Preparing for Retirement

[joel]

What I got was do not sale out to buy bitcoin & gold!
We will make you money in the loooooooooooooooooooooooooooooooog run, just trust us.

 

[Supervisor42]

1. Economic and earnings resiliency: With the S&P 500 on the edge of a bear market, the current decline implies a high probability of a recession. If economic data holds up in the coming months, consistent with a slowing but still growing economy, attention will likely shift back to focusing on opportunities instead of risks.

The Golden Nugget.
Keep your cannons loaded. Mine are.
I have confessed to being 'a bottom-feeder' before. (2008-2014) And I am not above doing it again.
If/when the economy goes into the crapper, you can lift the lid, look down thru the hole, and see me down there shoveling the <sorry, no @Pearl approved emoji available >.

Edit: Old quote I heard years ago: "Every time somebody loses 'everything', somebody else finds it."

 

[Neb]

What I got was do not sale out to buy bitcoin & gold!
We will make you money in the loooooooooooooooooooooooooooooooog run, just trust us.

Thank you very much for sharing that info.

It is consistent with where we are thinking.

Ben

 

[Neb]

The Golden Nugget.
Keep your cannons loaded. Mine are.
I have confessed to being 'a bottom-feeder' before. (2008-2014) And I am not above doing it again.
If/when the economy goes into the crapper, you can lift the lid, look down thru the hole, and see me down there shoveling the <sorry, no @Pearl approved emoji available >.

Edit: Old quote I heard years ago: "Every time somebody loses 'everything', somebody else finds it."

I quoted a line on Wdnesday night

When everyone is selling it is a good time to be buying.

Ben

 

[Supervisor42]

Thank you very much for sharing that info.

It is consistent with where we are thinking.

Me too.
Here's what retirement investing looks like in slow-motion...
January 2022 thru today:
Black line = The 'smart money' in Big Tech (NASDAQ).
Green line = The Dow Jones, ie: the stock market (DJIA).
Blue line = Some stock that I own a bunch of, that pays a 7% dividend (based on what I paid for it).

Boring!!!
*No advice here, just squiggly lines.

 

[UrbanHunter]

Okay, I'm going to show my full hand: (something I don't normally do). I am just turning 65 and am still carrying a Mortgage and a student loan. I have some money in a 401K and I was planning to retire in 5 years. My plan was to pay off the house over that 5 years and get completely out of debt. With COVID I was able to work remotely but now that they aren't tracking in the news we are being pushed to go back into the office. But the wife is very ill (End State Congestive Heart Failure) and she may not be able to remain at home if I go back into the office. The other issue I am seeing is that some of the people who are going back into the office are coming down with the Vid, 4 people went to conferences last month, 4 people came back with Covid, does not make me feel all warm a fuzzy.

I figure if I pay off all my debts using my 401K, I would still need about $3,000 per month to make ends meet. My wife is at full retirement age and if I retire she could SSA claim off my earnings which is about twice what she gets now. When I look at it with both of us in the house we could just make it, but if she passes I will be coming up short by about $100 per month.

Here's the bills I am planning for: Power (based on high month), water, car insurance, life/house insurance, property taxes, phone, car-gas, some medical, food, and property taxes. Am I missing something?

By sacrificing my 401K, I can see a pathway to having everything paid off by next year or sooner and just walking away from this, but I keep feeling like I am missing something.

 

[Supervisor42]

Here's the bills I am planning for: Power (based on high month), water, car insurance, life/house insurance, property taxes, phone, car-gas, some medical, food, and property taxes. Am I missing something?

By sacrificing my 401K, I can see a pathway to having everything paid off by next year or sooner and just walking away from this, but I keep feeling like I am missing something.

That is a tough decision that only you can make.
The future ain't looking so bright for some 401K's.
It may be 2 or 3 years before they 'flower' again.
If you have outstanding loans in the 5% range, and you can vaporize them, you will lock in that return as interest that you ain't gotta pay later.

Edit: Years ago when we moved down here I discovered a home-equity loan that the FIL had kept well hidden.
They were bleeding $145 per month paying 'interest-only'.
He was shaking like crazy and had been worrying about it daily for years.
I told him to give me 3 days, and 'we' will take care of it.

The household has had $145 per month more money ever since, and will forever.

 

[Amish Heart]

It's doable, Urban. You might also find some part time thing to do from home where you live now. Bills are a problem when you retire. I'd cash in that 401K and get them paid off. Our only surprise what insurance. Husband retired at 67. Not a problem for Medicare and supplement. I retired at 57. Just turned 60 now. Grandkids needed insurance, we are guardians. So we got medicaid for them, since neither of us were working. So that left insurance for me. Tried the Christian Sharing program, One Share. They wouldn't pay for anything, really, and when I had pneumonia last year, I felt it was an emergency since I couldn't breathe and had to go to ER, but evidently they did not. So the hospital reduced our bill, since we only show husband's SS income. They don't look at savings. We don't have any bills except our recurring ones, like phone, electric, insurance, etc. Finally found a decent rate for me thru Blue Cross, and a decent dental plan. So now everyone is covered, and that was our worry. If you are living there alone, and are coming up $100 short, that may be the time for you to sell and move to a cheaper, rural area.

 

[Neb]

Okay, I'm going to show my full hand: (something I don't normally do). I am just turning 65 and am still carrying a Mortgage and a student loan. I have some money in a 401K and I was planning to retire in 5 years. My plan was to pay off the house over that 5 years and get completely out of debt. With COVID I was able to work remotely but now that they aren't tracking in the news we are being pushed to go back into the office. But the wife is very ill (End State Congestive Heart Failure) and she may not be able to remain at home if I go back into the office. The other issue I am seeing is that some of the people who are going back into the office are coming down with the Vid, 4 people went to conferences last month, 4 people came back with Covid, does not make me feel all warm a fuzzy.

I figure if I pay off all my debts using my 401K, I would still need about $3,000 per month to make ends meet. My wife is at full retirement age and if I retire she could SSA claim off my earnings which is about twice what she gets now. When I look at it with both of us in the house we could just make it, but if she passes I will be coming up short by about $100 per month.

Here's the bills I am planning for: Power (based on high month), water, car insurance, life/house insurance, property taxes, phone, car-gas, some medical, food, and property taxes. Am I missing something?

By sacrificing my 401K, I can see a pathway to having everything paid off by next year or sooner and just walking away from this, but I keep feeling like I am missing something.

@Supervisor42 and @Amish Heart said part I was thinking. I will just list what comes to mind.

1
Is refinancing the mortgage at a lower rate an option? Maybe use the mortgage refi to pay off the debt?

2
Stick with insisting you work from home as long as possible. Meanwhile the Gig economy is a real thing and may offer an option if you are forced out.

3
Dave Ramsey's debt snowball says start with the smallest debt and through everything you can at it. As debts are paid off target the next largest with money that was going at the first. Lather rinse repeat.

4
Do you have anything that be sold to reduce the debt? spent brass? Tools you will never use again ?

5
Is it possible to borrow from the 401k to pay off the debt and then pay yourself back?

6
Are there tax complications from pulling from the 401k?

7
If downsizing your house is in the plan, the mortgage would be paid off. What in the house now wouldn't be moving with you? Can that stuff be sold to pay down debt.

8
Can expenses be cut until debt is paid off? Once paid reward yourself with you gave up.

9
Pray and listen for what God wants you to do. I'll pray for you to find answers.

Ben

 

[dademoss]

The thing that consistently bites my budget in the ass is the "expected unexpected" stuff. Leaking power steering pump, brakes, washer died, roof leaking, etc etc etc. Hard to plan and budget for

 

[Supervisor42]

The thing that consistently bites my budget in the ass is the "expected unexpected" stuff. Leaking power steering pump, brakes, washer died, roof leaking, etc etc etc. Hard to plan and budget for

Yep.
"We gotta have a new washing machine in 2 days!!!" $900.
Click, there it is.
'Expected unexpected', is a good term.

 

[joel]

The thing that consistently bites my budget in the ass is the "expected unexpected" stuff. Leaking power steering pump, brakes, washer died, roof leaking, etc etc etc. Hard to plan and budget for

Grown child total their car, with only liability insurance is the one that got me.
They were taught better, now they want to use my spare truck until they can save up the money for another car.

 

[UrbanHunter]

Thanks for the feed back, @Neb #2 If I retire I will be drawing SSA before full retirement age and anything I make will be deducted from SSA, #5 I can borrow from the 401K but not before December and it wouldn't pay everything off. #6, the only tax complications are the normal income taxes, but you have to be careful to not be bumped into a different tax bracket, #8 I am down to the 2 expenses that I listed (house and student stuff):

The real problem is shifting retirement just 2 years sooner will result in a $500/month hit forever.

I feel like Marty in Back to the Future III, "Why do we have to cut these things so close?"

 

[Amish Heart]

Our tax acct has told us how ,much we can take from our 401K each year before we are bumped to another bracket. Not hard to figure out. So we make sure we keep it under that.

 

[UrbanHunter]

I have started to execute a plan, this week I was able to reduce my total debt by $20K, by January I plan to only owe $20K on everything, and I plan to pay that off by the end of February. If the wife is still with me I will sign out then, if she is gone I will keep working for another 4 years... pretty simple plan...

The way I see it, every year I can keep working is an additional $500 a month for me in retirement..

The only thing that could change things is work itself, they are pushing for more travel, but they are also saying that COVID cases are increasing as people travel more, now they have a policy for when you catch COVID while traveling and have to isolate away from home. Perfect.....

 

[Heartbroken]

I've been working from home since we got locked out of the office March of 2020. Now they're starting to apply pressure about going back, so I hear ya. It's been like having a good raise, to not have the 400 miles on the truck every week. I hope you can do everything possible to fight going back.

 

[Amish Heart]

With gas prices so high, I'm not surprised everyone that can would like to work from home. I do admit though, husband drove me a little nuts when covid first hit and he was working from home. It was hard to keep everyone absolutely quiet.

 

[UrbanHunter]

This week has been a back in-person week, sort of....

Daily grind looks like this, 3 hour commute (30 miles driving, in heavy traffic), meetings start at 08:30 go till 7PM with 3 breaks and a lunch hour. Get home by 9PM, grab dinner and water the garden. I have had sit down meeting with or shook hands with over 90 people so far this week, ate in a cafeteria with about 400 people each day and rode a commuter train with the best of society for an hour each way.... It makes me feel over exposed....

Now I remember why I had trouble keeping my garden going in the past......

To be honest, I find remote work from my home office desk to be more productive because I can switch between virtual meetings (no walking from room to room), paper work, and calls without breaking stride. I'll bet I walk 5 miles a day when working in person and you are always in a rush.

 

[bamadeb48]

I regret retiring, I didn’t plan well . I miss my paycheck! But my arthritis is getting worse in my hands and knees.

 

[Tootsie]

So sorry, UrbanHunter, that you’re back in that routine. Does not sound fun.
Being home, and making the most of it, is a whole ‘ other world.
Regardless of where you are, what you have or wish you have, if you see the positive, life is good. Bloom where you’re planted.

 

[Morgan101]

By sacrificing my 401K, I can see a pathway to having everything paid off by next year or sooner and just walking away from this, but I keep feeling like I am missing something.

I am in very much the same boat. One thing that should be factored in I would call Maintenance. I don't know how much to add to the budget, but you know things are going to break and they are going to wear out. Cars need tires, and brakes and batteries and oil changes. God forbid they have a serious issue. Houses always need something. How old is the roof or the furnace or the driveway or the other major appliances. I'm sure we all have horror stories about home repairs that were totally unexpected and very expensive. I certainly didn't plan on having to evict a raccoon from my attic, but there you go.

I don't know how you budget for it or how much, but you know it is going to happen.

 

[joel]

I have the same paycheck as when I worked forty hours, but three more years Joe Biden & I may have less. When Mr. Trump was in charge, I made much more than I spent, but not now. Two years of Mr. Trump and one year with Mr. Biden is night & day.

 

[Wingnut]

ate in a cafeteria with about 400 people each day and rode a commuter train with the best of society for an hour each way...

Best of society!!! Lol... if you can actually stick with that routine, you're a better man than I am.

I certainly didn't plan on having to evict a raccoon from my attic, but there you go.

Ah, yes, those pesky raccoons... I had one try to set up shop in my attic in Show Low, and the critter was persistent.

 

[Supervisor42]

I am in very much the same boat. One thing that should be factored in I would call Maintenance. I don't know how much to add to the budget, but you know things are going to break and they are going to wear out. Cars need tires, and brakes and batteries and oil changes. God forbid they have a serious issue. Houses always need something. How old is the roof or the furnace or the driveway or the other major appliances. I'm sure we all have horror stories about home repairs that were totally unexpected and very expensive. I certainly didn't plan on having to evict a raccoon from my attic, but there you go.

I don't know how you budget for it or how much, but you know it is going to happen.

Ah, the "expected unexpected". I looked back thru 5 years of my finances before I retired and they were scattered thru all of them.
(Oh look I got a $1,500 crown&rootcanal on a tooth that month! )
On topic: too many people simply add up their typical monthly expenses, food, power, water, et al, and figure that is what they will need for retirement income. Mistake.
A simple glimpse into the past will show that this is not their actual 'operating expense'.
Plan for the 'unplanned'. Expect that 'the unexpected' will happen.
It has, all thru your life.

 

[Heartbroken]

Yikes, UrbanHunter, that sounds like torture to an introvert like me. And my commute is 47 miles and some days I could make it in 45 minutes. The biggest obstacles are deer, beet trucks, and if any roadwork is happening at the only river crossing.
I'm much more productive at home and glad to be saving the commute money.
I'm trying to plan for the unexpected; I hope to set up a small emergency fund that I can leave alone to earn a bit of interest until the refrigerator quits or the massive computer brains in my truck collectively go insane. I'm also looking at the possibilities to maybe forestall some of it by replacing the hot water heater, pressure tank and even the furnace now. I'm going to see if I can get quotes for installing a heat pump. Something has to be done about the propane. Heating this house is like having a second mortgage payment.

 

[UrbanHunter]

I'm trying to plan for the unexpected; I hope to set up a small emergency fund that I can leave alone to earn a bit of interest until the refrigerator quits or the massive computer brains in my truck collectively go insane. I'm also looking at the possibilities to maybe forestall some of it by replacing the hot water heater, pressure tank and even the furnace now. I'm going to see if I can get quotes for installing a heat pump. Something has to be done about the propane. Heating this house is like having a second mortgage payment.

Yep, and I was looking at my power bill today and noticed that in September the rate will go up 2 cents per KWH not a lot but on hot high load days it can add $1.60 per day, over $50 per month more. It sure makes you reconsider what you should be planning for when estimating your future costs.

 

[UrbanHunter]

The S&P is down 20.6% year to date, that will help everyone's 401K.

I have been very blessed I took out some money to pay down some bills, just happened to take it out during a positive spell so my 20% loss was in the form of taxes!
Some how I am still positive for the year. I have come to believe that being lucky can be better than being good.

 

[LadyLocust]

The S&P is down 20.6% year to date, that will help everyone's 401K.

I have been very blessed I took out some money to pay down some bills, just happened to take it out during a positive spell so my 20% loss was in the form of taxes!
Some how I am still positive for the year. I have come to believe that being lucky can be better than being good.

I moved my 401k into cash (non-investment) beginning of Feb. I think it was. At least I'm not loosing $ in addition to the inflation rate.

 

[Supervisor42]

The S&P is down 20.6% year to date, that will help everyone's 401K.

I have been very blessed I took out some money to pay down some bills, just happened to take it out during a positive spell so my 20% loss was in the form of taxes!
Some how I am still positive for the year. I have come to believe that being lucky can be better than being good.

Yes. My main point is, invest in something before you retire.
Market up or down doesn't make much difference in the long run *.
Doing nothing however, will guarantee that it is what you'll have.
And buying the latest&greatest skiboat will not help you much after you retire.
Sometimes paying off bills is the best investment because it vaporizes them from being income you will need in retirement years...forever.
*Unless people are 5 years from retirement and the country plunges into a recession.

 

[LadyLocust]

Yes. My main point is, invest in something before you retire.
Market up or down doesn't make much difference in the long run *.
Doing nothing however, will guarantee that it is what you'll have.
And buying the latest&greatest skiboat will not help you much after you retire.
Sometimes paying off bills is the best investment because it vaporizes them from being income you will need in retirement years...forever.
*Unless people are 5 years from retirement and the country plunges into a recession.

I currently have a call in to our CPA to find out how much we can pull from retirement either by Roth conversion or just out without changing the big picture on our taxes. It's maddening since we are still contributing and would like to retire some day.