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I am getting very confused by many of the remarks made in some threads. A new thread this weekend has a widow asking how to make her money last. She has only SS, which is the same for us. No pension. Many responses, not only in this thread but in many, state "get out of stocks now". My confusion is that if you have money in mutual funds (Vanguard, Fidelity to name the ones we use) they obviously invest in the market. We will outlive our money if we aren't invested for the future. We have 2-3 years of living expenses in cash related funds as well (bonds, cd's cash). But it's just not possible to retire with the non existant interest rate these days if you don't have a pension unless you invest for the future.
Many on the forum live off their pensions and SS and talk about not touching their principal. We are not in that position. Having said this, what would you do?
Please understand that I am not complaining that we don't have a pension to rely on (although it would be nice!) We raised our children, put them through college, balanced our lives so that we saved and also enjoyed ourselves. I think we did a great job saving, but realistically, without a pension we do have to use our savings. We just don't want to outlive it!
Thank you in advance for your responses. So many of you are truly a gift here with your knowledge.
Since you have a cash reserve I would not pay attention to the "get out of Stocks" crowd. I think you will find that over a 10 year period stocks do well. The problem is if the market is down AND you have to sell shares. That is why you have the cash reserve.
The most important thing when your cost of living exceeds your income is to reduce your cost of living. It can be done. Doing it carefully and intelligently can lead to more happiness. Not having to worry about money is a special kind of freedom that can be enjoyed by rich and poor alike. Just accept the fact that some of the things you take for granted are not necessarily affordable. Find ways to be happy without them.
The most important thing when your cost of living exceeds your income is to reduce your cost of living. It can be done. Doing it carefully and intelligently can lead to more happiness. Not having to worry about money is a special kind of freedom that can be enjoyed by rich and poor alike. Just accept the fact that some of the things you take for granted are not necessarily affordable. Find ways to be happy without them.
Since you have a cash reserve I would not pay attention to the "get out of Stocks" crowd. I think you will find that over a 10 year period stocks do well. The problem is if the market is down AND you have to sell shares. That is why you have the cash reserve.
the ironic thing is with the exception of gettuing hit hard the first 5 years spending down stock directly in good and bad times has been shown to be just fine.
the reason selling shares at a loss really does not matter despitewhat you were led to believe ? the cash and bonds act as weights in the up years cutting growth.
since markets are usually up 2/3's of the time and down only 1/3 the effect of selling at a loss and the greater gains in the up cycle cancel each other out.
cash buffers and bucket systems for spending are more a mind game than any practical benefit. they ease our mind psychologically.
once you get an up cycle under your belt you could spend directly down from equities and have done just fine.
as you saw in the charts i posted 100% equity has been almost 100% fine over every rolling 30 year period since 1926.
in fact going out longer than 30 years it has done almost perfect.
I would suggest the OP develop a full understanding of asset allocation and apply it to their situation. This would include all assets including home equity which might now be limited in accessibility at another stage it might not be. This also includes insurance along with savings and investment. Many of us comment in here but often those comments are based on our life situation and not others even if they may seem similar.
If you are worried about outliving your assets, I would rethink how you are living. I don't know your age or your health level, but I've got a dad who is still crazy-active at 83.
These are things I think about a lot at 38 though because I'm single and will be reliant on SS and my 401(k) savings.
If you are TRULY worried and are in good health, I would sell the house, invest the money and find a low-cost apartment and downsize your life. Where I'm from in NJ, there are any number of apartment complexes that are quite comfortable and within walking distance or a bus ride to shops. The car will last longer that way. I'd also get a part-time retail job to supplement the SS and just keep you active and social. I have many older friends who do this.
The way I see it, a house is great when you're younger, but it will become a cost drain as it ages and needs more repairs and as you age and need to hire more help to maintain it. Beyond repairs, there's the insurance, the property maintenance, the utilities, the possibility of injury, etc.
The retirement advice I've been seeing lately suggests focusing on dividends and viewing SS as a part of your fixed-income allocation. So maybe you shift a little more of your money into dividend-paying stocks. But no, definitely don't get out of the stock market.
I am 72 and my wife is 75. My wife has a very lucrative retirement plan from a state government plus SS. I have only SS. I would be financially hurting if I lose her income. She would not be financially hurt if she lost my income as I spend more then I make. We have no debt and we comfortably live well within our income so I am not crying the blues....at this time.....LOL
We have close to $400K invested in various mutual funds (Fidelity IRA's, Fidelity non-IRA's, and Vanguard) and $100K in Proctor and Gamble stock. We do have to take RMD's but they, any dividends, and excess cash are reinvested. While we not foresee the need for us to ever have to draw on any of our investments, I would have to if I lose her income.
My main goal is protect what we have versus make a killing and as such we have been investing our RMD's and extra money in Vanguard Wellington.
I feel that for our needs (more my eventual need actually) and at our age, funds like Wellington are a good selection.
I am a bit concerned about the heavy P&G but it is something we have had for a few years.
I am 72 and my wife is 75. My wife has a very lucrative retirement plan from a state government plus SS. I have only SS. I would be financially hurting if I lose her income....
Given that, why did your wife (or you and your wife if you discussed this) not elect to provide a survivor's annuity from her pension in the event she were to predecease you?
Quote:
Originally Posted by johngolf
I am a bit concerned about the heavy P&G but it is something we have had for a few years.
Comments, advice welcomed.
As well you should be. That's much too high of a concentration in one company - - - regardless of how well that stock has performed up until now.
As well you should be. That's much too high of a concentration in one company - - - regardless of how well that stock has performed up until now.
That is the Proctor & Gamble retiree disease. No matter how much the financial planners that P&G hires to counsel retirees try to get them to invest more broadly, it is hard to convince them to sell a portion of that stock and diversify.
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