Tuesday, September 1, 2015

What's Going On Here?

     You can go on vacation, but you can't get away from your IRA account.

     I've been away for less than two weeks, and Wall Street has gone crazy. What's a poor retiree to do?

     Well, if you're a poor retiree living on Social Security alone, then you probably don't care. Or if you have a good pension supporting you in retirement, then it probably doesn't matter much to you either. But for those us who have no pension, and who have spent a good portion of our lives saving up for retirement . . . that's all we've got!

     So what happens next? Nobody knows -- not your broker at Merrill Lynch, not the expert holding forth on CNBC, nor the reassuring missive that arrives by email from Fidelity or Vanguard.

     I guess we all have faith that over the long term the American economy will continue to prosper and corporate profits will grow along with it. And therefore the stock market will reward those of us who invest in it, either directly in stocks or mutual funds, or indirectly through some retirement plan. If you don't have that faith, perhaps you should be investing in Asia, or gold, or hiding your money under the mattress.

     Regardless, in the meantime we should all keep plenty of cash on the sidelines. Here's the best advice I've seen on that score.

     All the financial experts say you should set aside some kind of emergency fund so you're not forced to sell your assets in the middle of a crisis. Many recommend keeping enough cash outside your retirement account to cover six months of expenses.

     But here's the alternative I like better: Figure out how much you typically withdraw from your savings to cover the gap between your ongoing expenses and your recurring income from pensions, Social Security and anything else. Then set aside enough cash -- it can be inside or outside your IRA, it doesn't really matter -- to cover the gap for five years.

     Yes, five years. That's so you don't have to sell investments when they are down. (You didn't want to be forced to sell your stocks cheap in 2008 or 2009. But you didn't want to sell them in 2010 or 2011 either, not when they were going to be worth a lot more in 2012 and 2013.)

     But the amount you should keep in cash may not be as much as you think. For example, if you spend $3,000 a month, and take in $2,500 a month in pensions and Social Security, you have a $500 per month shortfall. So $500 a month for five years equals a cash balance of $30,000.

     Of course this is just an example, and there's always room for adding or subtracting a little bit here and there (subtract some if you really don't have the savings; add some if you're worried about a sudden emergency expense, or a return of inflation). But you get the idea.

     And besides, maybe the market will go up again next week, and all our worries will be over. I doubt it; but it could happen.

Sunday, August 30, 2015

Some Info. for You Landlubbers

     We were sitting on the beach, staring out across the water of Nantucket Sound, when suddenly someone piped up, "What is a sound, anyway? What's the difference between a sound and a bay?"

Cape Cod Bay & Nantucket Sound

     Nobody knew the answer, exactly, although there were many opinions. Until someone pulled out his smart phone and googled the answer for us.

     So if you landlubbers will indulge my sudden interest in the maritime lexicon . . .

     A sound is a large ocean inlet (such as Nantucket Sound) or a narrow ocean channel between two bodies of land (such as Vineyard Sound). But there must be some flexibility in the definition, because . . . what is Puget Sound? By the way, the word sound also refers to measuring the depth of the water, and is also said of a whale when it dives to the bottom.

     A bay is a body of water connected to the ocean or lake that is surrounded by land on three sides, and is formed by an indentation in the shoreline. We have Cape Cod Bay and Buzzard's Bay here in Massachusetts, and a lot of other bays along the East Coast from Delaware Bay and Chesapeake Bay on south. The West Coast doesn't have so many bays.

Classic cove
     A gulf is a large bay, such as the Gulf of Mexico, the Gulf of California or the Gulf of Alaska.

     So what's a cove? It is a small bay that's usually round or oval in shape with a narrow opening to a larger body of water.

     And how is that different from an inlet? An inlet is typically long and narrow, an indentation of the shoreline of an enclosed body of water.

More of an inlet
     And a fjord is a long, narrow inlet with steep sides created by glacial erosion. You don't have to be in Scandinavia to find a fjord. The Hudson River is actually a fjord.

     Then what's a harbor? A harbor is a bay or cove or inlet where boats are at anchor -- and is often artificially created or enhanced by breakwaters, sea walls or jettys.

     So there you have it . . . why, you can almost believe that you've been out at the seashore for a couple of weeks yourself!

Thursday, August 27, 2015

View from the Cape

     I called Cape Cod a spit of sand. But actually it is a terminal moraine left over from the last glacier which deposited big piles of rocks and other debris when it started to recede some 18,000 years ago. We now call this debris Cape Cod, Nantucket, Martha's Vineyard and -- by far the largest -- Long Island.

     That being said, there's a lot of sand on Cape Cod. We went to the beach on Nantucket Sound, arranged our beach chairs and sat in the sun and the sand for several hours (with plenty of sunscreen).

Looking out over Nantucket Sound
     Usually, the water off Cape Cod is pretty cold. So we were surprised to find it a relatively tolerable 72 degrees or so. It was so warm that I actually went swimming, which shocked B, since as she constantly reminds me, I am pretty much of a wimp when it comes to cold water.

Seymour Pond

     Then we rode our bikes up to Seymour Pond, which is a kettle pond -- a shallow body of water formed by the retreating glacier. Some kettle ponds turn into marshes and bogs. But Seymour Pond is nice fresh water, and small enough so the sun heats it up to 76 or 78 degrees. So the temperature was nowhere near glacial. I not only went for a swim, but I actually stayed in for a while.

Cranberry bog

     We also went to an outdoor band concert, where they were celebrating the birthday of Sadie, a beloved local grandmother. She's 95 years old. The band leader was not much younger than that. But he did a great job, and entertained us with various American classics as well as a soulful rendition of "Old Cape Cod."

Plaque for Tip O'Neill in Harwichport, MA

     Another local celebrity was Thomas "Tip" O'Neill, who was elected to the Congressional seat vacated by John Kennedy in 1952. O'Neill served as Speaker of the House from 1977 until his retirement in 1987. He died in 1994. 

View from the O'Neill monument

     Other than that . . . we've been eating. Clam rolls, clam chowder. Lobster rolls; lobster tails; lobster . . . oops, I mean, chowdah and lobstah, which is the way they say it around here. Which is one of the reasons why I like to go on vacation. You meet people who are a little different, with different backgrounds, different accents, and different views.

George steamed the lobsters for us

Tuesday, August 25, 2015

On a Spit of Sand

     Now that I've been certified as a safe driver, B and I are going on vacation, driving up* to . . . well, you tell me where.

     As soon as we arrived we took our bikes out to the National seashore and rode the loop through Beech Forest and out to Race Point Beach.

Fog bank over the ocean. Blue sky above.
     The trail is about six miles long, making its way up and down the dunes.

Curving around a sand dune

     It goes past the airport, where I stopped to take a picture ...

Hmmm, maybe they don't want me photographing here ...

     We finally arrived at the beach.

The dunes, the beach, the ocean

     The water was a little too cold to go swimming.

Skipping stones in the Atlantic Ocean
     There was a fishing boat out there in the fog.

     We then sweated our way back up the hill, put the bikes back on the car, and drove into town, where we wandered around with all the other tourists.

Commercial St.

     We ate lunch at a place near the pier called the Surf Club.

Guess what I had for lunch!

     I made a new friend . . .

Which one is the real fisherman?

     Then we headed back to the car,

One of the more colorful storefronts ... tattoos are available
     past the Governor Bradford restaurant.

William Bradford was governor of Plymouth Colony, 1621 - 1657

     But first, B had to find a bathroom . . .

It says:  Open for "business" 8 a.m. - 10:45 p.m

     And if you haven't figured it out by now, we're vacationing on Cape Cod. We spent the day in Provincetown, as far out on the Cape as you can get.

     Provincetown is located on what is referred to as the Lower Cape, even though it's north of the Upper Cape, which is where we stayed last year in Falmouth. If you say that Provincetown is on the Upper Cape, they know you're not from around here.

     * Another way they know you're not from around here:  If you say you're going up to the Cape. That means you're from someplace else, like New York, New Jersey or Pennsylvania. If you're a real New Englander, you say you're going down to the Cape, since the Cape is to the south. That's how the Bostonians tell if you're "one of us," as opposed to one of those tourists from somewhere out to the west where the yahoos live.

Saturday, August 22, 2015

The Money You Save May Be Your Own

     My new auto insurance bill came last week, showing a $120 increase for the next six-month period. Yikes! So I got on the phone and called my agent. She told me that my discount had expired from when I had taken the Motor Vehicle Accident Prevention Course three years ago.

     So I had to take the course again. You can sign up and go to a class. But I elected to do it on the computer. It consists of a series of pages that review all the stuff you already know about auto safety. The pages are timed, so you can't go too fast, and periodically you have to answer a question to make sure it's you taking the test, and not somebody else.

     The minimum amount to time allowed for the test is six hours. Six hours of sheer boredom. But it does remind you of a few things. And it does save you 10 percent on your auto policy for three years.

     So here are some of the things I found out from taking the test. You're not supposed to drink and drive. You're not supposed to speed or roll through stop signs or run a red light. Personally, I have never run a red light. Have you? If so, you're not alone -- 56 percent of drivers admit that they have!

     Here are a few other things I found surprising -- or if not surprising, at least telling . . .

     People over age 65 make up approximately 12 percent of all drivers. In general they get into fewer accidents than other age groups. But people over 65 account for 16 percent of crash fatalities, presumably because when they do sustain injuries they are less likely to survive them.

     I was also surprised to find out that people over 65 account for 19 percent of pedestrian fatalities. So be careful when you're crossing the street or walking through the parking lot!

     In 2010 -- the figures they had on the test -- there were 32,788 Americans killed on the road, many fewer fatalities than the bad old days of the 1960s and '70s, before air bags and seat belts, when over 50,000 people were killed each year. However, I recently read on CNN that so far in 2015 auto fatalities have actually increased over last year, and they are speeding along at the highest rate since 2007.

     A little less than 5 percent of fatal crashes are due to a driver falling asleep. You're most susceptible to falling asleep when you're sleep deprived, obviously. But people are also more likely to fall asleep at the wheel when they're driving alone, driving at night, driving on long trips. Truck drivers are more likely to fall sleep than regular drivers.

     About 12 percent of fatal accidents involve large trucks.

     About 15 percent of highway fatalities involve a motorcycle. Per mile driven, a motorcyclist is 34 times more likely to die in a crash than a passenger in a car.

     Some 30 percent of crash fatalities involve drivers who are under the influence of alcohol or drugs.

     But even slightly more than that -- 31 percent -- are caused primarily by speeding.

     The reason speed is so dangerous is because it cuts your reaction time if something goes wrong. At 55 mph, by the time you recognize a problem, react and then brake, it will take about six seconds to stop and you will have traveled 100 yards. At 70 mph, it will take the same six seconds, but by then you will have gone over 150 yards before you stop -- that's 50 more yards when you can run into something, or someone.

     There's also a reason why speed is so deadly. I don't pretend to know the physics of it. But what causes injury and death is the force of impact against the human body. The force of impact is in direct proportion to the weight of a vehicle, which is why, all other things being equal (which they rarely are), heavier vehicles are safer than lighter vehicles. But force of impact has a squared relationship to speed, which is why, no matter how equal or unequal everything else is, you're a lot more likely to suffer severe injury or death at 70 mph than you are even at 60 mph.

     So there you have it. I'm sorry. I can't offer you a 10 percent discount on your auto policy. But at least my policy will be going up only $40, instead of $120 for next year. And hopefully, I'll stay alive long enough to reap the benefit!