Retirement Planning - Lessons Learned

[Jchonline]

No.

My path was about the same as yours with about the same outcome. But the present generation is not facing the same reality we experienced.

For one example corporations are buying up all the rental property around here (and bidding up what they pay for them) so housing costs are far higher for someone starting out. So there's no opportunity for massive savings like you and I were able to do. And no way could someone pay off any house in three years on a starter salary, that's simply impossible. Its a different reality now.

A good union job with a pension constituted the middle class 50 years ago. No such thing today.

Someone starting out would need to move to a state where the cost of living is much lower, but maintain a job that still pays really well in order to make it work. You can slowly move up over the years if you buy/sell smart.

 

[California]

There is ALWAYS opportunity. As for housing, it depends GREATLY on where one lives. Houses in my area can be had real resonable. I just sold one myself.

Saying something is impossible tells me a lot.

Let me re-phrase that. It's impossible for someone earning a starter wage to pay off a starter house in three years in the parts of the country where the majority of people want to live.

 

[California]

Probably not good advice right now, when your short term losses could exceed 50%. Buy the index fund after the crash, not before.

I agree the odds are against you if you start investing right now. But still, analysis has shown that the only way to get long term returns that match the long term averages is to stay invested regardless of what the market is doing short term. I think this is because of another fact revealed by modern analysis: All of the investment gains that push up an average return, are earned in those few days of extraordinary market increases. All the other market numbers year in and year out, are just random noise that can be ignored. So - if you're not in the market on those extraordinary days you're not going to keep up with the long term S&P or whatever other index you like.

But yes, maybe with the market so high then real estate or some other alternative less linked to the economy, might be a better choice. If you have the analytical skill to identify the better alternative.

From my early days: Nice lady at Fidelity said why do you have this one account with so much cash when the market is rising? I replied that's what's left of my first significant investment in Fidelity Magellan back when Peter Lynch was a celebrity for beating the market year after year. That's the remaining half of what I put into Magellan. "Oh."

I didn't tell her this Fidelity account was my after-tax account while my long term investing was elsewhere in a Deferred Compensation (IRA) plan that I was locked into with my employer. Previously I had accepted a Fidelity offer to assign a Personal Investment Advisor and then learned when we met him that he wouldn't even look at that other half of my savings in the employer plan. We thanked him and walked out, that wasn't retirement planning advice at all!

 

[dirttoys]

Probably not good advice right now, when your short term losses could exceed 50%. Buy the index fund after the crash, not before.

Hopefully polite disagreement. Certainly buy low and sell high. But, time in the market means more than trying to time the market. If you are investing for long term (greater than 10 years), the upside lose can be greater than the bargain you might get waiting for a crash. Dividends play a role in long term investing, and they come with time.

If you are a rock star picker/timer, skip the index funds and manage your own money. If you are in the vast majority of folks that aren't, dollar cost average, and save as much as you can without missing all the fun of being young.

Try not to look at your balance more that quarterly, keep 20% liquid so you can buy a bargain, and worry about other stuff.

Best,

ed

 

[California]

... on the market for months...$89K, $79K, etc. It sold last year for (drum roll) $50,000. ($Fifty K).
... Young people bought it. Husband had construction skills and a few months later we got a walk through. They made it nice ...They soon resold it for $186,000.
Again...opportunities are out there.

Yes. We've been talking about passive investment, no management needed. There are far better returns available actively managing something. I got my start like that young husband, I asked a Realtor to find me a starter home and he offered that duplex I described above. I was employed as a Carpenter so he soon came back and said he had a listing that was un-salable, 5 units, all vacant and un-rentable, where a new buyer had ripped out the carpets, toilets, etc for a remodel then defaulted it back to the seller. The mountain of of rotting carpets and cabinet fragments in the yard was enough to scare off anybody. But I was able to negotiate a sweat-equity down payment to that discouraged seller. First clean it up then the seller would complete a proper sale to me, and carry the financing himself. A month working alone and $5k and I had four units rentable. This carried the mortgage plus funded fixing the fifth unit. Then it paid for me to go back to school for a graduate level degree. That minimal down payment eventually made the best return of anything I've invested in. When I sold it, the mortgage I carried on it more than made the payments on the nice home we still own.

Another principle I learned in my MBA long ago - much of the population is scared of risk and will pay good money to not have to think for themselves. People who rent instead of facing the unknowns of buying a home, is one example. Optional car extended warranties are a good example, overall you are paying both the average cost of repairs for your model but you are also paying the nice man or lady who sold you the policy, a very nice commission. And you're paying your share of the marble floor in the elevator lobby of the corporation that employs the sales agent. Skip your marble floor contribution and your share of the agent's Hawaii annual bonus vacation, carry the risk yourself, and long term on average you will be money ahead.

 

[MossRoad]

Probably not good advice right now, when your short term losses could exceed 50%. Buy the index fund after the crash, not before.

I disagree. Get in. Stay in. Invest a fixed percentage of your income every paycheck whether the market is up or down. When you start approaching retirement age, start moving towards safer investments.

 

[cdaigle430]

I am now forced into retirement because my job let me go due to COVID and lack of work after 23 years of loyal dedicated and hardworking service as a senior IT tech.

I am almost deaf so I its virtually impossible to get back to work because most want someone with excellent communication "skills" and on call work-I cant hear pager go off in middle of night without bed shaker and I am burned out from it because of my former job.

So now I am tapping into retirement but...underestimated the fact they will not only take 10% penalty fee but also state and federal withholdings before I get the check.. I am also worried about stock crash so and moving funds to less volatile investments.

Most PA wants a percentage of what you have so good advice is also expensive.

 

[goeduck]

I disagree. Get in. Stay in. Invest a fixed percentage of your income every paycheck whether the market is up or down. When you start approaching retirement age, start moving towards safer investments.

I have been trying to figure out what is safe.

 

[Fuddy1952]

Let me re-phrase that. It's impossible for someone earning a starter wage to pay off a starter house in three years in the parts of the country where the majority of people want to live.

That certainly may be true. Personally I want to live where it's safe, not heavily populated yet close enough for necessities and good medical care. Nice restaurants not far.
This is my idea of heaven. We can saddle our horses and ride for miles and miles over the distant mountains.
That would terrify some. I'm more terrified of big cities. Everyone is different.

 

[Fuddy1952]

I agree the odds are against you if you start investing right now. But still, analysis has shown that the only way to get long term returns that match the long term averages is to stay invested regardless of what the market is doing short term. I think this is because of another fact revealed by modern analysis: All of the investment gains that push up an average return, are earned in those few days of extraordinary market increases. All the other market numbers year in and year out, are just random noise that can be ignored. So - if you're not in the market on those extraordinary days you're not going to keep up with the long term S&P or whatever other index you like.

But yes, maybe with the market so high then real estate or some other alternative less linked to the economy, might be a better choice. If you have the analytical skill to identify the better alternative.

From my early days: Nice lady at Fidelity said why do you have this one account with so much cash when the market is rising? I replied that's what's left of my first significant investment in Fidelity Magellan back when Peter Lynch was a celebrity for beating the market year after year. That's the remaining half of what I put into Magellan. "Oh."

I didn't tell her this Fidelity account was my after-tax account while my long term investing was elsewhere in a Deferred Compensation (IRA) plan that I was locked into with my employer. Previously I had accepted a Fidelity offer to assign a Personal Investment Advisor and then learned when we met him that he wouldn't even look at that other half of my savings in the employer plan. We thanked him and walked out, that wasn't retirement planning advice at all!

My grandfather next door had a visit from Edward C. Johnson II right after WWII. Grandfather liked him, investing in the Puritan Fund. He did well...very well.

 

[California]

My grandfather next door had a visit from Edward C. Johnson II right after WWII. Grandfather liked him, investing in the Puritan Fund. He did well...very well.

Very lucky! Abby (third generation Johnson, principal stockholder of of Fidelity) seems competent but not genius like dad and ECJ II.

 

[heviduty]

"So for the experts:
- What have you learned in retirement?
- What would you have done/planned for differently?
- Did you move away or stay at home and are you happy?
Thanks for your time.
Andy in N.C."

Andy my retirement began on July 1, 2020. I was 66 and 10 months. SSA payments began when I turned 66 which is my FRA. It is deposited into a money market account.

My wife quit-tired 5 years earlier and began her SSA at age 63 because that's what she wanted.



I recommend putting all you can into a 401k if available and opening at least one IRA besides. If you expect to work 5 more years you can also benefit from a Roth IRA. Do not expect SSA to keep you up. Sign up for Medicare part A at 65 and get a supplement and part D drug plan started before your employers insurance runs out.

Try to enter retirement debt free and with 10 or more years of income in your retirement accounts. Invest in growth mutual funds and maybe a good index fund that follows the SP500.

We pondered moving but decided that for now our roots are too deep here in central NC with church, family and friends. That may change as friends and family dwindle.

I don't regret the decisions we made about retirement. I have friends and family that did not plan well, or were unable to, and it's sad. I feel blessed to have made it to retirement and recommend it highly if you are prepared.
I wish you many happy years of whatever you want to do.

No expert here. Ex= a has been
Spurt= a drip under pressure

 

[ultrarunner]

Interesting discussion as no one can truly know the future...

Each generation faces its own circumstances on the path forward... some negative and others positive...

2009-12 was the buy opportunity of a generation or more...

Being a contrarian has often served me well...

 

[oosik]

We were very fortunate - financially. Made enough $$$ on the sale of our house in Anchorage - built our house here in Ea WA - free and clear.

My parents gave us the 80 acres to build on.

My parents passed and left the wife and I a sizable amount of $$$. We put this money into an annuity and it has grown remarkably.

I retired at the age of 40 and have lived better in retirement than we ever did while I worked.

The only real "planning" - the wife ensured that we saved money while I worked. The rest - that's just the way things worked out.

 

[goeduck]

We were very fortunate - financially. Made enough $$$ on the sale of our house in Anchorage - built our house here in Ea WA - free and clear.

My parents gave us the 80 acres to build on.

My parents passed and left the wife and I a sizable amount of $$$. We put this money into an annuity and it has grown remarkably.

I retired at the age of 40 and have lived better in retirement than we ever did while I worked.

The only real "planning" - the wife ensured that we saved money while I worked. The rest - that's just the way things worked out.

I think I have piggy bank envy

 

[California]

Personally I want to live where it's safe, not heavily populated yet close enough for necessities and good medical care. Nice restaurants not far.
This is my idea of heaven. We can saddle our horses and ride for miles and miles over the distant mountains.

Gorgeous!
Don't make it sound too attractive! Here (NorCal), then Oregon then Idaho made that mistake and now the locals' kids cant afford to buy or sometimes even rent because they are outbid by all the new arrivals.

That RE brokers postcard I posted over in the Real Estate thread (and my following financial post) illustrate how bidding wars by new money have overwhelmed what used to be simple farmland around here.

 

[oosik]

Well - let me enlighten you goeduck. Everybody thinks Alaska is the land of opportunity. It could well be - except for those, like me, in government service.

We didn't live in poverty up there in AK but we sure weren't getting rich on my gov pay. It was just the quirks that put us in this current situation.

A whole lot of my "good fortune" is because I've always lived frugally and well within my financial means.

 

[goeduck]

Well - let me enlighten you goeduck. Everybody thinks Alaska is the land of opportunity. It could well be - except for those, like me, in government service.

We didn't live in poverty up there in AK but we sure weren't getting rich on my gov pay. It was just the quirks that put us in this current situation.

A whole lot of my "good fortune" is because I've always lived frugally and well within my financial means.

I was just joking. I am the same, I had lived all my life under my means until I was told I was a 1%er by assets at which time I loosened up a bit (but not much).

 

[California]

I was just joking. I am the same, I had lived all my life under my means until I was told I was a 1%er by assets at which time I loosened up a bit (but not much).

Ever get those letters inviting you to a free dinner if you listen to the pitch of a financial advisor?

A marketing prof said they don't expect to rope in many marks. But they watch for the crafty widow who lingers then shovels all the free pastries or something into her purse after the room seems empty. That's the wealthy mark that they held the dinner to identify, the wealthiest person who attended.

A week later: "Would you like to invest in our next round of condo financing?"

 

[lennyzx11]

I jumped ahead from post 200 as I’m working my way through the information and wanted to ask a question.

How do I calculate the number of how much I need saved in a 401k to get a certain amount back in the mandatory draw out?

I turned 58 last week I’m investing in 401K.

My current mortgage is being refinanced to 350k in Oct 30yr fixed.

Payments will be 2000 monthly.

If it’s not completely paid off when I hit 72 (13 years) I’d like to count on that mandatory payout to cover that 2k payment per month.