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Author: kfrank1 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19483  
Subject: Question for Retired Fools Date: 7/9/2012 5:30 PM
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I'm not retired yet myself, but was wondering how the retired have managed over the last 10 or so years when the market essentially gained nothing in the first decade of this century.

I don't see how anyone who retired in 2000 with what they thought was enough money to live off going forward would have been able to stay in retirement if the market didn't gain any.

I'm just curious how any retirees who may have been in this situation have managed over the last decade. I've heard that a lot of retirees had to go back to work at least part time.
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17704 of 19483
Subject: Re: Question for Retired Fools Date: 7/9/2012 7:45 PM
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I retired Jan 1, 2000 at age 53. Obviously you don't quit a job unless you have more than the bare minimum needed for retirement. That surplus came in handy when the dot com bust came along, but I had a substantial portion in bonds and fixed incomes providing steady income. Plus I had maintained reasonable diversification and was not overly concentrated in dot com stocks. That made for a pretty good recovery for most of it. Plus I also benefited from the real estate boom and managed to sell and move to lower cost Missouri close to the top of the boom.

The bottom line is there is nothing like reserves to cover the unplanned. And those surplus funds give you more choices. One is always go back to work or work part time. But so far that has not been necessary in my case.

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Author: billjam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17705 of 19483
Subject: Re: Question for Retired Fools Date: 7/9/2012 11:43 PM
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I also retired in January 2000 (age 54 1/2). I was feeling pretty comfortable by the end of March, not long before the tech bubble burst. But when I decided to retire 5 years earlier than I'd always planned, I knew I had to be careful with spending. I was taking Sec. 72t early IRA withdrawals but SS was a long way off. I had some investments outside the IRA to supplement my withdrawals but I watched my spending. When my portofolio dropped again after 9/11 I reduced discretionary spending as a precaution. Glad I did because the fall of 2008 brought more pain. Fortunately by then I had SS to help out.

Bottom line is I've gotten along pretty well. Managed to avoid selling in down market. Don't feel I've denied myself anything I needed and I've enjoyed plenty of travel. My portfolio is about half what I thought it would be by now when I retired, but I live comfortably on SS and less than 4% withdrawals. I also discovered some of the really expensive things I enjoyed while I had a good income aren't nearly as important to me now. No desire or need to go back to work. I do several unpaid community service jobs plus managing my own investments so I keep as busy as I want to be. Love to golf and travel or just relax on the porch with a book some afternoons.

Be realistic about what your retirement nestegg will allow. Expect the unexpected. React quickly to trim unnecesary spending during a financial downturn. And enjoy every minute of retirement in whatever manner you choose.

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Author: dbphd Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17706 of 19483
Subject: Re: Question for Retired Fools Date: 7/10/2012 5:49 AM
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If you can keep your necessary expenses within social security and any pension income it makes for better sleep. Then your investments can support discretionary spending. Before you retire you might use something like Quicken to track your expenses closely so you have a good handle on what you spend and where you might cut. You really need to know your burn rate before you retire.

db

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Author: Follydolly Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17707 of 19483
Subject: Re: Question for Retired Fools Date: 7/10/2012 9:31 AM
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Invest in dividend bearing stocks. As older bonds mature, there are no new bonds to replace them. My conservative investments seem to be holding up. That plus SS and Pension keep me afloat. I am expecting a huge increase in my Medicare fee under Obamacare, so that will cut into my SS next year.

I know there are SC who lost a bundle in the down markets and it is hard to get the income we used to be able to get. AAABonds, CD's, Treasuries, don't provide income of any consequence anymore.

Birgit

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Author: ResNullius Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17708 of 19483
Subject: Re: Question for Retired Fools Date: 7/10/2012 10:24 AM
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I left my firm on December 31, 1999, two week before my 49th birthday. I worked over the next 10 years on a very part-time basis from home, doing consulting. My part-time work amounted to less than 25% of my former full-time effort. My wife did much the same thing, only a year later. She wanted to see whether I could survive first. This allowed us to live for those 10 years off of our part-time earnings, so we didn't have to draw down on our IRAs or taxable investments. By not selling when the market went down several times during that same period, we didn't lock in any real loses. Our portfolio today is much greater than it was in 2000 before the dot-com crash. Both my wife and I have been fully retired for a couple of years now at age 62. We live off the income from our investments, and our portfolio is larger at the end of the year than at the start of the same year, which means we currently have a self-sustaining portfolio. I doubt that will always be true, and I anticipate some really bad times are coming due to the debt crisis in the US and around the world. We're about 57 in fixed and 43% in equities right now, which is a fairly conservative mix. Good luck to us all.

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Author: CABob Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17709 of 19483
Subject: Re: Question for Retired Fools Date: 7/10/2012 11:39 AM
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I retired in 2002 so I missed most of the dot-com problem, but, did experience the supposed 10 year period of no growth. I have had no earned income since then. My portfolio is higher than it was in 2002 even though I have taken some withdrawals from it. There is no secret here just things like a diversified portfolio, reducing risk, watch budgets and spending, etc.

Bob

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Author: kfrank1 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17710 of 19483
Subject: Re: Question for Retired Fools Date: 7/10/2012 8:19 PM
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Thanks for those interesting replies. Having a buffer like SS to use in the bad times sounds like a good thing. However before that time for me I guess I would have to be able to work part time if necessary, rather than dip into my funds.

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17711 of 19483
Subject: Re: Question for Retired Fools Date: 7/11/2012 3:55 PM
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For those who retire on investments and especially those who retire early--before Social Security age, Fooldom usually suggests having a minimum of 5 yrs living expenses in a laddered maturity bond ladder. This gives you interest from the bonds and the maturing bond to live off of. To continue the ladder as each bond matures you buy a new bond of five year maturity.

This keeps you from selling equities in a down market. You have a 5 yr buffer, But ideally in good times you sell equities equal to a year of living expenses each year and use that to buy another bond.

When interest rates are low, when equity returns are not so good, it becomes necessary to scale back expenses a bit, but it is also important to make hay when the sun shines. In good times, you need to be fully invested to get optimum returns and build reserves to cover the down time.

This works best for those willing to accommodate market volatility. Roll with the punches. You will be Ok if you have adequate resources.

For those uncomfortable with risks, annuities can be used. Laddered bond portfolios can help. Or perhaps a managed account is the right answer.

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Author: CountUpp 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: 17712 of 19483
Subject: Re: Question for Retired Fools Date: 7/12/2012 1:41 PM
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Follydolly: I am expecting a huge increase in my Medicare fee under Obamacare, so that will cut into my SS next year.

Birgit, I have several e-mails suggesting such an increase. Here's the Snopes info:

http://www.snopes.com/politics/medical/medicare.asp

The lie can go around the world before the truth leaves the gate. The anti-Obama people overlook no opportunity, no lie is too absurd for them to repeat it.

Count Upp

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Author: Follydolly Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17725 of 19483
Subject: Re: Question for Retired Fools Date: 7/15/2012 11:15 AM
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I am happy there will be no increase in Medicare fees for 2013! Thank you for the info. It is a different amount all the time it seems. 2010 I paid $220 a month, 2012 I paid 198.80 a month.

Keep in mind, that I am taking RMDs that are considered income and thus taxed double for Medicare fees if your income is over a certain amount.

I will find out when I get my SS statement what will be charged to me for 2013. I am expecting my supplemental insurance premiums to rise...something that has not happened significantly for some years.

I don't think I heard about any increase lie, I just assumed that someone has to pay for the new medical insurance plan. And I assumed (error?) that it would be the likes of me.

Birgit

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Author: mendomann Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17729 of 19483
Subject: Re: Question for Retired Fools Date: 7/17/2012 5:54 PM
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I retired in 1995 at age 57 with a defined pension. When I started getting SS @ age 62 it was like getting a raise. Most of my investments were and still are in fixed income, especially munis for income. I do have mutual funds in my IRA for growth, which mostly have recoverd their losses after things went south.

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Author: cgrinder Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17754 of 19483
Subject: Re: Question for Retired Fools Date: 7/30/2012 6:44 AM
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i am 56 1/2. i hope to bail at or before 62. i work on a shop floor on the graveyard shift machining a product for the auto industry. i have done this for the last 33+ years. i planned on my social security covering my fixed expenses and my profit sharing, roth account, rent from my upstairs apartment and my taxable investments to use as play money.

what do you all do about insurance?

i am "not" married, my kid is grown and i am pooped from working. i get about 2 days off a month right now. i would bail sooner if i was not afraid of running out of money too soon.

any help or suggestions are welcome!

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Author: cgrinder Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17755 of 19483
Subject: Re: Question for Retired Fools Date: 7/30/2012 6:52 AM
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another angle i looked at was buying dividend stock to cover my expenses. my land line and internet are century link. buy enough shares to cover the monthly expense. nipsco for my utilities etc.

any other ideas? lol

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Author: telegraph 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: 17756 of 19483
Subject: Re: Question for Retired Fools Date: 7/30/2012 9:19 AM
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If you can, you can go on COBRA for insurance for 18 months. Then you'll need a private policy to tide you over to age 65 when Medicare kicks in.

So time your retirement accordingly.

Likely, you'll have to get high deductible health care insurance.....to cover you for 18 months. or whatever you decide.

If you start taking SS at 62, you'll drop your monthly income by about 40% compared to taking it at your 'normal' age of likely 66 plus these days.


you still get Medicare at 65 regardless of when you take your SS.


t.

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17757 of 19483
Subject: Re: Question for Retired Fools Date: 7/30/2012 2:07 PM
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buying dividend stock to cover my expenses

In the current market with interest rates so low, dividend stocks--especially those with a history of increasing their dividend--is the best you can do. Most alternatives are higher risk.

I heard a speaker on CNBC recently saying that so much money has gone into dividend stocks that their prices now are quite high. That implies as interest rates rise (whenever--perhaps 2 years out or more), and investors decide they can get better yields or have better opportunities elsewhere, and sell, dividend stocks could take a beating as lots of sellers stampede for the exits.

In brief, dividend stocks could be a bit of a bubble. But you would think yield concerns would keep that bubble from getting very large. But still, its something to keep an eye on.

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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: 17791 of 19483
Subject: Re: Question for Retired Fools Date: 9/2/2012 3:04 PM
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I've managed my own IRA since 2000, when we retired, and have managed to beat most "normal" return measurements. I buy and sell, or let dividends come in, depending on what works.

Some dividend stocks have done very well and may continue for a while. On the conservative side, AT&T, GE and B&G Foods (and some others) have been good to me. On the wilder side, some REIT's (like AGNC, NLY, and others) pay outlandish dividends for now, while interest rates are low. But one must be nimble and pay attention to one's investments!

Note: I am NOT an investment counselor, nor do I suggest anyone follow what I recommend!

SS is our main income source, but I withdraw a little from my IRA as I need it, having it go overnight to my checking account, up to maybe $10,000 or so a year. I do not stick with the famous "4%" rule.

By the way, we have paid NO income tax for 3 years now (using TurboTax and filing peoperly) -- state or federal -- so no complaints.

I feel strongly that people need to LEARN and pay more attention to their own investments than they do to the latest TV show. Sadly, a lot of people don't do that.

Good luck.

Vermonter

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Author: fleg9bo 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: 17792 of 19483
Subject: Re: Question for Retired Fools Date: 9/2/2012 4:18 PM
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I'm not retired yet myself, but was wondering how the retired have managed over the last 10 or so years when the market essentially gained nothing in the first decade of this century.

I don't see how anyone who retired in 2000 with what they thought was enough money to live off going forward would have been able to stay in retirement if the market didn't gain any.

I'm just curious how any retirees who may have been in this situation have managed over the last decade. I've heard that a lot of retirees had to go back to work at least part time.


I retired in 2000 at age 53, near the end of the year. I was fortunate in that as a resident of Silicon Valley, I was well aware of the irrational exuberance of the late 90s and listened to a couple of financial gurus in 2000 who turned out to be right about the market top. I sold 90% of our stock holdings and sat out the recession with the cash earning interest in a Vanguard money market fund until I was fortunate again in getting back into the market very close to the recession's bottom.

Since my own stock-picking prowess was not all that great, I went with two managers in late July of 2002, both of whom I'm still with. One is Fisher Investments, which has just managed to match its benchmark (Morgan Stanley World Index) net of fees since my inception. The other manager, Private Management Group, has done much better, generating an internal rate of return of just under 200%, or nearly tripling what I invested with them.

We got hit like everyone else by the last recession but didn't sell anything at the bottom. We are not all the way back to our 2007 highs but it's enough. Since DW joined me in taking Social Security early, we live comfortably but far from lavishly on SS plus about a 2% withdrawl from our portfolio. That provides some comfort since a calamity that cuts our portfolio in half would still keep us at the 4% withdrawl rate. When DW joins me on Medicare in a year, our combined health-care savings will come to around $8,000 per year, an added cushion.

--fleg

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Author: telegraph 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: 17793 of 19483
Subject: Re: Question for Retired Fools Date: 9/2/2012 4:36 PM
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"I'm not retired yet myself, but was wondering how the retired have managed over the last 10 or so years when the market essentially gained nothing in the first decade of this century.

I don't see how anyone who retired in 2000 with what they thought was enough money to live off going forward would have been able to stay in retirement if the market didn't gain any.

I'm just curious how any retirees who may have been in this situation have managed over the last decade. I've heard that a lot of retirees had to go back to work at least part time."


----

Retired in 1999.......at age 52.5..... with a nice portfolio that was about 72% stocks...and 38% in bonds and CDs....

CDs did great for six or seven years...spinning off 5%. Had about 3% in tax free bonds spinning off nice non-taxable income.

Stock portfolio was spinning off 3% dividends....had some nice paying ones.

I signed up for SS at 62.

Had $4800/yr pension from GE starting at age 60..non inflation protected so took it immediately...no reason not to. That and the SS at age 62 paid most of the bills...well, about 80% of them if you include health insurance .......so could easily live on 2% SWR....and that was what the stocks and bonds were easily spinning off each year.

Then interest rates plummeted...but the bonds rallied....the GNMAs funds went up.....the TIPS fund went up nicely to compensate. Miss those 5-6% CDs, but the portfolio is still spinning off enough...

and at age 65, Medicare kicked in and I'm saving over 2000 a year in premiums on health insurance...and if I get sick, will save a lot more since I had a private policy with 2000 deductible and 30% co-pay up to 5K.

Life is still good, and absolutely no thoughts of going back to work.

Of course:

1) House was 'paid for' at retirement. So were my two cars. No debt.

2) Balanced portfolio...nearly all of it bought pre 1999....at least half of it bought pre 1990......but I saved and saved through the 1990s.....stashing away 35% of my paycheck each year. The stock gains through the 1990s did my portfolio very good.


Yeah, I took a hit.....but not that bad as the bond funds and REITS rallied......and for half of the 2000s, still had those nice 5% CDs kicking off nice interest each month.

If you lived in an area where you house plummeted, you were expected to cash out and retire elsewhere...you likely got hurt. our houses in Dallas area dropped 3%.....but never went up 10%/yr for a decade like Las Vegas or CA or south FL...... so it' not worth any more than it was in 2000.

Had a few stocks 'bought out'....but re -invested those funds, but had to pay cap gains that year on Lubrizol and some others. Got nice gains out of buyouts.

Life still good. Living off SS, interest and dividends from portfolio.....


t.

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