Safe Haven, if possible without...

[square1]

Thanks for the great replies! I'm reading and making notes for now (because it's still a workday for me - lucky retired stiffs )

 

[nybirdman]

Every-one's situation is different.I started working full time at 19 years old and be contributing to pension(s) plans since day one.Almost unheard of today.So in my case I have two pensions + hospitalization+medicare myself.Saved quite a bit in a 401k that is now invested by a financial consultant.
My wife has her own very good(NY state) pension when ever she decides to retire and her own savings and investments.
So;I work 42 years;you bet I take Social Security as soon as I can;I paid in for enough years.
My home has been paid off for many years and our only debt(s) are self induced.

 

[dickfoster]

...making a political statement, tell me were you would put your money in my scenario.

~4-5 years from retiring. Can take what I have saved now and what I can add to it between now and retirement and be okay. Won't be okay if my current savings take a hit. I imagine the advice of those already retired and funding it themselves are in a similar situation.

I have pretty good results with Fidelity but I have a good broker who's been doing my stuff for some years now. He started doing my stuff at Charles Schwab but when they started changing things he moved to Fidelity and I went with him. Finding a good a financial person or broker is lot like finding a good lawyer so I've had some disappointing results with people who came before. Plus he knows that if he screws up, I own a backhoe. Since I've retired, my investment strategy is not as aggressive as it was when I was still working. We still manage to stay ahead of the game by constantly changing the mix but that takes constant attention and work so he earns his fee.

 

[Garandman]

...making a political statement, tell me were you would put your money in my scenario.

~4-5 years from retiring. Can take what I have saved now and what I can add to it between now and retirement and be okay. Won't be okay if my current savings take a hit. I imagine the advice of those already retired and funding it themselves are in a similar situation.

You can find savings accounts that offer 1%: won't be much more unless interest rates go up. CD's (Certificates of Deposit) are the usual medium for larger sums. All that is taxable so it depends on how much you make for the tax bite.

We are about to hire a "Fee Only Financial Planner." You pay them by the hour. They are fiduciaries, the highest level of responsibility. They charge what lawyers do: $250 to $350 per hour, but you may only spend an hour or two with them. Because they are not selling anything and you are paying them directly, they have extensive referral networks for everything from bank accounts to credit cards and mortgages.

 

[Fossil Farm]

The only downside to my retirement will probably be the Required Minimum Distribution from my IRA that's coming up in 3 years. That's just painful to think about.

There are still good investments that can be made with the money pulled because of your minimum distribution. True, you do not get the tax break, but there are options. Some people I talk to seem to think they have to spend that money or have wild ideas about what they can or cannot do with it. It's just not in your IRA anymore. It is still your money and you still have investment options.

 

[Robert_in_NY]

Talk with a financial adviser, find a good one who you trust and have them help you. My wife is one and I've learned so much from her that I never would have known or even thought of before. My wife works at Merrill lynch and most of the people at her office are great and I would not hesitate to recommend others there.

 

[Oaktree]

Taking early SS at 62 seems ridiculous to me. I can make way more money from 62 till 67 by working and there is no penalty after 66 for other income. I could not have made it on SS at 62 and needed the extra years to get the house done and paid for, and build up some savings. My father retired at 62 and struggled the rest of his life. I have another friend that did it too. Now he is taking odd jobs and barely getting by. Retirement opens the door for travel and other adventures, be ready the best you can.

Depends on your situation. The company I worked for went feet up just before my 62nd birthday. The likelihood of finding another fulltime job with comparable pay & benefits that didn't require a hellacious commute was somewhere between slim and none. I took SS. As it happened I was able to find enough freelance work in my field to get by, indeed SS withheld payments for 6 or so months each year due to my earning over the ridiculously low limit. I turn 66 in a couple weeks, and SS re-calculates my benefits so those months I didn't get a check count as months worked and my payment will be adjusted accordingly. Had I known I'd do as well in self-employment as I did I probably wouldn't have applied for SS early, but way too many horror stories of age discrimination...better safe than sorry.

I am by nature pretty thrifty and have no debt, but as someone else noted living expenses really don't go down all that much with retirement. I figure on keeping the part-time self-employment gig for the foreseeable future. Besides, it gets me out of the house and keeps me mentally active.

There are annuities offered by companies like Vanguard that have limited costs and might be appropriate for some people. However, most sold by advisors are insurance products which have fees and costs that eat up the return. I speak from my experience. I bought an annuity many years ago when my tax rate was very high as a tax dodge. It's supposedly a market indexed fund but has consistently underperformed the market and my other investments because of the management and insurance fees.

Yeah, my wife learned that the hard way. They sound good in theory, but there are so many hidden fees that wipe out most of any gain.

 

[turnkey4099]

If "taking a hit" means losing money in whatever investments you make, then keep it liquid to be safe. Liquid means less risk and less chance for big gains, but if it will make you sleep better at night, it is worth the less risk. Money markets, CD's, etc. are liquid and safe. Stock market type investments can make better returns, but add risk. You can diversify and put a small amount in stocks, just depends on your situation and how you want to go. Don't be persuaded by claims of big gains or you are "losing money" by not investing in XX or YY or inflation will eat your savings. Your life, your decision. You know your lifestyle and your expenses better than anyone, so take some time and determine what income you can live on.

I am almost 81, had a bloated Moneyh Market account earning piss all nothing, same for savings account, basically no interest paid. Took the advice of the bank financial advisor and bought a couple of annuities payable to my estate but with options to withdraw funds in case of medical neeeds. One garauntees 2.5% return, the other they added $35,000 to the amount I bought in with (no interest after that.

Never played in the market, wage slave and military retirement all my life. How those liquid accounts built up to such levels is beyond me. Of course me an wife never livid high on the hog and bought nothing except cars on time. House paid off in half the mortgage time, all vehicles paid off, owe nothing except for taxes. Life is good if I just had my wife back again.

 

[turnkey4099]

I try to get by on social security, a few very small stock dividends, and a couple of pensions. Federal required minimum distribution, in my case, amounts to more than interest increases, so slowly but surely, my savings are diminishing, although not before I'm long gone I hope.
.

I have been kicking my rear for 15 years now since I retired. One of my jobs back in the 80s had a coumpany IRA contribution. They bought us out about 15 years into it. My payout was $23,000. I put it into some sort of IRA. Mine mandatory distribution is also slowly reducing it but I have already drawn way more than !2,000 over the years (mandatory payout) and the IRA is now standing at $19,000. I should have been adding money into it when I was still a wage owner. Too soon old, too late smart.

 

[k0ua]

I think one thing that many of the posters badmouthing annuities don't understand is that there are many different kinds of annuities. Some are safe and some are not. On Thursday I converted 3 different ones a fixed an indexed and a variable into what is called a SPIA and Single Premium Immediate Annuity. This is the final step of converting your growth vehicles into a monthly income for the rest of your life. And of course there are many choices in how to have this paid out, and what to do with the left over money when you die. Some of you seem to think that annuities are a scam of some kind, and there is the possibility of losing money on certain kinds of annuities, and yes if you pull out early you are subject to surrender penalties.

You just have to pay attention and understand what you are buying into.

 

[ultrarunner]

Waiting to draw SSI at 70 years old is a scam(IMHO),start at 62.5 and you draw a check for 7.5 years,yes reduced but for me the break-even point was 73 years old.

Dad was 70 when he had to draw and kept working right until he died from Leukemia a few years later... he would go in for dialysis from Chemo at 6 am and then off to work... they don't make many like him anymore.

It was his plan and what he fully intended on doing as Mom always worked but part time... so her SS was $540 a month and she now has Dad's which is $2200...

Sometimes you do things for those you care about.

Dad has been gone 15 years today...

 

[npalen]

Watching my Dad skin a dead cow back in the '50's has influenced my spending and saving habits over the years. He was a farmer/stockman trying to weather the extreme drought in Kansas during that time. I'm sure that the proceeds from the hide went to pay some bills. I recall seeing the local telephone company man pulling up in his pickup then getting out his ladder so he could cut our phone line.
My wife and I drive vehicles that are at least 10 years old. I am amazed at what folks, who can't afford it, will spend for a new vehicle just to keep up with the neighbors.

 

[ultrarunner]

I agree...

Unless you have experienced hard times it can be very hard to understand...

I have not by my thinking but had parents and grandparents made hardtimes very real to a young kid...

Growing up we never had Health Insurance and I guess to some that would qualify as hard times... my parents couldn't afford it...

Dad also always worked a minimum of a 6 day work week which I thought was normal until I became older... just like when I got my first real job at 12 paying into social security.

We never begrudge anyone's good fortune... Dad said if you want something you will have to earn it and he was very supportive saying it could just happen with the right attitude and determination.

We never invested in Stocks, only had well used Cars and all the kids worked... because this is how our folks were brought up...

Conventional wisdom would say not being in the market is foolish but Dad would say he couldn't afford to lose it...

35 years managing rental property has provided some real insights in how others manage money... and plenty of people do live paycheck to paycheck by choice... in other words money is to be spent... they earned it and they are darn well going to spend it.

I've seen some striking contrasts... growing up we all had hand me downs... and glad to have them.

At one time I managed a lot of Section 8 low income property... one of the tenants had a 17 year old daughter expecting her first child... so it would be 3 generations under one roof... I mentioned one of the Doctors I work for asked if anyone needed baby things as her daughter had outgrown them...

My tenant said her grandbaby isn't going to have anyone's hand me downs and that was it...

It's ironic because she went into debt to furnish an entire nursery and everything she bought went out for bulky trash pickup when the child outgrew it.

I really believe some live within their means and for others no amount of money would be enough.

Income property free and clear has been my goal and something to fall back on should the need arise.

 

[RSKY]

I have tried to post on here several times but for some reason I'm having trouble so I'll make this short.

I got some very good advice from several unlikely sources. From a friend working as a financial advisor I was told to avoid annuities at any cost. Financial service providers promote them because they make money selling them. Said his boss made him push them more than anything for that reason. He said they were for lazy people who would take a 2% return rather than take the time to manage and make 5%. Also when I was rolling my 401K over to the IRA the lady I dealt with offered me several different annuities to purchase. After I studied them and declined she laughed and said she was glad and hated to sell them but had to. Said they were the worst place to put your money.

When I reached 59 1/2 I rolled my 401K into an IRA with Fidelity. I pick the funds the money is invested in, move it when I want to another fund, draw a fixed easily changeable monthly amount. And can take out additional monies when needed. Such as last fall and earlier this year when my advisor told me if I needed a new vehicle that it would be a good time to take the money out before the market corrected.

You can draw $1000/month on a $100,000 investment and still be gaining in your fund. There will be downturns but just ride them out because THE MARKET ALWAYS COMES BACK.

I also use a Fidelity credit card and 2% of my purchases go back into my account.

Careful use of credit cards and paying them off can really help in retirement. I also have a Sam's card that gives back 5% on restaurant meals and 3% on gas purchases. When on a fixed income every single percent counts.

It is your money and your future and you can do what you want. I wanted as much control over my funds as possible and did not want to give it to an 'advisor' to invest it in the same places I already have it and then take a cut of my money for doing what I could do myself.

Back to the IRA. I only invest in mutual funds and have a pick of 11,499 in every sector possible. I don't get transaction fee funds so am limited to about 3700 to pick from. I pick the top performers in each sector and base my picks on 1, 5, and 10 year returns. I rebalance about every three to six months.

My best performing fund for four years made over 20% a year. This year it has lost 30% in a few months but is now coming back. A fund I cut back to $5000 and nearly dropped has made 40% this year. The secret is to keep everything spread out and not to put everything in one high performer that can drop in a few weeks. I rebalance the investments every three to six months. Most have earned 10-15% a year until this year, So far I'm down 1.38% as if 12/09/16.

What do you say? Your advisor doesn't offer you funds like that? I wonder why?

Talking to about a dozen or so that left our jobs at the same time I have done immensely better than any of the others who pulled their money out and gave it to 'advisors' to invest for them. Some are struggling with very low returns and one lost most of his investment (so he says) when he had to pull it all out due to his wife becoming ill. Cost him more than $20,000 to get it out then he had to pay taxes on it..

It is your money and you must make the decisions. Good luck and happy retirement.

RSKY

 

[NorTracNY]

Thanks RSKY. I'm glad you had a friend that was a financial adviser.

I just saw a comercial on TV yesterday. It reminded me of this thread. A dad was giving advice to his young adult son. He was suggesting his son contact the finacial guy he had used for so many years. The son thanked him for the advice and asked what the guy charged. The dad had no clue. I know this story to be true for so many. Several people here even mentioned buy products. I wonder if anyone really knows what they paid. Remember that someone is making money on every product offered. If that product is being advertised or pushed, then someone is making a VERY nice fee on it. I believe some of the highest fees are from annuities and other insurance products. If someone is happy with their product that's great. I just hate that the industry hides what they charge. You really should ONLY talk with those that are fiduciaries. They are the only ones working for you.

 

[RSKY]

Two things I want to explain before I leave this discussion. May take two posts but here goes.

First, if you do invest in the 'stock market' by buying mutual funds you MUST never panic. Things are never as bad as the news media say they are. And you MUST do the opposite on what would be considered common sense actions. I've read people on TBN saying, "oh yeah, I had a 401K but the market dropped and I lost all my money and so I took the penalties and got out of it."

IDIOTS !!!

Sorry but I've had several cups of coffee this morning.

When the market drops and everybody is gloom and doom and everybody had lost all that money (on paper) THAT is the time to tighten your belt and triple how much you are putting in. Or stop taking out as much and keep your shares. Because the market ALWAYS COMES BACK. And when it does come back the more shares you have the more money you will have (on paper). Am I making sense? Buy cheap, sell high! Not buy when everything is going gangbusters and sell when the bottom drops out and everything is cheap.

I bought a thousand shares of PBHG back in the nineties at $60 a share. Stuck way to much money in it because it had doubled in a year or so. Then the bottom dropped out of the tech market. The last I sold brought $6........ So I learned a bitter lesson and watch things a little closer now. Also don't follow fads. I learned to keep a balanced portfolio, spread everything out in different sectors. Even is some which seem to be underperforming at the time. (Have an acquaintance who put everything in silver, he actually did the right thing and held his funds until it came back but boy, was he scared for a while).

Am I making sense?

The lady I talk to at Fidelity did tell me, advise me, that they expected a big correction the last part of 2014, first part of 2015 and if I wanted to buy a big ticket item like a new vehicle to take the money out when shares were high. So I would be selling fewer shares then than later when the market, and share prices, dropped. So I bought a new truck. My old truck was bought new in 1993 and had served me for 21 years but that is another story.

Buy mutual funds, not thru a local advisor but with a large firm that has an online method of keeping up with things. That keeps somebody from taking a cut from your earnings. I do have an advisor that I talk to every three or four months or so but she is not on commission. Said she does get a bonus based on how well her clients do and on surveys her clients fill out. Her advice is more general and not specific. For example she was predicting the 2016 correction for a year or so before it happened. Said it was way overdue and suggested moving things to safer funds. I ignored her advice, more from laziness than intelligence, and came out ahead.

But I need to get back on the message. I want to be in control of my finances! I don't want an advisor who is looking to make a buck off me controlling my finances for the rest of my life. Their first loyalty is to themselves and their families, not to me and mine. If an 'advisor' controls my money it will be placed where THEY get the most reward.

Don't mean to step on anybody's toes with family in the business but that is just fact.

RSKY

 

[ultrarunner]

Not to disagree... years ago Mom bought an annuity from the bank where she goes... I was quite disappointed but it was done... actually feel bad because I gave her a hard time about it.

All these years it keeps paying 4%... so in retrospect it was OK since my family wants nothing to do with the stock markets...

I too bought some tech stocks that were doing great and then held on rode them all the way to being delisted...

Income Property for me has been safe... but it is a job because no one is going to be a careful and cost conscious as I am... the rest is earning 1%

 

[KennyG]

Not to disagree... years ago Mom bought an annuity from the bank where she goes... I was quite disappointed but it was done... actually feel bad because I gave her a hard time about it.

All these years it keeps paying 4%... so in retrospect it was OK since my family wants nothing to do with the stock markets...

I too bought some tech stocks that were doing great and then held on rode them all the way to being delisted...

Income Property for me has been safe... but it is a job because no one is going to be a careful and cost conscious as I am... the rest is earning 1%

For people absolutely cannot take a risk, annuities will take away a lot of risk. However, that 4% return is principle plus interest, not comparable to your 1% interest return. Also, if it is a fixed annuity, some risk does remain. If the insurance company goes bankrupt, the annuity disappears. Not a large risk, but it exists in these strange days we are in.

The rule of thumb has always been that if you have a balanced portfolio of stocks and bonds, you can take 4% per year out of it and you will never run out of money. That's been true over any significant period of time over the last 100 years. Insurance companies do this with annuities because they know they will end up with essentially all the principle at the end of the day.

 

[ultrarunner]

Mom's annuity pays 4% interest it is a variable but 4% is as low as it can go...

I've been stuck in the .75 to 1% deposit return for years... had planned to buy that forever home and just was not able to make it reality... now homes I had made offers on have literally doubled in the last 4 years since 2012... very sobering since one home my offer was 100k over the accepted offer, non contingent and as-is... just came in too late... a few hours after the sellers had accepted the lower contingent offer which strung out for 59 days...