2012 has been an interesting year that included bidding a fond farewell to Faux News, my 64th birthday, Barak Obama’s reelection, a new blue ray player, and a new camera and several milestones.
This summer, Aunt Mildred, Dad’s brother John’s wife passed away. This fall Johnny and Sue Gray (Dad’s sister) celebrated their 65th wedding anniversary. Shortly after that, Uncle Charlie Hamby passed away and recently, Aunt Gurla, John Watson’s wife. Aunts and uncles are getting thin on the ground.
Last year’s round of Christmas letters brought news of Peter Newcomb’s passing. Peter and I worked together at Combustion Engineering. Peter was a key part of the management of our simulator upgrade business, and was, like me, a former Navy Nuclear Propulsion professional. Peter was an interesting character who just missed a walk-on as offensive end at Penn State and worked for Pensky Racing in his miss-spent youth. One summer, motorcycling with his wife on holiday in North Carolina, Peter road by the farm and noticed the sign and asked about it on his return to work.
Charlie was notable in his dedication to the farming way of life and his active support of farm land preservation. Charlie was eloquent in his recollections of the good times had on the West Rowan, NC farms during the rough times of the depression. The Hambys, Watsons, and Bargers farmed the land at the west end of Sherrils Ford Road with the Watsons and Bargers on what was to become the extension service farm, “state farm” next door to today’s Hamby Brother’s Farms. One quote that has stuck with me over the years is, “I’m a farmer because I’m too stubborn to work for somebody else” Charlie also actively supported responsible hunting by leasing a tract for dove hunting to the local game preserve. Charlie was a character always ready with a ghost story for the nieces and nephews.
Gurla (Barger) also spoke fondly of her years growing up on the farm, particularly recalling how the three families would work the fields together and would help each other in times of hardship. This sort of helpfulness was a farm life tradition with 3 generations and sometimes 4 living on the farm. These were the days when mechanization was beginning. During the depression, my dad’s family worked the land with mule and horse teams. After the war, they began to mechanize and shifted from tobacco and cotton to dairy production. Uncle John was the leader of this transition, introducing ideas brought home from NCSU School of Agriculture.
Back in the day, people actually married the girl next door. Mildred Watson was dad’s girl next door and Gurla Barger was John Watson’s girl next door. As you drive around west Rowan County, you see names like Berringer Road, Hildebrand Road, etc, named for the farmers who built them for access to Sherrils Ford Road or the Statesville Road. During the pre-mechanized period, farms produced livings for several of the sons. With mechanization, national, and now world commodity markets, it is a challenge to support one family and children often move to the city as we are seeing in my cohort and our children.
Now, most of us are wage slaves in varied occupations and scattered all over the south east. Only a few cousins still farm, notably Louise Watson and her husband Joe Dean and Paul Hamby who does corn and beans on Hamby Brothers Farm. One second cousin is working on a microelectronics PhD, something about sharks with lasers. Another is a genetic biologist and is actually studying reef shark migration using DNA analysis. Another is a nurse. Cousin Jackson is in the large animal veterinary pipeline at Kansas State. Another is an undergrad at NCSU, judging from his Facebook posts, majoring in NCSU sports fan. Another has just started UNM and is either undeclared or unconfessed. And cousin Dustin is angling to work as a race car mechanic for one of the NASCAR teams. Others are IT professionals, cosmetologists, farm land preservationist, wilderness preservationist, you name it.
You know you’re old when you start reading mail from Social Security
Will you still love me when I’m sixty-four? Well, I’ve made it past that milestone and have actually been reading the Social Security Administration mailings I’ve received for the last two years. In the past, I would file them with the tax records after taking a brief glance. Needless to say, my retirement planning is changing from strategic to tactical.
I’m in that brave new world of defined contribution retirement. The strategic part is that I began saving for retirement in 1972 and believed Billie Holiday when she sang, “God bless the child who’s got his own.” Early on, I did not like the idea of leaving my retirement to the good graces of others and have been a conservative retirement saver. I also have a good financial advisor at Essex Financial Services which is the top ranked independent financial planning company in Connecticut. Hooking up with EFS was a beneficial side-effect of Mom’s injury back in 1993. The law firm who did Mom’s estate planning referred me to them. Between the two I’m well positioned to retire at 65 should I wish to while maintaining my standard of living.
It is important to do some careful planning as transition approaches because time value of money things can be counter-intuitive, particularly when Social Security is part of the mix. I found a good planning tool at http://www.esplanner.com that can do basic time value of money things. The basic planner is free and serves as a sales tool for their software and web services. The basic planner can function in accumulation mode or in economic mode. In the traditional accumulation mode, you tell it how much yearly income you would like in retirement and it determines the assets you’ll need to accumulate to produce that income. In economic mode, you tell it what your assets are, how they behave, and your obligated expenses (debt and other contractual obligations) and it will tell you how much discretionary spending your assets can support considering Social Security.
The model presents things in terms of your obligated expenses (taxes, contractual expenses, Medicare Part B, and your additions). Discretionary spending is anything not included in the obligated expenses Way cool. This is how I determined that I was OK. The model lets you add life stage expenses to the obligated side of the ledger. These may be things like eldercare, college expenses for offspring, or capital expenditures for home, cars, boats, etc that are one shot or recur for a few years.
When to take social security is the counterintuitive bit. Not having a surviving spouse, it is simple for me but the complexity of Social Security law with surviving spouses, disability, two earnings histories, two ages, two longevities, etc in the mix makes for a complex optimization problem. Esplanner has a tool for this problem too, unfortunately not free. In my case, it concluded the obvious, wait until 70 to collect Social Security. This increases yearly payout by 1/3. If you live to 85 (a reasonable assumption given aunt’s and uncle’s longevity), you break even. The counter intuitive bit is that this actually lets you increase you standard of living by freeing some assets held in reserve to produce late in life income for higher yearly discretionary spending. I would have expected being fully out of pocket for five years to have the opposite effect but the increase guaranteed (assuming Dec 2012 law) late in life income gives the opposite result for me.
The optional fee-paid models also lets you make assumptions about investment behavior and runs Monte Carlo simulations to determine the 95/95 spending supported over an ensemble of several hundred investment performance and yearly inflation random walks out to age 100. It also has an upside planning mode (a third option) that assumes that all equity investments are lost. Given this scenario, it does a Monte Carlo analysis to determine the 95/95 income that your bond investments can produce.
The basic planner does best estimate planning. If you guess the ensemble average investment performance and inflation rate conservatively (lower investment yield and higher inflation shrinkage) you will be ok but with lower predicted spending rates. Given that model initial conditions change each year as you spend and investments perform or not, it is good to repeat the exercise every year or so planning income harvesting for 2-3 years out.
This outcome is highly dependent on your total assets and the split between tax-favored and taxable accounts. You have to run the models for your individual initial conditions and assumptions. And the model produces predicted results. Actual results will differ.
At Last, a Real Camera
I finally tired of point and pray photography. With retirement approaching and time to kill, it was time to acquire a real camera. My pick is the Sony Alpha 65, a digital SLR camera, but with a twist. This camera uses a half-silvered fixed mirror that passes most of the light to the main sensor but splits some to a second sensor that services the viewfinder and phase shift autofocus sensor. The viewfinder is electronic which lets the camera show technical info and settings in-set in the finder. The finder design is excellent. I can see the full frame with my bifocals on and a diopter correction makes it possible to focus without them or I can let Auto do that chore. The finder also has a way-cool artificial horizon that lets you level the camera in pitch and roll. A pure optical finder can’t do this trickery at all. A hybrid finder can show a much smaller amount of information, usually mode, shutter speed, and aperture.
The fixed mirror makes the camera quite and low shake, just a focal plane shutter is moving. The shutter and electronics are capable of 10 frames per second until the burst buffer fills. The camera can also shoot full motion HD video in addition to high quality stills. The autofocus is like that in a motion picture camera. It continually focuses the camera as the subject moves and allows use of the zoom during filming. The auto exposure logic manages passable sunsets and indoor candids. This is the first camera to get them decent.
Being an enthusiast’s camera, it is also capable of full manual exposure and focus. In this way, it handles somewhat like a film camera but aperture and shutter speed are set using a front finger wheel. You have to toggle between them. Most of the time, you pick one and let Auto pick the other. Another convenient control lets you manually bias the exposure and you can configure the camera to take automatic bracketed 3 or 5 frame bursts.
So far, I’ve avoided writing politics here because I know many of you are set in your preferences and won’t be persuaded. But, many of you are just getting started. I’ll write a bit about my biases at any rate. First and foremost, I’m a city mouse. I grew up in small town New England on a river and surrounded by woodland. Gales Ferry, CT ( the Ferry) was a great place to grow up, but I’ve become a city mouse.
I was fortunate to go to a good private high school with a twist. Norwich Free Academy provided high school services to Norwich and the surrounding towns on a contract basis. That is to say, it had elements of a public school but also elements of a private day school. I was fortunate to have good teachers and one taught me civics. I firmly believe that whatever our political preferences, between elections, we all should work together for the good of the commonwealth.
The two great inventions of man that make everything possible are written language that allows us to have an institutional memory that is potentially but not necessarily accurate and the city that brings us together to specialize and trade. Life as we know it today is a result of our making effective use of these two enabling inventions. Great cities are more than the sum of their parts and owe their essential character to the interaction of those parts to make something more than the whole. Technically, they are systems. A system is an entity whose existence results from the mutual interaction of its parts.
When you look beneath the superficial analysis offered on the for-profit news or even NPR, when you look at the long analysis pieces in journals like The Atlantic Monthly, you see that our divide is between city mice and country mice. The city mice understand the benefits of living and working together and are willing to chip in for the common good. Many things that are just there in the country must be preserved and maintained or provided in an organized and engineered fashion in the city, things like open space, woodland for recreation, etc must be reserved and maintained to sustain the resource when exposed to concentrated use. Water, waste disposal, environmental quality, all require greater and more sophisticated effort than in the country because of scale. But because we are concentrated, we bring together critical masses of resources and talent to do things that don’t happen in the country. And we all realize that these advantages of membership require us to pay our city club dues (taxes).
That connection is less strong in the country. Many individuals seek country life because they find different things to value in a rural setting including a sense of freedom that results from the lower density of people in rural areas. Rural settlers provide their own water and sanitary services and schlep their own trash to the transfer station because the population is too diffuse to require doing these things as community services. Yet we still have to be good stewards of our land and follow good practices to preserve clean air and water to the benefit of both city mouse and country mouse. Because the country is less densely settled, the challenges and conflicts are different and a one size policy does not fit both our dense urban areas and the Nebraska outback with its 500 person Connecticut-sized counties. Techniques and doctrine that are adequate in the country fail under the weight of concentrated life in the city.
I view government to be much like a gardener. The gardener clears his garden patch, amends the soil, and maintains a proper environment in which his garden plants can prosper. The sower sows seed on prepared soil, unprepared soil, and rock. The seed falling in the seed bed germinates and grows well while that landing on sand and rock does not grow. I was fortunate to land in good soil. Like Paul realizes the importance of maintaining healthy soil on Hamby Brothers Farm, I realize the importance of maintaining healthy national soil so my second cousins and their kids can prosper too.
Many of our differing political preferences follow directly from our urban or rural living choices. One school of thought believes we’ve chosen where we live to be consistent with our political taste. Another believes that cities, by their very nature, are liberalizing forces in our lives. I lean to the second of these opinions but I have seen indications of the former in my cousin’s choices of places to retire.