Naked With Cash is the year-long series on Consumerism Commentary where seven readers’ households share their financial progress on a monthly basis. I’ve partnered with financial planners who will offer some guidance along the way. Read this introduction to learn more about the series.
SteveDH is retired, and he and his wife have two grown kids. By the time he retired in 2008, he had reached his retirement asset goal of $500,000. His goal now is to ensure his savings last as long as he does. Read his bio to learn more about SteveDH. SteveDH is on Team Roger, with Certified Financial Planner Roger Wohlner.
Keep reading to see his net worth report, updated for February 2013. Following the analysis from SteveDH, Roger Wohlner will offer his own thoughts and guidance from his planning perspective.
Roger Wohlner, CFP appears courtesy of The Chicago Financial Planner.
Analysis from SteveDH
February was fun. The month included nineteen days of travel, including 7 on a cruise ship proved a tad expensive, but it was worthwhile. Although we were on Holland America’s MS Ryndam, there is something a little surreal about sitting in your cruise ship cabin in the middle of the Atlantic watching CNN reporting on the Carnival Triumph.
Yep, it was the same week. It is especially thought provoking when you realize Carnival Corporation owns Carnival, Holland America, Costa, Princess, P&O Cruises, Seabourn, AIDA, Cruceros, and Cunard.
Just so you know that I’m respectful of other countries and their peoples, we did visit Mayan ruins in Guatemala, and I didn’t mention the calendar thing.
We spent the rest of the trip visiting and driving between family locations in Florida, Arkansas, and Missouri. We visited my brother and his family, my wife’s sister and her family, and my son and daughter-in-law.
Unfortunately my son’s family includes a new puppy, so I arrived home wearing warmer clothes than I wore in the Caribbean and a few Band-Aids. (That puppy had some darn sharp teeth and played hard.)
Regardless, February was fun.
My wife’s Carnival Corporation stock got us a $100 “Shareholder Benefit” to spend onboard, but some wine with our dinners and afternoon Buds blew through that pretty quickly. I applied all of the trip expenses except the cruise fare to my established budget categories (Food & General Spending), and although we were over-budget on food for February, we were 11% under our budget for the month.
The cruise fare was charged against the pre-paid expenses account.
Lackluster market performance and the hit on pre-paid expenses caused a dip in net worth performance this month, but February cash flow remained positive. We spent 79% of our fixed income (74% of total income).
Although this is an increase over last month and higher than our 2012 average, it remains below our 85% budgeting goal so I see no need for second-guessing. The next cruise is in June — and it’s on Carnival — might need some second-guessing about that one, huh?
Since there’s no special topic this month I thought I might share a thought or two on retirement.
I’ve often been told that there are three retirement phases: active, sedentary, and terminal. Other folks label them go-go, go-slow, and no-go. I prefer the latter because it doesn’t include the word terminal.
Right now at 65 I’m still in the first phase and hope to stay there for a few more years at least. Over the years I’ve seen many rules of thumb, and I dislike most of them. The most annoying to me is, “You’ll need 70% to 90% of your pre-retirement income to survive in retirement.”
Nonsense! You’ll need 100% to 130% of your pre-retirement spending to survive in retirement. A retirement plan must start
with an estimate of your retirement spending. Only then can you try to determine what you need to save. Keeping track of spending over many years is the best way to estimate your needs – but be sure to throw in a little extra for some cruises.
Looking forward to March.
I have nothing exciting planned for March, but it is the end of the quarter so at least we’ll see a jump in investment income. March will also include completing my taxes, and the preliminary numbers aren’t looking good. I may have to “sequester” some bucks to pay out in April.
Positive cash flow is peace-of-mind written in numbers!
Feedback from Roger Wohlner, CFP
First of all, consider yourself fortunate that your cruise on Carnival didn’t end up like several that we have seen on the news recently. I hope the cruise in June goes as well for you.
I wouldn’t stress in the least about your February results, you are on track and life is too short to worry about one month’s results. I couldn’t agree more with your statement that a retirement plan must start with a spending plan.
Keep up the good work!