Remember, Your IRA Balance is Inflated by 25% Since the Government Still Gets Its Cut

 

Before I retired, my “retirement income planning” meant shovel as much as possible into my IRA, then throw some extra into taxable savings.  Then one day I’d add Social Security (if it still existed). That was my entire plan, and I suspect many of you reading this are in that same boat.

Fast-forward to my first year of retirement, when I discovered I suddenly had to become an expert in:

• Taxes, surprisingly more complex than when you have straight W2 income
• Roth conversions
• Required Minimum Distributions (RMDs)
• Return of Capital (ROC), meaning that clever investment choice I made actually has a hidden capital gain down the road
• IRMAA, not my great aunt, but a Medicare surcharge if your retirement income passes a threshold
• The Rubik’s Cube of mixing pre-tax, post-tax, and Social Security income, and figuring out the best moves more than a decade in advance

And this is years before I have to deal with Medicare, supplements, and that IRMAA surcharge I didn’t even know existed before 30 days ago.

A surprising number of decisions need to be made years in advance, and some, like when you take Social Security, are permanent.

Sure, there are plenty of experts out there, but they all have strong (and conflicting) opinions. Just look at the permanent cage matches among YouTube financial gurus:

• Roth IRA conversions: brilliant or disastrous? (Dozens of people on both sides.)
• Social Security: take it early at 62, or delay to 70? (Pros and Cons for both)
• RMD strategy: panic now or panic later? (Arguments on both sides)

There is no one-size-fits-all.  At some point, you have to learn enough about all these topics to make decisions based on your goals, whether that’s leaving a legacy to your heirs or partying it away while you’re still around. Most retirement software assumes “maximize assets at death,” which may not match your priorities, plus you can’t take it with you.

So my advice as I sit here rooting for your continued employment to pay into my Social Security is: Look into this stuff now, not the year you retire.

Believe me, as I’m currently kicking myself for some IRA vs. taxable investment decisions I made twenty years ago.

Set Adrift Between Layoff and Revenge

My “forced retirement” wasn’t my first layoff, but it’s the one that stings the most because it came from a company that prided itself on “never doing layoffs.” So I definitely wasn’t looking for that iceberg.

Previous layoffs were easier to handle.  My first layoff was from a startup that completely shut down, so everyone was let go and we were all piled onto the same life raft together, the entire ship lost.  For my next layoff the entire division was cut, so again we all drifted away together, waving to the ship we once sailed, but with lots of company.

This time the layoff was more selective, and everyone – but me – stayed on the big ship sipping cocktails and playing shuffleboard while I sat alone on a raft, watching them recede into their wake.

 

The disappointing part was that no one onboard threw me a life preserver, offered any help.  I am talking about rank-and-file people I partied with at trade-shows, knew about their kids and families - they all just pretended I never existed.  No lifelines. Not even a text.

Maybe it was survivor’s guilt. Maybe they thought helping me would get them tossed overboard too. I’ll probably never know. But I know this: when I was on the ship and someone went overboard, I always reached out.

As I sit adrift on my raft, I see Retirement Island in the distance, and it is an easy navigation to its shore. In the other direction, the periscope of a familiar U-boat cuts through the waves: an old rival, now circling my former ship. I’m tempted to flag it down and join in, to help torpedo the vessel that cast me off.  But the old war no longer interests me, and I know my former enemy will win, with or without me.

So after more than three decades in the trenches, I realize the best revenge is found not in battle, but in a beach chair on Retirement Island, sipping Margaritas, watching from afar as the ship I once served capsizes slowly beneath the waves.

 

Forced Into Early Retirement, and I am not a Government Worker

My boss scheduled a “2025 Planning Meeting” for the second week of January.  I wanted to take it from the car as a conference call, but he wanted a Teams Meeting, so I assumed at the time he needed to show slides.

I called in, and in sitting in a Brady Bunch montage on the Team call was my boss, the CEO, a regional EVP and two HR representatives.  I knew immediately this was a layoff call.

I was magnanimous about it, although it was a chickenshit move to ambush me like that.  I have been laid off before, and the last time my boss gave me a head’s that a layoff-list was being made, that he would try to keep me off it, but he didn’t think he would be successful.  That allowed me to get my ducks in a row and not be ambushed, and I greatly appreciated the gesture.

This time I was treated no better than the junior engineers that also got the axe.  About 10% of the staff was cut, including shutting down all the overseas offices (I ran the US office for this Kraut company).  The 90% rump company remaining in Germany is getting absorbed into the larger parent German company, and this subdivision’s products tabled.

Originally the plan was for the overseas offices to merge over to the parent company as well, but the Germans are getting panicked about their economy and decided to make cuts.  Europeans are not risk takers, and in the end the layoff decision is not surprising as Germany slides further into economic and cultural irrelevance.  The decision all happened before the end of the year and US politics were not a factor any more than the Korea, China and other offices that were shuttered had any influence from their politics.

I was already planning my retirement in 3-4 years, so this move just accelerated those plans.  I told them point blank on the call that “I don’t have to work, I work because I want to,”, which is a 100% true statement.   And while I will certainly miss the cash flow from an emotional standpoint, it isn’t required to maintain my lifestyle.

But I then got the most insulting comment on the call: “We can give you a good reference!”.  Gee, thanks, I am sure there are TONS of jobs waiting in tech for a 50-something business development guy, and your recommendation is going to make all the difference in the world!

My chances of getting another job at a medium-to-large tech company at my age are zero to none.  I just might be able to get into a start-up if I know any of the principles personally, but no one my age is starting companies anymore.  There is an outside chance someone will toss me a consulting bone here or there, but that is the best I can hope.

So realistically my career in tech is over.  I am playing the game of tossing my resume out there and updating my LinkedIn, but by the end of this year I know I will just give up and put “Retired” on my LinkedIn page.

And then what will I do for the next 30 years of my life?  I have pondered that a bit before, and my concern is not money but boredom as I go through these last decades. 

One Reason Old People Don't Update Their Stuff

Walk into an old person’s home and chances that it feels old: old furniture, old decor, old everything.  I used to think that it was because once you get old you don’t care about keeping up with things, or maybe you don’t have money to keep updating stuff, or maybe you don't want to spend money again on something you already updated when you were younger.

Now I realize there is another reason old people don’t update their stuff: they don’t realize how fast time is passing.  I ran into this exact experience with my home WIFI network of all things.

I spent a lot of time putting in a mesh WIFI network into my home in 2018.  I got it working, then pretty much forgot about it.  When I turned on my home devices, they got internet.  If I got a new  gadget, I hooked it up to the network and it worked.

Now 2018 doesn’t seem too long ago (to me), but it is SIX years ago, over 2,000 days.  When I was a kid six years took forever, and I got not one, but two college degrees in six years, which also seemed to last forever when I was a young adult.

And in tech, six years is definitely a huge amount of time, and during that time WIFI got updated, faster, could go further, and so on.   Time had passed me by, and I didn’t even know it since to me in my 50s, six years now seems like six months.

I would have still been oblivious about my ancient WIFI system but I ran across an online bandwidth tester, tried it out and saw it was much lower than the big number that my cable company justifies for their ever increasing monthly rate.  So I spent a whopping $200 at Amazon for a new system and took all of ten minutes to upgrade my home network.  My home network is now five times faster than it was, with a noticeable improvement in buffering and latency.

Now this was cheap and easy to do, so it was not about money or technical ability.  It just never occurred to me how much time had passed since I installed it.  If you had asked me when I put in my WIFI system I would have said it felt like a year or two ago.

So I was getting old inside my house and not even knowing it, which I now realize happens to a lot of old people.  They are just fine with what is going on inside their house, they just don’t realize how fast time is passing outside of it.

 

"Trapped" In California

 

I don’t know how many times I have told myself “I got to get out of this state”, especially during Covid, yet here I am, still, after 26 years and almost half my life.   The main thing keeping here through most of that time was my kids, but now they're launched and out of the nest, the main thing keeping me in Coastal California is the weather and the scenery.

I hate to admit that something that seems trivial in an era of air conditioning is keeping me in a place that I despise politically, but I’ll visit locations and stand outside sweating, looking out and the flat boring land for miles and miles around and think “I’d hate living here even if the politics fit me better”.

To be fair I am a bit immune to the worst California has to offer.  I no longer have kids in the California education system.  I am protected from the rocketing crime rates since I live in an enclave that actually enforces the law.  And I bought into California real estate a quarter century ago so am mostly immune to the high cost of real estate.  But if I were younger, had kids in school, and was looking at one-million-dollar starter homes with no existing assets, I would forget the nice weather and 12-month outdoor activities and move my ass somewhere else.

BUT I do think I will need to leave eventually.  That 12 months of outdoor activities is already slowing down as I age (no one tells out how badly and quickly your body falls apart after 50).  As I spend less time outdoors, the less important the weather is becoming.  Retirement planning, income taxes and the like also start looming larger, and soon the weather will be overrun by other considerations.

But where?

•  Texas - I have ruled out going back to my home state of Texas – it is getting too crowded and dense, all the small towns I remember as a kid are all now absorbed into the major metropolitan areas.  In my lifetime all the main cities will merge into one giant city of Houston-Austin-San Antonio-Dallas covering half the state, one giant suburb with enormous amounts of traffic and endless rows of strip malls. 
  
  
• Arizona - I just got back from Arizona, and while it looks good on paper (low cost of living, low taxes, independent libertarian bent in much of the state) it is too friggen hot AND too friggen tan.  No greenery.  No trees.  Its mountains can be nice, but I need green.  Oh, and its HOT!
  
  
• Florida  - The Villages, which is the largest retirement community in the US, is a hoot, and everyone should visit just to see what it is all about.  It is basically a land-based cruise ship with everyone partying and golfing, and would be fun for a couple of weeks, but would wear thin after that.  Plus it is super hot in the summer, and the topology is pretty boring - flat and few trees in what is essentially reclaimed swamp land.  They just stamp out houses on endless flat land that stretches out for miles, so if topography is important, this is not your place.

     I also checked out the Florida coastal areas, which are nice and green and lush - when they are not mowed over by a hurricane.  Coastal Florida is on the maybe list, maybe more serious if I slow down a lot in my 60s or 70s, and maybe I will swing back for more exploring in another year or so.

• Nevada - Reno has a nice feel: just enough city to be interesting but feels like a small town out in the burbs.  The issue there is the weather is extreme – too hot in the summer, then too cold in the winter.  I know a couple that just moved away from Reno since they hated the temperature swings. Most of Reno is also in a valley in the flight path to the airport, so air traffic noise is pretty bad in most of the neighborhood areas.
  
  
  Tahoe is too expensive – might as well stay in California.  Henderson, Summerlin and the burbs of Vegas have the heat issue, of course, but now also over-development and crowding.  I was in Summerlin for the first time in a decade last summer and was shocked by the amount of development, which isn’t going to slow down.

So nothing is striking me yet.  Next up I will be exploring the Tennessee-Carolinas area.  This is getting out of my geographic comfort zone as I have no family or friends out there, but let’s see how the climate and topography trade off.

The Forgotten Employee

For the second time in my career my company has been acquired and being integrated into a much larger organization.  And while the gears of the large company grind to integrate the engineers, technology and roadmap, I have been forgotten until all the tech stuff is done, which will end up being about half a year.  This exact same thing happened to me about eight years ago.

I have a job, and am getting paid full salary and benefits, but I am not given much to do while this is all happening.  I literally have 3-4 emails a day to address, an occasional conference call, then I am done.  Since I work from home I am free to pursue what other interests I might have after about an hour of work.

This might sound great since it sounds like retirement on full salary pension and benefits, but actually it is a bit boring because I am not really retired.   While I have nothing to do it is not like I can take off to Hawaii or go on a two-week cruise and leave my laptop behind; I am tethered to email and a phone to answer the few items that are lobbed my way from time to time, so I can’t fully check out.  The down time does give me a chance to address a few health issues that I have been putting off, pursue a couple of hobbies more seriously, and start seriously planning for “real” retirement.

I do have to go through a variety of “on-line-training” for new BigCo employees.  I also had to attend in person “new employee orientation” at the US headquarters, and it was a bit humorous with me as a middle-aged guy near the end of his career in a company orientation with about a dozen new Gen-Z hires just out of college.  Talk about culture clash, and maybe I will write about that experience.

Supposedly after this interregnum I will become super busy once again with new products to sell from my previous company (now subdivision), a customer book assigned to me, and will back in Sales Mode with both virtual and in-person selling (so back on the road).  The issue then will be if I really want to go back into full work mode and the grind of present-day business travel.

The last time this happened I left the company and went to another start-up (my present company that is being absorbed) after the integration was complete and my down-time was over, but at my age and stage of life I may just go ahead and pull the chute for early “real” retirement this time around.

Getting Old in Just a Few Pictures

One of the most humbling things about going through my mother’s old photographs is seeing people I am related to go from young adults to old people in just a few photographs.  We all intellectually know this is true of everyone, including ourselves, but the fact of aging and getting old doesn’t really hit us until we are past middle age and feel aging hitting us acutely (as I am now in my mid 50s).  At that point we are no longer able to convince ourselves “that will never happen to me”

By inheriting the family records I see in just a few photographs how people aged from young, vital and beautiful to old people in what for me is a blink of an eye.  Note the modern AI colorization of old black and white pictures, which will be a separate post.

 

 

The super strange part for me is finding pictures of these relatives at my age (mid 50s) from about 80 years ago, and they look super old!  I look pretty good for my age, but my relatives back then at 40 looked 60, at 50 looked 80.  Maybe it’s healthcare, vitamins, diet, or maybe the fact I work on a keyboard and most of the men out on a farm, but it’s a little discerning to see people my age looking decades older.

Of course everyone above - but the bottom one - was dead before I was born.  

I suppose my own photos will make my own life like look like a blink of an eye to whoever goes through my album - if physical pictures even exist - in 50 years.