How are you getting by on your savings?

[ToadHill]

The bad part about this is what happens when one gets sick and can't work for an extended period of time or gets laid off or has triplets or is divorced or is sued for a large sum or ?? and can't or won't pay the notes anymore.

Anything bad can happen in 20 years.




If any of that happens, I won't have to worry about the bank throwing my grandkids out on the street. I'll eat the loss and reduce the amount they get in the will.

 

[Travelover]

............Keep in mind that there are different types of annuities (e.g., fixed versus variable) with their own advantages/disadvantages. Humberto Cruz is a financial columnist that I find informative. He has written several articles on annuities. Here's a link to one such article............. Steve

Annuities have been a notoriously bad deal for consumers, especially variable annuities. It is not that annuities are a bad idea, it is just that they are so complex that issuers have taken advantage of consumers with high commissions and fees. You are also at the mercy of the solvency of the insurer - if they go broke you lose your money, though most states insure to $100,000.

If I were ever to purchase an annuity, I would purchase a SPIA (Single Premium Immediate Annuity) and I would wait until I was at least 70 years old. Once you are that old, you benefit from the lost premiums of others that insured, but died early. I'd also keep the amount to less than $100,000 per policy. If you decide to go with an annuity, please research it carefully and don't be sold one - actively research it and buy one based on what you have learned.

My plan is to manage my own investments of low cost equity and bond index mutual funds and when I start getting too dizzy :confused2:, go with Wellesley.

 

[Mickey_Fx]

My sense is that the age distribution on TBN is somewhat north of middle age. If I'm right, there's gotta be some of you out there getting by on just SS and savings.

If so, how are you doing it...stocks, bonds, annuities, CD's? Are you rolling your own plan or do you use an advisor? Consuelo Mack and WealthTrack?

It seems that staying employed and accumulating assets may be easier than managing those assets to take us through retirement.

We are living on our SS and savings and I would not describe it as getting by. Best advise I can offer is to start saving, investing at an early age and always live within your means. I'd describe myself as a working guy and I was saving about 25% of my take-home pay when I was in late 20's. Tried as much as possible to never get in debt and did a pretty good job of that. My thought has always been, if I can't afford the cash price, I certainly can't afford the inflated financed cost.

Over the years I tried learning about investing and started moving in that direction in my 40's. For me I knew I'd never be sharp enough to dabble in individual stocks and bonds. What I felt I could do is get good enough to research mutual funds and find funds that were well managed and had managers with proven track records. That has worked well for me for many years.

In recent years other things started taking away from the time I had to devote to managing our investments so I turned it over to a financial advisor I knew of and had used to manage the assets of my parents when I was the trustee for them. Advisor charges a fee, very small % of assets under management. Advisor only makes money if I do. Advisor started managing my assets about 18 months ago and in these financially bad times I'm still showing a small gain under their management.

Time is on your side. Stock market has historically returned ~8%/yr. When young you can be a little more adventurous but one needs to become more conservative as one grows older and invest a larger % of assets into less risky investments. And don't put all your eggs in one basket, be diversified in your investments.

 

[Travelover]

..............

In recent years other things started taking away from the time I had to devote to managing our investments so I turned it over to a financial advisor I knew of and had used to manage the assets of my parents when I was the trustee for them. Advisor charges a fee, very small % of assets under management. Advisor only makes money if I do. Advisor started managing my assets about 18 months ago and in these financially bad times I'm still showing a small gain under their management..............

That's great that you found a good advisor. Most charge a minimum of 1% of your holdings. This sounds like very little, but to put it in perspective, consider this. The maximum safe withdrawal for a 65 year old with a 50 / 50 - stocks / bonds portfolio is widely considered to be 4% per year. It is less for those younger than 65. So if you have $1,000,000 invested, you can safely withdraw $40,000 a year less the advisor's cut , which is $10,000. So your advisor is taking 1/4 of all the available income. Vanguard Wellesley charges 0.21% or a little over 1/5 as much.

I have no financial interest in Vanguard other than being an investor there - I use this only as an example. There are other good low cost funds, as well.

 

[tglass]

I believe in someone like Vanguard that get a percentage of your profits if I'm reading this right. I have money sitting in the bank drawing very little interest now looking for a reliable investor, but being short of V.A benifit time in service, has anyone put the cost of health insurance, prescriptions, and if everything went bad, would I have the money to pay for it in the equation if I retired at 62 rather than 65?

 

[smstonypoint]

I believe in someone like Vanguard that get a percentage of your profits if I'm reading this right. I have money sitting in the bank drawing very little interest now looking for a reliable investor, but being short of V.A benifit time in service, has anyone put the cost of health insurance, prescriptions, and if everything went bad, would I have the money to pay for it in the equation if I retired at 62 rather than 65?

I'm not sure that I understand your question.

Are you asking whether you should take the reduced Social Security benefits from retiring at 62 rather than waiting for the full retirement age of 66 (for those born between 1943 and 1954)? I don't think anyone here can answer that question for you, and I wouldn't put any faith in their answer if they tried. There are too many personal factors to be considered. The SSA web site lists some factors that you should take into consideration.

Retirement Planner: Other things to consider

All mutual funds companies charge fees for their services. Vanguard has very low fees. Their Wellesley fund has been mentioned. That fund has an expense ratio of 0.31%/year compared to the industry average of 0.88%/year for similar funds.

Wellesley is an actively-managed fund and has a higher expense ratio than Vanguard's Life Strategy Conservative Growth, an indexed fund with an asset allocation similar to Wellesley's (approximately 60% bonds and 40% stocks) and an expense ratio of 0.24%.

Steve

 

[keegs]

Keegs,

Keep in mind that there are different types of annuities (e.g., fixed versus variable) with their own advantages/disadvantages. Humberto Cruz is a financial columnist that I find informative. He has written several articles on annuities. Here's a link to one such article.

Humberto Cruz: Annuities can be valuable slice of retirement funding pie | Dollars & Sense

Both Wellesley and Wellington are great funds, in my opinion. (Disclaimer -- I am a Vanguard customer). Both have relatively low fees for actively-managed funds. The Wellesley fund maintains an approximate 40% stock/60% bond allocation, while the Wellington fund maintains an approximate 60% stock/40% bond allocation.

Vanguard's Target Retirement funds are index funds with stock/bond allocations that change over time; e.g., the Target Retirement 2025 fund will gradually decrease its allocation to stocks and increase its allocation to bonds over time.

The beauty of the hybrid funds (Wellesley, Wellington, Target Retirement, Life Style) from Vanguard and other relatively low-cost companies (e.g., Fidelity, T. Rowe Price) is that you don't have to worry about rebalancing your portfolio -- they do the work for you. Set it and forget it.

Steve

Morning Steve. I wasn't considering annuities a few years ago (my wife has no interest in any of this stuff ...YET :laughing but this last crash renewed my interest in them. My guess is choosing to buy several annuities is so that you can hedge against any one insurance company going under. It's a little like divinging into a pool though. The first dive is the hardest.

I've had Vanguard as a 401k manager through a previous employer. I always liked John Bogle's pitch on indexed funds. He makes allot of sense. My take is though that they're better in the asset accumulation stage. Perhaps in retirement you're somewat better protected from long downturns with low cost income stock and bond funds. I've also considered the "bucket approach" although I haven't gotten into the weeds with any particulars on that.

Thanks for the link. It's all good.

CK

 

[keegs]

I believe in someone like Vanguard that get a percentage of your profits if I'm reading this right. I have money sitting in the bank drawing very little interest now looking for a reliable investor, but being short of V.A benifit time in service, has anyone put the cost of health insurance, prescriptions, and if everything went bad, would I have the money to pay for it in the equation if I retired at 62 rather than 65?

If the question is whether there's an affordable healthcare policy available to those between ages 62 and Medicare (65) then I believe that there's new options under the healtcare reform bill that just passed.

My understanding is that if you don't have employer provided healthcare insurance, the state and federal gov. have put together an insurance exchange where you can purchase a policy regardless of medical history.

It's a really good point since you have assets to protect.

 

[keegs]

We are living on our SS and savings and I would not describe it as getting by. Best advise I can offer is to start saving, investing at an early age and always live within your means. I'd describe myself as a working guy and I was saving about 25% of my take-home pay when I was in late 20's. Tried as much as possible to never get in debt and did a pretty good job of that. My thought has always been, if I can't afford the cash price, I certainly can't afford the inflated financed cost.

Over the years I tried learning about investing and started moving in that direction in my 40's. For me I knew I'd never be sharp enough to dabble in individual stocks and bonds. What I felt I could do is get good enough to research mutual funds and find funds that were well managed and had managers with proven track records. That has worked well for me for many years.

In recent years other things started taking away from the time I had to devote to managing our investments so I turned it over to a financial advisor I knew of and had used to manage the assets of my parents when I was the trustee for them. Advisor charges a fee, very small % of assets under management. Advisor only makes money if I do. Advisor started managing my assets about 18 months ago and in these financially bad times I'm still showing a small gain under their management.

Time is on your side. Stock market has historically returned ~8%/yr. When young you can be a little more adventurous but one needs to become more conservative as one grows older and invest a larger % of assets into less risky investments. And don't put all your eggs in one basket, be diversified in your investments.

I'll be 54 in a few weeks and the Mrs. just turned 56. Our journey sounds somewhat similar to yours, although our asset allocation has/has had a bit more risk.

I'm looking at ways of moving toward a more conservative approach at this point and need to form a better understanding of where I want to be, hense the initiation of this thread.

I'm going slow and steady.

 

[smstonypoint]

Morning Steve. I wasn't considering annuities a few years ago (my wife has no interest in any of this stuff ...YET :laughing but this last crash renewed my interest in them. My guess is choosing to buy several annuities is so that you can hedge against any one insurance company going under. It's a little like divinging into a pool though. The first dive is the hardest.

I've had Vanguard as a 401k manager through a previous employer. I always liked John Bogle's pitch on indexed funds. He makes allot of sense. My take is though that they're better in the asset accumulation stage. Perhaps in retirement you're somewat better protected from long downturns with low cost income stock and bond funds. I've also considered the "bucket approach" although I haven't gotten into the weeds with any particulars on that.

Thanks for the link. It's all good.

CK

CK,

I'm a Bogle fan, too. Vanguard has a publication that deals with alternative investment strategies for retirees: "Income in retirement: Common investment strategies." It's worth a read.

https://personal.vanguard.com/pdf/icrria.pdf

Good luck in your retirement planning.

Steve