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Old 04-12-2014, 07:14 AM
 
Location: Coastal Georgia
37,203 posts, read 45,756,171 times
Reputation: 61929

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To circle back to the OPs questions (eventually). The same thing happened to us. DH lost his job at 62, and then I lost mine at 64. Forget about ever getting a full time job at this age; it ain't happenin'.
Thankfully, we had downsized before this happened, so it is something you should do as soon as possible.
We both took our SS a few years before full retirement age, because we had to. Neither one of us has pensions, only savings.
DH works part time, and has enrolled in Obamacare. I am on Medicare. We feel secure our medical needs are covered. We expect to go down to one car in a few years.
We are trying to live on only SS, which is close to enough. When one of us dies, the other will need to start spending down the savings.
My advise to OP is to get with a different Financial Planner or even two, so that you have several opinions. It is important to grow your money as much as possible before you need it. Our money languished in some underperforming mutual funds for years, when we should have been doing more. We got with an Edward Jones Rep. and scraped our money into a pile to be actively managed.
Interestingly, we have a small amount in some annuities that have been earning 5% since the 1980s. This was considered chump change at the time, but now has become a nice safe decent return.
I know how scary it can be when life throws you a curve ball like this.
Our experience is that feeling secure that you are doing everything you can is half the battle for piece of mind when life pulls the rug out.
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Old 04-12-2014, 10:26 AM
 
Location: Idaho
4,650 posts, read 4,495,355 times
Reputation: 9150
Quote:
Originally Posted by Jkgourmet View Post
I'd suggest hiring a new financial planner. The type that doesn't sell ANYTHING except his/her knowledge and expertise.

Of course the Fidelity guy is trying to get you to buy annuities. He'll get a big, fat commission on that deal.

I'm not saying that annuities are always a bad idea. But just remember - it's a big, big financial decision, and basically irrevocable.

You're financial situation has dramatically changed. You and your husband are probably a bit shell shocked. This is the PERFECT opportunity to get a fresh, new look through a new pair of OBJECTIVE eyes. Find someone you pay by the hour who does not sell products. Look for a Certified Financial Planner (CFP) or Personal Financial Specialist (PFS)
+1,000

You can find a fee-only Certified Financial Planner through NAPFA.org, (The National Association of Personal Financial Advisors). Clark Howard, (the consumer advocate based out of Atlanta), thinks highly of the organization and its members.
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Old 04-12-2014, 12:47 PM
 
3,271 posts, read 3,014,223 times
Reputation: 1894
OP, you are 100% correct on this. By delaying social security, you are effectively "buying" a larger annuity from the government at a much better rate than the you can get from the market given the current interest rate environment. Your best play is to use your cash to delay taking social security as long as possible as you want to do. Go to a fee-only financial planner with your husband both so you can have a third party telling him that and to help you develop the best claiming strategy possible for your situation.
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Old 04-12-2014, 01:17 PM
 
Location: Baltimore, MD
3,746 posts, read 4,228,138 times
Reputation: 6866
I can't think of any retirement product that comes as close to replacing a pension than an immediate annuity. I fully intend to use a portion of my retirement savings to purchase an immediate annuity (or 2-3 small ones) to replace my nonexistent pension. I don't sell annuities and I'm not stupid or uninformed.
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Old 04-12-2014, 01:45 PM
 
2,982 posts, read 2,714,296 times
Reputation: 5631
Quote:
Originally Posted by lenora View Post
I can't think of any retirement product that comes as close to replacing a pension than an immediate annuity. I fully intend to use a portion of my retirement savings to purchase an immediate annuity (or 2-3 small ones) to replace my nonexistent pension. I don't sell annuities and I'm not stupid or uninformed.


I am thinking of doing the same. There is a place and time for annuities and most people don't realize that. The problem is that annuities are sold to a lot of people who do not need them or even know what they are because they pay big commissions to those selling them.
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Old 04-12-2014, 02:18 PM
 
29,847 posts, read 34,929,245 times
Reputation: 11781
Quote:
Originally Posted by lenora View Post
I can't think of any retirement product that comes as close to replacing a pension than an immediate annuity. I fully intend to use a portion of my retirement savings to purchase an immediate annuity (or 2-3 small ones) to replace my nonexistent pension. I don't sell annuities and I'm not stupid or uninformed.
What you are Lenora is a seasoned participant in these conversations and their practical application based on personal circumstances.
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Old 04-12-2014, 02:57 PM
 
Location: North Idaho
2,177 posts, read 2,093,977 times
Reputation: 2612
Quote:
Originally Posted by lenora View Post
I can't think of any retirement product that comes as close to replacing a pension than an immediate annuity.
A TIPS ladder would be one alternate to a SPIA to create a very low risk inflation protected income stream. I'm not aware of any SPIA's that are inflation protected, so that's one advantage of the TIPS ladder. The other is that you get your principal back. With a SPIA you run the risk of being the person who is funding the long lived insureds. Of course, you can get SPIA's with some level of guaranteed payback, but at a reduced income stream.

A TIPS ladder is a little more complex to arrange, but you can probably get a good fee based adviser to help if necessary.
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Old 04-12-2014, 05:31 PM
 
Location: VT; previously MD & NJ
2,230 posts, read 1,366,335 times
Reputation: 6455
Quote:
Originally Posted by Cnynrat View Post
A TIPS ladder would be one alternate to a SPIA to create a very low risk inflation protected income stream...
OK. I looked up TIPS the other day but I'm stumped on SPIA. I would guess the IA means immediate annuity, but what does the SP stand for?
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Old 04-12-2014, 07:17 PM
 
Location: North Idaho
2,177 posts, read 2,093,977 times
Reputation: 2612
Quote:
Originally Posted by ansible90 View Post
OK. I looked up TIPS the other day but I'm stumped on SPIA. I would guess the IA means immediate annuity, but what does the SP stand for?
SPIA = Single Premium Immediate Annuity

Single premium means you make one lump sum payment up front.

Immediate annuity means they begin paying you immediately.

The type of annuity you want to stay away from is the type where you make a payment, or a series of payments, with a promise that they begin paying you some time in the future. The returns and fees on those arrangements are typically well below what you could achieve with a nice conservative balanced portfolio of low cost index funds.
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Old 04-12-2014, 07:49 PM
 
Location: Florida
4,382 posts, read 3,724,411 times
Reputation: 4126
Quote:
Originally Posted by saralvr View Post
My husband was laid off recently. He is 61, I am 58. I still work, but I don't bring in much and have no benefits. We will have to get our own health insurance in 3 months (OUCH!) and he also is getting 3 mos of severance. He is hoping to do some consulting work (he is an engineer) but cannot rely on that. We are moving to a more retirement friendly state which we had been researching for a future move. We thought we had several more years to work and save. I will try to find a job there F/T with benefits, but cannot rely on that as it is very difficult in today's economy to find.

We went to our financial guy today and crunched number along with him. At our next session we will discuss when to take SS. My husband wants to at 62 but I am hesitant as it guarantees us 8% increase yearly to wait. But, we do not have enough monthly to live on. We have a shortfall and have to dig into our savings and investments.

I will say that we are 40/60 now and will keep it that way. I know it is risky, but we have to think growth longterm as we truly don't have enough.

Which brings me to annuities. He is suggesting to us to take 25% of our savings and put it in an income annuity which will NOT have a cost of living adjustment. He felt that we would need this by later this year when we have to start withdrawing money.

I have been using him for a while. I like him, but he does work for Fidelity and I get nervous when I think "is he just suggesting this because he works for the company? Is this truly in my best interet?" He told us it will have a "joint payment stream". I have a lot to research on all of this.


Always heard stay away from annuities. But, we DO NOT have a pension. We have our savings and future SS. That's it folks!! So, please give your opinions and insights.

On another side note, we thankfully were saving over 30% of our income in the past year or so. I know we will save moving, but unless I get health insurance for us through a job, that is where the bulk of our money will be going.

Mortgage, cars, credit cards- 0- but will probably need a 2nd hand car in year or so.
From your post it seems that you have good insight into the problem.

I would postpone Ss as long as possible as the 8% inflation adjusted increase in income is a good safety net, especially as you get older. Consider the money you did not receive from Ss as the cost of an annuity and compare that to what your advisor recommends. Ask what his commission is.


I think you should price annuities on line to compare. Since interest rates are low I think I would postpone buying now.
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