A carryover from this past Christmas season was a gift for the entire family that’s brought considerable joy- an online education subscription platform called MasterClass where viewers can access tutorials and lectures pre-recorded by celebrity experts in various fields. Started in 2014, almost 200 celebrity video podcasts (60-120 minutes of educational content broken into several segments) are available on a wide variety of subjects including Fitness/Wellness, Cooking, Writing, Knitting, Farming/Gardening, Music, Acting, Photography, Business/Entrepreneurship, and dozens more. Even subjects in which one may not have a direct interest are entertaining and worth watching. It’s expensive up front- must pay the annual fee of $180 (you can get refunded in the first 30 days)- but the content has been excellent, and certainly not “puff” pieces. The question will be whether we renew after the first year. I suspect not as we’ll probably run through all the ones we want to watch, unless they add considerably more content which keeps our interest.
www.masterclass.com
On to retirement subjects. With all the free time to fill these last 10 days thanks to COVID, I was able to take a thorough look at the full financial picture for 2022 and consider potential changes. The last two months of 2022 and this first month of 2023 will be considerably more expensive than other months, but otherwise, I don’t think we’ll be spending so much in 2023 since we won’t have to fit out a new home.
Related to the above, I heard from several sources that there’s (at least) one mental shift that retirees have to make the first year of retirement- get used to tapping into the retirement nest egg instead of steadily contributing into it like we’ve been doing the past 40 years. Well, I finally did tap into it at the end of the year, and even though it was a very small amount, I didn’t care for it at all. Not sure I’m ready for that mental shift. Perhaps that mental state will change when the nest egg is back to growing instead of shrinking like it did in 2022.
So all this leads to the main change for 2023- activating my Social Security effective this March. The cash flow will go from negative to a healthy positive month-per-month with much of the excess going into investments. That should change the mood quite a bit. It also means I’ll probably drop the part time golf starter job come April. I’ll miss some of the job perks (cost of golf is much cheaper), but will very much enjoy having the schedule flexibility back.
I tried to accurately predict how turning SS on will impact the tax picture, but there were too many unknown variables to factor in- there’s the drop to almost zero for W-2 documented income and the addition of the civil service annuity which completely changes our tax profile from the past several years. As we work the 2022 taxes between now and February, we should have a better picture of how 2023 taxes will look with SS factored in. And no state income tax for 2022 and beyond!
So now we’re looking at dividend stocks and tax-free bonds, all part of the big picture…..more on that in a future blog.
Great point on the mental aspect of beginning to spend the retirement vs. putting money into it. In addition to the mental change that goes into being ok spending monies you have worked hard over the years to grow, protect, and create wealth for retirement there is another mental adjustment for some. You nailed the first one and the other one is asking/answering the question do I need to leave anything to my children or spend it. Many feel compelled to be able to pass a nest egg onto their children and others will simply spend what they have saved.