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Sailing Through Retirement

04/30/01 04:53:50 PM PST
by Rachelle Waters

For all those who harbor dreams of exchanging their time cards for postcards, good news!

According to longtime investor Gary Ball, who retired at 51, you don't have to be a financial wizard to retire early. You only need to know three things: How much money you can live on in today's dollars; the future inflation rate; and how long you're going to live. You may never know the answer to the third question, but once you've nailed down the other two, you've laid the groundwork for a successful retirement plan. The rest is a matter of discipline and prudent investing.


Gary Ball started saving his money in the early 1970s, when he was freshly graduated from the University of Washington-Seattle with his electrical engineering degree in hand and his feet firmly planted on the ladder of his career. As he began to climb that ladder, though, he soon realized there had to be a better way to prepare for his future - something more profitable than just amassing money in a savings account.

Caught up in the real estate furor of the inflationary late 1970s, Ball set his investment sights on property. Carefully, he began to buy houses, until the maintenance finally caught up with him. "After the fourth house, it dawned on me: This is going to be a lot of work someday. This is not the way to go." Instead, he turned to the stock market, which promised to be free from such drawbacks as late-night calls from tenants.

Gary Bell with his grandson, Brayden, at the helm of his sailboat, Dione.

As soon as he discovered the benefits of investing, he jumped in headfirst. He read about investing and finance and gathered information from resources such as the Value Line Investment Survey. (Working Money's interview with Value Line's research chairman, Samuel Eisenstadt, is available at

The information Ball gained through his research was invaluable, but his education came primarily through trial and error. He notes: "Investing is like any other skill; you get better with practice. You make a lot of mistakes when you first start." And he admits he made his fair share in the early years. "One day I stepped back and realized that these mistakes were getting expensive. I realized I needed to be much more methodical. I needed to be more in-depth on my research." Ball began to spend more time managing his portfolio, and his returns improved. He adds ruefully, "I learned from my mistakes."

Ball gave his education a boost by joining the Golden Years Investment Club, where he became involved with the National Association of Investors Corp. (NAIC), a nonprofit investment club organization. As a result of his affiliation with the club and his dedication to investing, he has been teaching NAIC seminars in the Puget Sound area for 15 years, and for 11 years at the national level. After serving on the Seattle-area NAIC board since 1989, he joined the national board in 1994, and he became president of the NAIC's Puget Sound Chapter two years ago. Ball's busy schedule with the NAIC keeps him hopping from state to state, but he enjoys the travel. Thanks to his early retirement, he has time to give frequent seminars and attend other NAIC events.

Ball also teaches an investment class at the University of Washington-Bothell. This class, which covers a broad range of topics, is very different from the NAIC seminars; it covers stocks, bonds, options, and futures. The students are seniors in the finance department, but they still have many of the same questions that investors new to the subject do. Ball encourages all his students to "start saving. And what I really mean by that is very quickly start investing." If you don't have the inclination or dedication to research individual stocks, invest in mutual funds. Take advantage of Iras and 401(k)s. "My personal philosophy has always been to take any free money you can get. If you have a 401(k) plan at work, one where they'll match your contribution, max that thing out." Ball always contributes the maximum to his IRA every year on January 1, to optimize the benefits of compound interest. When he needs that money, it will be there - and there will be more of it as time goes on.


Ball worked for Fluke Corp. for 23 years - 19 years as an engineer and engineering manager and four years as investor relations manager. Although he enjoyed his job, retirement was never far from his mind. When a larger company bought Fluke Corp. and Ball faced changes in his job description, the time seemed ripe for retirement. He had been carefully planning to retire at 55. He was four years short of that target, but his foresight gave him the freedom to retire early - a choice he has never regretted.

His plan didn't stop there. Remember the third thing you need to know to retire early? How long you're going to live? Ball doesn't need to know the answer to that question, because he has devised an asset allocation system that will continue to produce income, no matter how long he lives.

To ensure steady income throughout retirement, he has divided his investable net worth between equity growth investments for the long term and a series of safe investments such as Treasury bills and certificates of deposit (CDs) that will yield fixed income in the short term. The growth portion of his portfolio should return 10% over time, allowing him to replenish and increase the money he has laddered in safer investment vehicles, which yield closer to 5%.

A word of warning, though, for those planning their retirement income. Ball cautions: "People have really gotten suckered recently. Up until this last year, there were a lot of younger investors who thought they could expect a return of 20% a year. ... If you're a believer in long-term averages, around 10.5% is what you get." When you calculate your investments' return over time, it's best to err on the conservative side.


Retirement, says Ball, is like a long summer vacation. An accomplished sailor, he enjoys exploring the Puget Sound in his sailboat with his wife and family. During the early days of his retirement, he tackled an extensive list of projects around the house, but that only lasted so long. "When you take on projects eight hours a day, every day, you can get a lot done." Before long, he found that he missed interacting with his coworkers. And at 51, most of his friends were still working. To fill his days, he decided to do some part-time work, on his own terms. He still takes summers off, and he uses the extra money to augment his investment income.

Like many retirees, Gary has found that the rat race isn't so bad when you participate because you want to, and when you control the course. But work will never be a luxury unless you start planning early. "Sometimes people say, gosh, you must have done unbelievably well on your returns to be able to retire as young as you did. I did well on the returns, but more important was the fact that I was just saving for a long time. If you start early, you don't have to get great returns. It's really the time in the market that will make you rich, versus the timing."

Rachelle Waters can be reached at

Copyright © 2001 Technical Analysis, Inc. All rights reserved.

Rachelle Waters

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