REAL ESTATE PRICES in California are through the roof. The price of a smaller home in our neighborhood just sold for $80,000 above the list price. Not only is housing expensive for retirees like us, but also the cost of living in California is very high. Gas, food and taxes are a lot higher here than in other places favored by retirees, such as the Sunbelt. When I was going to school, I was never good at math. In fact, I needed a tutor to get through algebra. But I know enough to calculate that—for the price of our house—we could move to another state, buy a nice home, plus a vacation home, plus a Range Rover for the garage. It’s very tempting, especially when I climb those 18 steps on my way to bed each evening. If we asked a financial advisor, he or she would probably tell us to put the for-sale sign out front and start packing our bags. But my wife and I have no intention of moving to another state with a lower cost of living. We've learned that retirement living isn’t just about how much money and stuff we have. It’s more than that. It’s about whether you enjoy your life. That’s the question you should be asking yourself before you make any major life-changing decision. It’s the true test of whether your retirement is on the right track.

I’M SAYING GOODBYE to an old friend I’ve known for 35 years. We had a special relationship that enriched my life in many ways. Although I’ll be moving to a new city and will never see my old friend again, I’ll always be grateful for our relationship, and how it helped me financially and emotionally. You see, as I put my dear little friend—a one-bedroom, 789-square-foot condominium—up for sale, I’ve come to realize how important it was to have a home that helped me live below my means. Our relationship over the years had its ups and downs. It would have been nice to have a larger home, so I could have offered out-of-town friends and family a place to stay. It would also had been more convenient to have a washer and dryer in my home, so I didn’t have to lug my laundry down to the appliances in the garage. I have to admit that moving to a larger home crossed my mind occasionally. A few years after I bought my condo, I considered purchasing a nearby 2,258-square-foot house with three bedrooms and two bathrooms. At the time, this single-family home was selling for $275,000, roughly three times more expensive than my condo. That single-family home has appreciated nicely over the years and is now listed at $1.2 million. Instead, I stuck with my condo, for which I paid $90,000 and which was recently appraised at $377,000. I ask myself, “Would I have been further ahead financially if I’d bought the larger, more expensive home?” It’s difficult to make an accurate assessment without knowing the total cost of owning each property. A bigger house comes with bigger expenses. That’s one reason I didn’t buy the house. When I looked at it, it already needed a new roof. I also didn’t need a house that size. Indeed, I have no regrets about my small, less expensive condominium. It’s benefited me in at least nine different ways: The condo meant low fixed expenses, including modest mortgage payments, property taxes, utilities and insurance. It helped me have hope for the future, because I could save for my long-term goals. It allowed me to make maximum contributions to my 401(k) plan. It also allowed me to contribute to a traditional IRA, a Roth IRA and a personal savings account. It gave me the financial leeway to build up a six-month emergency fund. It helped me live free from financial stress. It allowed me to become financially independent, including the freedom to retire at age 58. It helped me help others. I was able to quit the workforce, so I could assist my parents as a caregiver. Most important, it put an affordable roof over my head, keeping me safe and secure during difficult economic times. The important thing to remember when purchasing a home: Buy one that you can afford, so you won’t have to mortgage your financial future. That’s exactly what I did—and I’m thankful for it. Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor's degree in history and an MBA. A self-described "humble investor," he likes reading historical novels and about personal finance. His previous articles include On My Mind, Turning the Page and Journey's End. Follow Dennis on Twitter @DMFrie. [xyz-ihs snippet="Donate"]

MY DOCTOR TOLD ME that my white blood cell count has been trending lower for the past five years. He was concerned there was something going on with my immune system and wanted me to see an oncologist. The oncologist performed a number of tests and couldn't find anything that would have caused my condition. He wasn't concerned about my ability to fight off infections because my absolute neutrophil count was in an acceptable range. He went on to explain that neutrophils are one of the most important types of white blood cell, because they’re a first responder to any infection. They can travel through the walls of blood vessels and tissue to combat injury and illness. That got me thinking about other parts of my life—and I realized there are financial neutrophils, which also act like first responders. They come in different forms: a financial asset, an insurance policy, your spouse, a best friend. Their job is to combat those unexpected expenses that threaten your financial security. To do this, they need to be readily available, so you can deploy them at a moment’s notice. According to a 2015 report by the Pew Charitable Trusts, 60% of households experienced one or more financial shocks over the prior 12 months, with the most expensive shock typically costing $2,000. Pew defines a financial shock as an unexpected expense, such as a job loss, injury, illness, death, or a major auto or home expense. The best first responder against a job loss, as well as an unexpected household or auto expense, would be a six-month cash emergency fund that would cover your living expenses. This would allow you time to find another job and pay for any major repairs. If necessary, you can also use money from a Roth IRA, because you can withdraw your contributions at any time without paying taxes or penalties. The Kaiser Family Foundation found that 26% of U.S. adults had difficulty paying their medical bills over the prior 12 months. This number includes people who have health insurance. High medical expenses can lead to financial bankruptcy. The best first responders against an injury or illness would be a combination of health insurance, a health savings account, disability insurance and a six-month cash emergency fund. Here are some other first responders you might deploy when unexpected expenses hit: Term life insurance offers low-cost financial protection, should your spouse or significant other die. Home and auto insurance can help protect you from natural disasters, such as floods, fire, earthquakes, hurricanes and tornadoes. A personal umbrella liability policy provides added protection against legal claims made against you. A home equity line of credit and a credit card with an available balance can help cover major expenses when you’re short on cash. And don't forget family and friends. They can be a valuable resource in protecting you from unexpected costs. According to a Wall Street Journal article, "an estimated 34.2 million people provide unpaid care to those 50 and older. These caregivers, about 95% family, and long the backbone of the nation's long-term care system, provide an estimated $500 billion worth of free care annually." Having family and friends nearby, who are willing to provide assistance at times of need, can save you thousands of dollars. First responders are not intended to grow your portfolio, as a stock would.  Instead, they protect you from sacrificing your financial future for an unexpected major expense. They can also help you avoid bankruptcy. They make you feel safe and secure, offering invaluable peace of mind. Dennis Friedman retired at age 58 from Boeing Aerospace Company. He enjoys reading and writing about personal finance. His previous articles include Truth Be Told, Mind Games and Looking Forward. [xyz-ihs snippet="Donate"]

IF SOMEONE ASKS ME what my favorite day is, I’d have to say the second Wednesday of the month. That’s when my Social Security check gets deposited into my checking account. I’ve received three checks so far and each one has been a joy. The experts might be right when they say retirees who have predictable income are happier. At age 70, I feel like a little boy who just got his first bicycle. I waited a long time for my first check—and it was well worth it: I now have the best income annuity you can own. Compared to annuities sold by insurance companies, Social Security has better inflation protection, it’s taxed less heavily and there’s less credit risk. Because I waited until 70, my check is large enough to cover our overhead costs. That larger check reduces the risk that our investment portfolio will run out prematurely. We can spend more freely knowing we have a financial backstop in my larger Social Security check. Delaying my benefits has lowered our taxable income. While I waited to claim Social Security, I was able to do larger Roth conversions, and those mean I’ll have smaller required minimum distributions starting at age 72. If I die tomorrow, you could argue that I made the wrong decision in delaying Social Security—and you might be right, though my wife will get my benefit as a survivor benefit. On top of that, from a financial point of view, dying tomorrow isn’t my big concern. Instead, what would be more worrisome to me is watching our savings dwindle in our later years—and be left with a smaller Social Security check to fall back on.

SOME PEOPLE SAY I eat like a dog. I eat the same food everyday. For breakfast, I have egg whites with mushrooms on a whole wheat tortilla, and oatmeal with fruit and almonds. For lunch, I have a salad of tomatoes, cucumbers, carrots, avocado and baby spring mixed lettuce, and usually a nonfat bean and rice burrito.  For dinner, I have vegetables like broccoli, cauliflower, spinach and squash with fish or poultry. When I feel adventurous, I might have a turkey burger with a little mayonnaise. My lifestyle generally is just as disciplined as my eating habits. Some people might describe it as plain and boring. I live in the same small condo I bought more than 30 years ago. I drive a 2010 Ford Fusion, which I plan on keeping until it becomes too costly to repair. I exercise every morning, usually at the same gym. I go to bed every night at 9 p.m. and wake up every morning at 4 a.m. Every day, I listen to the same music from the 1960s. As you can see, I don't like change and I'm very disciplined in how I live my life. The question I keep asking myself is, why can’t I have the same discipline when it comes to investing? Last year, I wrote in a blog about the four simple investing rules I follow. Rule No. 4 says I control my emotions by tuning out the noise and rule No. 3 says I don’t make significant changes to my portfolio. Lately, I have done just the opposite. In 2017, I lowered my stock position from roughly 50% to 25%, plus I made changes in the mutual funds I own. At the time I made these changes, I was losing confidence in the sustainability of the bull market and wanted to reduce my risk. Tomorrow, I will probably have reasons I should make further changes to my portfolio. Why do I have so little discipline when it comes to investing? I’ve concluded I have a difficult time dealing with things in my life that aren’t black and white. For instance, I feel pretty confident the food I eat are nutritious and are beneficial to my health. But when it comes to investing, matters aren’t so black and white. What the stock or bond market is going to do tomorrow or 10 years from now is pretty much anyone's guess. Investing requires faith that what you’re doing today will lead to a successful outcome. Maybe what I need is a little faith. In the absence of that faith, I’m falling back on a friend. To bring more discipline to my investment decisions, I decided to share my portfolio with a close friend—and to confide in her next time I get the urge to make major portfolio changes. Dennis Friedman retired at age 58 from Boeing Aerospace Company. He enjoys reading and writing about personal finance. His previous blog was Lessons Learned. [xyz-ihs snippet="Donate"]

EVERY SO OFTEN, I see comments on social media about Vanguard Group’s Personal Advisor Services (PAS). One person posted that he’d talked to a growing number of people who quit PAS. There was no particular reason given for why they left. But I don’t doubt it. I’m a PAS client. I’ve often thought about terminating my relationship. I’ve been with PAS since 2018. When I first joined, the PAS advisors made a few changes to my investment portfolio. They increased my stock asset allocation by about 12%. In my bond portfolio, they increased my exposure to corporate bonds by about 30%. Have I benefited from these changes? Yes. They added enough value to justify the 0.3% advisory fee. I now ask myself: What value can they provide over the next three years? Why don’t I take over the management of the portfolio they created? All I have to do is rebalance it every so often. My expenses would be just 0.06% of assets, versus a total of 0.36% today. That would be quite a savings. But life is not always that simple. If I was in the accumulation stage, I’d be managing my own money. But I’m not. I’ll be 71 this year. This is the time when my wife and I are planning to make significant withdrawals from our portfolio. We’re planning to do a lot of traveling in the next three years. If COVID is under control, we’ll spend most of our time on the road. We also want to buy a new vehicle, plus do some more work on the house. What do I want from my PAS advisor over the next three years? A withdrawal plan for these large expenditures. I would also like some emotional support, such as a periodic phone conversation reassuring me that these large withdrawals won’t jeopardize our financial security. I don’t want to be worrying about money—not while I’m trying to enjoy my retirement. Three years from now, I want to relax in my hotel room, log on to my PAS account and still see that big green round circle that reads: “>99% likelihood of success.”