There's only one shadow on the horizon of former mortgage banker Michael Kelly's long-planned retirement. That shadow, more a looming dark cloud at this point, is the volatile stock market and what it isn't doing for Kelly's $1 million-plus retirement portfolio.

Don't get me wrong-Kelly's zest for fun and travel his first year of retirement hasn't been slowed by the stock market's erratic heartbeat. In fact, since I last talked to him in September 2006 as he approached retirement, Kelly has been doing pretty much what he said he'd be doing: spending time at his beach house and traveling the world. The 63-year-old jetted off to Istanbul, Turkey, in 2007 and jaunted around Germany four times in the past 15 months, visiting a long-time friend and opera aficionado in Frankfurt. Next up? He was heading to London for a 10-day excursion. High on his priority list? He was planning to see the Royal Academy's exhibit of paintings from Russia's Hermitage and Ridiculousness on stage at the Barbicon Theatre.

"I usually stay with friends, and we all like to cook, which makes travel affordable," says Kelly, who also uses London's centrally located half-price ticket booth to his advantage. "I'm having a wonderful time. You can spend a lot of money, but you don't have to," says the former mortgage banker, who retired in December 2006.

It's exactly the lifestyle Kelly wanted in retirement. It may seem lavish, but it isn't, and frankly he can't afford an extravagant lifestyle. After all, his $1.1 million portfolio, which includes a pension, 401(k) and IRAs, only generated income of $34,875 last year. He also received $17,761 from Social     Security and $5,222 in dividends, capital gains and interest from other investments, bringing his total 2007 income to $57,858.

The good news is, Kelly has his budget under control and is determined not to touch the principal of his investments until he has to-at age 70½. He also has a paid-up beach house in Rehobeth Beach, Del. (property tax bill in 2007? $700); likes comparison shopping for travel bargains; and proudly drives his hybrid Toyota Prius (49 miles per gallon on the highway) to and from his primary home at the beach to his second home in D.C., a stately         Logan Circle town house his significant other owns.

Kelly's retirement would certainly be a dream for all those 60-plus year olds who haven't socked away anything for retirement, or those who rode the market down, or those who depend on scant bank account interest for their income.

The European jaunts are not unusual for Kelly, who has been a world traveler for decades. In his former life as a banker, he set up operations in far-flung places like Hawaii and Germany. His current income has made him a budget-minded travel planner, so you're not going to find any last-minute or first-class tickets or overpriced hotel rooms on his credit cards.

Kelly is admirable because he knows how to have a blast without blowing the bank. He offers a lesson that everyone, especially retirees, should be able to appreciate, and it's one that investment advisors might want to share with their spendthrift clients who think once they sock away a cool million it will be smooth sailing.

Kelly owns his home free and clear. Think of the folks you know who have those god-awful $10,000 monthly mortgage payments going into retirement. How many times would they visit Europe on a pre-tax income of $57,858?

Of course, the awful investment environment is not lost on Kelly, who spent more than three decades in banking. "I recognize that I have a pot of money and that it's finite. So it's pretty high anxiety when the market is gyrating. My portfolio is down 30% and it may be ten years before it comes back," says Kelly. "This is the worst of times for a retiree. Land values are down, the stock market is down and interest rates are down. You'd at least expect to be able to earn money on CDs, so it's an unusual period. I'm not hurting, but there are a lot of people relying on savings accounts and they must be traumatized."