retirement concerns

[seemoreroyals]

Notes, I wish there was hope in the not to distant future that financial markets would return to normalcy. What is going on now makes no sense at all. When I graduated from college in 1980 interest rates were near 20%, inflation was rampant and now we have the exact opposite and instead of cutting spending our politicians, both Dems and Reps alike are spending money like drunken sailors.

Sorry to offend any Navy people on here or people that like to drink.

[olds442jetaway]

I am probably the oddball in the pack. The wife and I live well below our means by choice. Both of our parents lived through the depression and we were always taught to save for a rainy day which will come. We live in the same little house for over 43 years, but other than the winters getting harder and harder, we are happy here. Neither of us have ever had a car payment. We either bought used or low dollar new cars. Until a few years ago, I did most all repairs myself. Both of our starting salaries were well under 7k a year, yet we scrimped and saved and paid off our mtg in 6 years. The house was less than 35k though. We are big savers, but I know we are way too conservative. Just too afraid of a major collapse of uninsured instruments. Used to have a big stock portfolio and did day trading as a hobby. Still have some good dividend stocks, but most of savings just in bank or credit union. Wife has a good 403b plan putting in the max. We always maxed out our IRAs, but get very little return on them. I have a pension and Fed thrift savings play but the pension is not a great one. Insurances, and taxes are out biggest cost. Not cheap living in Ct near the shore. Wife still teaching and still likes it which helps. Never could make it on my pension alone. I have thought about things like corp bonds, additional annuities etc. but at this stage of the game, we are afraid to take on much of any risk. I also should have said for me, vp is my biggest expense, but that is by choice and does not hamper our laid back low key lifestyle. The only loan I or we ever had was a few hundred bucks to my parents which I paid back a few months after graduating college. I repeat, I know I am an oddball, but I just hate debt period. By the way, never paid a penny in credit card interest. PS...I never paid a penny in credit card interest and will never ever have a debit card. I am somewhat anti technology as you can tell by lack of pic posting and computer and phone savy and really am lost in the 50's. Hee hee. Just to add a final bit to the oddball comments, I never bought a new lawn mower. Always got mine from those that others discarded. I fixed them up myself. Have a small year anyway. Edited to add....at least we are not a drain on society and the middle class which evidently over half the people in this country are. I am not including disabled folks or those that for whatever legitimate reason just cannot help themselves. That is what charity is for.

[notes1]

-do not think anyone suggested that having most of their money in CD's was the proper allocation. suggesting what someone's else's allocation should be is not advisable.

-any financial product that includes corporate bonds and stocks does not have the same guarantees that come with a CD. it may be a fine product, but at one time General Motors was a blue chip company. their bond holders got squashed.

[notes1]

smr, the comments you are making are the reason I started the thread. rates were high, late 70-early 80, because inflation was out of control. the FED raised rates to combat that inflation.

in many developed countries, if you buy a 10 year government bond, you get a negative return, is that where we are headed?

the markets will never return to the 'old' normal, until government intervention ends.

for our generation, as far back as I could research, 5 year CD rates averaged approx 5%. now, rates are less than half that rate, requiring someone to have more than double the savings, to produce the same return. that is clearly impossible for nearly everyone. unless of course, one takes more risk, which has no guarantee.

my worry is that folks are being forced to make investment decisions and in many cases, take on more risk, than they are comfortable with. I am surprised that retirees are not raising hell over this.

[billryan]

When you invest in a managed fund, there should be both upside and downside protection. Having individual stocks and bonds is considerably more risky than having a managed fund.
I invested some money via Lending Club, as a sort of give back. In effect, I loaned a thousand people twenty five dollars each that they will pay back monthly for three years. Obviously, some will default, but enough will pay me back to give me a nice income stream for the next three years. The expected return should be about eight percent.

[olds442jetaway]

I have big concerns, but don't know how much we can do about it. Gone are the days for me earning over 18% on CDs in the Carter days. We had no debt back then either so for us that was a gold mine. Anyway as little as a few years ago, the interest and dividends for the year would take care of all of our federal and state taxes and insurances. What a blow this is. I am not sure what we would do if the Mrs wasn't working still. I will never get any SS retirement income due to the cheap Fed pension that is still almost fully taxable and the Mrs. will have her SS offset by about two thirds. This situation has got most seniors in a real bind. Not only that, but many of their children including mine have moved back home because the rents are so high here they cannot afford to live on their own with entry level income. That is another entirely separate topic seniors are dealing with. The young ones are not used to living the very conservative life style either and often times get themselves in credit card debt or worse where they cannot maintain. Luckily, that did not happen to ours and she is almost conservative as we are. I see no good solution to this problem. One thing I do see are numerous houses up for sale in our neighborhood. Most are or were occupied by seniors. Guess who is buying most of them when they finally do sell.....Foreigners of all types not our young people...Hmmmmm.

[Carcounter]

I have a good company managing my company's  profit sharing plan, but it still has been sideways, maybe up a little lately. I am going to be 65 in November, but have no immediate plans for retirement. I could afford to, but really need to think about what I want to do with that free time. It scares me quite frankly.

[billryan]

[QUOTE=billryan] You shouldn't have most of your money in CDs. There are plenty of safe investments that will give a three percent return with no worries. People got lazy when CDs were paying 6 percent or more. Now you have to work for a decent return.
If you are an AARP member, TDAmeritrade has fee free introductory programs. It can literally save you thousands of dollars and get you into a portfolio of government and
Corporate bonds with a sprinkling of blue chip dividend stocks.

I am an AARP member and several of my brokerage accounts are with TDAmeritrade so I have ample exposure to stocks and bonds. The reality of the current economy is that interest rates are artificially low for how long who knows. I was fortunate in that most of my money that I have in both munis and corporate bonds was put there a long time ago. If I decide to move my CD money into bonds at this time I would have to pay a big premium or accept a risk that I am not willing to accept.

As far as stocks go I have mainly stocks that pay dividends such as utilities, telecoms, oil and gas, and a little of everything. My wife and I are in our late 50's and like Doris have no expenses or dependents other than our cats but it pisses me off that people that have worked hard to save their money are having to subsidize all of those that live beyond their means or have bitten off more than they can chew.[/QUOTE] Are you aware of the TD/AARP Institutional Funds? TD doesn't market these for some reason, but its a great secret program that you have to ask them about. My outlook is just like at a BJ table. I'm playing one on one against the dealer( life) and nothing anyone else does has any long term effect on me.

[seemoreroyals]

No Billyran, what exactly is it? I have put some of my money in their Amerivest program over the years but took it out because the results were not as good as I could do myself. I googled it and it appears to be linked on at least one level to Amerivest. I don't know if my broker there knows I am an AARP member so I may have to call over there and look into it myself.

[seemoreroyals]

Carcounter, I semi-retired at 49 and have no regrets. I don't know how my wife and I got everything done when we had our business. Now we have more time to travel, hobbies, and spend time with friends and family. If you are financially set and are thinking about retirement you will find that there is no shortage of things to do.