Retirement Planning - Lessons Learned

[kenmac]

It is important to pay off those bills before you decide to retire.

well, I left the work force about 8 yrs ago and bought a farm. I really don't care if I ever pay it off. When I die, the kids can use the money I leave and pay it off. Its the only bill I have, other than power, water, food, etc,.

 

[MossRoad]

Mossy=a smart fellow!
I bet Mrs. Moss is smart as well!
You did well.

Thank you. However, some question her judgement when it comes to picking me for a husband. I, on the other hand, get reminded pretty much daily that I'm the luckiest man on the planet.

When we were going to get married, we had to take a "marriageability" comparison through her church. There were 6 subjects. Children. Finance. Religion. Employment. Existentialism in postmodern literature. That kind of stuff. It was over 100 questions. We filled in the little circles in separate rooms, then the priest graded them and gave us the results. He said he'd never seen anything like it. In 3 of the subjects, we were exactly 95% compatible. In the other 3 we were exactly 95% incompatible. He said half of all marriages work and half don't. We stood just as good a chance of making it work as anyone else. Let's have a wedding!

 

[Larry Caldwell]

08 was an anomaly to the system and housing specifically as the financial world was mixing bad loans with good loans and pushing them off a Grade AAA investments. One can argue fraud, but because the credit rating agencies were backing the grading, it was hard to pin on anyone. You can't count on that happening again. You can count on long term economic principles holding up as I noted. A dead guy buying a place in 08 would look good today, and a lot of people that were liquid enough in cash made a lot of money.

Volcker was the one that raised interest rates, regardless of what specific year he did it in.

I don't know how the next downturn will play out. It might be a brief 10-20% drop before it goes back up again. Those expecting a massive price fall, might not ever see that come again.

I didn't predict cheap houses returning, though I think the current bubble will pop. I saw assets getting cheaper thanks to a currency crisis like the late '70s. The ghost of Volcker will come again. As soon as the Fed quits dumping money and starts raising interest rates, stock markets will puke and $trillions in 1% bonds will be heavily discounted. I remember the Dow around 800 in 1983. I wanted to buy stocks so bad I could taste it, but I was broke. I think they are whistling in a graveyard if they think inflation will go away.

Boomer retirement savings will evaporate. We will be dumping assets to raise money for living expenses. My real fear is that offshore creditors will start dumping dollar assets. If that happens, the damage will be immense. It could bring down the entire world economy.

 

[ljjhouser]

well, I left the work force about 8 yrs ago and bought a farm. I really don't care if I ever pay it off. When I die, the kids can use the money I leave and pay it off. Its the only bill I have, other than power, water, food, etc,.

That is true and probably a good plan. I never thought I would be able to ever get the house paid off and never thought I would be able so retire. I don't think either of us will worry about monthly payments after we die.

 

[Doughknob]

It's only money......

 

[MossRoad]

If your investments are making good returns and you know you have a reliable stream of income, there's no reason you can't buy a house in retirement.

 

[kenmac]

If your investments are making good returns and you know you have a reliable stream of income, there's no reason you can't buy a house in retirement.

I'm not to sure about that reliable income. I have lost money the last two days !

 

[MossRoad]

I'm not to sure about that reliable income. I have lost money the last two days !

Yes, me as well. But I had stuffed pork chops, stuffed mushrooms, corn on the cob, steamed green beans, rice pilaf, carrots, cukes, and cherry tomatoes for dinner.

 

[MossRoad]

 

[kenmac]

Yes, me as well. But I had stuffed pork chops, stuffed mushrooms, corn on the cob, steamed green beans, rice pilaf, carrots, cukes, and cherry tomatoes for dinner.

I should have come for supper. I had a sub sandwich

 

[MossRoad]

I should have come for supper. I had a sub sandwich

I had that Sunday night. Split it with my wife.

 

[MossRoad]

One thing I have to say is that really, all you need in life is food, water and shelter. Everything else is gravy. We're just used to a lot of gravy. I'm very grateful for what my wife and I have. We are fortunate that we have not had any medical or financial catastrophes, good steady employment, and family to support us.

I tell young people to live below their means. Enjoy life today, but save something for tomorrow in case you live to be 100. Pay yourself first. Set goals and work towards them. I try and show them the power of compound interest and dollar cost averaging. And...

 

[California]

One thing I have to say is that really, all you need in life is food, water and shelter. Everything else is gravy. We're just used to a lot of gravy. ...

I tell young people to live below their means. Enjoy life today, but save something for tomorrow in case you live to be 100. Pay yourself first. Set goals and work towards them. I try and show them the power of compound interest and dollar cost averaging.

Heck yeah. We continued to live like a couple of college students in the first years. Bought a duplex that pencilled out where the tenant paid all our housing expense so we banked 25% of gross income into IRA's and 403b's (the maximum) plus saved more to pay cash for cars etc - used cars at first then new a little later. That is strategy I recommend for anyone if you don't have wealthy parents.

We also were simply lucky to start owning rentals during the massive inflation of the 70's, so that cleaning up and selling them made a double return. The increase in sale price as a multiple of increased rent income, and the dollar increase due to inflation that became real dollars upon selling the properties at inflated prices. I don't know what might be an equivalent strategy in today's economy but somebody out there must have found a similar route to making money.

As you noted, the magic of compound interest, applied to all the savings you can manage, paid off very well later in life.

 

[kenmac]

With all these people that don't want to work, I thought the Government might come out and say, ''all the old people that want to go to work, go and we won't penalize you''. But it didn't happen. so....
I wouldn't mind going back and work some, but I don't want to take a cut in pay to do so.

 

[two_bit_score]

It's only money......

Paper and ink.....

 

[check]

All too complicated for me. I just bought real estate. And it has worked out very well for me!

 

[drssg]

Yes.

Why annuities are a bad idea for almost everyone

You’re betting the insurance company that you’re going to live longer than they think you will.

www.marketwatch.com

I personally don't own any annuities for reasons similar to what it mentioned in the article, but people have different goals and risk tolerance. @MoKelly indicated that he is a fixed income investor, and I believe they are worth investigating for that goal.

From the article you posted:

So why do people like them?

Fixed annuities prevent losses. You are typically guaranteed that the value of your principal will not go down regardless of what the stock or bond markets do.

Fixed index annuities allow the investor to take part in some upside, though it is usually very limited — about 4% per year in this low interest rate environment. So the investor is trading upside potential for downside protection.

If the market soars 20%, the investor will only make 4%. But if the market falls 20%, the investor won’t lose any money.

That is a tremendous comfort for some people. I have a BIL who lost a bunch of money in 2020 because he just couldn't stand to watch the stock market plummeting and he sold all his stuff. It's not for everyone.

 

[kenmac]

That is a tremendous comfort for some people. I have a BIL who lost a bunch of money in 2020 because he just couldn't stand to watch the stock market plummeting and he sold all his stuff. It's not for everyone.

yeah, some just don't have much risk tolerance . But if he's still working and investing. When the market is down, he was continuing to buy those stocks /bonds at a reduced price.

All the financial advisors I interviewed seem to ask the same question.
If the market fell xxxx would you hold, sell, or continue to buy ?

 

[California]

I have a BIL who lost a bunch of money in 2020 because he just couldn't stand to watch the stock market plummeting and he sold all his stuff. It's not for everyone.

People need to accept that investing money in the market is a LONG term investment, at least a decade minimum if you hope to match historic averages. Short term the market moves randomly and can chew you up.

 

[arizona98tj]

I have been retired 17 years. I guess I have learned that the amount of money you have monthly during retirement is important, but the amount you spend may be more important. It is important to pay off those bills before you decide to retire.

I grew up as a farm kid with my Dad teaching me the value of a dollar. I made sure I was debt-free when I retried at age 60 upon finishing a 30 year career at a nuclear power plant. We sold the house we'd live in for 30 years and headed back to where I grew up as a kid in northern MN. My folks left me 80 acres, thank you Mom and Dad, quite some years back and we built a new house on it along with a 3 car garage, a 10x30' wood shed on a slab, a 12x40' loafing shed, and a chicken coop. I bought a new tractor and since then, a bunch of stuff to put on the 3 point hitch and the Mrs. got an almost new car. We paid cash for everything.

I'm still debt free thanks to a nice pension that came with a good medical plan and a nice investment portfolio. And to top it off, I just became old enough to file for full Social Security benefits. However, this month, we'll start construction on my wife's studio. Rather than spend savings, we decided to finance the build because rates are still reasonable in my opinion. It will get paid off before the note comes due unless our investment advisor finds a reason not to.

We never lived beyond our means. We never had a flat-screen TV until 6 years ago and my pickup is 19 years old. We raised 4 kids on my salary from the power plant. We never wanted for anything that we needed....but there were plenty of times we wanted something we didn't need. I tried to instill that concept in my kids....there are times I still wonder if I succeed. I've only held three jobs in my life including my military enlistment. In contrast, I do believe one or two of my kids have held three different jobs in a single year. We did the best we could. We hope to leave something for them.....time will tell.