retirement concerns

[notes1]

I have also had some concerns about not having a bucket list of things to do, which is one of the reasons I keep working at 62, although not as hard as I used to. lost my interest in golf and cannot spend every day in a casino. I do think one needs a plan of things to do before they retire.

olds, I don't think there is anything that can be done about interest rates. there is an old line, 'do not fight the fed'.

I am a little surprised that so many here have apparently done just that, accepting the rates the way they are and adjusting their investments without worrying about the additional risk. that is clearly what the fed wanted.

personally, I am a fund person, do not trust myself to pick individual stocks.

lots of good, wide ranging info about retirement.

[Carcounter]

My retirement issues are more family related. My wife has taken it upon herself to watch grandchildren all day rather than have them go to daycare. Currently has a 2 and 5 yr old she takes care of. Youngest daughter is getting married in a few weeks and will start a family soon as well. So I go to work, but take time off as I need for golf during warm weather and a trip to AC one afternoon each week. Helps me keep my sanity, Wife will not take any more trips to Vegas. Need to have a plan for retirement. Not there yet, but maybe soon.

[notes1]

each household has it's own complications. that is why a cookie cutter approach often does not work. one thing that many are doing is having a transition period. instead of just stopping working altogether, they gradually decrease their time, hours, income, to see how it works out.

interesting you bring up sanity. that is one of the main reasons I play VP, a distraction from life's challenges. at least for a couple of hours, one can escape.

[notes1]

with the low rates, here is an example of a situation I find sad.

a couple retired 10 years ago at age 65. they had a paid up house, no debt and managed to save $1m. they live a moderate lifestyle. all in all, they did a good job and far better, than the average person. their plan was to collect their combined $30k in SS and they put their savings in a guaranteed pot, earning 5%, giving them an income of $80k.

ten years later, their guaranteed pots have all come due, now they are 75, and the best interest they can get is 2%. if they wanted the same no risk structure, their income would drop from $80k, to $50k. they did nothing wrong, lived within their means and have suffered an unlivable annual loss of $30k income, thru no fault of their own.

the lower rates are forcing folks, some who have no experience or desire to be invested in more complicated/risky investments, to make difficult choices. some of these folks may not have the capacity to even understand the choices.

these folks were not the cause of the credit crisis/great recession, but they are paying the price.

[Chicagoan]

I am pretty heavy in mutuals, maybe more than I should be, but I hate low interest rates. However, I balance it with some commercial and residential real estate investments that so far have done very well on return and growth.

Long term retirement plans will include selling my home in an expensive northern metro and moving to a 2nd home we have owned for many years near the Gulf Coast. The realistic cost of living there is about 60% of what it is here, and obviously shedding one of our homes (in a high property tax area) reduces that COL even more.


Seeing as we are all nameless, faceless strangers here, I would be interested to know what your return objective is on mutuals. I have reached the point where I am willing to accept 5% but would like a bit more as long as it's not too risky. Discussing this with a group of friends, I heard everything from 2.5% to 8%.

[Carcounter]

As I am getting close to retirement age, I would accept 5% return on my portfolio. However, since we have decided to be very consevative, we have been closer to 3% the last few years. That's ok with me. I am an engineer, not a financial expert and just feel something is out of whack here. The fed can't raise interest rates because they know any meaningful increase would cause consumer spending to crash, and the whole economy to follow. We have had super low interest rates for how many years now, and GDP growth that is less than half of what it should be in a healthy recovery. I think we are sitting on a house of cards.

[notes1]

there are many of us that feel the same as CC. that is why I have been taking out all my fund gains from the last few years and putting them in safer places. moving them to less risk, means lower returns on those monies I have moved, but I sleep good at night. now, I have a large pot of safer dollars in the event this 'great experiment' does not work out as planned.

most domestic usa stock funds over the past 5 years have performed better than 3%. a 3% return would indicate a bond fund.

as for future returns, I gave up guessing hears ago. I have no idea.

[olds442jetaway]

I never thought in our lifetime we would see savings returns of less than 3 percent. I started saving in grade school when we filled up the little books with dimes, went to the bank as a class and opened accounts. The chances of that happening in this day in age are zero. I credit that as well as reinforcement and stories of the depression from my parents for our very conservative savings approach. I still get a kick out of those who bragged a few years ago about their big tax deductions on their huge mortgages in the 9 percent range. When I told them they were still losing over 6 percent a year, most who didn't understand finance at all looked at me like I was nuts. All they cared about was getting a huge federal refund. There was one exception to that which will probably never be repeated again. For a short time when Carter was president, we carried a 9 percent mortgage and of course deducted it on our federal return and had a net loss in the 7 percent range. At the same time, the banks were offering CDs in the 18 percent range. We scraped together everything we could and loaded up on those. Small dollars by today's standards, but even after paying the feds on the 18 percent, we still netted about 14 percent. As soon as those rates disappeared which they did in short order, we paid off the 9 percent mortgage which was open ended. By that time, bank rates had dropped down to about 8 percent on savings. Some will remember....to entice those used to the huge cd rates, the banks offered microwaves, vcrs, tvs and the like for new money CDs. at the time we were excited to get those too until we received the inflated 1099s at the end of the year for the inflated value of those so called gifts.

[case]

My wife and I retired in our mid 50s and life has been great for us. We are different than most and will take on some risk for better rewards. We are mostly dividend players who invest in strong companies who are on the dividend aristocrat list.

Our money has increased since retirement but my wife also has a strong pension that helps a lot.

I know stocks risk scares many people and I understand that. We are not 100% stock of course and are well diversified.

Canadian banks are our biggest investment. They pay a dividend from 4-5%. The kicker is they have not cut and dividends since WW 2.

If (and when) the market retreat we just sit tight. No need to sell. It is actually a good time to buy IF you do your homework and if you have the nerve.

I know this is not for everyone. What ever lets you sleep at night is the best approach for most. But when the world changes you have to change with it or get left behind.

[billryan]

Might be a buying opportunity on ATT right now. It's off about 10%from recent highs and pays a strong dividend.