@dstark, I had a small pension from my previous company. Indeed there is no inflation protection. Another trend at that time (in my last 7-8 years or so working for them) for the company to improve their bottom line 1) stop the pensions for newer enployees and switch their retirement plan to 401K only. 2) for employees who had been working for them longer and had the pensions plan, made them switch to some “portable pensions plan” (really just a one-time payout rather than an annuity for most such employees. If the employees really chose to keep the traditional pensions plan, they freezed their pensions plan (and no more cost of living adjustment) even though some of them are in their 40s and will not be able to retire for another 20 years (so when they retires in 20 years, the payout will be peanut due to the inflation in 20 years. The board members awarded the CEO handsomely because his contribution on this front (but I think the same thing happened at many other companies around that time, So he was neither better nor worse than the norm at that time.) I remember that when this pensions plan change was announced in a corporate level meeting, and some employees complained, the CEO angrily scold that employee on the spot and said to him that he was free to hand over his badge if he was unhappy with this policy change. (This CEO came in for less than 2.5 years and harvested a pile of gold and never had to work for another single day. But he mostly tricked the investment community (the big guys like Blackstone private equity investors.)
The bottom line: For many people who are not rich, SS is a much better deal than the pensions, especially the kind of pensions that are frozen well before the employees are able to retire.
My husband says our retirement accounts have lost 200K recently. We are far too heavily invested in aggressive stock funds. But we’re not going to sell anything now. My official plan is to stop looking at our accounts, and drink heavily. X_X
My 401K with my current company (only 5 years of 401K contributions) invested in some target date plan, likely 35% in equity and 65% in fixed income for my age group.
All other retirement money is in either FDIC-insured savings account or other non-FDIC-insured cash equivalent at a discount broker (I am very “chicken” here.)
I am actually thinking of investing it slowly in the next year or two. (I.e., investing 5% of it every quarter starting 3-6 months from now, and eventually, 35% of the total IRA will be in stock in 2 years. That is, in April or July 2018, 35% of my before-tax nest eggs will be in stock. I think right now only about 7% of my retirement account (i.e., 35% of my current 401K) is in stock. How do you think of this strategy?
@ixnaybob, it was the type of annuity he purchased - single premium deferred. He gave them the money and will determine when he wants to start taking the monthly benefits. It will be a guaranteed monthly benefit for life, with any remaining going to our beneficiaries. It does not have any cost of living rider (nor does his pension). We talked to several people before we chose one to advise us on annuities. They are through major insurance companies - Allianz and somebody else whose name escapes me right now.
DocT, I had a similar problem when an RMD didn’t happen (mom’s account). My former IRS agent accountant advised that if you write a letter to the IRS asking for the fine to be waived and explaining the oversight, the fine will be waived. I did this last year for my mom and it worked.
I just looked up the paper document for my 401K account. Ouch…the 35% in stock is for the US stock only. There is also 23% in the non-US stock.
I have not created my online account yet, so I could not find out how “bloody” it is. Maybe it is better not to create my online access because not knowing anything about it may be better for me. (Our company just switched our 401K broker. Our 401K was just transferred from one broker to another at the beginning of this year. So I have not set up my online access computer account yet. Actually, we had a blackout period of more than half a month. – this does not mean that the money has not been invested in the market. It just means that we are not allowed to make any investment change during this blackout period.)
Hearing some of the big tax increase plans out there lately gets me thinking about the early retirement option again. As it becomes less profitable to work, it becomes more tempting to consider getting out of the game. I admit, part of me might not mind a big tax increase, because it would make the decision easy (sorry how it affects others, though)! Then again, talk is cheap, so who knows what will happen in the future. It’s a big decision to give up your livelihood, but at some point do I just want to work for free catering and hotel rooms? Getting more sleep could be fantastic.
I also think that you’d better have something planned that you really want to do. I envision doing things that are meaningful, interesting, mentally stimulating and fun. However, my post count seems to indicate that I might just spend that extra time on internet forums ~O)
One of the most difficult things going into retirement is finding things to do to occupy all that extra free time. In my case, I wasted nearly 2 hours commuting. At least the first few years, I’ll be spending significant amounts of time fixing our house so that we can downsize.
That sounds like a good project. Of course, maybe you’ll fix your house so well, you won’t want to move! Two hours a day is a lot of time commuting. Not pleasant.
H has been doing a ton of deferred maintenance since he retired. As it is all on HIS time schedule, he is very content and refuses to allow us to hire any help.
My job involves working 3 days a week for 32 weeks a year. I also have time off during that 32 week time. I very rarely go in before 10:00am. Most days I am done by 4:30 or earlier. No one watches when I come and go. I do not punch a time clock. Sounds wonderful. And it was for decades. But now I can’t wait for the breaks and weekends. It is just time to retire.
But H is two years younger than me. So he is still trying to move up. Just submitted an application yesterday. I can not justify to myself not working, when the hours are so good, while H still does. Especially when the market is so bad at the moment.
But at least we gave been taking two nice vacations a year and weekend get a- ways in between. That will do until we retire.
@morrismm, I too try to take nice vacations “in exchange” for probably working longer than I need to. I can retire in 4 years, but will likely work 7. I told my husband, and he agrees, that we need to take time to enjoy ourselves while we are still very mobile and in good Shape.
I guess one of my “projects” in my retirement is to hang out at College Confidential more frequently, especially Parents Cafe. LOL.
When I mentioned to my wife that I do not know how to send a PM on CC using my iPhone (too lazy to find how to do this), she said I might need at least an iPad. When she said the iPhone’s screen is too small for my aging eyes, DS said he could give me his iPad when he came home next time. He said he really did not use it. (He used iPhone 6 and a 15 inch Macbook Pro at school.)
I admire your returns from 2015 @DocT and that is a solid fixed annuity too. What state is your W’s teacher retirement in?
Some gov’t and state pensions are very strong; some not-so. The generalizations on bond/stock funds - it depends on your specific choices. We ‘sold’ the bond investments in H’s 401k in Dec (which we could do and move out, since he is now 59.5) and moved it to a insurance product fixed indexed annuity that our Financial guy Don recommended. So we now have the stabilized return w/o the risk that our 401k bond had.
MIL has her main teacher retirement from Iowa, and a small one from WI. She has done pretty well with it since she is now mid-80’s. I don’t think she will have more years in retirement than her work years, but I sure hope to live longer and healthier…I had my health crisis at age 53/54 with stage III cancer, and I am now cancer free 5 years. If one can avoid cancer, heart issues, and stroke or aneurysm, keeps weight in check and moderate exercise/activity…
@mcat2 couldn’t open the article because I am not a subscriber…
Consumer Report March 2015 had a nice article (cover page) on “Boost Your Home’s Value by 10% - easy upgrades whether you’re selling or staying put”. Also “Money Saving Secrets Realtors Don’t Want You to Know”. However Dave Ramsey would disagree with their “Best Ways to Finance Home Repairs” - cash flow instead of HELOC. Single best month to sell a house, April. I was surprised, 63% of real estate agents said they negotiate their fees at least half of the time. Many tips one generally knows, but a lot of good information put together.
One tip - google search for your address to make sure nothing negative comes up such as an old lawsuit or public record with inaccurate information. Also look at street view on Google Maps.
I hope the market doesn’t get as bad as in 2008, but I recall an impressive financial move from back then. A guy I know who was single and made a lot of money invested 100K into the market when it was VERY low (did it actually get below 7,000, I can’t remember?). In any case, he’s done very well with that investment.
I received my quarterly retiree t account statement today. I did fine last quarter, but this quarter is looking pretty bad so far.
