Can we talk about retirement?

[Tozguy]

Best advise on this subject . None of us could ever sit still and do nothing !

and tolerate other people trying to keep us busy.

 

[7milesup]

I think I understated things. It is the case that many of the advisors do a great deal of harm to their customers. Many (most?) are not in it for you. Many put you into funds that cost you and pay them a commission. It isn't uncommon that 1.5-3% or even more of your return gets siphoned off by "management fees" or fund expenses.

I appreciate your insight Reddinr. I am going to look into some of your aforementioned information.
You mention 1.5-3% management fees. Vanguards personal advisor services charges 0.3%, which is why I chose Vanguard, at least for now. My personal limit has always been 1% total fees, whether it be for the fund itself or ancillary charges such as an advisor fee.

 

[pdentrem]

My dad had a broker who just about refused to buy stocks since there was no pay out to him versus mutual funds where dealers get 1/4 - 1/2% of the value per year. Dad switched shortly after that to my advisor and has not looked back.

There are financial planners and advisors who offer free consult and only charge for trades. I currently do about 4 trades a year as I realign the percentages with the dividends received. Yes now that the stocks are settled on, I could switch to a self trading low cost outfit but it is nice to talk to someone who has a view from the inside.

Here is an article that I saved years ago and found to be very informative and confirmed my thoughts on the type of investments that yielded best return over the long haul. The charts are missing as they become dated fairly quickly but the text is right on. We all know a guy who bought the rising star, boasted about the leap in value and later cried the blues when the stock returned to earth. You may recognize your broker‘s style or your own in one of the styles mentioned here.

Six winning strategies to build your wealth - MoneySense

Looking for an investing strategy that really works? We can help.

www.moneysense.ca

I also subscribe to this site and use their informational charts and pages.

The Dividend Guy Blog - Unconventional Lifestyle and Dividend Growth Strategy

Unconventional Lifestyle and Dividend Growth Strategy

www.thedividendguyblog.com

Pierre

 

[Papa Charlie]

I retired at 62. We discussed waiting until 65 and 4 months, but I was ready to retire and did so. What I hadn't counted on was the $230,000 profit sharing my employer dumped on me. It and SS have made the last 20 years pretty soft. Cancer took my wife last Feb, SS went down, I'd rather have her than her SS, but it's not to be. I figure to get by another 10 years or so. Life's still good, I play in my shop most days, some days profitably, other just for fun. And I won't die broke.

Very sorry for your loss. My wife is my best friend.

We lost everything in 2008 and had to rebuild financially from scratch. I have been able to put a pretty good amount away, not as much as much as we would have had, so every resource will be needed for us to retire. Our future will also include a full house payment and all the regular bills that life hands us, not alone in this by any means. My shop will be a source for additional income and I may have to have a part time job at some point. My wife's health isn't the best and I want our last years to be in the country and to have the quality of life that we have dreamed of for so long.

 

[projectnut]

What's this talk of profit sharing , pensions , vacation time etc everyone is speaking of ?

It's a historical point of reference. There was a time long long ago in a far away land where these "benefits" were offered to employees who managed through the daily harassment and whippings long enough to retire. The amount varied from company to company, but was generally available should the company not go bankrupt and/or raid the fund for some nefarious purpose. In many cases they were not a lucrative as you might think. Hourly employees where I worked got a whopping $230.00 a month pension (and a gold pin) for a mere 35 years of service.

Those days are long gone. Most companies ceased the activities with the advent of the 401K. There were still a few of us that had accumulated a bit toward retirement before the practice was discontinued. The company I worked for initialed the 401K in the late 1980's. Those that had been there a minimum of 5 years still could still participate in the pension program. The entire pension program was ended in 2000. No company contributions to that benefit after Jan 1, 2000 regardless of the number of years of service.

Having said that it was a good place to work. Hourly wages were excellent, but required discipline on the part of the employee to not spend every cent they took home. Salaried employees benefits were better with merit and performance raises commensurate with accomplishments. As with the hourly employees the pension benefits were minimal.

I wouldn't want to calculate my salary in terms of an hourly wage. There were so many 12 hour+ days I would be depressed to count them. Then there were the 200+ days on the road, and the 100,000+ annual air travel miles. There was however a feeling of accomplishment when a job was finished, and a newly designed machine was running far above expectations. Would I do it all over again? The answer is YES, in a heart beat.

 

[pdentrem]

Someone said that is too true. “Expect and prepare for the worst, and you will not be disappointed!”
Another one is “pay yourself not the bank” This applies to not using mutual funds and prepared service plans except when one is just starting up and don’t have a large account to buy the minimum 3 stocks - one bank, one electric company utility and one food supply company. One builds from here

 

[ArmyDoc]

The definition of Retirement is: to leave one's job and stop working. But I don't like that definition.

I think Retirement is to leave ones job, but I don't think you have to stop working. To me, retirement is to leave your job and to enter a new phase of your life. And I guess I'm more focused on what I am moving towards, than I am on what I am leaving behind. Yes, when you retire, you leave your job, but what you do afterwards can be what ever you want it to be.

I've had 4 "careers". During the years before and after college, I worked in several jobs - all of which were in someway connected to engineering. Then I joined the army and went to medical school. So my next "career" was in the Army. After the Army career, I spent 8 years working at a medical university, and now I work for the VA. My reasons for leaving each job was a mix of not wanting to do what I was doing, and wanting to do the new job. I dont think I would have left the old job unless something better had come along, because generally I've only worked in areas that I wanted to do in the first place.

Retirement packages were involved in the decision making, but weren't the only factor. I left the Army 4 years before I could have retired. Family stability was more important than the guaranteed income. One of the factors for choosing my next job was that I was able to convert some of my army time towards being vested, so I didn't lose all of that time. When I left the Academic job, it was because I got to the point where I couldn't stand the politics and started to hate my job. When I left, I was 2 years from being vested. But it wasn't worth staying. I took the VA job because it allowed me to reclaim my military time, and salvage a retirement, but also because I like working with veterans, and I like the people I work with. If I didn't like what I am doing, I don't think it would have been enough to make me come to this position, even with the retirement benefits.

Circumstances change, interests change, and opportunities change, so I don't think you have to do or should keep doing something just because you wanted to, or it made sense to at one time. It may be worth it to put up with an unpleasant situation for short time, but life is too short to spend many years being miserable. Also, I feel it's important to always be moving towards something. Goals are important to me. Without them, I don't know how or why I would want to keep moving forward.

As I get closer to a retirement that meets the actual definition of retirement, I find myself wondering if I want that. Why should I retire, if I enjoy my job and I'm still good at it? I could retire in 2 years. I don't think I will. So long as I enjoy my job, I'll keep working atleast part time, simply because I enjoy it.

 

[HarryJM]

Hey Jeff,

One thing to keep in mind is that your Social Security benefit amount increase every year from age 66 to 70 which you probable know about.
https://www.ssa.gov/benefits/retirement/planner/1943-delay.html

I was very fortunate with my last job prior to retirement as it was a “walk in the park” as the saying goes. I was responsible for managing a piece of software for a local trucking company and my boss did not care what I did, within reason, between keeping it up and running and all of the down time in between of which I spent on various metal working forums during the day. I guess managing boredom was my main challenge.

I will be 74 next May and retired 2 years ago as of this post and that corresponded to my wife's 65th birthday and her signing up for Social Security. I chose to start my Social Security about 2 years prior (4 years ago) to my retirement just to have a little bit extra money coming in due to my wife's early retirement due to health issues.

When I signed up for my Social Security they gave me the option of backdating my benefits start anniversary date for 6 months and then gave me a check for the difference between the 6 months ago amount and the amount I would have received now at sign up time. That check amount was for a period of 10 years if I remember correctly. So my break even point will be when I turned 80. In other words they gave me a check for the 6 months difference in the benefit amount for a period of 10 years. If I die before my 80th birthday I am still ahead in the amount of my monthly benefit check. And after that I will in essence get a smaller monthly check that reflects my 6 month early benefit date. This is probably what you were explaining at in your example, just a little more long winded for my version.

Now for a little background concerning me and my wife and our retirement planning. Neither one of us have any children and we both worked up to retirement. Brenda as a RN and me as a computer programmer as a second career starting around 1988.

We purchased our current home smallish home (about 1100 sq feet) in the early 1980's and refinanced about half way through our 30 year mortgage to a 15 year one and then started making extra monthly principal payments to pay it off early, which we did. We also decided to not buy a bigger house as our current one is quite comfortable for us and our dogs and cats over the years.

We both have a nominal guilt free monthly allowance that we can spend without hurting putting us into debt and we monitor/plan our purchases so we can pay off our monthly credit card bill.

Me and Brenda are pretty much home bodies with no desire to travel/etc and truly enjoy our individual hobbies and being able to site back and enjoy our life together. In other words life, even through these stressful times is good.

I absolutely love retirement with no regrets or longings. Its like a second childhood of an endless summer of doing whatever I want to do within reason and my allowance. During my first two years of retirement I seemed to still be on that working schedule of time of do things in a hurry as I guess it took me a few years to slowly switch to retirement time.

Best wished for a wonderful retirement!
Harry

PS

After reading the below post I decided to add a PS to mine. While index funds are a great place to park you retirement money, we decided to get completely out of the equity market and moved all of our retirement saving into CD ladders. While the interest is very little we are at a stage of life where we will probably not have the time to weather an market downturn and wanted something safe as FDIC insured CD's are insured up to at least $250,000 per CD per issuer.

 

[Reddinr]

Vanguards personal advisor services charges 0.3%,

7milesup - I think that Vanguard's PAS is a pretty reasonably priced one. I used their advisor services when I was setting things up with them but discontinued in a year because there was really nothing to do after that. Fidelity has some good options too. I mainly rail against the big name ones that you see/hear ads for quite a bit. They show this smiling friend in a business suit or with rolled up sleeves ready to help you... Yup.

If you are in low cost index funds already you are 90% there and the rest is tuning it for your own risk tolerance. I use Vanguard too, for it's low cost funds but Fidelity has good ones too. I considered continuing to use their PAS advisors but I found that there is really nothing to do except rebalance once or twice a year if I choose to do it. Takes maybe 2-4 hours per year. My highest fund expense about 0.11%. I have four funds, many people use three and there are decent options for just having one low cost balanced fund that you set and forget.

For those with an advisor that are more comfortable with that, you are in good company. Many people use advisors and are happy with the choice. Just be aware of the costs. These costs reduce your total savings both when saving for retirement and when spending down your savings in retirement.

Some good reads:

Investment education, resources, & guidance | Vanguard

Take control of your future with investment news & educational resources from Vanguard. Sign up for our newsletter to get insights straight to your inbox.

investor.vanguard.com

How to Invest in Index Funds: A Beginner's Guide | The Motley Fool

Get a fast introduction to index funds. Learn why investors love them so much and see how these investing vehicles can help secure your future and inform your portfolio.

www.fool.com

Bogleheads

www.bogleheads.org

"The bogleheads guide to investing", "The bogleheads guide to retirement"
"The millionaire next door"
https://www.etf.com/docs/IfYouCan.pdf -- More geared to younger savers but a good read.

OK. Now I'm done proselytizing. I realize I'm being that pita uncle that won't shut up.
SO what was the question? Oh yeah... Social Security...

PS.
HarryJM - Very good point in your PS above. The balance of equity, bonds and cash-like investments like CDs is also important and a personal decision based on your risk tolerance and ability to "ride it out". I didn't mean to imply that all funds should in equity.

 

[Aaron_W]

By far the best advice we were given was to have a project to retire TO something, as opposed to retiring FROM something. Have a plan or vision for what you want to do with your time (that does not upset you spouse) .

Most retirement training focuses on finances, but I think this is a great point. I've seen a number of people who dread retirement, or retire and then take a some job, not even something they are interested in just to have something to do.

I actually liked my job, grew to hate the administrative side of it which seemed to grow each year, but I enjoyed the real work. I had just reached a point where I wasn't going anywhere with it. I had been an engine captain for 10 years, and had no interest in becoming a chief (way too many meetings). New guys every year, most 18-25 and they never get old because there are new ones every year. Towards the end this scene from Breaking Away really started to resonate with me, not so much the quarterback part, but the part about getting pushed aside by an endless stream of never aging new people. It does start to make you feel old.

Anyway it was time to go, and I could, so I did. It was less about not going to work anymore and a lot more about having the time to do other things I wanted to do. I still work per diem on large fires which brings in some extra money, and lets me bump into the poor slobs who still go to work everyday. While most of my other activities are not paid, I certainly do work since I retired. A 110 year old house, 6 and 20 year old sons, 43 year old wife, 51 year old Landcruiser, 62 year old fire engine, a ridiculous stash of models and a basement full of machines keeps me busy. I actually feel a lot younger than I have in years.

Retirees who used to state - "I dont know how I used to get anything done when I was working as I'm so busy now"
Now I do this.

I think this is how you know you are doing it right.