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How to retire richly and gracefully

Updated on December 28, 2012

Tips for graceful retirement

“When a man retires, his wife gets twice the husband but only half the income.”

Chi Chi Rodriguez

For most people, retirement is a phase in one’s life where the daily grind of eight hour work no longer exist, and a time for taking long walks at the beach whenever you want it. Realistically, life beyond work can be treacherous if it’s devoid of careful planning prior to retirement. Finding balance between enjoying a state of comfort and striving to work at living it to the fullest is certainly ideal. A smooth transition from a working environment to retirement should be everyone’s goal for retirees. It takes calculated strategy to achieve this goal.

Financial stability is the biggest concern among would-be retirees. Relying on social security is not enough for the majority. One way to alleviate this type of pre-retirement anxiety is to figure out your comfort level. Some thrive even when they’re in the midst of humble existence. If you have the propensity for places outside the United States, you might consider living in third world and/or exotic countries where you can get more bang for your bucks. It’s called offshore retirement. My fellow Asian friends went back to the Philippines where they now enjoy the luxury of having house maids, cheaper accommodations, and bigger houses. Places in Central and Southern America are popular among American retirees.

What is the best Retirement Plan for you?

There is no retirement plan that is suitable for everyone. We all have different lifestyle, income, and levels of risk preference. Understandably, what works for someone will not necessarily work for you. Recent statistics show that people are living longer due to the advent of medical technology advancement, and people’s increasing awareness of their health condition. This is good news; however, living longer requires more retirement savings to ensure that we don’t outlive our funds. Let’s take a look at some of these retirement plans.

·Traditional IRA vs. Roth IRA. Individual Retirement Account (IRA) and Roth IRA are retirement savings offered at work or investment companies like Charles Schwab and Fidelity Investments. It is the money you contribute which are then invested by custodians (commercial banks and retail brokers) usually in mutual funds. The main difference between the two is tax benefits. Traditional IRA is the money you put in the account before taxes and can be tax deductible. The potential interest is tax-deferred until distribution and/or withdrawal when you reach the age of 59.5. The caveat is: withdrawal is treated like an ordinary income and is therefore subjected to income tax. Roth IRA is the money you put in the account after taxes, that’s why distribution is not taxable since you have already paid taxes. Most investors believe Roth IRA is more advantageous than Traditional IRA for this reason. Additionally, there is age eligibility between the two: Less than 70.5 for Traditional IRA, and no age limit for Roth IRA. For more information, visit and

·401(K). Most employees use this account as a form of retirement savings, which is sponsored by the employer. The money contributed is made by the employer and the employee. Say for example you choose to contribute 10% of your income, your employer usually matches that amount. There are variations in 401(K) such as profit sharing and availability of loans.

·Roth 401(K). Some financial experts agree that a combination of 401(k) and Roth IRA is the best retirement plan for individuals who want the highest return on their investments. Dave Ramsey, a financial expert, said that if you want to create millions by the time you retire, it only takes simple planning. After opening a 401(K) account, open Roth IRA as well (if you have earned income). 15% of your income should be invested in both 401(K) and Roth IRA. Visit for more details on his article, “Simple Plans Create Millionaires.”

·Keogh Plan. The driving force of this plan is Eugene Keogh. This is a type of retirement plan for self-employed or small business owners. It’s a pension plan that is tax-deferred, and is set up as defined-benefit or defined-contribution. Its investment portfolio is similar to 401(K) and IRA. To read more about this plan, visit

·Annuities. This retirement plan is generally sold by insurance companies. Fixed annuities pay interest at a set rate and set number of years. Variable annuities parallel mutual funds. Annuities are bought either in lump sum or making premium payments at a set given period of time. The advantage of Annuities is its guaranteed lifetime income thereby reducing investment risk. However, financial advisors are not too crazy about this plan because of the expenses and taxes involve in managing the account. Mortality and Expense (M&E) charges are taken out from your account yearly averaging at 2.3% which is hefty compared to mutual fund’s 1.44% rate. A 7% surrender charge is also not surprising. Moreover, its financial performance is easily beaten by 401(k) and mutual funds. Some still opt for annuities when they are faced with bankruptcy, maxed out on their contributions on other plans, and those who want to avoid probate.

Most people downsize everything such as their house, discretionary spending, and travelling plans as soon as they leave the workforce. Some experts think it’s a recipe for poor living. What usually happens is that retirees utilize their retirement funds like a piggy bank. They break it only when adverse events occur, like the death of a spouse and threatening health issues. Retirement savings should not be a rainy day type of expenditure, but rather a resource for prolonged vacation. Consider hiring a financial advisor as they can help steer you in the right direction. What they do is write an Investment Policy Statement to layout your portfolio objectives, and help you establish the investment strategy that best fit your needs. Creating a retirement savings plan the soonest possible is the key to a comfortable and/or bountiful retirement.

Guidelines on How to Retire Gracefully

·Planning your retirement is a must. Coasting along will not get you the desired end result. What’s important to you? Would you like to travel around the world when you retire? If so, then you must plan on having the financial resources to achieve your dream. Cut back on unnecessary expenses like dining out and frequent movie going. Downsize your mortgage. Sign-up for a retirement plan if it’s not available where you worked. Not making enough money? Where there’s will, there’s a way.

·Nurture activities that you enjoy doing like photography, gardening, flower arrangement, volunteering, writing, etc. When I went on semi-retirement, I spent most of my time gardening, which gave me so much pleasure. I treated my plants and trees much like my children. I speak to them whenever I make my morning rounds. I also coordinated potluck lunches with friends. My husband’s passion is photography. He travels occasionally, and then come home with hundreds of beautiful pictures. He now sells them online. The rate of return on his work is minimal if not dismal, but he finds utter joy in looking at the finished product of those pictures after a tedious editing process. To him, that’s what matters. Sometimes, the simple pleasures in life give us the most gratifying experience.

·Take care of your physical, mental and emotional well-being. If Zumba exercise is too much for you, then Tai-Chi or Yoga might be a better alternative. Or, you can simply take a walk around your neighborhood or nearby park. Adopting a pet might do you good emotionally as well. If you’re a church goer, volunteering at church activities can be satisfying for you. For workaholics, find activities that replicate work based on your corporate experience. Exercise your brain by reading and engaging with people.

·If you find yourself financially strapped, having a part-time job might offer relief and a sense of belonging. Consider the insurance, real estate, and retail industry. Ask for help if you need to. What’s important is to focus on things that make you happy.

Mark Twain said, “Age is an issue of mind over matter. If you don’t mind, it doesn’t matter.” Age is usually the deciding factor when to shut down from a full time career.The popular age to retire is 60 and 65. However, I’ve seen people who chose to retire in their fifties, who had planned it early on knowing (or not) what the consequences lies ahead.I know someone personally who retired in his mid-fifties, but decided to “un-retire” when his wife started giving him domestic assignments, such as running errandsto the grocery store frequently and doing home repairs, which are two things he can live without. Additionally, he realized that spending time with his golf buddies got old pretty quick. I also know some people who are in their seventies, but continued to work because they find their spouses quite unbearable to live with 24/7.

Having a rich life doesn’t necessarily equate affluence. Life can be a meaningful existence if you focus on things that really matters - to you. Perhaps in your youth, you spent most of your time chasing rainbows, that you lose sight of the things you value the most, such as marriage that could last a lifetime, and having a happy family. Counting your blessings daily and consistently working on making a difference to society will bring fewer regrets. Wake-up every morning as if you’re in an extended holiday. Retirement can be the best thing that life has to offer yet.

References:,,, www.daveramsey/article/simple-plans-create-millionaires/lifeandmoney_investing/text3/,, www.investopedia,, Mandating the Probability of Success: A New Approach to Retirement Planning (by John Barber and Dan Laimon)


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