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I don't know much about stocks and whatnot. I do know that I had my IRA retirement money in mutual funds like Vanguard. After many years it was pretty much worth what I had contributed into it.
I pulled the money and rolled it into rental houses. I just ran a what if scenario to see what my money did with the rentals versus had I left it where it was. Over the last two years the rentals had outperformed the market by well over 2x.
This was based on me converting when the market was about 15,700 and a few days ago when it was sitting at 18,500.
None of the money was leveraged so it was just straight cash vs cash. If it was leveraged with financing the return probably would have been 4x or more.
I took the rest of my money from my home sale equity and bought cheaper area rentals, moved to a cheaper area to live, and have about a 13% return netting me almost $100K a year. I didn't buy a home, I just rented as I wasn't sure if I was going to stay in the new area. I also have about $23,000 a year in depreciation which brings my taxable income to $77K.
I'm not saying you should do this. It takes a lot of time and research to do it right. It worked out for me though and I know others that have done similar.
My friend used to be a financial planner and was complaining about how her nest egg wasn't growing much. She watched me over the last 2 years as she didn't quite believe what I was doing would work. She now sees I am retired and living off my rentals and has converted her retirement funds from the stock market into rental homes and is now up to 5 rentals and trying to pick up 5 more.
A lot of people gave you advice here and you just need to do more research and pick what you feel comfortable with.
The only thing I can say is be don't invest in something you don't understand.
Good advice but I would have to spend an awful lot of time and effort learning about real estate, which I know nothing about.
Definitely do not pay TIAA, or anyone else for that matter, 1% per year in management fees. If you are drawing down 3.7%, almost a third of that is being spent just on fees. Yikes!
You need to consider the effect of inflation. Living off interest payments and annuity stipends will lose purchasing power if those are not inflation adjusted. Inflation looks small and harmless but after 10 or 15 years it can really add up.
Yeah, with ultra-conservative investments, the 1% fee is kind of ridiculous. I don't see how those investments are any better than money markets. I have to look over that TIAA analysis again though. They gave me this beautiful book with colored charts -- so I would be impressed with their lousy strategy.
Definitely do not pay TIAA, or anyone else for that matter, 1% per year in management fees. If you are drawing down 3.7%, almost a third of that is being spent just on fees. Yikes!
You need to consider the effect of inflation. Living off interest payments and annuity stipends will lose purchasing power if those are not inflation adjusted. Inflation looks small and harmless but after 10 or 15 years it can really add up.
Oh yes, inflation is the scary unknown. I have to make sure to keep enough cash to deal with it.
Gee, why do you need to generate income? You're already wealthy compared to most people I know. When is ''enough'' enough?
Just sayin'...
I just feel better not living on savings, at least for ten years. I am trying to have enough money in case I have to move, buy a car, any kind of emergencies. Of course we can never foresee most of that.
I don't know much about stocks and whatnot. I do know that I had my IRA retirement money in mutual funds like Vanguard. After many years it was pretty much worth what I had contributed into it.
I am trying to figure out how this is possible other than making poor investment choices and/or pulling out in 2008.
Well the statement "I don't know much anout stocks and whatnot" explains it all. The smart advice was "only invest in what you understand"
To the OP, I ABSOLUTELY guarantee that you did the math wrong if you are thinking you are only $27k ahead based on your numbers. It is way way more than that. You really need to see a fee based Retirement Income Advisor, NOT a Financial Advisor that makes money based on your decisions.
Well the statement "I don't know much anout stocks and whatnot" explains it all. The smart advice was "only invest in what you understand"
To the OP, I ABSOLUTELY guarantee that you did the math wrong if you are thinking you are only $27k ahead based on your numbers. It is way way more than that. You really need to see a fee based Retirement Income Advisor, NOT a Financial Advisor that makes money based on your decisions.
OP can listen to the good advice here for free or pay to hear the same good advice for money, or pay to hear bad advice for money. This is not rocket science, this is a matter of irrational behavior refusing to listen to simple common verifiable common sense about using his savings knowing there is higher SS down the road but preferring to do the irrational thing because of his irrational principle of not drawing down savings and irrational fear that SS will not be higher down the road.
There's all kinds of things to consider. For instance, putting your money in real estate including rentals may be good but you lose the legal protections of a 401k/403b/IRA account. If you get sued for whatever reason and lose, you could lose your rentals. Depending on how ownership is structured (LLC, family trust, etc), they may be protected or the creditor may be able 'pierce the corporate veil'.
No such problem with 401k type-plans. Just ask O. J. Simpson. They are protected from lawsuits and bankruptcy.
Depending on your age and health, you might want a deferred income annuity that doesn't pay until you're in your 80s. That's what's replacing long term health care insurance policies.
Lots to consider besides your immediate income needs. Good luck.
I think that's called longevity insurance. Not expecting to live too long, but you never know. If it's a good deal it could prevent a lot of worry.
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