Running out of mojo sooner rather than later. Talking about what you want to keep, good health insurance outside of employer(s) plan can be costly - so IMHO if you are scared, you might want to be sure to be 65 or older before retiring. That can take off those insurance premiums one would have to pay for ‘good health insurance’. Figuring out a cash flow in retirement if you don’t have anything with payments coming in outside of Social Security.
With the annuities we purchased, we did need to have for a year before we could make non-penalty withdrawals. DH and I both had annuities mature, and the conversion to other annuities meant a $1600/month decrease in our retirement income flow, which was noticeable with our checking account balance. We took a withdrawal from DH’s 401k (small transaction fee), and that took care of the period before newer annuities kicked in with no-penalty withdrawals starting with those annuities.
I’m starting to worry a lot about the economy. I think there’s a great deal of instability. Inflation seems certain to be on the rise, with high tariffs looming, that’s a no brainer. Record levels of credit card and household debt. Significant numbers of government layoffs and now military spending decreasing by 40% over five years. How do you, as a retired person, plan for this?
I’m thinking, definitely pay off debt that isn’t fixed, if you can. Decrease your spending if possible, though buy things you need now before tariffs kick in? I think people with no debt and plenty of assets will be fine, but what about much of the rest of the country, many people are already living on the edge? I feel like this is going to be a defining moment here, but I don’t really know what actions to take.
I spoke with my son yesterday, whose job services manufacturing, research and agriculture. Sales have been stagnant recently, as their clients have been tightening their own belts. He believes that current events will make things worse. The impact of the current administration - not making a political statement, but rather an observation of reality - will be a big hit to our economy. I guess the best advice is to be conservative with your investments if you need your savings anytime soon. There is no way to predict markets, so you just have to be careful. This may be a time for some to consult an advisor … but if you aren’t close to retirement yet, staying the course can make sense for some.
With no crystal ball to predict what is going to happen, I am erring on the side of caution. There are some purchases I have been putting off because they aren’t completely necessary. That’s my coping mechanism for now - cutting expenses where I can, just in case.
Had dinner with good friends last night. Their employer is tightening its belts by cutting out all travel and freezing certain expenses. Ditto our employers, and we are not directly affected by the current government cuts. Anecdotal data? Sure, but where there is some smoke, there is also a fire. We are rethinking travel and postponing some home renovations.
I am not a believer of debt. Really the only acceptable consumer debt I think one should have is a mortgage and a car debt. Some will argue that car debt is not good because a car is a depreciating asset. While true a car is a tool needed for most to earn a living.
We paid off our credit card debt back in Feb 1997. Never carried a balance since that day. And the only interest I have paid since then is mortgage and car. At the moment we don’t have any car debt and the mortgage is at 2.375%. No hurry at the moment to pay the mortgage off. We still use credit cards for everything. In '24 we earned a bit over $1,600 in cash rewards from credit cards.
People have to remember the economy is cyclical. I have lived through years where mortgage rates were 15%, then years where mortgage rates were 3%, years where CD rates were 10%, then years where CD rates were only .5%, years where inflations was double digits (remember whip inflation now) and years with under 1% inflation, years where every company offered a pension, and years where they won’t even match your 401(K) contribution.
Many of us are now retired or near retirement age and these swings seem more alarming. I think if you have been a responsible saver and a low spender you will come out OK. We have never had debt (except a 15 year mortgage paid off years ago), including buying cars with cash and never carrying a credit card balance. We have always made the max 401(k) contributions which the company matched. We have always saved in low risk vehicles (S&P, Munis, CDs). We have amassed more than enough to live comfortably in our retirement.
Some are hearing more ‘worry’ messages depending on where they live. W/O going into deeper message/politics, we have had a population growth during a period with 2% growth while the federal budget/spending grew 55%. We are having a transition time with a lot of changes, so that can be unsettling to many.
Those that have retirement nest egg in place and steady on their spending, the period of feeling instability hopefully will pass.
We have ‘Ask Eric’ advice columnist (somewhat syndicated, R. Eric Thomas), and this was his response to someone who is ready to retire at 65, the financial planner says all is in place but the person has concerns - especially with breaking out of work routine. This is what was said:
"Dear Plans: There’s a version of yourself in the past who started on this journey of saving and planning with the hope that he would one day be in your shoes. And every time you/he struggled to get through a work week, perhaps you thought of this moment. So, congratulations, to you in the past and in the present. You did something incredible.
You know how sometimes you go on vacation but you’re not in the mood to vacation for a day or two? Unfortunately, we don’t have a relaxation switch. So, don’t try to force yourself to suddenly be in retirement mode if you’re not. Make a plan for your days and your goals that’s realistic. You have time to get used to this new phase.
You’ve trusted your financial adviser thus far; when you start to feel anxious about leaving a check behind, reach out. “Remind me that I’m fine.” People do this with financial advisers all the time. It’s perfectly normal to need reassurance.
This is a transition, a big one. While it might seem like a phase of life that one would leap into happily, it’s right to acknowledge the complicated feelings around it, too. You’re shifting the way that you live and breaking routines that you’ve had for decades. This is going to take some adjustment. Give yourself space and time to feel that and the freedom to change course whenever you want."
I agree that those near/already retired who have saved and paid off debt will likely be fine. Those who haven’t, or are living near the edge could be in trouble, especially if they decide to stay in the workforce and are unable. I do think programs like Medicare and Social Security are going to be on the table for cuts. This is where the big money is. I also wonder about whether the government or your company can access your 401K, which used to seem like paranoia, but everything appears to be fair game now. I vaguely remember something about rolling your 401K over to an IRA for security reasons, but I don’t remember exactly why. Unfortunately we can’t just roll our same funds over, we have to sell.
I can’t imagine if mortgage rates went up to 15% and credit card interest rates skyrocketed. I think there would be a lot of bankruptcies and foreclosures. It’s hard enough for people to buy a home, trying to compete with REITs and large companies, and dealing with inflated prices. We’ve had rates so low for a long time, zero percent teaser credit cards, low unemployment numbers, a serious change could be a real shock to the system.
Fingers crossed, we are closing on the sale of our old home in a few weeks. I will sleep a lot better once that is completed. While I’ve had a few trips in the past few years, H and I haven’t been on a lengthy “true” vacation in several years. I had been dreaming of one but now I’m worried about flying and I’m worried about spending the money. I also wanted to redo our kitchen this year, but I honestly don’t think that’s going to happen either.
I don’t know if it’s a good idea to cut back on distributions from an IRA now or not. I think I will keep them at the same level and just put any “extra” money away. I trust my FA but these days there is no telling what is going to happen next.
I love this. I have always said how hard it is to go from saver to spender. When my daughter started college and I had to write those big tuition checks, I had to keep telling myself, this is what I saved that money for. Same now for retirement. This is why I saved all my life, to enjoy my later years!
I can’t find the link now, but an economist from UofChicago posted a piece. He thinks that unemployment will reach the levels of 2008-9 and early 2020 by March. Not just all the federal employees, but then all the cascade from that. A recession is likely.
If someone is looking at just the number of federal job cuts they could be missing the big picture. So many federal employees are probably reconsidering any non essential purchase given the chaos and chances of job loss with zero notice.
Yes, that’s what I meant by the cascade. All the related pulling back by individuals and by companies. All the job cuts by companies that rely on government contracts. You can’t destroy the federal workforce without many secondary affects.
I have read that the 80% is an underestimate for the first few years of retirement. Travel and medical expenses are higher and you could easily be at 100%. As one gets much older, expenses decline but medical expenses and life-help can become pretty high.