

Rule 16: Overflow with Meaning

Below is an excerpt from the book Downsize Sooner than Later – 18 Rules for Retirement Success available on Amazon.com.

Life is uncertain and who can say whether he or she will even make it to tomorrow? Given this fact, living well at all ages is virtuous, as any day can be one’s last. But beyond the importance of elevating the present, there is also the opposite concern:

Life can last much longer than one expects.

Senior years and retirement often represent a significant portion of a person’s total life. For many, as much as a third of it. This is far too much time to leave to idle.

Just as it would be a shame to die young without fully living, it is similarly unfortunate – and a serious disappointment for those who experience it – to live a substantial portion of later life adrift, with the absence of significant goals, purpose, or enduring pursuits of personal value.

One of several risks of such unfocused living, as alluded to in the last rule, is who knows what fills the empty time. Rest assured, something will fill the space. The question is what:

• Cable news?
• Chronic complaining and over-fixation on health?
• Constant worry and anxiety about money?
• Binge-watching television reruns?
• Continual outrage and anxiety about politics?
• Paralyzing obsession with the “glory days” of the past?
• Addiction to sensational news media?
• Addiction to social media, web surfing, or Internet porn?
• Addiction to casino slot-machine gambling?

Shake your head at some of these possibilities, but I can easily predict that everyone reading these words knows at least one person who has fallen prey to such traps later in life. I am reminded of the wise saying: “The idle mind is the devil’s playground.” This warning applies not only in youth, but to any age group. Given this reality, what can one do to avoid such pitfalls and even turn such a potentially challenging problem into an opportunity for greater strength?

The pursuit of meaning.

Experts in human psychology generally agree that identifying and pursuing meaning in one’s life is essential for living well. Meaning relates to the purpose or the “why” for living. It is the wellspring of the willingness to face each day with energy and direction.

The idea that retirement is somehow exclusively a carefree space and free of difficulty is folly. Life is life, and its challenges continue – perhaps even especially – in older age. When the big challenges inevitably appear, will you be mentally stronger or weaker? Drifting and unfocused living is corrosive to one’s strength. To engender fortitude and optimal mental health for the road ahead, a meaningful purpose for living is vital.

As Friedrich Nietzsche observed, “He who has a why to live can bear almost any how.” What can you do to deliberately establish and maintain a meaningful purpose for living during retirement? What is meaning, as relates to your life? How would you know it when you see it? Where can you look to find it?

Below are several clues to help characterize and identify meaning, along with one major “secret” to help uncover and amplify an abundance of meaning in your own life. 

Clue 1: Meaning precedes feelings of fulfillment.

Just as a horse must be in front of a cart to pull it, true feelings of fulfillment require meaningful action to occur before feelings of fulfillment can be manifest. Expressed as a formula, it looks like this:

Meaningful action + reflection = fulfillment

Meaningful action may occur along a broad spectrum, from extensive physical activity such as work, exercise, volunteering, or other ongoing regular activity, to extensive mental activity such as speaking, writing, teaching, consulting, or the decision to bear a particular burden in an exemplary way. Such actions, once taken and reflected upon, produce positive feelings that engender sustaining and motivating energy. Reflection to generate feelings of fulfillment can occur as a result of setting aside specific time to reflect – such as journaling or simply stopping to reflect each day – or intuitively, moment by moment, as a matter of course.

Consider the following two examples.

Jane is financially set – guaranteed income for life, adequate insurance, emergency fund, investments in place and positioned to grow undisturbed. She enjoys spending time with her great-granddaughter Lilly. Two days a week, she watches Lilly during the day, while her grandson and granddaughter-in-law are at work.

Jane and Lilly read stories, play games, take strolls in the local park, and have lunch together. At the end of such days, Jane is tired, but she has a very enjoyable time. Thinking back on it, she is thrilled that she and Lilly can be an important part of each other’s lives. She knows that she is helping Lilly grow and experience life in a special and unique way. With these positive feelings in mind, Jane stays energized and motivated to continue this highly rewarding activity.

Albert, after visiting the doctor for moderate but recurring abdominal pain, was diagnosed with pancreatic cancer of the Steve Jobs’ variety. This diagnosis came out of nowhere and was a complete shock to him and everyone close to him. Based on the cancer’s stage at diagnosis, he was given an estimate of 12 to 18 months to live.

Family members never knew exactly how to talk to Albert about his illness. To protect those closest to him, Albert made a deliberate decision to limit discussions that focused on his difficulties. During his remaining time, Albert worked painstakingly to set his affairs in order. He made the decision to take on renovating several rooms in his home – paying remarkable attention to detail – preparing it to be a comfortable refuge for his family in the years after he would be gone. In the process, Albert left a legacy of how to heroically face the close of life without complaint, and with dignity and strength.

In the end, it took nearly five years for the cancer to finally claim Albert’s life. While impossible to prove empirically, his meaningful effort to finish strong and elevate concern for those closest to him may have bought him some extra time. Regardless, he left a legacy of courage and determined character that those closest to him will never forget.

Clue 2: Meaning must be specific to the individual.

Broad generalizations about actions a person might take to establish meaning in their lives are difficult to make. This is because meaning requires a custom fit. It doesn’t work well for someone to say that taking specific action “x” or “y” will always be meaningful to every person. People can offer suggestions and share what may seem meaningful to them – and they may get close to describing something that may appear meaningful to you – but, in the end, everyone must decide.

For example, Joan is thrilled about realizing her dream of bottle-feeding puppies and kittens when she retires. This seems meaningful to Joan, but others may find such a pursuit as possessing significantly less meaning. It follows that any answer to the general question “What is the meaning of life?” or “What should a person do to achieve meaning in life?” will only be valid based on how it aligns with the values and inclinations of the particular individual.

Clue 3: Passion is not meaning.

People are often given the advice “Follow your passion!” as a directive for identifying or establishing meaning in their lives. However, such advice, if you try to follow it, can be difficult and confusing. The reason this happens is because passion, like fulfillment, is a byproduct of first engaging in meaningful action.

Pele is passionate about football because he has worked very hard and accumulated a track record of success and fulfillment from playing the game. However, had he fallen short in his early career and derived no ongoing joy from football, he may have never developed the same momentum. His initial actions – risky, uncertain, and independent of his preexisting talent – were necessary pre-steps to developing the passion he enjoys today.

Because meaningful action once taken and accumulated into fulfillment generates passion as a byproduct, initiating a search for meaning in one’s life from a starting point of passion puts the cart before the horse.

This is not to suggest that passion isn’t valuable. Passion can be a useful sustaining force that helps support creative capacity and ongoing meaning, but it is not a creative force in and of itself. To help prove the point, try the following experiment. The next time your spouse or partner asks what he or she should make for dinner (assuming it’s not your night to cook), try answering with only, “Something that tastes amazing!” You will soon discover that passion by itself just doesn’t work.

Clue 4: The pursuit of meaning is fortifying.

As mentioned in the anonymous but real-life story of Albert above, his sense of purpose and meaning provided a means of sustenance during extreme difficulty. His will to live with dignity and his desire to protect and provide for his family gave him a clear purpose for living. This purpose fueled him to battle through years of difficult cancer treatments, to complete demanding tasks of importance, and to live more fully.

Thinking back on it, it is amazing to remember how, post-diagnosis, he continued to live with such vigor. He went on trips, attended concerts, attended sporting events, spent extensive time with family, friends, and attended his children’s activities with full zeal. I even remember playing golf with him about six months before he died. He was still striping the ball even then, and we had a fantastic time together.

To this day, it brings tears to remember my last fist-bump with Albert. “Later, dude!” just days before he died. But even on that day, he remained his uncompromising self, burning with fire for life. Albert exemplified the essence of Nietzsche’s charge to possess a strong and meaningful “why.” Such possession engenders the strength required to power forward even at the most difficult of times.

The secret to finding meaning.

Given the characteristics of meaning that we have discussed, and the fact that pursuing passion as a means of its discovery often falls short of the mark, what is a practical pathway for identifying relevant meaning in one’s life? The method I am going to suggest is surprisingly uncomplicated, yet capable of producing an abundance of meaningful options from which to choose. It hinges on answering the following question:

“What is something only you can do?”

Take a moment to try and answer. If you are frustrated at first – no worries. An initial measure of frustration seems to sharpen the impact, once the underlying simplicity of the question is revealed. Notice that this question does not seek a singular “one” thing that only you can do. More like asking, “What is something you can eat for breakfast?” a variety of answers will suffice.

The question is also not about skills, per se. If it was, most would conclude that there isn’t much only they can do. Are you a scratch golfer? Well, many people can do that. Are you good at drawing or painting? There are a lot of accomplished artists and painters. Do you play the piano well? Same story. Even little kids can be great at piano. Focusing on undifferentiated skills throws the question off and steers it away from its intended target.

However, by narrowing the focus from skills in and of themselves to the application of those skills, a completely different landscape of meaning emerges. Others may play the piano, perhaps even more skillfully than you, but only you play the piano the way you do. Only you can bring to the application of your skills the broad base of your personal experience and perspective. If, on a surface level, your skills, when compared to others, appear similar or even deficient, your application of those skills remains decidedly unique.

In addition to the idea of uniqueness in application of skills is the idea of uniqueness in roles and proximity.

Roles are your distinctive positions in family or other social spheres. Examples of roles include,

  • You are the only husband (or wife) to your spouse.
  • You are the only mother (or father) to your child.
  • You are the only grandparent of your kind to your grandchildren (mom’s mom, dad’s mom, mom’s dad, etc.).
  • You are the only brother or sister of your kind to your sibling (older brother, little brother, youngest brother, etc.).
  • You are the only child of your kind to your parents (daughter, son, first child, middle child, third child, youngest child, etc.).
  • You are the only master of your kind to your pet.

Proximity reflects the distance – physical or relative – between you and your aim.

Things in closer proximity generally offer more fertile pathways to meaning. The simplest manifestation of proximity is physical distance. Say you want to tutor disadvantaged kids to help improve their math skills. It will generally be easier to do so locally, versus attempting to do so in a far-away state. Other distances are more relative in nature. Say you want to mentor professionals during retirement, and you were a cardiologist during your career. You may find it more conducive to mentor physicians versus architects or engineers because the physicians more closely match the experience with which you are most familiar.

By surveying a combination of your applied skills, roles, and proximities, it is highly likely you will find several opportunities for pursuing meaning. 

Many will represent areas that exclusively only you can impact. So much so, that without your stepping forward, such opportunities will remain absent from realization in the universe for all time.

A few examples:

Frank is a retired nurse and a considerable handyman due to decades of developing personal skills in home improvement and repair. Frank also happens to live in the same city as his older sister Joan who is recently widowed and living alone. On weekends, Frank regularly stops by to help Joan with odd jobs around the house. As a result, Frank gets to work on satisfying projects he enjoys, while also being a big help to his older sister. The quality time they spend together has enabled the two of them to achieve a much closer and more meaningful relationship.

Alejandro is a retired manager from a large company involved in chemical manufacturing. During his 35+ year career, he helped supervise the execution of several multi-million-dollar building projects. This makes him very familiar with the ins and outs of commercial construction and complicated project planning. Through a personal connection, Alejandro was invited to serve on a building committee for a local non-profit health clinic with plans to expand. Bringing his considerable knowledge and experience to the table, Alejandro helped the non-profit build better quality facilities, finish projects on schedule, and save money. He finds helping in this way highly rewarding, good for the community, and is glad to be able to make a real difference.

The pursuit of meaning never stops.

Once you have identified areas in which to pursue meaningful action in the near term, don’t stop there. Plan to continue doing so indefinitely. Don’t think, “Well I can do these things now, but only until about age 80. After that, it won’t matter because I probably won’t be able or around much longer.” Such thinking is shortsighted. For all you know, you may live to your mid-90s. That’s 15 more years!

Do you remember how much living you did between preschool and graduation from high school? Would you allow an equivalent amount of time to be lost to lingering without plans or purpose?

The reality is, the pursuit of meaning and its manifestation in meaningful action should never consciously conclude. Consider Albert’s discovery that his end was near. He had every justification to decouple and withdraw from life. Yet did he do so? Did he surrender his remaining days to hopelessness and drifting in despair?

Not even close.

He pulled himself together from the initial shock, regained his footing, and – until his body finally denied him – showed those closest to him what it looks like to stand heroically in the face of adversity. His extraordinary why afforded him meaning and purpose during the most devastating of how.

Questions or comments? 

I can be reached at this link – contact Ted Stevenot.

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Rule 17: Slay Your Dragons

Below is an excerpt from the book Downsize Sooner than Later – 18 Rules for Retirement Success available on Amazon.com.

A “dragon” is any issue that the longer you ignore it, the bigger it grows. Ignored long enough, a dragon can grow so big and so strong, it becomes capable of eating you alive. In tandem with a dragon’s growth in size and strength, the weaker your ability becomes to fight it. At last, in the dark of night, when you are least prepared, it calls you out.

By then, it is too late…

We have discussed many issues in the prior rules that qualify as dragons.

A few include:

  • Ignoring the fact that you will always have bills to pay (Rule 1).
  • Ignoring your spending habits (Rules 2, 3 and 4).
  • Ignoring simplifying and putting order to your life (Rules 2, 3, 12).
  • Ignoring that you may live longer than you think (Rules 1, 6, 7, 10).
  • Ignoring separating your income from your wealth (Rule 5).
  • Ignoring a plan for sustainable lifetime income (Rule 6).
  • Ignoring a plan for wealth to grow undisturbed (Rule 7).
  • Ignoring a plan for extended care (Rule 9).
  • Ignoring securing a will and other important legal planning documents (Rules 8, 12).
  • Ignoring putting your passwords in a place where loved ones can find them (Rules 8, 12).
  • Ignoring expressing your final wishes (Rule 8).
  • Ignoring your diet (Rule 13).
  • Ignoring to move your whole body (Rule 14).
  • Ignoring your long-term mental input (Rule 15).
  • Ignoring intentionally pursuing meaning in your life (Rules 11, 16).

It’s no secret that some of the above items are tough to deal with, and there is always an excuse to put things off. Fighting dragons is never easy. I have lived long enough that some of the things I have put off are now beyond my reach. There is no second chance for a do-over or to catch-up.

Ironically, when things are going well, it is one of the easiest times to ignore the dragons.

There’s just no sense of urgency. At other times, the urgency is overwhelming.
When John died, I was in the middle of writing what you see here and entering the busiest time of the year for my principal business. Life did not stop its march forward just because John was suddenly gone. Business demands continued. Bills were still due. Responsibilities were still expected to be met. Adding salt to the wound, in the few months after his passing, the sky seemed to open and rain swarms of dragons all over us.

Throughout this period, aside from support from family and friends, my salvation was my routine.

Earlier in the year, before John’s death, after months of introspection about what were the most important things to be doing with my life, I rebuilt my routine. Like what we discussed in Rule 16 on meaning, I decided my family, my health (diet and exercise), and my personal businesses were my most important things. For each, I broke out daily activities I could do to move these areas forward in a positive way. Rather than a “to do” list, this was more like a “to become” list.

Once I decided on the key activities on which to focus, I weaponized them into a scheduled daily routine.

It may seem a digression, but it’s important to note, whenever I felt tempted to feel angry or bitter or to curse life for what so unfairly happened to John, I deliberately decided not to pursue such nihilistic thoughts. This was in part in homage to him. I know with complete certainty he would never have wanted me to use his death as justification for sinking into despair and not living my own life fully. John did not suffer fools easily and to say that he would have had no patience for me taking a victim-based mindset is an understatement.

Some days, when things are tough, and I am tempted to overthink or worry about the past or the future, I say to myself, “Just focus on today. What’s on deck for today?” With my routine available, it has made narrowing my focus and answering this question easier. Consequently, and even during this past year’s difficulty, forward progress continued.

I offer to you as proof, the completion of this blog (now a physical book on Amazon.com).

Click to preview the book on Amazon.com

During the worst of the siege, my routine looked something like this,

• Up at 5 a.m. – grab gym clothes (laid out the night before), make coffee, let out dogs, put on headphones, select/play instructive audiobook or podcast, drive to the gym, workout, come home, wash hands, clean up the kitchen, set breakfast table, cut up fruit bowls for Ted and Jan, make Jan’s lunch.

  • Do breakfast dishes, make to-go-coffee for Jan, kiss goodbye, say, “Be safe!”
    • Journal (15 minutes).
  • Write (2–3 hours).
  • Business calls (2–3 hours).
  • Lunch (15 minutes).
  • Follow-ups (1–2 hours).
  • Slay dragons (1–2 hours).
  • Jan home – dinner, relaxing evening together (gym, biking, walking, screen-time, reading, painting, errands, movie nights, etc.).
  • Lay out gym clothes.
  • In bed by 10 p.m.
  • Repeat daily until the weekend.

Note on the list above, the line titled “Slay dragons.” For this daily activity, I created a list of the most uncomfortable, difficult, pain-in-the-neck, must-do but don’t-want-to-do things I had on my plate.

A few examples were: following up with the coroner about the cause of death, getting John’s phone back from the police, working on his estate details, court docs, bonding, paying off his car loan, retitling his car, squaring away his investment and retirement accounts, collecting his personal items – books, journals, computers, clothes, and other belongings – notifying John’s clients that he died, collecting his W2s, 1099s, preparing his income taxes, etc., etc., etc.

Nearly every one of the above items completely sucked to work on.

Many were like being stripped, tied to a post, and whipped. But I had to do them. I also had to keep my regular life going and not drop my critical activities.

As I write this, John has been gone eight months to the day. I share this in order to say that at least one key to getting hard things done – and especially in the hardest times – is to have a routine. And to add space in that routine specifically for the hard stuff. It still sucks, but at least it comes in manageable doses. On an individual day, when you slay a small dragon, or on other days when all you can manage is a few slashes at one or two, there is a sense of satisfaction that you are moving forward, even if the progress seems small.

I suppose it is remarkable that throughout this ordeal, we still managed to keep so many important things going – not the least of which has been still eating healthy and making it to the gym. Has there been grief? Tons of grief. Tears? Rivers of tears. I know John would understand that we need time to grieve, and we have spent time doing so. At the same time, I think he would be proud that we kept so many things together that he knew to be so important.

I can imagine John asking, “Do you still have your six-pack, Dad?” 

Hell, yes, I do.

When the book is published, one of my next projects will be to publish his manuscript. That will mean reading through it and making sure it is ready. Doing so will be hard, as I have read some of it recently. It is as if he’s standing right next to me, looking over my shoulder. But I will battle through and make it happen. My routine will be a major help in making it so.

I invite you to make your own dragon list of “to do’s” and “to becomes”.

From there, focus on building a routine. Each day do something that moves the ball forward on the things that matter most in your life. If you make such a system to do so and put your affairs in order, I can promise you two major things:

  1. You will slay your dragons, winning peace of mind for yourself and benefiting those who depend on you.
  2. Your personal willpower will grow. This happens because such a constructive routine builds both momentum and mental muscle.

Once you get a serious taste of habitual dragon slaying, there is no going back.

Questions or comments? 

I can be reached at this link – contact Ted Stevenot.

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Rule 18: Income Is the Answer

Below is an excerpt from the book Downsize Sooner than Later – 18 Rules for Retirement Success available on Amazon.com.

With this rule, I want to conclude our discussions with a final rule to help sum up all the others. I once answered the following question on an online forum:

“What’s the one thing that makes you the happiest in retirement?”

Given all the rules we have discussed, if I had to circle back and pick just one, what would it be?

What’s the cornerstone? What’s the base upon which all the other rules stand and can be built? What’s the one thing that, if you had it nailed down, would make all the other things easier and more possible? Is it downsizing, budgeting, investing, routines, diet, exercise, pursuing meaning, or something else?

Certainly, all those are very important. But my answer was simple:

“Of all the retirees I know, the ones with guaranteed income are the happiest.”

I went on to explain that this means having enough combined income from Social Security, pensions, and annuities to cover basic bills for a lifetime. After that, staying productive, healthy, and fulfilled are important, but without the core security of knowing that financially, you will have your essential bills paid – i.e. a roof over your head, food, transportation, healthcare, heating/cooling, etc. – it’s just not the same.

My two most notable retiree heroes – inspirational “someday I want to live like them” friends – both have significant sources of guaranteed income as well as other investments and part-time love-to-do work.

One of the two regularly travels internationally with his wife, yet still has managed to accumulate millions in legacy for his family. My wife and I joined them on a recent trip to Maui. Though now in his mid-80s, we snorkeled coral reefs together and biked through the clouds down the 21-mile face of Mt. Haleakala. He and his wife are undaunted. Free from gnawing worry about the condition of personal finances, they are focused on living fully and maximizing quality time spent with the people they care about most. Their positive outlook and will to finish strong offer a shining example of how fulfilling and enjoyable late life can be.

My other top retiree hero is more of a 48-contiguous-states kind of guy. But, he is always posting on social media the amazing things he and his wife are doing, places they are going, wineries, bed-and-breakfasts, time with grandkids, and on and on. On many occasions, I have found myself taken aback by the exceedingly high level of overall joy in his world. To say that his life is overflowing with meaning is obvious. It’s the scope of it that is so amazing.

I remember asking him, “What’s the secret?”

Unprompted, he smiled widely, clapped, and rubbed his hands together, and exclaimed, “I have an annuity, baby!” He went on to explain that he didn’t have to worry about the market or many of the things other people worry about. He knew he and his wife were going to get a check in the mail every month to cover their expenses for the rest of their lives.

This is security. The freedom to live fully day-to-day without financial worry.

It makes fulfillment and enjoyment that much more possible when you are not in angst about buying groceries, making ends meet, or otherwise running out of money. Add to this the concept of planting a money tree – that you do not disturb – to grow wealth throughout retirement, and the circle is complete: income and growth. Truly, this is having your cake and eating it too.

But if I had to pick just one – the beachhead, the foothold, the stepping-off place – the answer is income.

Take care of yourself. Take care of your spouse. Make sure there will always be money coming in to cover the inevitable bills that must be paid. This will provide you with a lasting means of dignity, freedom, peace of mind, and shelter from the rain.

From such a foundation, build your best and happiest future retirement.

Questions or comments? 

I can be reached at this link – contact Ted Stevenot.

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The 60 Second Retirement Plan

While no one plan fits every situation – and you should certainly spend more than a minute formulating an actual plan – the hardest part about anything is getting started.

If this motivates you to take your first step, its worth it.

1) Lower your expenses. Don’t let your upkeep be your downfall. Get rid of debt. If you plan to downsize, do it sooner than later. Don’t bum out about downsizing. Even if you’re rich, “simpler” is better and you’ll likely be happier anyway.

2) Use “guaranteed” income to cover BASIC living expenses. This will keep you from blowing your nest-egg on groceries. There are basically three types of guaranteed income: social security, pensions, and annuities. Figure out your basic bills, and pay as many of them as possible using guaranteed income.

3) Protect against healthcare costs. Attend a Medicare “educational event” and learn how Medicare actually works. Medicare educational events are free and presenters aren’t permitted to try and sell you anything.

4) Plan for “extended” or “long-term” care expenses. Who really loves you and would drop everything they were doing to take care of you? Without a plan this is the person who ends up getting hurt the most! Learn about “asset based” long-term care policies. Underwriting is easier and heirs can get your money back if you don’t use the coverage.

5) Protect against inflation. If you follow STEP 2 and cover your BASIC expenses with guaranteed income, you can leave more of your nest-egg in growth mode. This affords you a critical hedge to protect against inflation over time.

6) Study and focus on fulfillment. It’s not only how long you live, but how well you live. Stay productive. Keep learning. Keep experiencing. Be grateful. Make the most of each day and don’t become a curmudgeon. Set an example and age with grace.

Questions, thoughts, comments? You can reach me directly here or by posting a comment below.

Here’s wishing you a secure and happy retirement!