How To Not Outlive Your Retirement

[Terri9630]

We've talked about visiting or maybe even working seasonally at a few of the national parks after we get this place set up the way we want it.

 

[joel]

Only 15%, the lease you should put up is 15%.
People at work would talk about how much money they lost when the company stocks went down & I would increase the amount that came out of my check, tighten my belt, because I knew when the stock went up, I would double my monies. I retired at 59 & spent $50,000.00 in six months & have $60,0008.00 more than I had the day I retired in just one year. If a ignorant red neck can do it, anyone should be able to do it. However, if thing get as bad as some say it will, then I could be broke by the end of the year.

 

[UrbanHunter]

I am still a ways from retiring. When I started this job, work had a 401k program with matching up to 5%. I started putting away just enough to get all the matching, then every time I got a raise I put it into the 401K (My thinking was, hey if I can pay all my bills I don't need more spending money). The wife complained that I had never taken home a raise, by the time I did bring home a raise I was putting away the maximum into the 401K. Then the wife say's we are not saving enough, I say but we are paying our bills and putting away $26K a year into the 401K and she says, that's not savings... I am so confused on the 401K vs savings thing....

 

[Spikedriver]

God willing, when I'm 56 I'll get the required months of service to qualify for an actual pension from my job. Coincidentally that is also when I'll be able to get full disability from the Federal Railroad Retirement fund, just in case I need it. I can't fulfill my months of service for full retirement until age 66. I don't know if I'll be able to make it or not.

I confess I have neglected my 401k. It was well stocked but divorce took that away. With my physical problems I don't really expect to live long enough to put it to use. I may regret that decision later but I want to live now. I plow money into savings, in order to pay for things with cash instead of cards or loans. I've put over 25k into savings in the last 25 months. I expect to continue that for the foreseeable future. It has already paid off, as I was able to weather my recent, 7 week medical layoff without incident, on just the money I had in my checking account - and I still had over 8 grand in that account when I got back to work. And, my daughter will be off the child support in a few short years. That will be another $882/month in the bank, going straight into the house down payment fund.

I think what I'm doing is working...

 

[Supervisor42]

I am still a ways from retiring. When I started this job, work had a 401k program with matching up to 5%. I started putting away just enough to get all the matching, then every time I got a raise I put it into the 401K (My thinking was, hey if I can pay all my bills I don't need more spending money). The wife complained that I had never taken home a raise, by the time I did bring home a raise I was putting away the maximum into the 401K. Then the wife say's we are not saving enough, I say but we are paying our bills and putting away $26K a year into the 401K and she says, that's not savings... I am so confused on the 401K vs savings thing....

You are doing exactly the right thing.
The funds in the 401K are compounding.
And unlike 'savings', the money you would have paid in taxes on them is growing alongside them.
When you pull it out, you are in a much lower tax bracket so you get to keep more of that.
Hopefully they are in decent investments.
The ones that suck usually show themselves early on, but that is the topic of another book.
And I can tell you is, compounding works!
*Disclaimer: Not investment advice.

 

[joel]

I had most of my money in a 401k, some is in a standard IRA, I also have a Roth IRA.
I have a small pension, too.
I rolled everything when I left the company & got a much better % rate.

 

[UrbanHunter]

In 5 years I will get a small pension, but they are taxable so I figure I will only get about 75% of that they say it is. I will also qualify for Social Security but again it is taxable income... Uncle Sam taketh and then he taketh some more... Don't forget taxes when you are planning, I had a friend who was younger but about to retire after 25+ years, I asked them if they included taxes in their planning. Saw them 2 years later and they were still working, they said dang you, when I included the taxes I couldn't afford to retire when I wanted to...

Because of our late start (15 years by my book) I have a lot of bills that would normally be paid off before reaching retirement that still have 10 years left on them. So, I have been taking small chucks out of the 401K to put on the house. I did the math and I can live well if I don't have a house payment.. I revisit my plan every year (keep it in a spreadsheet) to see how I am doing relative to my plan and readjust accordingly.

The average male lifespan in my family history is only 73 years so I won't have to make it last too long.... knowing my luck I live to be 200.....

 

[Amish Heart]

It's only taxable after a certain amount. We just get Social Security now since last August. Our tax person told us how much we could take out of our 401K each year without being taxed, because it would be added as income to our SS. So we just stay under that number.

 

[UrbanHunter]

All I know is that between the Fed and the State there is always someone there to take their pound of flesh; I would rather plan for it than get surprised by it.

 

[The Lazy L]

I had to play catch up from my previous career. 20% of my new career pay went into a 401K. Work matched the first 3%.

House mortgage interest was a variable rate. Rate went down every year except one year. I managed to pay the original payment. Mortgage was paid off 6 years early.

Work changed to a high deductible medical insurance. They paid $5,000 a year into a Health Savings Account (tax free) in my name. I let it accumulate over the years for our "old age" need.

No mortgage(s). No credit card debt. No loans. 100% vested in work's pension for several years.

Replaced twenty year old house appliances and water softener with new.
Replaced the truck and car with a newer car (used 3 year old). Paid cash.
Stripped the asphalt shingles off the house roof and replaced with steel along with Leafguard gutters.
Then I handed in my resignation and retired. (insert dance and a loud yahooo here).

Pension pays for month to month expenditures. Social Security goes into savings.

Rolled the Stock based 401K into a IRA. I believe the Stock Market is over inflated and is pass overdue for a major correction. I wanted to "lock in" my paper profits. Took a little out to purchase a 12 year old, 24 foot motor home. Plan on doing a little traveling and sightseeing of this great country.

For years we done without in order to save up for retirement.

Ain't rich. Not pinching pennies just nickels. No lavish lifestyle but comfortable. Good Lord been good to us.

On the overhand a former co-worker retired just before me. Co-worker has three house mortgages, two car loans, borrowed against their 401K for the latest iPhones and a ATV. Too young for Social Security benefits. Complains to all that can't avoid them how the pension can't support their life style.

 

[Weedygarden]

On the overhand a former co-worker retired just before me. Co-worker has three house mortgages, two car loans, borrowed against their 401K for the latest iPhones and a ATV. Too young for Social Security benefits. Complains to all that can't avoid them how the pension can't support their life style.

There are many who will never be able to really retire because they have to have the latest and the greatest. Immediate self gratification versus those of us who were blessed to grow up in poorer conditions with hand me downs and others donations. What seems like a poor me situation is often ultimately a blessing.

 

[angie_nrs]

In 5 years I will get a small pension, but they are taxable so I figure I will only get about 75% of that they say it is. I will also qualify for Social Security but again it is taxable income... Uncle Sam taketh and then he taketh some more... Don't forget taxes when you are planning, I had a friend who was younger but about to retire after 25+ years, I asked them if they included taxes in their planning. Saw them 2 years later and they were still working, they said dang you, when I included the taxes I couldn't afford to retire when I wanted to...

That is an excellent point. Anyone who has a regular IRA or 401K is not the only owner of that account. Uncle Sam is also an owner as well. Either you pay him now or you pay him later......that's the choice you get. We've taken the 'pay him now' option when it made sense for us to do so by converting some of our regular IRA's into Roths. We didn't do it all at once, just when our tax bracket allows us to do so without bumping us up into the next one. It gives us more flexibility as we get older since we'll be able to draw out of the Roth without having to concern ourselves with Uncle Sam, since he's already had his hand in those accounts.

 

[joel]

" Uncle Sam is also an owner as well "
That is why we save gold and/or silver, so we have something the world can not see.

 

[Supervisor42]

Rolled the Stock based 401K into a IRA. I believe the Stock Market is over inflated and is pass overdue for a major correction. I wanted to "lock in" my paper profits. Took a little out to purchase a 12 year old, 24 foot motor home. Plan on doing a little traveling and sightseeing of this great country.

For years we done without in order to save up for retirement.
Ain't rich. Not pinching pennies just nickels. No lavish lifestyle but comfortable. Good Lord been good to us.

That's the way you do it!
I did the same thing.
The important part is, if I had paid taxes on the stuff that went into the 401K, at the time, I would have paid it based at twice the income level I am at today.
Instead, that money sat in the 401K earning income for decades.
Since everything is paid off now, I live the same lifestyle today on half the income and taxes are a fraction of when I was working.
I still have money in stocks because I am a 'dividend-hog', and it is money that I won't need for 10 years.
If the share price goes down or up in the next few years, I won't care... as long as they keep paying me my damdividend.
And they ain't missed a beat. Based on what I paid for them, 6-8% each year.
*Disclaimer: I would NOT recommend that anyone buy stock at the present time.

 

[joel]

I have one that pays a percentage in return, no mater what the market does. The holder will make a ton of money off my investment in the good years, but if the market goes down, I still get the locked in rate.

 

[angie_nrs]

I have one that pays a percentage in return, no mater what the market does. The holder will make a ton of money off my investment in the good years, but if the market goes down, I still get the locked in rate.

That sounds like an annuity within your IRA (perhaps). I'm not a huge fan on annuities due to their typical high maintenance fees, but there is a place for them. We also have that kind of setup in our portfolio. It's a smaller percentage of our overall investments, but it is there to provide stability in what could be an unstable future. A guaranteed return is tough to turn down, especially in these turbulent times.

 

[Supervisor42]

That sounds like an annuity within your IRA (perhaps). I'm not a huge fan on annuities due to their typical high maintenance fees, but there is a place for them. We also have that kind of setup in our portfolio. It's a smaller percentage of our overall investments, but it is there to provide stability in what could be an unstable future. A guaranteed return is tough to turn down, especially in these turbulent times.

I learned my lesson on an annuity the hard way years ago. Never again.
I watched it go up in value for years and when it reached maturity, the value went absolute flat-line.
For over a year.
Stuff may go up or down in value, but never stationary.
I read the fine print and after it reaches the 'value' to meet the obligation of the annuity 'promise' they get to keep anything it makes after that.
All I'm saying is, keep an eye on it.
It's an insurance product, not an investment.

Fixed annuities – These are annuities with fixed payments. If provided by an insurance company, the company guarantees a fixed return on the initial investment. Fixed annuities are not regulated by the Securities and Exchange Commission.

*Disclaimer: This is not investment advice. Just an old guy ranting.

 

[dademoss]

Me, I'm a financial simpleton. I can do a lot of things, but when I did a simulated portfolio investment scenario I lost my A$$. At retirement, I engaged an RIA firm. 6 years in, so far so good, we spend money, they make it back and more. Roughly 70% stocks/30% high rated bonds.

Other than that, our portfolio is Lead/brass/copper and long term foodstuffs.

My FIL has an annuity, shall we say highly leveraged. They can't afford to fix their coveted BMW 7 something series or get the AC fixed.

Bottom line, DO NOT exceed your income in retirement, keep it around 4% withdrawal rate or less.

 

[Supervisor42]

My FIL has an annuity, shall we say highly leveraged. They can't afford to fix their coveted BMW 7 something series or get the AC fixed.

Two Louisiana natives that did not get the A/C fixed in their BMW:

Cremation not required. They saved tons of money!

 

[VThillman]

That sounds like an annuity within your IRA (perhaps). I'm not a huge fan on annuities due to their typical high maintenance fees, but there is a place for them. We also have that kind of setup in our portfolio. It's a smaller percentage of our overall investments, but it is there to provide stability in what could be an unstable future. A guaranteed return is tough to turn down, especially in these turbulent times.

Depending on the 'turbulence', such guarantees may not be guaranteed. There can be several unpleasant stages of disruption before a true interregnum results.

 

[angie_nrs]

All I'm saying is, keep an eye on it.

Yup, it's a very small part of our portfolio and is only there for stability with a guaranteed return. I was hesitant about it, but it was well researched and it made sense in our situation. It won't be there forever. I keep track of the maturity date and make sure they pay their stated amount. I reconcile my IRA every quarter. I try not to hoover over it b/c I don't plan on doing anything with it for several years, but I remember the old saying "if you don't keep an eye on your money, somebody else will."

There was one time several years ago that my monthly investment didn't show up in my account. I called them up and asked where it was. Apparently there was an error and it went into someone elses account. They fixed their error, but I'm no longer with that company. So your advice is valid and prudent for all accounts, not just annuities.

 

[Neb]

This is a topic near and dear to my heart. I have been retired for over a year now and The Princess should doing the same in the next month or so.

We have a financial advisor that has earned his keep. We have a phone meeting every week with him because the markets are shifting so quickly these days. He never has advised for an annuity because he can get us a better return. Yor milage may very.

The other factor that has helped us is being committed to being debt free. It reduces demands on our budget to only reoccurring expenses.

Diversifying outside the markets in real estate to spread our risk out.

Recently we started to invest in gold via glint since hyperinflation could turn our world up side down fast.

Let me confess all of this is still wishful thinking. Time will tell.

Ben

 

[Supervisor42]

There was one time several years ago that my investment didn't show up in my account. I called them up and asked where it was. Apparently there was an error and it went into someone elses account. They fixed their error, but I'm no longer with that company. So your advice is valid and prudent for all accounts, not just annuities.

Now, now, if you read my tiny disclaimers, I don't give investment advice.
You can get in trouble doing that.
+1 for Ben. If you don't want to learn a new career, get a financial advisor...
(which I am not)

 

[winds-of-change]

We have an appointment with a financial advisor Tuesday. We are looking forward to retiring.

 

[Neb]

We have an appointment with a financial advisor Tuesday. We are looking forward to retiring.

Thank God for you.

Make sure they are a fiduciary .

Make sure you understand what options you have and why. If you don't understand then make them explain.

Fair enough

Ben

 

[Supervisor42]

Make sure you understand what options you have and why. If you don't understand then make them explain.

Wanna make some cool magic happen?
Ask them the 'magic' question: "How do you and your company make money?"
He will frown and whip out about 4 full pages of paper and it will be like a kindergarten teacher reading a book. He cannot say no.
As required by law, it is very understandable . And quite an eye-opener.

 

[winds-of-change]

Wanna make some cool magic happen?
Ask them the 'magic' question: "How do you and your company make money?"
He will frown and whip out about 4 full pages of paper and it will be like a kindergarten teacher reading a book. He cannot say no.
As required by law, it is very understandable . And quite an eye-opener.

We went with an independent financial advisor.

 

[dademoss]

We went with an independent financial advisor.

Even an independent FA should be asked if they are acting as a broker or as a fiduciary, and how they determine their fees.

 

[winds-of-change]

Even an independent FA should be asked if they are acting as a broker or as a fiduciary, and how they determine their fees.

He talked about how he makes his income while I had him on the phone. I can’t remember exactly what he said. He is coming over next Tuesday to talk to hubby and me. I’ll get clarification. This financial advisor is from Tennessee and has taken classes taught between Dave Ramsey. He has a Nashville area code.
Thank you for pointing this out to me. We’ll take all the knowledge anyone can offer us.

 

[Neb]

Even an independent FA should be asked if they are acting as a broker or as a fiduciary, and how they determine their fees.

Yes fiduciary is important.

Our guy gets 1% of whatever he is managing for us.

Ben