The Road To Retirement

“The Road To Retirement”
Mark L. Morelli
Madison, CT

November 2015
I have been awarded a contract to write a technical book. The working title is “Practical Guide To Accelerated Stress Testing: Introducing Market Feedback Analysis”. I plan to complete the manuscript by October 2016

I have completed more than 25 articles for Seeking Alpha.

August 2015
I completed four technical papers. Two will be presented at IEEE ASTR (September in Boston) and two at RAMS (Jan. 2016 in Tucson, AZ).

Have written 15 articles for Seeking Alpha.

July 2015
Moved to new house in Madison, CT.

June 2015
I am in the process of drafting four technical papers which I plan to present at IEEE ASTR (September in Boston) and RAMS (Jan. 2016 in Tucson, AZ). More updates on this later.

I just started writing for the financial site Seeking Alpha.

May 2015
I recently returned from a hiking adventure in Tucson, AZ. I logged over 30 miles in the deserts and mountains which surround the “sunniest” city in the U.S. I also had the pleasure of visiting one of the best displays of aircraft in the country, the Pima Air Museum. I documented the trip in a slide show.

March 2015
Over the next few months I’ll be documenting the investing and retirement planning process that I’ve used to get to this point so far (and what I plan to do as I transition further into Phase II). Look for this articles on various social media and financial sites.

  • Phase I (working)
    • Step 1 (budgeting for spending and investing while working)
    • Step 2 (investing and financial activities while working)
    • Step 3 (living and non-financial activities while working)
  • Phase II (living in retirement/encore career)
    • Step 4 (budgeting for spending in retirement)
    • Step 5 (investing and financial activities during retirement)
    • Step 6 (living and non-financial activities during retirement)

As part of Phase II, over the next few weeks I’ll be researching and writing technical papers that I plan to present at the 2016 Reliability & Maintainability Symposium (RAMS), which will be held in late January 2016 in the sunny climes of Tucson, AZ, a city that I’ve visited well over 30 times as part of my original Phase I career as an engineer. and also at the IEEE ASTR workshop in Boston, MA during Sept. 9 – 11, 2015. Click here for a LinkedIn posting that provides details for a tutorial that I plan to present regarding accelerated stress testing.

I’m also considering a hiking trip to Tucson for late-April or early-May, which I plan to use as a test case for a potential business involving “off-the-beaten path” travel and activities.

I am also building up a reliability consulting business, likely under the umbrella of MathMann Enterprises, which will feature an emphasis on field data collection and analysis, accelerated stress testing (AST), Highly Accelerated Life Test (HALT, and Highly Accelerated Stress Screening (HASS).

February 2015
Quick retirement checkup:

Use this three-step approach to see if you are ready for retirement:

1. Create a multi-year budget. In Col A sum all of your anticipated spending for the time that you expect to be in retirement. Pick this time based upon life expectancy calculations (not something you just read online from a blogger). For example, in the 19th century Gompertz developed a statistical distribution for life expectancy that has held up today based upon demographics and actuaries (Ref: http://en.wikipedia.org/wiki/Gompertz_distribution). The typical 62-year old male can reasonably be expected to live another 20 to 25 years — NOT 35 or 40 years. Include inflation. While inflation has been low as of late, expect it to be about 3% or 4% a year over a relatively long period of time.

2. In Col B add your investment gains for the time expected to be in retirement to your expected nest egg at t = 0. Use reasonable outcomes. No, you probably won’t make 9% to 10% a year on your entire portfolio. Fidelity estimates the typical balanced fund of stocks/bonds/cash with minimal trading will grow 4% to 6% per year over a 20 to 30 year period.

3. If the sum of Col. A is less than the sum of Col. B you are ok. If not, accumulate more money or reduce spending 🙂

***************************************
I’ve created a Facebook page for exchanging information on early retirement.

Links to helpful retirements articles:

1. Early retiree income bridge: http://www.foxbusiness.com/personal-finance/2015/02/27/how-early-retirees-can-build-income-bridge-930516190/?intcmp=obnetwork

2. Dangerous assumptions to make in retirement: http://finance.yahoo.com/news/4-dangerous-assumptions-could-hurt-060000724.html?soc_src=mediacontentstory&soc_trk=tw

3. Test drive your retirement plan before you retire: http://time.com/money/3615581/test-drive-retirement/

4. The center of gravity for retirement investors (or what is the optimal asset allocation to have): http://www.forbes.com/sites/rickferri/2015/02/06/the-center-of-gravity-for-retirees/

5. Do you have the right retirement planning tools?: https://www.fidelity.com/insights/retirement/5-steps-to-make-retirement-easier

6. Don’t be a penny pincher in retirement: http://www.wsj.com/articles/dont-spend-old-age-pinching-pennies-1422148300

7. How to spend during retirement: https://www.fidelity.com/insights/retirement/4-ways-to-approach-retirement-income

8. Dividend stocks can be good for your retirement: http://www.marketwatch.com/story/rise-above-low-interest-rates-with-these-dividend-stocks-2015-01-22?link=WSJDNportfolio_news_top

January 2015
After about 7 months of retirement all is (fairly) well.

I do not write freelance articles for either The Motley Fool or Benzinga.com as a change in their business models resulted in a reduced demand for freelance workers (including for me).

I occupy my time by going for lots of hikes (even in the winter here in Connecticut), playing basketball every Wednesday, reading, listening to music, and starting to learn about the beer brewing process. I currently have two batches underway. In the farthest (very far) reaches of my mind I have considered starting a beer brewing business.

In addition, I am currently exploring consulting opportunities in the engineering field, including with my former employer.

So far I am adhering pretty well to my retirement budget. Currently I am spending about 20% less than planned and my investments are earning a bit more than projected. More on this in future posts.

May 2014
I retired in May 2014, at the age of 55, from United Technologies Corporation (UTC) after a 32-year career in engineering, working at the United Technologies Aerospace Systems (UTAS), Otis Elevator Co., and Carrier Corp. divisions.

I followed a conservative investment philosophy through the years, taking advantage of the UTC 401k plan which holds index funds (based upon the SP500 and MCSI EAFE indices) and a stable value fund, a taxable brokerage account containing mostly dividend growth stocks and bond funds, and a federally insured money market account at a low-cost credit union (where I also have a no-cost checking account).

Using a relatively conservative spending and budget plan I was able to save and invest an amount of money which I felt, invested correctly over the entire retirement horizon, would allow me to live approximately the same lifestyle that I had prior to retirement.

I have started implementing my retirement plan and so far things are working out ok. My spending is slightly below my anticipated levels and my investments have slightly exceeded expectations, although my portfolio is down a bit so far in 2015.

I developed a spreadsheet which tracks my current portfolio and my retirement budget, including my UTC pension, dividends, and income from bond funds. I am planning out to ages 85 (30 years of retirement), 92 (37 years), and 95 (40 years). Longevity runs in the family (three grandparents lived into their nineties and both parents are still alive and healthy in their late 70’s). Based upon my projections (which are very conservative) I shouldn’t run out of money under any of the three scenarios. My family can expect to receive an inheritance under this situation.

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