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Old 08-30-2011, 06:58 PM
 
455 posts, read 822,963 times
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I work in the public sector and may retire in 4 to 9 years. We don't pay into social security and its been 21 years since I've paid into Social Security. I'm looking into starting a supplemental retirement account.

Should I contribute to my credit union's IRA or 401k, my bank's IRA or 401k or my work's (county) 457? I may want to take some funds out for a house down payment, so I'm not sure on the above plan withdraw penalties.

Appreciate any pros or cons on the above plans. I have been contributing to my regular savings account with the credit union.
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Old 08-30-2011, 07:10 PM
 
Location: Lexington, SC
4,281 posts, read 10,760,570 times
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Quote:
Originally Posted by chgodon View Post
I work in the public sector and may retire in 4 to 9 years. We don't pay into social security and its been 21 years since I've paid into Social Security. I'm looking into starting a supplemental retirement account.

Should I contribute to my credit union's IRA or 401k, my bank's IRA or 401k or my work's (county) 457? I may want to take some funds out for a house down payment, so I'm not sure on the above plan withdraw penalties.

Appreciate any pros or cons on the above plans. I have been contributing to my regular savings account with the credit union.
I have no answer to your question and I am far, far from an expert but once one has so many paid quarters? into SS, they can get something in SS payments. All aside, it might well be in your economic interest to get a "part time" job and pay into SS.

SSA can be time consuming to get through to on the phone or schedule an appointment with a local office, but once done they are very helpful people
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Old 08-30-2011, 07:46 PM
 
48,516 posts, read 84,078,425 times
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Ask about ICMA which was origianlly for city managers who frequently move from city to city within the country.It was opened up to other public sector workers by the courts long ago.Your employer in the public sector should be able to inform you on ICMA which has mnay advantages such as amount allowed eve with a pension and age to with draw. It eve has a makeup provision.
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Old 08-30-2011, 09:27 PM
 
Location: Wisconsin
21,552 posts, read 44,134,462 times
Reputation: 15171
Quote:
Originally Posted by chgodon View Post
I work in the public sector and may retire in 4 to 9 years. We don't pay into social security and its been 21 years since I've paid into Social Security. I'm looking into starting a supplemental retirement account.

Should I contribute to my credit union's IRA or 401k, my bank's IRA or 401k or my work's (county) 457? I may want to take some funds out for a house down payment, so I'm not sure on the above plan withdraw penalties.
You can open a Traditional or Roth IRA and deposit up to $6,000 annually at either your credit union or bank and earn virtually nothing. You can do the same at many mutual funds like Fidelity, Vanguard, TRowePrice, and earn, at minimum, 4-6% annually with little risk in a conservative GNMA fund which has very low volatility.

401k's are employer-sponsored, private sector retirement plans. Thus, you cannot open a 401k at a bank or credit union. The equivalent to a 401k is your 457(b). If you are over 50, you can deposit up to $22,000/year into your 457(b).

https://401k.fidelity.com/public/con...ContLimitCalcc

You cannot withdraw from the 457(b) for home purchases, but you can from IRAs for first-time home purchases, up to $10,000 without taxes or penalty. If it's you and spouse, double that.

Roth IRA First Home Purchase Withdrawal Rules

How to Tap an IRA for a Home Purchase

Websites of major mutual funds or the IRS all have good info in this. Do a little sleuthing. I was too lazy to check the govt sites.

I suggest you open an IRA at a good mutual fund, deposit the max into a conservative investment (they have advisors you can talk to), and put any extra money into your 457(b). You will need every penny when you retire.

The last thing you want when you retire is a mortgage. Unless you anticipate a very comfortable retirement income, I would consider very carefully the pros and cons of obligating yourself in this way, not to mention the attendant costs of owning a home. You might want to explore other alternatives. I own a home and it is an enormous financial and physical burden I would rather not have. Costs such as maintenance/repairs, plus insurance, water and property taxes are enough to cover rent in a very nice apartment. The only way I can afford this is the rental income I collect. Nonetheless, it is a responsibility. I am single, however. If you have a spouse, to share the responsibility, it might be doable.

Last edited by Ariadne22; 08-30-2011 at 09:46 PM..
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Old 08-31-2011, 05:17 AM
 
Location: SW MO
23,605 posts, read 31,542,742 times
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Quote:
Originally Posted by Ariadne22 View Post
The last thing you want when you retire is a mortgage. Unless you anticipate a very comfortable retirement income, I would consider very carefully the pros and cons of obligating yourself in this way, not to mention the attendant costs of owning a home. You might want to explore other alternatives. I own a home and it is an enormous financial and physical burden I would rather not have. Costs such as maintenance/repairs, plus insurance, water and property taxes are enough to cover rent in a very nice apartment. The only way I can afford this is the rental income I collect. Nonetheless, it is a responsibility. I am single, however. If you have a spouse, to share the responsibility, it might be doable.
My wife and I have only been married for 15 years. She had never owned a home. I had but lost everything in a divorce at age 50.

Once we were both retired we made a major move to another state and bought a home with a no-down, VA loan. The payment for principle and interest is actually less than we were paying to rent in the other state.

Sure, there are other costs and impounds, maintenance and upgrading but those are easily handled within our pensions and Social Security.

For us, the bottom line is that our house is NOT an investment. It's our home. We own our little piece of terra firma and that's very liberating and satisfying.
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Old 08-31-2011, 07:32 AM
 
455 posts, read 822,963 times
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Well, I'm paying $1,100 per month for a studio apartment in Southern CA. That's why I may move back to the IL suburbs. My whole family is still back there. New homes are cheap too near Vegas. I understand and appreciate the above posts. I've never owned a home.
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Old 09-01-2011, 11:00 AM
 
Location: SW MO
23,605 posts, read 31,542,742 times
Reputation: 29083
Quote:
Originally Posted by chgodon View Post
Well, I'm paying $1,100 per month for a studio apartment in Southern CA. That's why I may move back to the IL suburbs. My whole family is still back there. New homes are cheap too near Vegas. I understand and appreciate the above posts. I've never owned a home.
For perspective, our three bedroom, two bath, 1480 sq. ft. (how much room do two people and two cats need?) home on a quarter acre lot on the shore of a large (800 mile shoreline) lake costs us less than $900 a month for principal, interest, taxes and insurance and that's with a no-down, 30 year mortgage.
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