Retirement questions....What are you doing to prepare?

[Cheetahwoman7]

I've been thinking alot about retirement planning lately and trying to get my finances organized in regards to it. What about everyone else?


What is the minimum income amount you think you'll need monthly to retire comfortably or in the manner to which you're accustomed?
What are your specific retirement goals/plans?
Do you have your money in various types of saving programs? If so, which and why those particular programs?
What are some of your concerns when it comes to retiring?
What things will need to happen for you to get there?
Will you downsize your home?
Move to a different location?
Anything else?

Thanks,
CJ

[shelbylovesmelby]

I don't know that we'll every be able to retire. Honestly, w/ me being home getting by is about all we can afford to do. So my personal retirement fund is just the land I have & it's recently gone up 357% in value since they put a hwy thru so that's my fund til I start working once the kids are in school.

I don't think we could downsize our home it's alreay only 1000 sq ft, ok we could buy the il's 600 ft home *L*

We will need to win the lottery for us to be able to retire. Alot of folks can't do it. Not just because they aren't saving but things that were guaranteed in the olden days aren't anymore. Hence why you see alot of seniors working retail jobs, not because they are bored but because they need the medical insurance & the income.

[pearlieq]

What is the minimum income amount you think you'll need monthly to retire comfortably or in the manner to which you're accustomed?

I never bothered calculating out the actual monthy income, but our goal is $4 million for retirement. We have a long way to go until retirement, but I think we're on track. By the time we retire we will have finished paying for our house and for college funds.

What are your specific retirement goals/plans?

I can't see DH really retiring completely until he absolutely has to, so I can imagine him consulting or participating on corporate boards. I will probably devote my time to volunteering and leisure. We also plan to travel extensively for as long as our health allows.

Do you have your money in various types of saving programs? If so, which and why those particular programs?

We have money in several vehicles. I have money in my 401k at work, and I'll keep contributing until I leave. That helps relieve our current tax burden and takes advantage of a company match. DH and I also both have Roth IRAs, which will grow tax-free for the rather long stretch of time before our retirement. Finally, DH has a mandatory pension through work, though if he leaves before 8 years all we will get are a refund of his contributions.

What are some of your concerns when it comes to retiring?

Health concerns me greatly. I'm worried that DH's health will deteriorate during his working years, I'm worried that one or the both of us may have a bad accident or find we have a degenerative disease. I'm worried that our healthcare costs will be so great that we will only be able to get by while retired, not enjoy ourselves.

I'm also worried about taxes and means testing on social security. With so many people coming into retirement so ill-prepared I'm worried I'm going to be taxed into oblivion and denied the chance to collect on social security.

What things will need to happen for you to get there?

We will need to stay our current course of investing and guard our health as much as we can. We will need to do everything we can not to have more than 2 children, and work hard to pay off the debt we do have and not accumulate more.

Will you downsize your home? Move to a different location?

Possibly. Downsizing is very likely, probably to a small, one-level home, and moving is also possible. We've considered the Las Vegas area before, and may wind up making the move.

[Ima saver]

We certainly did not start saving for retirement early enough. I think that is the biggest advantage that the young people on this forum have, starting early. I did not start my IRA until I was in my forties. We made a big move in 1984 and both went without work for over a year. So, we lived on our savings.
I think we could really play catch up if we would sell our house and move every two years. We can keep the money and not owe tax on the capital gains. My husband is a builder, so only the moving part would be hard to do.
I don't think about my dh ever stopping work. He has to have something to do all the time.

[Broken Arrow]

I don't have my retirement strategy worked out yet. However, I do want to share something very peculiar about my current employer:

They will match up to 100% of your income(!), but they match only $0.28 per dollar. Such as it is for working with a small company I guess.

Still, with a guaranteed return of 28%, before the money is even invested... well, I don't think there's anything else out there that's better right now....

Of course, there's always the 15k IRS limit I have to "worry" about, but then, I may have been over-stretched already, trying to contribute as much as I am right now. Besides, if I ever get to 15k, I'll just open up a Roth IRA afterwards.

So, for now, my retirement strategy is a dirt-simple one: Throw everything I can into 401k. (Unless you guys think I should do something different?)

[creditcardfree]

Originally Posted by Broken Arrow

So, for now, my retirement strategy is a dirt-simple one: Throw everything I can into 401k. (Unless you guys think I should do something different?)

Yes, a match is a match. It is free income. I think that is a fine retirement plan. I love that it is simple, too.

I like that we put a good amount into our roths and the income will be tax free in retirement. My husband will no longer get a match...since he changed to a government job. If he sticks it out long enough, there will be a monthly paycheck at retirement. But that is still to be seen, so for now we'll max out our roths and put a little into the Thrift Savings Plan to get to our 15% of gross.

I haven't figured out the amount we need. I'm just socking away as much as we can and will work with what we have when we get there.

[disneysteve]

What is the minimum income amount you think you'll need monthly to retire comfortably or in the manner to which you're accustomed?
I think the minimum would be right around $2 million, but my goal is $2.5-3 million.
What are your specific retirement goals/plans?
We enjoy traveling and look forward to having more time to do it. Right now, we have the money but not the time. In retirement, we hope to have both money and time.
Do you have your money in various types of saving programs? If so, which and why those particular programs?
We have traditional IRAs that we no longer fund. We have ROTHs that we actively fund. My wife just enrolled in her 403b at work and we will max that out each year. We also have various investments outside of our retirement accounts.
What are some of your concerns when it comes to retiring?
Healthcare is the big question mark. Nobody knows what costs will be 20 or 30 years from now. Rising costs could seriously impact anyone's retirement plans.
What things will need to happen for you to get there?
Just staying the course we are on now and staying in good health.
Will you downsize your home?
I don't know. We like where we live, but may well move south, or at least have a 2nd home in Florida.

[Cheetahwoman7]

Wow, great answers everyone. As I've shared with Ima before, I'm most concerned about health care as well. I saw my mom go on Medi-Cal where they would limit what they would pay for while she was sick. Because of that, many times she didn't get the prescriptions that the doctor would have liked her to have. She would get the "alternative" ones that the insurance would pay for.

I'm not sure how that affected her quality of life, but I'm sure it didn't help it. Kinda makes you think, it's about quality of life (how you live your life), not just quantity (how long you live).

CJ

[Cheetahwoman7]

I guess I should answer my own questions:

What is the minimum income amount you think you'll need monthly to retire comfortably or in the manner to which you're accustomed?

I figured out the BARE minimum I would need is around $1000 a month, but that doesn't take into consideration any health care plan. That's also if I sit at home and don't do much. I love to travel and would like to have that opportunity. As far as how much $$ I would have to save up to do that...I have no idea. I'm sure there's some sort of calculator that let's you figure out what you can earn from your investments, I just don't know where to find it.

What are your specific retirement goals/plans?

This is something I'm working on at the moment. I'm not sure what I want to do when I retire.

Do you have your money in various types of saving programs? If so, which and why those particular programs?

My money is kinda mixed up. While I was working for a private company, I put money into their retirement plan. Currently, it's only worth about $8,000, paying 1.8%...I know, I know. I'm looking into how I can transfer it into some sort of mutual fund that's paying more. I have another $3,150 that's in a traditional IRA. Again, it's paying almost nothing in interest. I'm losing money on it too. I have a $15 annual fee on it and it only pays $12 in interest a year! I'm seeing if the two of those can be some how combined into one account to give me some $$ to work with.

The only other account I have is my teacher's retirement. It's pretty paultry too, considering I've been teaching for almost 20 years. It's, as of the last statement for 2005, at $65,100. Can you believe it? And people say teachers have it made...yeah, right!

What are some of your concerns when it comes to retiring?

Again, as with others, it's the health care issue. I'm wondering if I shouldn't buy some long term care insurance, especially after watching my mom pass away slowly over a 3 year period.

What things will need to happen for you to get there?

I'm not sure. That's why I'm here.

Will you downsize your home? Move to a different location?

Well, I'm like Shelby here, my house is only about 900 sq. ft. I live in a good area of town, but I'm also in California. Costs are high. I've been playing with the idea of moving to the South (as in southern US, not S. Cali ) to save $$ on housing and such.

Anything else?

I'm not sure yet. I'm working on getting everything organized so I can truly see what my retirement picture is going to look like. I'm in my 40's, so I don't have as much time as I would like. I would appreciate any help in finding a retirement calculator (is there one on this site?) so I can start playing with figures.

I've never been married, so there's no getting any $$ from a hubby's retirement account or being a beneficiary of anyone's will. Shoot, I'm still trying to square things away from my mom owing everything she had to the Medi-Cal program. That's a LONG and EXPENSIVE story I'll save for some other time.

Anyway, I enjoy this site, am learning alot, and hope to have all of this retirement stuff sorta figured out by the end of the school year (JUNE). Thanks for everyone's help!

CJ

[disneysteve]

Originally Posted by Cheetahwoman7

I figured out the BARE minimum I would need is around $1000 a month

Wow! I couldn't live on that now, even if my house was paid off. My property taxes alone would eat up more than half of that and I live in a pretty modest older home.

While I was working for a private company, I put money into their retirement plan. Currently, it's only worth about $8,000, paying 1.8%...I know, I know. I'm looking into how I can transfer it into some sort of mutual fund that's paying more. I have another $3,150 that's in a traditional IRA. Again, it's paying almost nothing in interest. I'm losing money on it too. I have a $15 annual fee on it and it only pays $12 in interest a year!

OMG! You have got to fix those things ASAP! Even if you move that $8,000 to an account paying 5.25%, you'll earn an extra $285 over the next year. And that money really needs to be invested in the stock market to maximize growth.

As for the $3,150 paying $12 interest, that is less than 0.4% interest. What the heck are they doing with it? Again, even at 5.25%, you'd earn $169 instead of $12. Monday morning you need to be on the phone to each of those plans to move that money. Good luck.

[Cheetahwoman7]

Thanks Steve,

The account with $8,000 has been moved several times just by the companies being bought out or merging. It's now with John Hancock. I have the ONLY communication they've ever sent me, and I'll get ahold of them tomorrow to see what my options are.

The $3,100 account is with Washington Mutual...again, the bank it was originally in was sold. I'll also give them a call and see what I can do. I'm almost tempted to see if the mutual funds that I currently invest in would take the $$ in a rollover. I think the rollover has to be initialized by the mutual fund and not the banks that hold the money currently.

I'm reading the 403(b)wise site right now. I knew we had that program at work, but it seems they would only talk to you about it once a year by sending you to some scuzzy insurance guy who didn't seem to be too forth coming on what the different programs were. He did seem to push his annuities though. I knew I didn't want one of those.

I'm going to the District office tomorrow to see if I can get a list of "venders". I'll go through that list and see if there's anyone I'd like to invest with. Hopefully, they'll have some good mutual funds listed there. If not, the 403(b)wise site says I can request that the District add a fund that I recommend. It may or may not happen, but I'd like to try to get a good fund to put my $$ in.

*fingers crossed*
CJ

[meaghanchan]

OK- The disclaimer here is I'm 24 and planning to retire at 70, if I should stay in good health and can work up to that point. So that gives me about 45 years to retirement- a lot of time for a lot to happen. It's like being in 1960, and trying to plan for a 2005 retirement! Who knows what the economy, politics, etc, will do to affect our plans? I plan the best I can but... who knows?

What is the minimum income amount you think you'll need monthly to retire comfortably or in the manner to which you're accustomed?

Currently I spend about $1400 a month on living expenses. So... I would say that's the minimum I'd need as income to retire on. But that's not taking into account things like health insurance, and it's not taking inflation into account either. The other variable is that I don't own a home, I rent, and am not sure if that will be my situation when I retire. If it is, rent can increase greatly in one year, and I don't want to spend my old age moving every 2 years because of rent increases. I want to have enough cushion in my investment income that I can deal with stuff like that (if I'm renting) or that I can afford to buy a home (if I don't own one by that point). I also want a little bit extra for travel, which I hope to do if I'm in good health. All of which is to say... I would much prefer about $2000 in today's dollars, though I could get by on $1400.

What are your specific retirement goals/plans?

I would like to teach part-time and make films as long as I'm able. I would also like to travel a lot- at least one international trip a year.

Do you have your money in various types of saving programs? If so, which and why those particular programs?

I have an emergency fund, which doesn't really count, and I have a Roth IRA. I chose the Roth IRA because I'm young and have a lot of time to take advantage of tax-free compounding. I don't have a lot of money in there because I just started investing this time last year. I hope to max it out for 2006 and 2007. 2006 isn't very likely, but if the job situation continues working out, it will at least be close. I don't have a 401(k) or any other type of retirement plan at work, so the Roth IRA was the obvious choice for me for retirement savings. My Roth IRA is invested in a stock mutual fund that is an index of the total market.

What are some of your concerns when it comes to retiring?

Health care, health care, health care. And, ya know, the fact that I have no idea what the world will be like in 45 years. It's likely that the problems I'll be facing haven't even been thought of yet!

What things will need to happen for you to get there?

I need to continue contributing the maximum account I can to my Roth IRA each year. I probably also need to start up a taxable account, because the Roth IRA won't be enough and I don't have access to a 401(k).

Will you downsize your home? Move to a different location?


Can you downsize anymore from a single room in a 4BR apartment you share with roommates? I'm sure I will upsize before I downsize.

Anything else?

Who knows? I don't know what the future has in store, but I figure I'm better off with a little more in the bank than a little less.

[Cheetahwoman7]

Meaghanchan, I think you're doing GREAT to already be thinking about your retirement accounts. And you're right, you're better off with a little more money in the bank than a little less. All the rest will come with time, the house, the mortgage that comes with the house, the repair bills that come with the house...heheheehe, or at least that's what happened in my case.

CJ

[creditcardfree]

You probably can initiate a rollover at the current company, but you would need to have the account set up or paperwork filled out for where the money will be deposited or invested. The current companies want to know where they are sending your money.

Does that make sense?

To me, having worked in mutual fund industry, it seems best to have your new company handle the request to move money to them. Doesn't hurt to call all parties involved!

[disneysteve]

Originally Posted by Cheetahwoman7

I'm reading the 403(b)wise site right now. I knew we had that program at work, but it seems they would only talk to you about it once a year by sending you to some scuzzy insurance guy who didn't seem to be too forth coming on what the different programs were. He did seem to push his annuities though. I knew I didn't want one of those.

It seems that many teacher 403(b) plans only offer annuities which is a disgrace. Why put a tax-free plan within a tax-free account, and have an added layer of fees on top of it?

Fortunately, my wife's plan allows her to invest in any fund offered by the Oppenheimer fund family, so she has a broad range of choices. We split her money between a Global Opportunity fund and a Gold/Precious Metals fund.

[Cheetahwoman7]

Hi Steve,

I picked up the list of venders for our 403(b) program. Almost all are annuities, but there are a few "custodial" accounts, which I assume means that I have more choice than just an annuity. The gal that handles the program for our District, didn't seem to know much. All she was able to tell me was I had to set up an account with whichever vendor I wanted before they can process my application and start taking $$ out of my check.

What really got to me is that on this vendor's list there's NO CONTACT INFO!!!! The gal at the office said it was so they wouldn't be accused of recommending any of the program vendors specifically and so that we would go through an independent financial planner. Oh, and there's several people who call themselves independent financial planners who would love to "help" you select a vendor that would work for you. Problem is, many of them are former school/district employees who have found out they can use their friendships to sell products that may not really work out well. I've talked to one of these people before and they know less than I do!!!!

I also found out that most everything has to go through the County Office of Education, and that STRS (State Teacher's Retirement System) must approve any "vendor". Guess there's some hoops they have to jump through to get on the "list".

Here are the vendors that have custodial accounts:

Ameriprise Financial Inc.
CalSTRS 403(b) State Street Bank (guess they're getting a cut on their own pension plans)
Conseco Annuity Assurance Company (don't know what kind of custodial acct. they have)
First Investors Corporation
Franklin Templeton (FINALLY, one I recognize)
FTJ FundChoice, LLC
Jefferson Pilot Financial
The Legend Group
PFS Investments, Inc
Pioneer Investment Management, Inc.
Plan Member Services (IRM Distributors)
Security Benefit Group
Thrivent Financial for Lutherans (my mom's insurance company)
VeriTrust Financial, LLC
Waddell and Reed Inc.

That's it! No other's on the list that deal in custodial accounts. I've only heard of two of them. There's about 50 others on the list that only sell annuities.

Any suggestions as to where to go from here? Seems anyone connected with giving out information on this program doesn't have much of a clue. I'll go down to the County Office of Education this week and see if I can't get more info.

CJ

[disneysteve]

Originally Posted by Cheetahwoman7

I picked up the list of venders for our 403(b) program. Almost all are annuities, but there are a few "custodial" accounts, which I assume means that I have more choice than just an annuity.

I don't know most of those either, but a few are financial services companies that do offer other investment options, like mutual funds. Ameriprise does. PFS is Primerica which is a large company. A couple of the others probably do too. Jefferson Pilot is now part of Lincoln Financial, so they may have something too.

It's lousy that they make you do all the legwork. It would be nice if they gave you more info or at least some direction as to where to look depending on what you wanted.

DW's plan was simple. They have an investment advisor with Janney Montgomery Scott who handles the plan and the choices available are all funds offered by Oppenheimer, which offers a full range of funds - domestic and international stocks, bonds, sector funds, etc. All I had to do was browse their website and research the funds. Too bad your place is making it so difficult.

Just stay away from annuities no matter what.

[Cheetahwoman7]

Ok, I just went online to the CalSTRS site and found that they list all the available venders that I can use. They have it set up where you can compare vendors, have contact information and be taken to see how the funds have been doing on a 1, 5, and 10 year basis.

Here's the best thing though. CalSTRS is a vendor themselves and they have, hidden away, the VANGUARD FUNDS. Here's the list of the mutual funds they offer:

Citi Institutional Liquid Reserves Fund CILXX
Vanguard Total Bond Market Index Fund VBTLX
Dodge & Cox Stock Fund DODGX
Vanguard Institutional Index VINIX
Vanguard Total Stock Market Index Fund VTSAX
Fidelity Growth Company Fund FDGRX
Prudential Jennison Equity Opportunity Fund PJIAX
Delaware Trend Fund DGTIX
Blackrock Aurora Portfolio SSRAX
Brown Capital Small Company Fund BCSIX
Artisan International Fund ARTIX
Vanguard Short-Term Bond Index Fund Admiral VBIRX

Any suggestions on these?

CJ

[safari]

I really like Dodge & Cox Stock Fund (DODGX); I am investing a large portion of my 401(k) into that fund. It's closed to new investors, so you can only access it throw your employer's plan.

[meaghanchan]

Originally Posted by Cheetahwoman7

Any suggestions on these?

Do you have an asset allocation plan set up? Meaning, have you figured out how much % of your money you want in stocks and how much in bonds? More in stocks means more potential for growth, but also more risk. Their are a couple good asset allocation calculators you can find online, or you can go with one of the 'rule of thumb' formulas. I've heard two variations- your age in bonds or your age-20 in bonds. So I'm 24- by that formula I should have 4-24% of my assets in bonds and the rest in stocks. But it depends on your risk tolerance- imagine yourself in a bear market like after the tech crash. If your portfolio lost 20% of its value- would you be OK, confident that it's going to go back out, or would you take your money out? You have to get yourself at a level where you would keep your money in, because otherwise you're buying high and selling low (at the bottom of a crash)- not a formula for success.

Once you have an asset allocation plan figured out, I would find out more about the individual funds. Look at 10-year performance and look at expense ratio. Expense ratio is one of the best predictors of future performance. A fund can do well or a fund can do badly- but if you're paying more than 1% in expenses, you're losing 1% a year regardless of whether your fund does well or badly.

Once you've done that, I would divide your money between the good funds in your plan according to your asset allocation. So you might have 30% in VBTLX (Vanguard total bond market, which I know is a bond fund with low expenses), and 70% with either DODGX (Dodge and Cox stock, which I think is a great fund despite the slightly higher expenses) or VTSAX (Vanguard total stock market index, which has very low expenses.)

I would also recommend an international fund of some kind... for 10-35% of your stock portfolio. My target is 25% of stocks being interntional. You can either do that in your 403b, with ARTIX (Artisan International fund, which I don't know anything about) or you can do that in your IRA, with any international fund you want.

Sorry for the book- hope this was slightly helpful!