It's hard, but first off - relax. You don't want to be making any decisions when you're in a panic mode. It's just too easy to make mistakes when you feel vulnerable. No matter what, retirement and/or a change in life is always a leap of faith and when you've done your best to work out a smooth transition, it generally all falls into place. In no particular order: Make arrangements to have a talk with your 401k administrator even though retirement is over a year in the future; they're in the best position to discuss options with you. Once retired and no longer actively contributing to the plan (and having reached the age of 59 1/2) you can start either taking the 401k in monthly installments for X number of years to augment the SS payments, or withdraw some funds for a purchase, etc. without the customary 10% early withdrawal penalty and leave the rest to keep accruing until you must start withdrawing funds at age 70 1/2. If you're a member of AARP, they have a personal health insurance plan underwritten by United HealthCare Insurance Company (www.aarphealthcare.com) that might be worth looking in to. I'm always a little torn on life insurance; is that something everyone needs? With grown children, etc., does life insurance do anything more than guarantee funds to cover funeral expenses or provide a few dollars for the surviving spouse to get grounded once again? I have a life insurance policy as a benefit of retirement - and with no husband or children, all these assets will simply plow into my estate for whatever will be left for my heirs after my final expenses are dealt with. I've also made it known I want no funeral of any kind and only a simple cremation. I do have a spot in the family plot (we took care of the cemetery business as a family about 10 years ago) for my "cremains" when the time comes - hopefully, many years from now - and will arrange in advance for my footstone to be placed and for my heirs to have the dates chisled, etc. Have all your legal documents in order - seemingly a less taxing factor while still actively working: wills, Trusts (Trusts are such beautiful instruments for avoiding probate), Powers of Attorney, End of life Documents, DNR's, No CPR's, up to date lists of beneficiaries, lists of assets and where they're located. These things have nothing to do with what is generally considered to be in the process of retirement, but they do tend to get put aside to be taken care of later. Sometimes "later" happens and people are caught unprepared. And I've dealt with a few elerly relatives who left messes behind because they trusted when the time came everyone would "do the right thing". Wow, if they only knew how much time and energy went into doing the right thing...!!! Keep track of your expenditures for the next year or so, no matter how small - it gives you an idea if a corner needs to be cut somewhere or if you're sacrificing some enjoyments in favor of saving. Some things will always be beyond your control - like inflation, the cost of utilities, gasoline, health care, home insurance and property taxes. Is this a time to start using some of the things you put aside for future use - like the nice table cloths, dishes, silverware, glassware? Time to declutter, either finishing or dicarding the old projects laying around? Too many old books you won't reread, old clothes shoved to the back of the closet? These things don't necessarily help with finances, but decluttering is liberating and frees you up for what you're really interested in doing. And some traveling and fishing and spending time with family sounds pretty good.

time for this to drop down

I have been thinking a lot about comfort zones since Katrina. People refused to get on planes to go to states with low unemployment rates, and inexpensive housing so I asked myself where I would be willing to go. I am from Washington State. I would be pretty comfortable going to Oregon, Idaho, Colorado, Montana, the Dakotas, and Arizona. Anything else seems too far away, too foreign, too unfamiliar. I think this carries over into retirement planning. I couldn't go to Georgia because it is too far away. Until it got too expensive, people from Washington who wanted a warmer climate when they retired went to Caifornia. Now it is Arizona and Arizona is where I plan to go. It seems to me that people in the Northeast are more likely to stay on the east coast. I don't know what people in the heartland do. Do you go to Texas, New Mexico or ? Part of it is that I don't want to be more than a 3 hour plane ride from my children, but I think there is more to it than that. There may be very little difference from one state to another, but I don't know that and something in me seeks the familiar. Coming from a "blue" state, I will settle into the only "blue" county in Arizona. I would like to be more adventurous, but I always find myself seeking out the familiar. Someone I knew years ago had moved to Washington from the east coast. She said that it was so important to her that television was the same everywhere. Some people derided her comment because of her reliance on television, but I think I know what she meant. Once while visiting in South America, I found myself watching Plaza de Sesamo (Sesame Street) just for the familiar characters.

Hi again, all you Canadians, Suppose, when the bank stock was at about $105.00, I'd decided to borrow $40.00 using those certificates as collateral (a lot more that the $4.00 original value!), and having certificates issued for the new shares and giving them to the bank to add to the collateral. When the original stock dropped to $68, a drop of about 1/3, (thanks almost entirely to that dratted U.S. sub-prime mortgage debacle - smells a lot like a hot shot lender-generated scam, to me) ... that would have been a real "loss" had I lost my nerve and sold it. If I'd used that $40. to have bought more stock of the same bank (not a good idea - best to own a variety of issues), that $40. stock value bought with the loan, having also declined by 1/3, to $26, would, added to the $68 of the original, produce $92.00 total current value ... more than double the $40.00 that I'd borrowed. So I'd have avoided a margin call on the loan, i.e. bring in some money to reduce the lender's loan to below 50% of total asset value, or more shares to add to the worth of the collateral ... by late today, tomorrow at the latest! And it would have been a lot wiser had I had stocks in about three not only actual companies, but types of industry, used as the collateral: less risky ... or, rather, spreading the risk over a wider area. Also, I still owed the bank $40. .. but the asset that it had bought was now worth only $26. By the way: note this aspect of calculating. The stock price dropped from 105 by a third to 68 ... but it's gotta gain by a half to break even: 68 + 34 = 102. It's a quality stock - it'll recover. I've got time to let it happen ... well, if, at 79, I don't, the executor of my will does. Neither of my major beneficiaries are under any more pressure to liquidate under pressure than am I. The pressure would be to pay income tax, about a year or slightly more later ... and there are other assets at close to real value to take care of that. Or, if everything were undervalued, she could use some of them to borrow to pay the tax, repaying the loan after recovery ... but the trouble with that would be that the loan interest wouldn't be deductible. Further to the rule of 72. At the price of $68., the stock price has doubled from the original $4.00 or so about 4 times: 8, 16, 32, 64. When one divides the 41 year period by the number of doubles, or 4, one gets 10.25, i.e., it took 10.25 years on average to double. Divide 72 by 10.25, one gets 7.02: the growth rate of the basic asset was about 7%. On the other hand, if you know the rate of interest that you expect a certain investment to achieve and divide that number into 72, say, 6%, you'll get a result of 12 ... it'll take your investment about 12 years to double (with no allowance for erosion of the income by tax, or of the value of the asset by inflation). In addition to the approximately 7% growth rate that my bank shares achieved, over the years they paid me about 3% in dividends, for a total growth rate of 10% or so: not too shabby ... especially when it's tax-advantaged, deferred and also tax-advantaged. And the annual rate of dividend grew since my last report to $3.48, which I think that they will make a strong effort to maintain, despite the drop in value of the stock. If they drop it back somewhat, it'll likely hit the stock price for a while, but I won't cry too hard. Earlier, at $105., or 4.5 doubles (8, 16, 32, 64, 128), dividing the 40 years by 4.5 gives 8.888, which is the rate of growth that the stock developed. Add about 3% or a little more of dividends that the shares paid over the years, and you get a total growth rate of close to 12%. I can handle that ... especially when I remember that I pay a low rate of tax on all of those dividends. I use the full amount earned by the loan-purchased stocks, plus part of that earned by my original cash amount invested to pay the interest on the loan, which interest is deductible (as it would not be were I to borrow to purchase an RRSP) and I think that you may get an idea of the reason that I prefer non-RRSP investing in a number of situations. Especially since, were I to cash out at either $105. or $68., after I deducted the $4.00 of original investment, I'd get half of the difference with no tax liability. But every dollar that I withdraw from an RRSP (or successor RRIF after age 69) ... gets added directly to income, and taxed at regular rate. If you can't avoid tax, defer it. But if you can pay some tax now and not only arrange for ongoing income to be taxed at a low rate ... but defer a substantial portion ... and then arrange for a major portion of it to be tax-free ... so much the better. So ... I think that sometimes it makes sense to pay some now, in order to arrange major tax benefits ... not only ongoing ... but later, as well. Not only that, when you have a major portion of your assets in an RRSP ... ... supposing that you need some money during those years of living and want to ask your lender for a loan. Can you use your RRSP assets as collateral for a loan? Officially, no ... unless you have a very accomodating lender, who'll make one without collateral (since they already carry your RRSP). Some will - some won't. Even so, the rate of interest might be higher. Good wishes for increasingly effective management of both your income and your assets. ole joyful P.S. Have you read my thread somewhere around here that outlines how to borrow to invest at almost no net cost (without making any allowance for possible increase in value of the invested asset)? Plus another asking which ordinary person/investor gains from the erosion in value of one's investment by inflation? o j