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Old 04-26-2014, 12:14 PM
 
Location: State of Being
35,885 posts, read 67,193,442 times
Reputation: 22375

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Quote:
Originally Posted by TheMartianChick View Post
anifani821 got it right! You have to be able to think your way around the issue of retirement.

I was always that kid that didn't like to be told, "No!" It served as a challenge for me to prove someone wrong and find a way to get the outcome that I wanted.

Some people are going to have to work to come up with creative solutions to retirement. The traditional pension is an endangered species today. Many people have no idea as to how to manage a 401K and many more work for employers that don't provide one. You can worry about it, but that won't solve anything!

My husband and I will be retiring next year. While we always planned for retirement, we didn't always have 401Ks and didn't count on working for an employer who provided one. Instead, we bought rental property. I gained access to a 401k at the age of 26. I contributed to it for 4 1/2 years and then stopped when I left that job. With the company matches, stock options and an antiquated pension plan. The money has been adding up over the years in three different pots.

My husband (56) is a bit older than I am (43) and he earned a decent middle class salary. His employer didn't begin offering a 401k until he was 40. As most of you know...That is a little bit late to begin your retirement savings!

We immediately began plowing the maximum allowed into his 401k to get the company match. When he was eligible for catch up investments, we made sure to take advantage of those, too. We also opened Roth IRA's.The market has been good to us with the exception of 2008 when we lost about 45% of the value in our retirement portfolios.

The money in my husband's 401k is nowhere near enough for us to retire on comfortably, according to all of the experts and I'm too young to tap into mine without penalty. Despite this, we WILL be able to retire next year with next to no debt. Our rental properties are what will allow this to happen. Prior to my husband turning 40, we thought that he'd have to rely on the rentals to provide for all of his portion of the household expenses. We never counted on Social Security being available because we'd both been hearing that it would no longer exist by the time that we were eligible.

Over the years, our rentals have become like a 3rd spouse in our relationship. They are always there when we need them to shore us up financially. While we may age and want to retire, our rentals just keep chugging along! There have always been folks who were naysayers in our lives. Many felt that being a landlord was too difficult. They cited the late night phone calls to address property issues. We've just never had that as an issue. Our rentals should be able to continue to provide an income long into the future, as long as we keep them in good condition. Our retirement income is diversified across several properties, the 401ks, the Roths and we are now (finally) factoring Social Security into it.

Don't accept that you will never be able to retire...Find a way to make it happen! There have been recent changes in some of the laws that can make things easier. For us, one of the keys was the 55+ Exception that allows you to pull money out of a 401k without penalty as long as you are 55 years of age or older. The catch to that is that you must no longer be employed with that employer!
YES! You created a LIFE PLAN. And you thought outside the box and didn't stop with "conventional wisdom."

Kudos to you! Worrying doesn't help. Identifying concerns and then taking action (even if there have to be revisions along the way) is all we can do when preparing for the future. And when we have done our best to mitigate situations, no use to worry about it . . . life unfolds in ways that are often out of our control, anyway.
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Old 04-26-2014, 12:24 PM
 
Location: SoCal desert
8,093 posts, read 13,240,703 times
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Quote:
Originally Posted by TuborgP View Post
Folks let me offer the original source which is a Gallup survey and please note the context of it being the TOP FINANCIAL WORRY:
Retirement Remains Americans' Top Financial Worry

(( snipped ))

So how many of us are worried about the above to any degree?
I read it and came to the conclusion that I am very very fortunate and lucky.
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Old 04-26-2014, 12:47 PM
 
Location: Los Angeles area
14,018 posts, read 17,751,136 times
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Quote:
Originally Posted by StealthRabbit View Post
'Retirement' (in USA) is but a figment of the imagination for the millions without pensions, savings, healthcare, and those that will get hit by a bus or stricken with a terminal illness today.

Worrying about something that has a low probability of happening, and that you have 40 yrs to AVOID worry, (if you have the wherewithal) seems pretty shallow to those who have bigger fish to catch or to fry, and to those who have no hope of achieving retirement by health or wealth.

Having dealt for 40 yrs with elderly who encounter severe health and wealth issues leading to death, I have never heard them discuss 'worrying' about finances. For many in the world (and now in USA) you run out of money. You die. Very simple. No access to healthcare assures that! And it can happen to you or I. (If we avoid that bus today.

Look both ways before crossing, especially in a foreign country where the buses might be traveling the opposite direction of normal traffic! (Splat)
The above is a non-sequitur. I just don't follow you. When we turn 65, almost all of us have healthcare; it's called Medicare. So the normal pattern is that we have health care through our employer until age 65, then Medicare thereafter.

Of course someone could be unemployed, under 65, and without healthcare, and then be stricken with a terminal illness. But that is not a normal pattern, as you try to make it into. (Getting hit by a bus will get you medical care provided by the liability insurance of the bus company or the entity running the buses.)

You write, "....it can happen to you or I (sic)." To you maybe, but not to me; I have not been without health coverage since I was 26 years old, and I am now 70. And no, I am not an unusual case at all.

I can see now where the misunderstanding came from; you wrote of outliers as if the outliers represented the normal situation. In the aggregate, retirement is not at all "a figment of the imagination".
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Old 04-26-2014, 02:38 PM
 
29,784 posts, read 34,885,423 times
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Quote:
Originally Posted by Gandalara View Post
I read it and came to the conclusion that I am very very fortunate and lucky.
Bada Bing
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Old 04-26-2014, 08:29 PM
 
48,516 posts, read 83,978,960 times
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I am also but that is not about everyone. For instance many who didn't worry in states are now worried since many local governments are filing as bankrupt or their fiscal state in highly in question.. Concern after all is what causes a person to act .
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Old 04-26-2014, 09:44 PM
 
2,575 posts, read 4,693,815 times
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Quote:
Originally Posted by nurider2002 View Post
I understand how someone could be tired of the endless articles about the coming catastrope! Yesterday I read about how 1 million in savings won't be nearly enough, that you would need a minimun of 2.1 million now if you retire at 65.
I'm also tired of the doom and gloomers. Useful advice, fine. But articles insisting you can't retire unless you have $XX are silly. There are too many variables: where do you live? How expensive is it there? Is your home paid off? Can you downsize to a less expensive area and get cash out? Do you have a spouse and therefore two people to support? Do either or both have pensions in addition to SS? Do you have a chronic health problem? Dependents such as disabled children to help support? Do you have an expensive non-working younger wife like my brother does?
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Old 04-27-2014, 03:15 AM
 
71,706 posts, read 71,829,507 times
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the big financial worry is, as many here guessed the new normal we are in is hazardous to our wealth.

this combination of low interest rates and high stock valuations never ever happened before in our history.

14 years of basically stagnant markets have left folks way behind in their anticipated plans. the 20-25% per year average growth we had the last 5 years left older money doing next to nothing.

while most folks here heard in some shape or form if they held spending to 4% or so inflation adjusted they should be okay the old data may not reflect the new norm at all.

a new study by texas university was released last week and the news wasn't good. texas university is at the fore front when it comes to real estate and retirement numbers crunching .

since it took 30 years for interest rates to get to these levels , the sluggish economy and economic data is showing a very slow long ride back to more normal levels.

while a 50/50 mix of equities and bonds had a 96% chance of not ever running out of money at a 4% level new number crunching at texas university shows at best it is now showing no more than a coin toss chance of holding that 4% level and not buring all principal.

they ran monte carlo simulations of every conceivable ramping up of interest rates and the time frames all took to long to help new retirees have sustainability.

since dividends reflect interest rates for the most part and dividends tradionally reflect about 1/3 the markets gains the market growth doesn't indicate much help either sustaining things and overcoming the low rates on bonds and cash..

an entire retirement is shaped by what happens the first 15 years and gets most of that shape in the first 5 years. that does not leave much time for rates to rise for near term retirees . after 15 slow or bad years there always has not been enough capital left for the next 15 years to grow substainally so the results for the entire 30 year time frame are pretty much cast in the first 15 years.

so while health issues are number one on my list the future outlook for not joining those in the failed retirement graveyard is a big concern too and rightfully should be a big concern for anyone newly retired or potentially retiring near term.

through out history we either had low interest rates and low stock markets where they had plenty of growing room or we had high interest rates and high stock market values so when markets did their typical rollback interest rates sustained things.

it used to be a 15% fall in markets was wiped away with 2 years of interest payments. today we are talking 200 years.....


while most doom and gloom articles are just that and usually slanted with mis-information the fact in this case is it is something we all pretty much see , feel and can see has a very very good chance of being correct.

of course the big question for those with no pensions is now what do we do or plan around ?

Last edited by mathjak107; 04-27-2014 at 03:51 AM..
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Old 04-27-2014, 04:18 AM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
22,628 posts, read 39,998,659 times
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Quote:
Originally Posted by mathjak107 View Post
the big financial worry is, as many here guessed the new normal we are in is hazardous to our wealth.

this combination of low interest rates and high stock valuations never ever happened before in our history.

...
through out history we either had low interest rates and low stock markets where they had plenty of growing room or we had high interest rates and high stock market values so when markets did their typical rollback interest rates sustained things.

it used to be a 15% fall in markets was wiped away with 2 years of interest payments. today we are talking 200 years.....

of course the big question for those with no pensions is now what do we do or plan around ?
And to compound the financial situations of retirees... the 401k / 403 / IRA bonanza (i.e. self directed retirement responsibilities and accts) 'assumes' every USA pre-retiree is an informed and qualified money manager. I don't think there is a high number of 'average' retirees doing well with their funds. I know many 'old-schoolers' who will still not touch any investment not offered and guaranteed by a brick and mortar bank.

The new normal has me HOPING that mortgage interest rates will creep back to above inflation rate, so that in 20 yrs when I carry back the paper on my investment properties I will be getting a sustainable return.

Quote:
Originally Posted by Escort Rider View Post
... ... I have not been without health coverage since I was 26 years old, and I am now 70.

..the normal pattern is that we have health care through our employer until age 65, then Medicare thereafter. You come from a very different (sheltered) industry and era. Employers / health / retirement plans are stripping HC benefits to workers and retirees
..
Retirement has many different perceptions / meanings / definitions, but for those of us who never worked for the gov, and will never have a pension (or company provided HC), retirement has nothing to do with age 65, It is when we no longer have to daily punch a clock out of necessity. If you can do that at age 15, or 55, or 85, enjoy being 'retired', and Be Happy... don't worry (especially about something as fleeting as 'retirement'.)
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Old 04-27-2014, 04:33 AM
 
71,706 posts, read 71,829,507 times
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i wouldn't blame the 401k as thinking everyone is a money manager. i blame the public for having no interest in learning. they rather learn about sports, refrigerators and their cars.

i am on the 401k committee at my firm and am shocked at the lack of interest and knowledge they have in their financial lives.

the problem with rates coming back in 10-20 years is you may be waiting so long for that ship to come in the pier collapses. most folks living off their nest egg under low rates and sluggish markets will have spent down so much waiting that there will be little left to even grow money on if things come back strongly.

at 4% withdrawal rates anything after 15 years of spending down at below a 2% real return average return may be peeing in the ocean. the balance left may be to low to influence things.

so far since 1926 we never had a 30 year time frame that had its course changed by what happened after 15 previous years while spending down..

even those who retired in 1966 were part of the greatest 17 year bull market in history averaging over 13% a year the entire time and yet what they had left when that bull market came was not enough to change their outcome of being one of two groups to have to take a pay cut at 4% or run out of money.

Last edited by mathjak107; 04-27-2014 at 04:47 AM..
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Old 04-27-2014, 04:49 AM
 
29,784 posts, read 34,885,423 times
Reputation: 11710
Quote:
Originally Posted by Gandalara View Post
I read it and came to the conclusion that I am very very fortunate and lucky.
Congrats for actually reading. Amazing how this discussion developed from it. I wonder if it had been linked in the OP if it would have still happened. Ahhh the power of Gallup Poll results summarized in one sentence.
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