Start saving now for retirement

As I approach my 10 years in retirement I can attest to all of the above good advice for you youngsters. We did most of what is recommended years ago so we wouldn't have to worry too much during our retirement years. One other suggestion I might make that we did was to pay cash for our cars to keep down our debt. Once my car was paid for we'd put the same amount of money in an investment account (CD or such). Since we had been spending that money each month anyway it was not now missed. When we got ready to buy another car we then had the money to pay cash for the car and not incur additional debt.

We once walked into a dealership to get the car my wife wanted. She had researched the car and what it SHOULD cost including the dealer's profit. We had a check made out for what WE would pay for the car. After negotiations, the salesman wasn't down to the check amount so we got up to leave and asked for the keys to her old car (they had them to check out the trade value). Then the salesman got the sales manager. Then he got the dealer. Then they talked with their bookkeeper. Finally they took the check and gave us the title to the car.

One other note about that - When you pay cash you do not build up a credit history. We bought a car (for me) and the dealer was offering 0% interest for x amount of months. We thought - "OK, let's use their money instead of ours and it can continue to draw interest." Their finance department didn't want to loan us their money since our credit history was non-existant. (Our house was financed by the previous owner). It took some doing but they did finally loan us the money and we just made the monthly payments until it was paid off without using all our car money at one time.
 
Button Pusher said:
Congress better keep their tax hands off my money.
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I recall when that scum bag Paul Ryan was running for VP. He proposed very one under 50 forfeit their SS. Bull Spit on that. At the time I was about 40 and had already paid into it for about 25 years.

Edit to add, as @SSgt75 just pointed out, credit is a tool, but it's one you need to use in order to keep it sharp. In retirement, my parents noticed their score dropping, so they financed a lawn mower at 0% and set up auto bill pay monthly.
 
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Tim said:
Why isn't your adult son making his own decisions? or, at least, participating in them?
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Sounds a lot less like him making decisions for his boy, but giving his kid a hand up to help him along. I do it for mine. Not everybody agrees with that. To each their own.
 
SSgt75 said:
We bought a car (for me) and the dealer was offering 0% interest for x amount of months. We thought - "OK, let's use their money instead of ours
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I do this occasionally with a credit card I have for 'just in case'. When they send along a 0% offer, I'll put whatever my next purchase is on the card and pay it off 1 month ahead of the offer expiration. It's a nearly free way to keep your credit rating up without paying normal CC interest. Sometimes there's a 2-3% fee which I consider a reasonable cost for the benefit of maintaining the rating.
 
@Ferrisfan

You and your wife can each make significant tax free gifts to your son. Why not forget the 1040 and tell him you’ll match each dollar he earns by depositing into a brokerage account? That might give him the incentive to mow more lawns as well as get him interested in stocks and markets.
 
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since we're posting our plans:

mine is: same house same wife.
 
Tim said:
Why isn't your adult son making his own decisions? or, at least, participating in them?

I am fortunate that my parents helped me learn early on the value of saving. So that, as an adult, l wouldn’t need anyone making decisions for me. So far, I've done all right.
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As appealing as it seems at times, most of us don't usher them out of the house and change the locks when they come of age. Independence is a transition, not an event. When they hit puberty, they suddenly know everything and you are stupider than a rock. It seems to be fading now, but you can't feed it to them any faster than they are willing to take it. And in the meantime, I'll be active in the parts he's not yet ready for.
 
MostWanted said:
As appealing as it seems at times, most of us don't usher them out of the house and change the locks when they come of age. Independence is a transition, not an event. When they hit puberty, they suddenly know everything and you are stupider than a rock. It seems to be fading now, but you can't feed it to them any faster than they are willing to take it. And in the meantime, I'll be active in the parts he's not yet ready for.
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I certainly agree that 'coming of age' is a process, and as @fieldgrade said above "to each their own".
 
Sevenshot said:
Never heard of the triple tax free bond. I've utilized 401k partly for the tax deduction.
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Im not current on all the available state triple tax free bond funds but at the time I was active in it, Franklin Funds was the only investment company offering a NC triple tax free fund. Basically the investment company buys municipal bonds in the state the fund is named for and creates a mutual fund. All proceeds are exempt from Federal, State and City(?) taxes. (yes the city of Philiadelphia at one time and may still have a income tax. Im sure there are others. The company I worked for at the time wanted to open an office there and no one would work there unless the company grossed up their pay. The company cheaped out and located the office in King of Prussia, PA instead of Philly.) Fidelity offers the Franklin NC triple tax free bond fund as well as Franklin directly. When the Dow ever hits 26,600 again, I'm getting out of a growth and income fund and putting that money in the Franklin NC triple tax free. Market is just to volatile and the fact that Jim Kramer is not in federal prison is proof that buy and hold of equities is for suckers.
 
Jeppo said:
@Ferrisfan

You and your wife can each make significant tax free gifts to your son. Why not forget the 1040 and tell him you’ll match each dollar he earns by depositing into a brokerage account? That might give him the incentive to mow more lawns as well as get him interested in stocks and markets.
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The only issue with this is that the money will not grow tax free. If you do it inside a ROTH it will grow tax free and when you sell it for higher education, first house or retirement it is not a taxable event. The minor must have income in order to contribute to an IRA Roth or Traditional. It is much easier when the minor has a job which issues a W-2. The power of compounding interest in a tax free investment is hard to out perform in a taxable account.
 
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Started an IRA about a decade ago.
Dont put a ton in, but slowly building up.
I'll have a pension in 16 years, wait another 10 and have even more of a pension.
But I still put extra away, because when I quit working I still want to live
 
Amps 13 said:
How do you know my Mom?
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I shoot matches with a retired doctor who told me one of his adult kids asked him for an advance on their inheritance to buy a boat. He basically not only told him "hell no", but inferred that he planned to spend all his money fishing and shooting, then bounce the check to the funeral home after he was gone. It was hilarious.
 
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MostWanted said:
As appealing as it seems at times, most of us don't usher them out of the house and change the locks when they come of age. Independence is a transition, not an event. When they hit puberty, they suddenly know everything and you are stupider than a rock. It seems to be fading now, but you can't feed it to them any faster than they are willing to take it. And in the meantime, I'll be active in the parts he's not yet ready for.
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One thing you might consider is using the account as a teaching tool. By showing him what you have done and the difference in the amount in the account vs if you had just left it alone. What you are doing is giving him a great headstart! I think it would be even more impactful if he was actively pushing it forward with you so that when you are no longer in that role it is his standard operating procedure vs something he has to learn. I commend you for giving him a helping hand!

The start of my financial education was from my mother. She bought me and my brother 10 shares of GE back before Jack Welch was CEO. Each month we would look in the paper on the 15th of each month and see where it was at. We wrote it down in a ledger. Over the years it grew. I reinvested the dividends and the stock would rise to over $100 per share and then split. It did this many times over the years when I was a kid and I watched it grow. I saw the power of time and compounding growth/interest. By the time I was a young adult I used the money to fund my college education, the birth of my son and to purchase my 1st home. It did not pay for all of any of those events but it served as a foundation. I owned that stock for almost 30 years. My brother on the other hand at 18 cashed it in a bought a monster truck. He got the same education but it never stuck. He basically go nothing out of that GE stock.

I opened an IRA the first year I made enough money so I did not have to live and to mouth anymore. I have have been putting money into IRAs & 401Ks for over 25 years. I have never cashed any of it in. When I left a job I rolled my 401K over to my IRA and then started contributing at the new company. I was fortunate enough to be able to put away a decent percentage of my income over the years. I would always put large portions of bonuses and raises into long term retirement savings. Hopefully it will pay off in the long run. I still have a while before I will draw on it but foundation is there. Like I said in my other post I certainly have spent money on "Stuff" and "experiences" but I have not sacrificed my future in order to do it. I consider myself very lucky.

Young people today need to understand that they will not have a pension. They will maybe get some version of SS but that they are responsible for building their retirement income over their lifetime. It is not like the old days where you could work for the same company for 40+ years collect a pension and SS and then live comfortably. They have to take control of their retirement future sooner rather than later. I can't stress it enough that time is their greatest asset.
 
SSgt75 said:
As I approach my 10 years in retirement I can attest to all of the above good advice for you youngsters. We did most of what is recommended years ago so we wouldn't have to worry too much during our retirement years. One other suggestion I might make that we did was to pay cash for our cars to keep down our debt. Once my car was paid for we'd put the same amount of money in an investment account (CD or such). Since we had been spending that money each month anyway it was not now missed. When we got ready to buy another car we then had the money to pay cash for the car and not incur additional debt.

We once walked into a dealership to get the car my wife wanted. She had researched the car and what it SHOULD cost including the dealer's profit. We had a check made out for what WE would pay for the car. After negotiations, the salesman wasn't down to the check amount so we got up to leave and asked for the keys to her old car (they had them to check out the trade value). Then the salesman got the sales manager. Then he got the dealer. Then they talked with their bookkeeper. Finally they took the check and gave us the title to the car.

One other note about that - When you pay cash you do not build up a credit history. We bought a car (for me) and the dealer was offering 0% interest for x amount of months. We thought - "OK, let's use their money instead of ours and it can continue to draw interest." Their finance department didn't want to loan us their money since our credit history was non-existant. (Our house was financed by the previous owner). It took some doing but they did finally loan us the money and we just made the monthly payments until it was paid off without using all our car money at one time.
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I will always take someone else's free money. If you want to give me $30,000 over 5 years for free instead of me giving you $30,000 right now I will take that every single time. These days I can make 2% a year in a savings account with that $30,000. If I put in a proper diversified fund I have a chance to make a lot more over that over a 5 year period. This is why I argue all the time that not all debt is bad. If used correctly debt can give you flexibility and allow you to make more money with your money.
 
Button Pusher said:
Agree, one that us a fiduciary, act in your interest.
Never buy an annuity. They have their place but not worth the high fees.
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I was always stunned when people did not understand that a broker or advisor is not necessarily, and in most cases not, a fiduciary. I was amazing that people did not understand that most brokers are sales people looking to sell you a product that might or might not be in your best interest.
 
skiles said:
My employer matches up to 6 %, I put in 15%. I haven't started a Roth although I guess I should.
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Same here..... I got a relatively late start (divorce sets ones fiances back a bit) but started around age 40 pretty seriously, and I put back quite a bit (>20%) after building an emergency fund. Even 25 yrs (the last of which have not been wine and roses stock wise) will pile up quickly if you stuff it in a blend of funds (mine are in various Vanguard funds ) and leave it alone for a few decades. I'll retire later this year with zero debt and a paid for home as I've generally lived within my means.

I wasn't smart enough to listen to my Dad who told me "start as soon as you get your first paycheck" (he also had concerns about wife 1.0).

Dads can be pretty smart people...
 
JohnFreeman said:
Same here..... I got a relatively late start (divorce sets ones fiances back a bit) but started around age 40 pretty seriously, and I put back quite a bit (>20%) after building an emergency fund. Even 25 yrs (the last of which have not been wine and roses stock wise) will pile up quickly if you stuff it in a blend of funds (mine are in various Vanguard funds ) and leave it alone for a few decades. I'll retire later this year with zero debt and a paid for home as I've generally lived within my means.

I wasn't smart enough to listen to my Dad who told me "start as soon as you get your first paycheck" (he also had concerns about wife 1.0).

Dads can be pretty smart people...
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Very true! I'm 45 and have been working since I was 12 starting with a paper route. I got a late start with a "real" job in my mid 30's. If I had saved just $25 a paycheck those first 20 years it would be ridiculous. I don't necessarily blow through money but I work hard and like to live so to speak. You have to find that balance...
 
When I got promoted at work about 10 years ago I promised myself that every time I received a rate increase I would up my 401 k % by 1%. I dont even notice the difference.
 
wvsig said:
Contribute the min % of your income into your companies 401K needed to get the company match. Over time increase it because the tax break yields an instant rate of return, which will vary based on your tax bracket, but something today is better than promise later that might not be there. When you leave a company roll it over into your Traditional IRA. DO NOT CASH IT OUT. You can do a roth conversion but you will pay taxes and if you already have funds in a Traditional IRA it is more complicated.
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Agree the minimum match to get free money is a no brainer. As to immediate rollover upon leaving a company however I'd advise caution and research BEFORE retirement. ( Avoiding cashout- unless you are in a dire situation Agree 100% ) Knowing your current 401K's Summary Plan Description document is Tres Important. Knowing f you already have an existing Plan that offers good investment choices, low expenses and reasonable administration rules is important. Not all 401Ks or IRAs or anything for that matter are equal. If you or your money can stay in an existing Plan ( no new contributions but can manage existing $$$) that is working for you why change ? I'm not aware of any situations where the balance is over $5k that force you to close your existing 401K with a former employer. In fact, your new employers plan may be worse in terms of choices and expenses than the old one.

As to rolling over to your outside Traditional IRA , be aware that very similar investment fund names have different expenses and returns- some of the institutional fund choices available to larger corporate group investment plans may not be available to you

The Finance industry lives and is PAID on Buy/Sell. Buy Stocks, Buy Bonds, Buy IRAs, Opening an Investment Account, etc. is a Sale. A Rollover is a sale. Sorry, no other way to put it. If its warranted, great. If not its marketing.

Get real cozy with a Fiduciary ( fee only financial planner) is my advice.

Oh, and I'd strongly advise the keen 401K investors to read all they can about the Age 55 Rule.
 
Alfred said:
Agree the minimum match to get free money is a no brainer. As to immediate rollover upon leaving a company however I'd advise caution and research BEFORE retirement. ( Avoiding cashout- unless you are in a dire situation Agree 100% ) Knowing your current 401K's Summary Plan Description document is Tres Important. Knowing f you already have an existing Plan that offers good investment choices, low expenses and reasonable administration rules is important. Not all 401Ks or IRAs or anything for that matter are equal. If you or your money can stay in an existing Plan ( no new contributions but can manage existing $$$) that is working for you why change ? I'm not aware of any situations where the balance is over $5k that force you to close your existing 401K with a former employer. In fact, your new employers plan may be worse in terms of choices and expenses than the old one.

As to rolling over to your outside Traditional IRA , be aware that very similar investment fund names have different expenses and returns- some of the institutional fund choices available to larger corporate group investment plans may not be available to you

The Finance industry lives and is PAID on Buy/Sell. Buy Stocks, Buy Bonds, Buy IRAs, Opening an Investment Account, etc. is a Sale. A Rollover is a sale. Sorry, no other way to put it. If its warranted, great. If not its marketing.

Get real cozy with a Fiduciary ( fee only financial planner) is my advice.

Oh, and I'd strongly advise the keen 401K investors to read all they can about the Age 55 Rule.
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Sometimes leaving it in your previous companies plan is fine. You have to look closely at the fees and expenses. Unless your fees are below the norm in your 401K you can often do better moving the money out to a low cost online broker and going with index funds. It always makes sense to look at the fees and calculate the total return. For the financial services industry 401Ks are a goldmine. It is harder and harder to find one with low fees, good offerings and flexibility. Most 401Ks are where there is a captive audience that does not understand fee schedules and the financial services industry exploits it.

I have done this, left $$$ in a past employers 401K but one of the issues is that you run into is now have multiple places where your money is and the fees and the offers may change. Consolidating into one location is often easier to manage. Also if you roll over your 401K to a Traditional IRA there is no penalty. I almost never recommend rolling over one company 401K into another companies 401K.

The age of 55 rule is fine if you need the money but I personally think you are shorting your future if you pull that money early. Also you are limited to funds in the 401K from the job you are leaving not other funds from other 401Ks. Hopefully by 55 there are better ways to ride out a rough patch. If you are retiring early because you have enough to live out your days then yes the 55 rule should be investigated.
 
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There is NO reason to get a financial planner unless s/he is getting you double digit returns. You are way better off to just throw your money in diamonds (DIA index etf). The fees that traditional brokers charge over the years are enough to make you cry if you look at them. Your average broker has zero market skills, anyway. They are sales people, not market mavens.

When I used to trade on the floor, we LOVED fading retail wire houses. Stupidest timers and trade callers out there.

You can learn to "trade" your own account, but the initiation fees are high (i.e., you WILL lose money). The sucker assumption is that some "professional" is going to give you better advice than either 1) just buy the indexes and ride the ups and downs or 2) get in and out of the market based on the spoken decisions of the federal reserve on interest rates. Just buy the diamonds, cubes or spiders and sit on them. You will do better than 80% of the "professionals"
 
wvsig said:
The age of 55 rule is fine if you need the money but I personally think you are shorting your future if you pull that money early. Also you are limited to funds in the 401K from the job you are leaving not other funds from other 401Ks. Hopefully by 55 there are better ways to ride out a rough patch. If you are retiring early because you have enough to live out your days then yes the 55 rule should be investigated.
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No one here is being encouraged to withdraw any or all funds at age 55 or any age thereafter up till their age 70.5 tax comeuppance, eg Required Minimum Distributions.
I was merely pointing out that it is a relatively unknown feature of 401Ks that makes no money for the financial services industry is thus never ever brought up. I bet 20 people had to google this just now as they never heard of it. All you ever hear is withdrawing before age 59.5 results in a 10% additional penalty.
 
Alfred said:
No one here is being encouraged to withdraw any or all funds at age 55 or any age thereafter up till their age 70.5 tax comeuppance, eg Required Minimum Distributions.
I was merely pointing out that it is a relatively unknown feature of 401Ks that makes no money for the financial services industry is thus never ever brought up. I bet 20 people had to google this just now as they never heard of it. All you ever hear is withdrawing before age 59.5 results in a 10% additional penalty.
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I understood what you were saying. I guess I was looking at it from the perspective of too often once people are able to access the money without penalty they do. In my experience there is no hard and fast right time to withdraw money. The total financial picture long term life expectancy and expenditures should dictate withdraws not universal rules. Everyone needs, wants and goals will be different.
 
"I wasn't smart enough to listen to my Dad who told me......................"

I've said before that I was about 30 years old before I realized what a smart guy my dad was and now I'm reminded of that fact about every day. We had our differences ( as much my fault as his ) but he did give me some good advice that I decided not to follow more than once.

.
 
Clark Howard on the radio told me about "fee only" financial planners. They don't try to sell you anything, they just give advice like a lawyer or CPA would, and charge a fee. When my mom died last year, I inherited several accounts, and he went through and said "keep this one", "this one's not good, let's get something better", or "sell this one and put it against your mortgage". Someone who was paid by selling me an annuity or loaded mutual fund would have had a conflict of interest--advising me to pay down my mortgage or keep it where mom had it would have cost him money. I appreciated that I didn't have to worry about that. I have appreciated his advice and can cite specific examples where he saved me more than he cost me.
 
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@MostWanted Also sorry to hear of the loss of your mom.

I used to do all my own investment planning, but it is an incredible time suck to do a good job at it, so I now pay a Fee Only CFP for a certain scope of work I want done.

Nearly the entire Investment industry is paid based on the buy/sell cycle, not on how much money you as an investor earn as a return. They do not share the risk of investing your money, nor do they particularly care whether you shoot yourself in the foot by chasing the market. I have about given up saying anything to folks who think they have an Advisor and then proceed to tell me what brokerage, insurance co. or bank the person works for. Folks also do not understand the difference between Fee-based and Fee only and seem to have been hypnotized into believing "their guy" is their friend.

I highly recommend people study what the different certifications are, understand what Fiduciary means, and research anyone who claims to be an advisor or planner.
A good resource to use is the website https://www.adviserinfo.sec.gov/IAPD/default.aspx where you can look up what is called an ADV form for the individual or firm to get a sense of the details of their business, what their client base looks like, how many people work there, how they make money, and if there are any SEC violations etc. on record.
 
I didnt read thru all the stuff above but you can take a 72T distribution from your 401K at age 55 uninterrupted to 59.5 without penalty but you do pay income tax on the money. There is a formula for how much money you get as the distribution ( you cant just decide you want X$'s a month, the formula decides for you) and it aint alot so dont plan on living on it but it can supplement other income. All the 72T distribution does is eliminate the 10% penalty tax. There is also a form you have to file every tax year you take the distribution to avoid the penalty and you must take the distribution thru age 59.5 or the penalty kicks in. Another reason not to do a 401K or IRA unless there is a significant reason like FREE MONEY (matching funds from employer). You dot know whats going to happen by the time you are 55. I had had enough of 12 hr days and 60 hr weeks at age 55. I took EARLY RETIREMENT to save my physical and mental health. Lived off savings and the 72T distribution. Wife's pension just kicked in and we are 2 yrs away from early social security. The corporate world can just KMA!
 
Don't go blind, do your research. And don't watch the funds, but watch the account. Two stories.

I worked for the state of SC. They have a mandatory retirement fund. It's not a pension, but it's not a 401k either. When I left the money you invest draws interest until retirement and then you have a set amount you are paid for life based on how long you contributed. It was not a ton, but I thought it was a safe bet. About 5 years after I left, and left the state of SC, I find out my money is no longer growing and they changed the requirements for the payout too. Pulled my money out and invested it. If we had not looked into it my money would not have been there like I expected when I retired and SC would have had my money interest free for 30+ years.

The company I currently worked for initially didn't have a 401k. When they finally got one they mad a big deal about it. It sucked. Funds sucked. Rates sucked. Fees sucked. It was a token gesture and they picked one of the worst funds in the business. I made my own investments until they got serious and moved into some funds that were worth my time and money.

And if you move around, consolidate your funds as you move. Don't leave a bunch of little funds scattered around that you can't control. You have a window of time to transfer your money tax free into another account.
 
jimmyjames8 said:
I didnt read thru all the stuff above but you can take a 72T distribution from your 401K at age 55 uninterrupted to 59.5 without penalty but you do pay income tax on the money. There is a formula for how much money you get as the distribution ( you cant just decide you want X$'s a month, the formula decides for you) and it aint alot so dont plan on living on it but it can supplement other income. All the 72T distribution does is eliminate the 10% penalty tax. There is also a form you have to file every tax year you take the distribution to avoid the penalty and you must take the distribution thru age 59.5 or the penalty kicks in. Another reason not to do a 401K or IRA unless there is a significant reason like FREE MONEY (matching funds from employer). You dot know whats going to happen by the time you are 55. I had had enough of 12 hr days and 60 hr weeks at age 55. I took EARLY RETIREMENT to save my physical and mental health. Lived off savings and the 72T distribution. Wife's pension just kicked in and we are 2 yrs away from early social security. The corporate world can just KMA!
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All your eggs should not be in one basket. I would argue that tax the tax free growth of IRAs and 401ks make it almost impossible to beat their rate of return. That does not mean you shouldn’t have money and investments in other places but you have to consider a lot of factors in order to find the right fit and best rate of return.

Taxes on dividends and capital gains can eat you up over the long haul depending on your tax situation. Not being able to rebalance a portfolio without causing a tax event sucks. Not being able to lock in gains without paying taxes undermines growth. There are very few companies you want to holding on forever.

Skipping these types of retirement accounts is trading flexibility for a lower return. Like in most things a balanced approach is often the best.

I however completely understand getting out early to preserve your mental and physical health. My hope is that my wife will be able to do something similar. If we can get to the right number with the right diversification she will be able to check out of her industry when she wants to vs when they want her to. I luckily already checked out...
 
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Interesting thread. I know nothing regarding stocks and such. I do have a 401K. Company matches up to 5%. Will have a pension when I reach my 30 years in 7 1/2 years. Company stopped the pension in 2010 so anyone hired January 1, 2010 and later only have a 401k. I tend to take after my dad's side of the family. He died a 69. His parents were in their mid 60's when they died. I do NOT plan on working full time until I die. Might not have much but ok. My current plan is to work where I am for 7 1/2 years. Retire from there, get my monthly pension, and go to work full time at my now part-time job until I am 62. At age 62 I plan to cut back to 20 hours a week. Minimum needed to have insurance coverage. I will have to work past age 65 for insurance because my wife is younger than I. For my pension, I have 3 choices. The one I will chose will be a reduced amount but should something happen to me it goes to my wife until she dies. Using the tracking tools provided through Fidelity my 401K is on track.

Brings up my next point. My wife doesn't have anything retirement. I would like to start something for her. Again, I know nothing about Roth's, etc. I hear Dave Ramsey say all the time to invest in "good mutual funds." Ok Dave, any suggestions? Same with Clark Howard. I realize they probably can't recommend any particular ones, but still. Any recommended reading for the basics? Suggestions as to where to start?
 
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easternnc4me said:
Interesting thread. I know nothing regarding stocks and such. I do have a 401K. Company matches up to 5%. Will have a pension when I reach my 30 years in 7 1/2 years. Company stopped the pension in 2010 so anyone hired January 1, 2010 and later only have a 401k. I tend to take after my dad's side of the family. He died a 69. His parents were in their mid 60's when they died. I do NOT plan on working full time until I die. Might not have much but ok. My current plan is to work where I am for 7 1/2 years. Retire from there, get my monthly pension, and go to work full time at my now part-time job until I am 62. At age 62 I plan to cut back to 20 hours a week. Minimum needed to have insurance coverage. I will have to work past age 65 for insurance because my wife is younger than I. For my pension, I have 3 choices. The one I will chose will be a reduced amount but should something happen to me it goes to my wife until she dies. Using the tracking tools provided through Fidelity my 401K is on track.

Brings up my next point. My wife doesn't have anything retirement. I would like to start something for her. Again, I know nothing about Roth's, etc. I hear Dave Ramsey say all the time to invest in "good mutual funds." Ok Dave, any suggestions? Same with Clark Howard. I realize they probably can't recommend any particular ones, but still. Any recommended reading for the basics? Suggestions as to where to start?
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Vanguard Index are a good place to start but you need to look at them closely and determine your risk tolerance vs your timetable. If you did do stocks I would look at blue chip stocks only, large companies with known track records and performance within a large cap fund. Based on your age you do not want to be too heavy in stocks because of their potential volatility. These are just suggestions and take them with a grain of salt. I am not lic advisor anymore and this info is worth what I am charging for it. LOL

For Stocks:
S&P 500 which are the top 500 stocks on the US exchanges.

https://personal.vanguard.com/us/funds/snapshot?FundId=0040&from=TPV&FundIntExt=INT

Total Market Fund which simulates the entire US stock market

https://personal.vanguard.com/us/funds/snapshot?TTVETF=VETFCNTRL&FundId=0585&FundIntExt=INT

Balanced Fund 40% bonds and 60% Stocks

https://investor.vanguard.com/mutual-funds/profile/VBIAX

Intermediate Bond Fund https://investor.vanguard.com/mutual-funds/profile/VFICX
 
MostWanted said:
Clark Howard on the radio told me about "fee only" financial planners. They don't try to sell you anything, they just give advice like a lawyer or CPA would, and charge a fee. When my mom died last year, I inherited several accounts, and he went through and said "keep this one", "this one's not good, let's get something better", or "sell this one and put it against your mortgage". Someone who was paid by selling me an annuity or loaded mutual fund would have had a conflict of interest--advising me to pay down my mortgage or keep it where mom had it would have cost him money. I appreciated that I didn't have to worry about that. I have appreciated his advice and can cite specific examples where he saved me more than he cost me.
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When I managed opm, I was fee only. I took a 2% fee and then 20% of earnings. Charging commissions encourages churning.
 
easternnc4me said:
The one I will chose will be a reduced amount but should something happen to me it goes to my wife until she dies.
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Sounds like you have a Defined Benefit Plan, which is what the old fashioned pension plans are called in the biz- congrats. Choosing a Joint and Survivor option, depending on the terms of your plan lets you elect what amount ( eg 50% , 75%, 100% etc.) of your pension you wish to set up for the beneficiary after you are gone. The amount you get now at retirement is reduced from the Age 65 Single Life Annuity amount because from an actuarial perspective they are essentially covering multiple lifespans and paying out over a longer period.

I imagine the other options available to you are the Single Life Annuity ( spouse gets nothing if you croak) , and Lump Sum. Based on the Net Present Value comparisons of the choices typically the Lump Sum option for a Defined Benefit Plan is not a move to make unless you have very good reason ( immediate critical need for $, fund a business startup , etc. ) These are irrevocable choices once you process your retirement paperwork, but it sounds like you have lots of time to research and pick what works for you.

In the interim, make sure your beneficiaries and contingent beneficiaries are up to date and correct on any of your accounts. ( 401k, Life Ins, bank accts, etc.)
 
Alfred said:
Sounds like you have a Defined Benefit Plan, which is what the old fashioned pension plans are called in the biz- congrats. Choosing a Joint and Survivor option, depending on the terms of your plan lets you elect what amount ( eg 50% , 75%, 100% etc.) of your pension you wish to set up for the beneficiary after you are gone. The amount you get now at retirement is reduced from the Age 65 Single Life Annuity amount because from an actuarial perspective they are essentially covering multiple lifespans and paying out over a longer period.

I imagine the other options available to you are the Single Life Annuity ( spouse gets nothing if you croak) , and Lump Sum. Based on the Net Present Value comparisons of the choices typically the Lump Sum option for a Defined Benefit Plan is not a move to make unless you have very good reason ( immediate critical need for $, fund a business startup , etc. ) These are irrevocable choices once you process your retirement paperwork, but it sounds like you have lots of time to research and pick what works for you.

In the interim, make sure your beneficiaries and contingent beneficiaries are up to date and correct on any of your accounts. ( 401k, Life Ins, bank accts, etc.)
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Printed it off before I left work. Have 4 options.:
1. Straight life. Monthly payments to me until I die. Then it stops.
2. 50% Joint & Survivor Annuity- Reduced monthly payments during my lifetime then , upon my death, 50% of the monthly benefit to my wife.
3. 100% Joint and Survivor Annuity- Reduced monthly payment to me until I die then the same amount goes to my wife.
4. 10 Year Certain & Life Annuity- Reduced monthly payments to me as long as I live. If I die before I receive 120 monthly payments my beneficiary gets the remaining 120 payments. If I die after 120 payments then no further payments. If my beneficiary dies before receiving 120 payments the plan would need to be called.

wvsig said:
Vanguard Index are a good place to start but you need to look at them closely and determine your risk tolerance vs your timetable. If you did do stocks I would look at blue chip stocks only, large companies with known track records and performance within a large cap fund. Based on your age you do not want to be too heavy in stocks because of their potential volatility. These are just suggestions and take them with a grain of salt. I am not lic advisor anymore and this info is worth what I am charging for it. LOL

For Stocks:
S&P 500 which are the top 500 stocks on the US exchanges.

https://personal.vanguard.com/us/funds/snapshot?FundId=0040&from=TPV&FundIntExt=INT

Total Market Fund which simulates the entire US stock market

https://personal.vanguard.com/us/funds/snapshot?TTVETF=VETFCNTRL&FundId=0585&FundIntExt=INT

Balanced Fund 40% bonds and 60% Stocks

https://investor.vanguard.com/mutual-funds/profile/VBIAX

Intermediate Bond Fund https://investor.vanguard.com/mutual-funds/profile/VFICX
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Up until last year I was 70% aggressive/30% conservative. Last year while talking to the Fidelity rep, I didn't want to be as risky. It's now 50/50. When the 2008 collapse hit, I know I lady that lost close to $60, 000. That's a lot of money to me. Checked my YTD so far and it is 9.2%. I will have to check and see but I'm sure it has been that or better the last 2-3 years. I *think* I am ok as of right now regarding pension, 401K. Main interest is setting something up for my wife for the next 20 years. Oh, and before I left work I increased my 401K contribution from 12% to 15%.
 
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the "old" diversification rule is by age.
if you are 40: 40% conservative, 60% aggressive.
if you are 60: it's reversed.
 
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