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Author: jadeandrio Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19257  
Subject: Managing retirement savings? Date: 3/19/2013 8:46 PM
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I am 60 years old and retired for several years from a state job. I am living off a small pension of $32,000. When the stock market crashed in 2008 I moved my 457 plan of $80,000 from the stock market to their stable income fund. I also have $70,000 in an ING savings account and 30,000 in local banks. I am wondering what is the best way to have my $180,000 in life savings grow being that I am very risk averse. I am considering moving the 457 plan money to a whole term life insurance policy and moving the money from the savings account to gold. Are these smart decisions? What do you think is my best course of action?
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Author: telegraph Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18289 of 19257
Subject: Re: Managing retirement savings? Date: 3/19/2013 9:40 PM
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"I am 60 years old and retired for several years from a state job. I am living off a small pension of $32,000."


Heck, $32K isn't a small pension. tens of millions would love to have that income.

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" When the stock market crashed in 2008 I moved my 457 plan of $80,000 from the stock market to their stable income fund. "

And you lost out on a 40% increase in the market.

But at least you slept better

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"I also have $70,000 in an ING savings account and 30,000 in local banks. "

I'd keep a 6 to 8 month emergency fund in a savings account paying 0.1 % these days

and invest the other

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"I am wondering what is the best way to have my $180,000 in life savings grow being that I am very risk averse."


Well, if you are 60, your life expectancy is at least another 25 years and you need to plan accordingly.

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"I am considering moving the 457 plan money to a whole term life insurance policy "


Horrors!...you don't need life insurance at this point in your life. It's a gigantic rip off and you don't need the 'tax advantage' of it. It will make your 'financial planner' a boatload of money. He likely gets about a 5% commission on all you invest..which is money you never get back. NO NO NO NO

YOu are getting BAD BAD financial advice

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"and moving the money from the savings account to gold."

Wow...and you worried about a drop in the stock market? What if gold went to $800/oz?

No one should have more than 10% of their savings in gold.

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" Are these smart decisions?"


No no no no no.....a thousand times no. Run from anyone trying to sell you whole life insurance at age 60. QUickly. Fast. Run even faster if they start talking variable annuities, or 'guaranteed income' contracts with wraps containing funds with stock. They'll make the money in commissions and fees, and you you'll get the scraps!



" What do you think is my best course of action? "


You'll be making your financial adviser quite happy if you follow your suggested advice. You, on the other hand, will be taken for a ride.

It sounds like you should stick with your stable value funds.

t.

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Author: RetiredVermonter Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18290 of 19257
Subject: Re: Managing retirement savings? Date: 3/20/2013 7:03 AM
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t:

You and I don't always agree, but we do on this one! I would echo every single one of your statements!

As I have said many times, here and elsewhere, people need to study and learn how to manage their own money -- within and without their IRA's. I've managed my own IRA for 10 years+ now and have done pretty well. Rich? No way, but we do okay.

His $32,000/year pension sounds fabulous to me! We live mostly on our Social Security incomes, plus occasional withdrawals I make from my IRA when we need some extra, and a tiny pension I have that pays me just $350/month, which covers our Medigap insurance.

I just used TurboTax to file our state and federal taxes. We paid nothing and got no refund. A total wash, which isn't bad! (We've paid NO taxes for 4 years now.)

Vermonter

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Author: RetiredVermonter Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18291 of 19257
Subject: Re: Managing retirement savings? Date: 3/20/2013 7:10 AM
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jadeandrio:

I agree with telegraph. You're not getting good advice. I won't repeat everything t said, but pay attention to him!

My main advice is this: Study up and learn about how to manage your own money. Forget the so-called "newsletters", which are published by individuals and organizations to make money for themselves! Avoid annuities and life insurance salesmen.

$32,000/year is NOT a "small pension"! Ye gods! We live mostly on our combined Social Security payments, plus a few thousand I take in dribs and drabs from my IRA, as needed.

I maintain my IRA myself, with a combination of a few good dividend-paying stocks (like AT&T and B&G Foods, to name a couple), a couple of REIT's (which pay VERY high dividends but must be watched carefully), and some growth stocks.

I do NOT have money in any mutual funds, but that's because I watch my own investments carefully on a daily basis.

My two cents.

Good luck!

Vermonter

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Author: TwoCybers Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18298 of 19257
Subject: Re: Managing retirement savings? Date: 3/20/2013 1:22 PM
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Gold is crapy investment. Check out its return over the last 50 years vs the S&P 500. Yes there are periods of time it has done well. There are also periods like say 1983 to 2004 where it has lost value. Finally, if you buy physical gold, you can never in my experience sell it for the "price". If you buy and ETF you get to pay an annual fee.

Everybody has their own situation - If you had left your 457 plan in the stock market you would certainly be ahead of where you were in 2008 and maybe ahead of your max in 2007. But you chose to be "risk averse" in your words.

You can keep you money in banks, pay income taxes on the interest and have decreasing value as measured by pounds of hamburger. Not wise in my view, but an option.

If you really want to avoid loosing money in dollar terms, take all your money out and bury it in the back yard. If you are interested in keeping up with inflation, and willing to accept that for periods of time your total value will either go up or go down, think about putting most of your money in say Vanguard's Wellington. Take out 3.5% of the dollar value you put in and increase the withdraws in dollar terms by the same percentage your gross Social Security goes up -- not your SS check, but the gross amount.

Gordon
Atlanta

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Author: CountNoCount Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18301 of 19257
Subject: Re: Managing retirement savings? Date: 3/20/2013 2:26 PM
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I do NOT have money in any mutual funds, but that's because I watch my own investments carefully on a daily basis.

My two cents.

Good luck!

Vermonter


I mostly agree with RV and tele. Point of disagreement is that I have all our invstment money in mutual funds. In some respects, we have a motley assortment, but it has served us well, and I don't have to think about it.

I can recommend the various Vanguard index funds, in particular the Extended Market Index fund (VEXMX). It emulates the entire (US) market, less the S&P 500.

Good luck! Well, not actually luck, but judgement. I echo your other advice to dump the "planner". They mainly "pllan" to make money from your money.

Regards
Count No'Count

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Author: oceanbluela Big red star, 1000 posts Old School Fool Ticker Guide SC1 Red Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18304 of 19257
Subject: Re: Managing retirement savings? Date: 3/20/2013 5:39 PM
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Horrors!...you don't need life insurance at this point in your life. It's a gigantic rip off and you don't need the 'tax advantage' of it. It will make your 'financial planner' a boatload of money. He likely gets about a 5% commission on all you invest..which is money you never get back. NO NO NO NO

YOu are getting BAD BAD financial advice


The above is excellent advice, and I beseech you to listen to it. Your pension will most likely cover most or all of your basic bills, and you can augment that with profits from your investments. If stocks scare you, invest the rest in a mix of several Vanguard (or other fine) index funds. Take a 30 day free trial to The Fool Rule Your Retirement Newsletter. You will learn a lot, and I suspect you will keep the subscription as the boards there are filled with good, smart people with excellent advice and similar life experience.

Best,

Vivienne

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Author: TheTortoise One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18305 of 19257
Subject: Re: Managing retirement savings? Date: 3/21/2013 5:13 PM
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I am considering moving the 457 plan money to a whole term life insurance policy and moving the money from the savings account to gold. Are these smart decisions? What do you think is my best course of action?


Hi jadeandrio,

I wholeheartedly agree with the posters in this thread who think the investment possibilities you mentioned for your retirement nest egg are a bad idea. I have another suggestion you might want to consider.

I think most here would agree that Vanguard is an investment company which can generally be trusted. They offer a family of retirement funds for people who know very little about investing called Target Retirement Funds, including a specific fund for those already retired -- the Vanguard Target Retirement Income Fund.

You would buy just one fund -- and Vanguard would take over the investment decisions for you.

Within the fund, Vanguard would allocate your money among a number of index funds containing U.S. and international stocks, bonds, U.S. Treasury inflation-protected securities, and cash. The most conservative allocation is for those already in retirement -- with the goal of controlling risk so you can sleep at night.

And Vanguard is famous for having very low expenses.

https://personal.vanguard.com/us/funds/vanguard/TargetRetire...

Morningstar gives this fund its highest rating -- 5-star.

http://quotes.morningstar.com/fund/vtinx/f?pgid=hetopquote&a...


P.S. I don ‘t own this fund--or any mutual fund--because I enjoy doing my own investing. But it sure is a lot of work ... like having a part-time job.

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Author: Brooklyn1948 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18310 of 19257
Subject: Re: Managing retirement savings? Date: 3/22/2013 12:17 PM
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$32,000/year is NOT a "small pension"! Ye gods! We live mostly on our combined Social Security payments, plus a few thousand I take in dribs and drabs from my IRA, as needed.

_____________________________________________________________

My husband gets a pension of $500 from an employer he left 12 years ago. We consider ourselves grateful that he got anything in the way of a pension. Added to our SS and the draw down from our 401K, we are able to survive.
$32,000 pension is a lot of money in my book.

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Author: RetiredVermonter Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18313 of 19257
Subject: Re: Managing retirement savings? Date: 3/22/2013 5:41 PM
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Brooklyn1948:

Shows you it's all relative.

Like you, we have NO pensions, really, just a $350/month one I get. Otherwise, all we have is our SS income and what I pull out of my carefully shepherded IRA when we need money.

I just found out that, though, that, per 1040 IRS Instructions, our income is low enough that we didn't even have to file federal tax forms AT ALL for the past several years (as suggested on this board)! I still have to check with our state people, though.

Good luck. Live carefully!

Vermonter

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