Retirement: What’s In It for You?

Clients come to Baltimore-Washington Financial Advisors with many questions about their retirement. Often, these are financial — How much money will I need in retirement? How do I draw down my savings for living expenses? But we have found that the most important questions are not financial. These questions relate to having a meaningful retirement and enjoying days without full-time work responsibilities. In May, we tried to provide some answers to these “softer” questions about retirement. Six BWFA clients who retired from the Applied Physics Lab (APL) in Laurel, Maryland, participated in a panel discussion about retirement. They fielded questions from an audience of pre-retirees about their experiences. Below is a brief summary of the discussion.

Family Time, Travel, and Community Activities Equal Satisfaction
Every one of the panelists said that he is enjoying his retirement. Each has enjoyed extensive travel opportunities and good health. Most have family nearby and thrive on being grandparents. Several are pursuing hobbies and working as volunteers in their communities. In response to a question from the audience, the panelists said they would not return to full-time work, even for a “great” APL project. “Retirement is very good,” said Terry Betzer, who retired after 34 years at APL in 1999. “I spend quality time reading and traveling. I like being able to read the paper in the morning�instead of getting to the Lab at 7:00 or 8:00 a.m.”

Temporary assignments, which are often available at APL, have great appeal. “Temp work is a nice transition,” said David Carter, who retired just last year. “I like to maintain my contacts at the Lab, but I also like the freedom of being able to take off for a month to travel with my wife.”

Dennis Kershner, who retired from APL in 2005, quickly grew accustomed to his new life. “Even after just two years, I have gotten into a routine of my retirement,” he said. “It would be tough to give it up.”

For Dennis, retirement is anything but idle. He plays tennis several days per week — “It’s really sweet when you can play tennis at 10:00 a.m. on a Wednesday,” he laughed — and he scouts for properties that his son can purchase and rehab profitably.

Travel has been central to Bill Engelkemier’s retirement. Soon after he left APL in 1996, Engelkeimer and his wife sold their home and purchased a large recreational vehicle. “We were on the road for several years. My son called us �affluent street people.’ We loved it,” Bill laughs. Slowing down recently, the Engelkemiers purchased a house in Pennsylvania.

Ross Hatch acknowledged the impact of age on activity, too. “We’ve gone from taking trips with Earthwatch to traveling with Elderhostel,” chuckled the former Navy officer and APL employee.

Surprises in Retirement
Some of the most interesting comments came when audience members asked the panelists what surprised them about retirement. Terry Betzer came to BWFA in 1998 armed with a spreadsheet he developed to track his investments and to model the drawdown of those assets during his retirement. This quantitative approach is common among BWFA’s clients from APL. While spreadsheets are valuable tools, they cannot capture all of retirement’s complexities. “The way that the cost of living is growing is a surprise,” said Terry. “Total inflation might be 4%–5% or less, but it seems that some of my expenses are going up way more than that. Baltimore Gas & Electric’s rates are going up 52%, and my property taxes are going up more than 10% per year.” “Retirement is not going to be a lot cheaper than when you were working. You need to plan how you will spend,” added Ross Hatch.

Retirees need to shift their thinking about income and spending, said Jim Stadter. “BWFA calls it your �decumulation stage’�where you have a fixed pot of money, but you do not know how long you will live.” Jim said it took him about two years before he became confident his spending level was OK. Equally important, Jim and several other panelists said that BWFA checks their spending plan regularly to make sure that the decumulation phase is on track. For Jim, this was especially important during the stock market downturn during 2000-2002, when he was already retired.

While many panelists said that time with grandchildren is one of their great joys in retirement, they acknowledged that family responsibilities cut both ways. “My wife’s parents are still around, and they are in their nineties. We are helping them a lot. I didn’t anticipate that,” Dennis Kershner said. And aging is inevitable, said Bill Engelkeimer, as other panelists nodded in agreement. Bill said that he’s found “my body has started to degrade, and it modifies what you can do. I don’t know how you plan for it�how you know what will fall apart next.” Ross Hatch put it this way: “It takes longer and longer to do fewer and fewer things.”

Next Panel Discussion in November
BWFA is grateful for the support it received from the APL Federal Credit Union who sponsored the event and from the panelists. BWFA will host another panel discussion at APL on November 7. For more details or to register to join us, please see our seminar page.