Retirement

[Redbug]

I have less than 3 years before I can retire. I have been invested in Vanguard and have a 401, house paid off, maxing out the ira's etc. Besides these forums, I also keep up on the Early-Retirement forums. That's the best advise I can give...

FIRE and Money - Early Retirement & Financial Independence Community
And don't forget to look at all the other ones...
Community Forums - Early Retirement & Financial Independence Community

 

[MossRoad]

I've read that folks nearing retirement, & in retirement, should hold less & less stocks, and more & more bonds, to help avoid such drastic drops. I think the idea is that the older you get the less you can afford a huge portfolio drop since you're less & less able to go back to work.

Yup. Just don't make the mistake of going too conservative too early or you may outlive your money. It is a balancing act for sure. That was my original point.

 

[ultrarunner]

Reading the posts... I can see my family background is very conservative financially.

The Great Depressions was very real for my Grandparents and Dad... they made it real for me by never missing an opportunity to point out the value of saving and living within your means...

My Grandmother would point out homes of people that had lost everything in the Depression by risky investments and made it very real for me as a kid... then came the 70's oil shortage... the family car business went months without selling a single car... things were looking very grim but years of savings made sure the necessities were covered.

My parents and Grandparents avoided stocks like the plague... Mom and Dad never owned any ever. In high school we had a project to pick a stock and follow it... we even had the opportunity to buy through a local broker... I did and have nothing to show for my $100... one company went bankrupt because of fraud in government contracts and another old American company, Coleman.... lost just about all it's value.

Mom's side of the family lost what little money they had to horrendous inflation where it would take a wheel barrow of money to buy a grocery bag of food and then the currency became worthless... her father had sold part of the farm to a local business man taking payments for 5 years... the night before the currency collapse, the business man came to the farm and paid off the debt in full... the next banking day the money was worthless.

No one ever retired in my family and I never really see it in the cards for myself... I did go to work in Health Care with all the benefits that came with it... my parents were astounded and cautious... paid vacation, sick time, 401k, Company Match, Profit Sharing, Employee Stock Plan, Sabbaticals and excellent Health Insurance... almost none of the above exists in 2011... makes me wonder if Dad and my Grandparents distrust was well founded after all.

My eyes glaze over listening to the 401k presentations... same old song of looking out for your future while the fund takes 2% every year...

My plan is to be debt free with income property... whatever comes my way from Social Security or my 401k is extra... Restoring Antique cars as a hobby also helps since my hobby pays for itself...

(On a side note... anyone notice all the fees being attached to anything financial??? I think my Bank has sent out 3 revised fee schedules in 4 months.)

Nothing against those that have done well in the markets... I'm either not smart enough or lucky enough to expect it will work for me...

 

[tglass]

Anyone thought about medical cost? If I retire before age 65 there will be no help at all. A few years ago I would not consider this an issue as my health was better than average. Today, it is quite a different story. Is there any good and cheap medical ins. w/prescription benefits anyone has seen for senior citizens? There should be, we have paid in all these years and haven't lived off the government all these years of collected inusrance.
When you retire, how are you going to pay for the ever increasement of medical insurance and especially the cost of prescriptions?

 

[Travelover]

..........
Nothing against those that have done well in the markets... I'm either not smart enough or lucky enough to expect it will work for me...

I've never been lucky, but I am persistent. I started investing in index funds in the mid 80's and by 2000 I had enough to retire. I continued to work until I was 54 in 2007.

One thing that worked for me was to diversify - not put all my money on one stock, but spread it around in a fund. Also never market timed - just kept adding year in and year out. Worst setback was 2009, but I still kept buying and I'm more than flush now.

YMMV

 

[ultrarunner]

I've never been lucky, but I am persistent. I started investing in index funds in the mid 80's and by 2000 I had enough to retire. I continued to work until I was 54 in 2007.

One thing that worked for me was to diversify - not put all my money on one stock, but spread it around in a fund. Also never market timed - just kept adding year in and year out. Worst setback was 2009, but I still kept buying and I'm more than flush now.

YMMV

I opened a SCHWAB account in 1980... Charles Schwab was a regular where my brother worked and mentioned to my brother the benefits of his new Schwab 1 account... still have the account, have not traded in years.

Here's how my original retirement plan started:

In 1982, I started investing in rental properties... I bought my first while still in school... just couldn't see paying money in rent... I had been working paying into Social Security since age 12 and had money for a down payment... had zero chance of getting a loan.

At that time, lenders wanted 3 years in the same line of work, 2 years on the same job, living expenses of 6 months in the bank, 20% down plus closing costs, meet credit requirements, property had to appraise and have a clear structural pest control report... in short, there was no way I was qualifying because working 3 part-time jobs and going to school wasn't going to cut it.

I started looking around and found a home for $30k in the Oakland CA... I went to look at it and it was in the condemnation process and still occupied... utilities were still on.

Home was real bad... I told the agent I was not interested just needed too much work... I could see daylight in the back bedroom from years of leaking roof, the bathroom floor had rotted through and you had to either step on joists or the dirt.

Agent was persistent... finally I said it's not worth more than $11,000 to $12,000 dollars... she said is that your CASH offer? I said what's the point since it was listed for 30k... she wrote up the offer for $11,500 cash with no contingencies and called my later that day to congratulate me on buying my first home...

Family was in shock... step-grandfather came down to take a look and told my grandmother he didn't have the heart to tell me I should just walk away because I was so excited at being a home owner and paying CASH for my house at 21/22

Anyway, I moved in and spent the better part of a year fixing the place up as I could afford... after a year, I was able to get a loan on it and bought my next property and kept house number 1 as a rental... it has been rented ever since...

Back in 2006/07 my net worth on paper was unreal... of course that all changed now... that 11,500 home was up to $250k and now is closer to $85k... property in some areas fell by 80% from peek.

Unlike my mutual funds... my rents have remained constant... I did not raise them in the boom years and some of my tenants have been with me more than 20 years...

I think it is the peasant/farmer stock in me that inspired me to own land... friends have done quite well in stocks, most have lost a bundle and our totally out... especially those that quit work and became day traders...

My Father's and Grandparent's happiest day was the day I went to work for the Hospital... they said I can finally use my degree and have a REAL job with medical and great retirement... something they never had being self-employed.

In retrospect... there have been some good things working for a company... I do believe I would be much farther ahead had I stayed with my original plan to buying and renovating income property...

 

[Travelover]

..........
In retrospect... there have been some good things working for a company... I do believe I would be much farther ahead had I stayed with my original plan to buying and renovating income property...

You have certainly been a go-getter. I never had the stomach to be a landlord after being a renter and seeing the shenanigans fellow renters pulled on the landlords. :confused2:

Sounds like you have done well in the end, and that's all that counts.

 

[ultrarunner]

You have certainly been a go-getter. I never had the stomach to be a landlord after being a renter and seeing the shenanigans fellow renters pulled on the landlords. :confused2:

Sounds like you have done well in the end, and that's all that counts.

Like everything else... rental property has changed dramatically in the last few years... at least for residential rentals.

My entire rental agreement started as a single page plus one signed condition and inventory page. Today, it is 28 pages.... 25 of which are government mandated... anything from lead, asbestos, child molesters, rent board, rent control, city smoking ordinance, etc...

Never thought about being old enough to wax nostalgic about the good old days...

My original plan was law enforcement... 12 of my buddies went right in from the Junior College... I read applicants with a 4 year degree started with a 4% pay increase from day one... in the 2 extra years it took to get my degree... the entire economy was in the dumps and cities here were letting people go...

Fast forward 30 years and almost all the guys are quite happy enjoying their retirements... none under a 100k... still boggles my mind...

 

[CurlyDave]

I've read that folks nearing retirement, & in retirement, should hold less & less stocks, and more & more bonds, to help avoid such drastic drops. I think the idea is that the older you get the less you can afford a huge portfolio drop since you're less & less able to go back to work.

There are a couple of ways to look at this.

If you are getting any kind of pension or SS benefits, advanced retirement and/or financial planners will frequently treat these as "phantom" bonds. I.e. you consider yourself as having fixed income bonds which would produce the same income as your pension or SS, possibly with a discount for the non-reliability of pensions.

In the case of myself and DW, who both get SS and who both get pensions the amount of these phantom bonds is very large. Large enough that we can't possibly hold enough stocks (not enough money) to get too much in stocks in our asset allocation.

One of the ways I interview financial planners is to ask them about phantom bonds. If they haven't heard of them, go somewhere else. If they have heard of them, but don't use them in their asset allocation models ask "why not".

It seems to me that a pension which produces $1000 per year income is very much the same as a bond which produces the same income. Oh, you can't sell the pension and use all the money at once in an emergency, but no one can swindle you out of future pension payments, the way they can swindle you out of a bond.

Anyway, the part of our portfolio that we can control is 100% invested in stocks or real estate.

 

[dmccarty]

Just throwing this out since what Curly said made it pop into my head....

There is a rule or maybe guideline is a better term, that you should subtract your age from 100. The result is the percentage you should have invested in stock. So if you are 20, 40, or 60 years old you be 80, 60, 40 percent invested in stock. The other investments should be in less risky investments.

You want some money in stock later in life to cover inflation.

You can use a larger number if one does not like risk or a lower number if risk is ok.

Later,
Dan