How are you getting by on your savings?

brin · Oct 2, 2010

jinman said:
I am one of those lucky folks who has double retirements. I have a military retirement with medical for me and my wife. I also took Social Security early at age 62. My wife has a city retirement. Those incomes easily cover our living expenses and gives us enough for a very good life. We both have recently sold property for a substantial profit and we have our 401k and additional savings for big projects. We still borrow money to buy cars because of the low interest rates and I have 7 years to pay off my home mortgage on a 5% loan. I just can't see paying those off with cash when I can keep my liquid assets working for me if I invest wisely. I said I feel lucky, but I should have said I feel blessed. I have a loving wife and a lovely life in retirement, more than I ever expected, and surely more than I deserve.

Jim - Luck ?

Luck is when opportunity and preparation come together...congrats...!:thumbsup:

Egon · Oct 2, 2010

Savings?? What Savings???:confused2::confused2:

Roadside bottle pickup seems to work.:thumbsup:

mjarrels · Oct 3, 2010

I'm like Jinman, love that Navy retirement pay and VA disability. I'm too young for SS, SS will probably be gone before I'm 62. Yep, eat more chicken than beef and nothing better on a cold night than a big pot of navy beans and cornbread, about a $2.00 meal with great leftovers. We get by.

mark

MoKelly · Oct 5, 2010

I'm no economist, but it seems to me the historical low interest rates are tough on retirees. I guess low interest rates are great for buying homes (and tractors), but for trying to generate investment income to live on ... well, its not so much fun.

This economy has got to get moving forward ... and it seems to me it won't until unemployment starts going down down down.

MoKelly

keegs · Oct 5, 2010

MoKelly said:
I'm no economist, but it seems to me the historical low interest rates are tough on retirees. I guess low interest rates are great for buying homes (and tractors), but for trying to generate investment income to live on ... well, its not so much fun.

This economy has got to get moving forward ... and it seems to me it won't until unemployment starts going down down down.

MoKelly

When interest rates are falling bond yields are rising and vis-versa...No?

smstonypoint · Oct 5, 2010

keegs said:
When interest rates are falling bond yields are rising and vis-versa...No?

True-- bond prices rise (fall) when interest rates fall (rise). The longer the bond term, the larger is the effect of the interest rate change on the bond's price. I have a portion of my IRA in Vanguard's Long-term Investment Grade Bond Fund: as of yesterday (10/4) the SEC yield is only 5.05%, but the Year-to-Date (YTD) Return is 15.10%. When interest rates go up, my YTD return is going to suffer.

But a lot of retirees rely on CD yields and they are hurting. According to CD Rates | Highest Yield Bank Certificate of Deposit Interest Rate, the average 5-year CD rate is only 2.4%.

Steve

keegs · Oct 5, 2010

what about holding corporate or gov bond(s) to maturity as opposed to investing in a bond fund (where i gather you need to be more concerned about int. rates)?

Gem99ultra · Oct 5, 2010

I took half of my combined pensions and rolled that into an IRA and took the other half in a monthly lifetime distribution.

At first the IRA was netting something like $200/day; life was good. But when the market crashed, so did my retirement nestegg. After 5 years, it's about 20% less than what I started with. The distribution portion is barely enough to cover my miscellaneous monthly expense but not my mortgage. In addition, I do collect a paltry sum from SS. That's enough to cover my mortgage.

So, the short answer to a complicated question is, I'm barely making it. As prices and taxes go up, the closer to not eating I get. And there is no SS cost of living adjustment this year. Eventually I'll have to cash out my IRA, paying a 10% early fund withdrawal penalty plus a 28% income tax (which is expected to go back to 33% next year).

So, after 50 years of working, I get the honor of dying bare bones broke with nothing to show for it. It's just not a pretty picture any way you look at it.

smstonypoint · Oct 5, 2010

keegs said:
what about holding corporate or gov bond(s) to maturity as opposed to investing in a bond fund (where i gather you need to be more concerned about int. rates)?

With individual bonds, you face the risk that the issuer will default. Think about GM. The primary advantage of a good bond fund is that it holds a diversified portfolio of bonds, so the effects of default by an individual issuer will not be catastrophic.

Here's a link that does a reasonable job in discussing the advantages of bond funds over individual bonds.

Litman Gregory - Bond Funds vs. Individual Bonds - October 9, 2009

Steve