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Old 11-07-2016, 12:33 PM
 
Location: Florida -
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(Retired 8-years) For several years, I've had some sizable, self-directed IRA's invested in a relatively stable 'managed accounts' of a large bank/brokerage company. I'm not making (or losing) any money in these accounts, meaning I've barely averaged 1+ percent return. (Frankly, the bank is making more money in fees on them, than I am!)

We have other retirement income sources and don't need to draw-down these accounts to live, although RMD's are coming due and the tax hit is going to significantly cut into the initial principle just to pay the taxes). [I often wonder how people who are actually living on their IRA's manage??].

I've never been much of an investor and don't want the stress or hassle of monitoring and managing stock and bond accounts, but this is getting ridiculous!

What are you 'securely' invested in that pays you a reasonable return - without a roller-coaster risk scenario. I'm thinking perhaps dividend stocks or ??? (I was going to post this in the 'Investing' thread, but am more specifically interested in the responses of "experienced retirees."
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Old 11-07-2016, 01:04 PM
 
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dividend payers or nnot they are volatile as heck ,especially now . even AT&T has seen a 14% drop over the last 3 months since rates on bonds started to go up .

short of a low allocation to equity's and some bonds coupled with an spia there is not much now that is not going to be volatile and offer a chance of a return
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Old 11-07-2016, 01:17 PM
 
Location: Florida -
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Quote:
Originally Posted by mathjak107 View Post
dividend payers or nnot they are volatile as heck ,especially now . even AT&T has seen a 14% drop over the last 3 months since rates on bonds started to go up .

short of a low allocation to equity's and some bonds coupled with an spia there is not much now that is not going to be volatile and offer a chance of a return
Thanks -- But, under the status quo, it seems like I might as well simply keep these assets in a money-market account (or under an 'IRA mattress').
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Old 11-07-2016, 01:25 PM
 
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there is no such thing today as no or even low risk that will give you any kind of return except 5 year cd's . if inflation picks up they can be a poor deal too .
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Old 11-07-2016, 02:30 PM
 
Location: Somewhere in deep in Maine
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If you want a pay out that is higher than 5 year certificates of deposit at 2.02%, then you will have to assume some risk. There is no around that.

And even CD's, you should get no higher denomination than $10K, in case you need a small amount of cash from them, so that you don't pay a hefty withdrawal penalty that takes away some of your principle.
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Old 11-07-2016, 02:54 PM
 
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you can buy them from fidelity and sell them when you like . interest is a bit less but it can be worth the convenience . if rates fall you can sell them for more than you paid .
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Old 11-07-2016, 03:11 PM
 
Location: Haiku
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Quote:
Originally Posted by jghorton View Post
We have other retirement income sources and don't need to draw-down these accounts to live, although RMD's are coming due and the tax hit is going to significantly cut into the initial principle just to pay the taxes). [I often wonder how people who are actually living on their IRA's manage??].
I am not sure I understand this ^^^. When you make an RMD, the tax is not against the principal, it is against the RMD. If you don't need the RMD, your income is obviously high enough without it so the tax will not materially affect you. People who do rely significantly on the RMD will have low other income so their tax bracket is likely low anyway so the tax burden will not be a significant chunk. A couple filing jointly can have an income of over $100k and still stay in the 15% bracket.

For us, when RMD's kick in I will simply back off on generating cash from our taxable account and replace that income stream with RMD's. In either case I am paying tax so the net effect is almost a wash.

Quote:
What are you 'securely' invested in that pays you a reasonable return - without a roller-coaster risk scenario. I'm thinking perhaps dividend stocks or ??? (I was going to post this in the 'Investing' thread, but am more specifically interested in the responses of "experienced retirees."
The word "securely" is the $64,000 issue. We all have different ideas about what that means. Dividend stocks are no more secure than non-dividend stocks. Generally, when people want security they go to fixed income - bonds or CD's. For us, we have 60% of our investment in stocks, 40% in bond funds. To me, that is the right amount of gain vs. security. Others will have different ratios. There is no one-size fits all.

The stock portion of our portfolio is very diversified, which is one way to minimize the risk in equities. But it still suffers the up-downs of the stock market. But we just live with it; it is the price we pay to get a better return.
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Old 11-07-2016, 07:29 PM
 
Location: Florida -
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Originally Posted by TwoByFour View Post
I am not sure I understand this ^^^. When you make an RMD, the tax is not against the principal, it is against the RMD. If you don't need the RMD, your income is obviously high enough without it so the tax will not materially affect you. People who do rely significantly on the RMD will have low other income so their tax bracket is likely low anyway so the tax burden will not be a significant chunk. A couple filing jointly can have an income of over $100k and still stay in the 15% bracket.

For us, when RMD's kick in I will simply back off on generating cash from our taxable account and replace that income stream with RMD's. In either case I am paying tax so the net effect is almost a wash.

My thought is I will have to pay taxes on RMD's (coming out of IRA's or Annuities) at our full income rate. I had hoped to balance the RMD tax bite with IRA account growth ... which is not happening. ?? How does a couple with an income over $100K stay in the 15% bracket? (Low write-offs, except for giving)

The word "securely" is the $64,000 issue. We all have different ideas about what that means. Dividend stocks are no more secure than non-dividend stocks. Generally, when people want security they go to fixed income - bonds or CD's. For us, we have 60% of our investment in stocks, 40% in bond funds. To me, that is the right amount of gain vs. security. Others will have different ratios. There is no one-size fits all.

The stock portion of our portfolio is very diversified, which is one way to minimize the risk in equities. But it still suffers the up-downs of the stock market. But we just live with it; it is the price we pay to get a better return.
To me "securely" means, I don't want dramatic 'roller-coaster' ups/downs on a regular basis. Mine likewise is diversified, so much so that it seems to simply ride up and down with the market (with greater emphasis on the downs than ups).
.
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Old 11-07-2016, 11:02 PM
 
Location: Haiku
4,144 posts, read 2,591,176 times
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Quote:
Originally Posted by jghorton View Post
.
My thought is I will have to pay taxes on RMD's (coming out of IRA's or Annuities) at our full income rate. I had hoped to balance the RMD tax bite with IRA account growth ... which is not happening. ?? How does a couple with an income over $100K stay in the 15% bracket? (Low write-offs, except for giving)
OK, I see what you are saying. If your RMD is around 10% and you are in the 15% bracket, your tax hit is 1.5% of your IRA. Even if you are 100% bonds you will get a return of about 2-3% a year which easily covers that. If you are in the 25% tax bracket, you can still cover it with just bonds. Equities, when doing well, will more than cover it. But of course they are up and down.

As to 15% bracket with $100+ k income...
- Because 60% of our portfolio is equities, most our income is cap gains and qualified dividends, neither of which count towards one's tax bracket. Tax bracket is only determined by ordinary income (interest, earned income, SS, RMD's, ordinary dividends...).
- We are pretty thorough in claiming any possible itemized deductions.

Quote:
To me "securely" means, I don't want dramatic 'roller-coaster' ups/downs on a regular basis. Mine likewise is diversified, so much so that it seems to simply ride up and down with the market (with greater emphasis on the downs than ups).
Realistically, the stock market has been on a major bull run from 2009 through 2014. It is only the last 18 months or so that it has been up and down a lot. The stock market goes up more than down so you just have to ignore the up/downs and realize that over time it pays off.
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Old 11-08-2016, 01:57 AM
 
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it really involves matching time frames to investments . even at 65 you have money you will not eat with for 20 or 30 years so that is plenty of time to smooth out the roller coaster ride .

right now the biggest problem is really the intermediate time frame . typically that would be handled with bonds and bond funds . but this rise in rates the last 3 months have been hurting bonds and it may continue to do that for many many years .

the historical average is 5-6% for rates so that can inflict a lot of pain on bonds .

to me , bonds are more of a problem than equity's since stocks tend to recover far quicker than the 30 plus years of interest rate cycles . it took 35 years for us to get this low . it can take a very long time to go back up . with an intermediate term bond fund losing about 5% for each point up that is a lot of pain .

higher rates tend to follow higher inflation so getting your 1k back years later will take a purchasing power hit just the same on individual bonds . when rates and inflation rise there is no ducking the damage to certain types of bond funds .

in the past a 35 year bull market in bonds made just buying bonds for income easy . all we had were a few bumps in the road along the way down to where we are today .

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