Could those retired fools give the rest of us "getting close" tells us the 5 smartest and 5 not so smart things they did as preparation for retirement. Looking baack with hindsight, what is the single most important thing to do preparing for retirement?
Could those retired fools give the rest of us "getting close" tells us the 5 smartest and 5 not so smart things they did as preparation for retirement.Well, I can't come up with five, but here's what I do have:Smartest:1. Getting out of non-mortgage debt2. Socking away as much cash as possible3. Having a career that provided an inflation-indexed pension and group health insurance for lifeDumbest:Not starting earlier with 1 & 2. I was 43 before I was out of debt. Lots of great memories, but I'd be a lot better off today if I'd put more aside.Phil
My comments largely parallel to Phil's:1. Eliminated all debt but mortgage back about 20 years.2. Accelerated mortgage payoff in a final burst to the finish line.3. We have max'ed IRA/401k contributions since they have been available. I'm pretty sure things would look much bleaker if Congress hadn't created them. Without the before tax aspect, and the employer matching that is commonly made, I doubt we would have had the initiative to be as aggressive in our setting aside.4. Tied to #3, it would have been a nice touch if the IRA/401k think had been available to us before 1984, our first year.Bad decisions:Mostly, being unrealistic about "looking at the big picture" and knowing, for one example, that a company like IBM going thru the big losses in the early years of the last decade would be coming back and adding to our positions significantly. [FWIW, IBM shares bought at the bottom back then would today have a cost basis of ~~$10.50.] Olde too schoon, schmardt too late.
Smartest:1) Set a before retirement budget and an after retirement budget.2) No debt except mortgage and accelerate that if possible.3) Replace items and pay cash. (i.e. "toys", roof, landscaping, etc.)4) Ditto on the "inflation-indexed pension" for both of us.5) Retired early with ability to work again if needed.Dumbest:1) Could have put more bucks aside.2) Didn't realize how much health insurance would rise each yr.
Smartest (in no particular order)1. Maxed out my 401K contributions every year they were offered. (Had an IRA too)2. About seven years before retirement, I redid my mortgage as a 15 year instead of a 30. Then, over seven years I made extra principle payments and paid the mortgage off in seven years, not 15 so I retired debt free.3. Married someone with a retirement health insurance plan.4. Reduced my stock market exposure as retirement approached. Basically got out of stocks in 1999. That year was tough; the S & P 500 was up 21% and I made less than 10%. One of my accounts made only 1.31%! But in 2000 through 2002, when the S&P lost 40% and Nasdaq did a lot worse, I actually made money, and I upped my equity allocation to 45% in March of 2003. I missed the crash entirely.5. Took a lump sum pension instead of the income.Five Dumbest:1. Have been underinvested in bonds the last 5 years.2. Should have been looking more at real estate as an investment.3. There are some things around the house I wish I would have gotten done before I retired, like a new kitchen; stuff it's easier to bite the bullet and do when you are working.4. Wish I had put every cent I own in Euros in about 2001. For that matter, I wish I would have bought an appartment in Paris or a farm in Tuscany at that time. Someone who worked it so they have their hard assets in Euros and their liabilities in dollars at U.S. interest rates could have gotten sort of rich without really trying in the last 5 years and had a lot of fun doing it.5. As John Meynard Keynes said on his death bed "I wish I had drunk more champagne".
I probably missed the most important thing, which was to retire early, at 55.I am in training right now for a trip to Yellowstone next month. My wife and I are going hiking with the rangers, out into the park to see the wildlife. My training hikes are 4-8 miles and I am carrying progerssively heavier packs and looking for gradually more difficult terrain.When I was a kid, I was in the infantry. I know hiking. But I can tell, at 58, my knees are getting progressively weaker and more sore. Had an offer the other day to play on a softball team and I said no thanks. I was playing once a week only ten years ago. I have no doubt that there will be stuff I could do today that I will be less able to do at 59 1/2, even less able to do at 62, and arguably unable to do at all at 65. That's the trade offs you start making by working another year....It's not worth it to me. I can work at a desk when I am 80 if I have to. What I won't be able to do when I am 80 is hike out and see the bears or walk the canal in Paris from St. Martin to the Parc de la Vallette, just for the hell of it.You only go around once and you are going to be dead a long time.
All the comments I've read are applicable for us all. The one I would add is that I waited too long to leave the rat race. I retired at 49. I should have left sooner. Of course, being able to predict with absolute certainty the course of future market swings would be nice, but I've yet to meet anyone who can claim success in that regard. Buy, hold, and keep buying and holding in a well-diversified equity portfolio (like an Index fund) is the best advice I can give to a young investor, along with reducing your debt to zero at the earliest possible time.
Author: Maggadoodle | Date: 5/13/05 6:43 AM | Number: 9776 Could those retired fools give the rest of us "getting close" tells us the 5 smartest and 5 not so smart things they did as preparation for retirement. Looking baack with hindsight, what is the single most important thing to do preparing for retirement?Smartest:1. Went to college using the GI Bill and earned an MSEE degree.2. Always made contributions to my 401(k) to the maximum matching level. Made additional contributions when I had extra money.3. Always lived below my means. Had a mortgage and car payments, but never had any credit card or other debt. Always paid off credit cards monthly within the grace period. Waited to have children until I could afford it.4. Stayed with the same company (Texas Instruments) for my entire career, and retired after 27 years at age 53. Took my pension as a lump sum. Took TI stock out of my 401(k) using the 'Company Stock Rule'.5. Started a Roth IRA for my son as soon as he had enough earned income (1998) and invested it in an S&P 500 Index Fund. Of course, he spends all of his earned income (he is in the Army 3rd ID in Iraq), so I am still gifting him enough to max out his Roth each year, and it is still all going into the S&P 500 Fund. I'm pretty sure he will appreciate that someday.Not so smart:1. Had brokerage account with Merrill Lynch during the 70's. Invested in Federal Securities Trust (front loaded bond mutual fund) for 10 years. Bought several stocks on Merrill Lynch advice. All turned out to be very poor investments. Merrill Lynch made out just fine, though.2. Put the wrong account number on the check for a qualified distribution I received from my 401(k) administrator, and the money was put into my regular account instead of my IRA. I finally reversed that and got the money into the IRA, but I think I aged 10 years in the six months that it took.3. Bought into an oil lease partnership in the 80's; a rock solid deal with no chance of losing anything. I lost my entire $7000! Never invest in 'get rich quick schemes'.4. Bought a car with a 300 hp engine.5. Worked 60 hour weeks for much of my career, and being salaried, it didn't add anything to my paycheck. Don't make your job your life!!Russ
Looking baack with hindsight, what is the single most important thing to do preparing for retirement? Go to the driving range every day and fine tune your game. Also work on your short game and putting. Be ready because there are a ton of old codgers out there just waiting to take your money. Those old 70 and 80 year olds are deadly once they get to the green. Beware of guys with deep tans and white left hands.Regards,ImAGolfer
Could those retired fools give the rest of us "getting close" tells us the 5 smartest and 5 not so smart things they did as preparation for retirement. Looking baack with hindsight, what is the single most important thing to do preparing for retirement?I did more dumb things than smart. Maybe that's why I'm not yet retired (Next January, though!)Best: 1. Got a univeristy education, which offered me a well-paid career path.2. Got out of all non-mortgage debt early. (This rates high with me, and apparently with many here.)3. We have saved prodigously for the past ten years. Maxed out 401K, wife's SEP-IRA, Keogh IRA's. and other savings.4. Own our residence as opposed to rent. Some would disagree, but we have a lot of equity we wouldn't otherwise have. 5. Bought and held mutual funds. Started buying (too late - 1993), and bought front-end loaded funds (American Funds), but I have held them through thick and thin. The portfolio is broadly based. In the "bad" years of 1999-2002 we moved mostly horizontally (although our Small Cap World got clobbered.) The portfolio is worth several times the starting value today.I have to add a sixth:6. I am very pleased with the time-share units we have. We like to travel, and this gives us a pre-paid package of accomodations far superior to a hotel/motel. Buying was painful. But now we are glad to have the use of it. We have invested roughly the price of a new Cadillac, but the Caddy would depreciate faster. Both require maintenance (Time shares carry an annual maintenance fee), and, yes, there is an exchange fee. Still we have enjoyed the use of them.Worst things:1. Waited far too long to get serious about saving. Lived too well, didn't save nearly enough, early enough.2. Bought a few "get-rich-quick" investments that didn't pan out. The old adage: If it sounds too good to be true, it probably is.3. Bought stocks relying on the advice of my Dean Witter advisor. 'Nuff said!4. Bought bond funds (GNMA and High Yield - Dean Witter.) When interest rates soared in the 70's, I got clobbered.5. Bought a variable annuity. A plain mutual fund would have been (and still is) better.cliff
Could those retired fools give the rest of us "getting close" tells us the 5 smartest and 5 not so smart things they did as preparation for retirement. Looking baack with hindsight, what is the single most important thing to do preparing for retirement?---------------------------I think that there are some things that most of us have in common, however, there are several we do not. So, what some of us did to prepare for retirement might not necessarily work for others. I'm probably stating the obvious, but I just wanted to preclude my experiences with that comment.Smartest things:1) Joined the service at at early age and followed through for 31+ years. My pension didn't waiver a bit during the first several years of the new millennium. Who woulda thunk it?2) Sorry...I can only remember doing one thing right!Not so smart (DUMB) things:1) Thought I had it made with my pension so, I failed to learn about the benefits of investing until I had reached an "advanced age".2) Sorry...I can only remember doing one thing wrong! :0)Regards,Bill
#1 smart thing, buying a house in a nice neighborhood in Los Angeles and hanging on to it though the '90s downturn.#1 dumb thing, well all of them are #1, but one that immediately comes to mind is sitting on a stock that is going down --- and sitting and sitting and sitting, hoping it will turn around, knowing it won't, but afraid to take the loss.Hedge
#1 smart thing, buying a house in a nice neighborhood in Los Angeles and hanging on to it though the '90s downturn.#1 dumb thing, well all of them are #1, but one that immediately comes to mind is sitting on a stock that is going down --- and sitting and sitting and sitting, hoping it will turn around, knowing it won't, but afraid to take the loss.HedgeKeith~ "...but TMF was telling me to just hold and be patient."
Recommendations: 2 Thank you for recommending this post to our Best of feature. Looking baack with hindsight, what is the single most important thing to do preparing for retirement? Go to the driving range every day and fine tune your game. . . . Regards,ImAGolfer ++++++OCD:Going to the golf course every week day.Ya gotz to leave those weekends to those working stiffs!sunrayman
Many replies here that are pretty common across the board.Would add one more mistake that I made. I used the retirement calculators that assume a constant rate of inflation and investment return over the course of your retirement. This tends to yield a withdrawal rate that is probably too optimistic. After retiring, found more realistic calculators like those from the REHP (Retire Early Home Page) that use historical inflation and returns that yielded a less optimistic withdrawal rate. Wish I had known about the other calculators before I retired. I could have worked a couple of more years without a problem for me and would have a higher retirement income today.JG
Best and worst things I did before retirement:The best for me was a "hobby" that could be profitable, namely stock investing. I "learned" to make the money I was saving "work" for me. I learned a bit about money management, which served me well after retirement.The second best item was to slowly work into retirement, switching to a part time schedule about 5 years before early retirement at age 55.I had known people who's "life" was their business and who went into depression or even died shortly after retirement. So seeking a hobby that was not expensive appealed to me, and also one which was not physically demanding. Investing was one such thing I enjoyed.I thought (before retiring) that I would like woodworking as my brother did, so bought some equipment. For the last 17 years I have just "stored" the saws, the wood, etc. Rather than wait and try that "hobby" I invested in equipment too soon. In the last years before retirement we did not know if we would like camping so bought a mini-motorhome as a "second vehicle" to try it. We still have it 20 years later and spent many hours and miles traveling in it, including travel to determine a retirement place to live. We ended up in the Olympic Peninsula area of Washington State for financial and weather conditions, and love it. I recently returned to the investing methods I used when I started so do not have the financial concerns many have.Being able to "live well within your means" has been one of the greatests comforts of retirement to me. There have been so many ways to help family and others through charitable funds, etc. and to save on taxes. (See posts between #9 and #14 at the start of this topic.) The recent tax law changes have caused me to pay much more in taxes these last couple years, which I do not regret.Sincerely, Gapfan
Best1. Married a wonderfull woman that hated t be in debt and kept monthly recoreds of every significant (and many insignificant) item bought. She can look up somthing bought 30 years ago and give the date and cost!2. used credit card -paid it off every month (somtimes had to barrow from the bank to do it)3. Bought company stock in plan with company participation4. Maxed out 401K & IRA (moved everything into co.stock plan within the 401K the last year I worked when the stock went from below $60 to $157 (sold and imediatly setup my retirement5. Went on a "vacation" for 7 weeks and came home to a job "remodeling" our home.6. had the kids early so that they were grown and married 10 years before retirement (alowed me to do 4)Worst not learning enough about investing by reading - Had to make all the mistakes myself- speeds the learning process, Especiallly when you get a "funds required to cover"- on a move you didn't fully understand.
I have a home for any tools you want to get rid of, especially woodworking tools :) Hal
<<Looking baack with hindsight, what is the single most important thing to do preparing for retirement?>>Aside from the sound financial you already received, the two most important things we did was to stay involved with people and find hobbies. On retiring I no longer had the social aspect of work, ie: coffee breaks and lunch breaks with co- workers, nor the contact of co-workers in the work arena. We moved to a new community, away from family and friends. We wanted out of the city life and hassle.We joined social groups and volunteer work. The friends we made and the volunteer work is very rewarding and very satisfying in our 'new life'Not having a hobby before retirement, I discovered "weaving" and now have four looms of various sizes and for different types of projects. I really surprised myself as to some of the nice things I wove in the process of learning different patterns and such. I found a guild of about a dozen ladies who are weavers and I was invited to join them. I can't begin to tell you how much fun I have with these ladies and how helpful they've been teaching a novice like me to weave.Filling the void of the time that was spent at work is important. Too many found this to be true and hated retirement for the lack of staying involved with people and having things to do.Realizing the need to prepare will ensure you a comfortable and happy retirement.Good luck to you and yours in the planning of your future.
Looking baack with hindsight, what is the single most important thing to do preparing for retirement?I just noticed the word "single." Well, the single most important thing I did to prepare for retirment was to live long enough to reach it.
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