Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Next Thread
Author: kaser Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19412  
Subject: retired with Variable annuities Date: 10/13/2000 11:23 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
I am 56 and just retired with enought money to live on with my pension. The TDA (variable annuity) isn't growing as fast as I think it can (obviously a relative statement). I have been reading Tyson's book on Mutual Funds for Dummies and just started to read the Fool. I would like to see this money grow, but middle of the road. Perhaps in five years I would like to use this money to buy another home on Cap Cod, MA. I would maintain residency in NY with the no state tax on pensions (unless I find that Mass. does not tax my pension). It appears that I should buy no-load mutual funds and not pay for loaded funds. Is this sound strategy and how do I proceed next.
Is a financial advisor useful for initial guidance in making these decisions?
Should I just look and try to find the house on the Cape soon and that will be an investment as well as something extra for my wife if I die; since she is not part of my pension? We do own our home totally. My wife will work another 8 years.
Richard

Print the post Back To Top
Author: jtmitch Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5302 of 19412
Subject: Re: retired with Variable annuities Date: 10/16/2000 3:39 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
Richard --

You have quite a few questions in here and I will give you a short opinion on the ones I see. But your main need right now is to educate yourself (through the Fool and other sources you can access on your own without paying anyone.) The main thing you need to keep in mind is that you don't need to be hasty about doing anything (but don't procrastinate either.)

I am 56 and just retired with enought money to live on with my pension. The TDA (variable annuity) isn't growing as fast as I think it can (obviously a relative statement). I have been reading Tyson's book on Mutual Funds for Dummies and just started to read the Fool. I would like to see this money grow, but middle of the road. Be careful with variable annuities. Since the money is already in one, you will pay ordinary income tax on any gains if you withdraw the money to put it into a non-annuity mutual fund. In addition, since you are under 59 1/2, you will pay a 10% penalty to Uncle Sam on any withdrawal. In addition, your annuity might have surrender fees that need to be paid. You need to study up on annuities and make sure you know what your contract specifies. Without knowing any more, if you are unhappy with the performance of the annuity, I would consider a 1035 transfer to a low cost annuity that offers a good choice of subaccounts. TIAA-CREF and Vanguard are the preferred ones, in my opinion.

Perhaps in five years I would like to use this money to buy another home on Cap Cod, MA. I have a home on the Cape which I inherited from my parents; my long term (2 - 3) plan is to retire to the Cape (although not to that house.) Cape property is very high right now (it always is when the times are good.)

I would maintain residency in NY with the no state tax on pensions (unless I find that Mass. does not tax my pension). As I understand Mass law, there is no state income tax on contributory pensions; however, if it is a pension to which you did not have to contribute (like a military pension), you will have to pay Mass. tax on it.

It appears that I should buy no-load mutual funds and not pay for loaded funds. Is this sound strategy and how do I proceed next. I don't know if this question is intertwined with the earlier one about your annuity or not. In other words, is your mutual fund strategy part of or in addition to whatever you are going to do with the annuity? In any event, I see no reason to pay for loaded funds. See my comments about educating yourself. I would look at Vanguard and TIAA-CREF for low cost, high quality mutual funds. Vanguard generally has lower expenses and greater choice of funds but TIAA-CREF is very strong as well.

Is a financial advisor useful for initial guidance in making these decisions? Maybe; maybe not. But probably not; read http://www.geocities.com/WallStreet/8257/feeadv.html as part of your educational process.

Should I just look and try to find the house on the Cape soon and that will be an investment as well as something extra for my wife if I die; since she is not part of my pension? Are you going to use the house regularly yourself or rent it out? Summer rentals bring in big bucks (on a weekly or monthly basis) but there are cleaning and maintenance expenses. Maybe even agent expenses if you need someone to help you find tenants. Also, not everyone who rents your house on the Cape during the summer is as interested in keeping it as pristine as you are. The year-'round rental market on the Cape is very strong and my personal experience says that you make almost as much money with less hassle renting your place that way. You also ensure it isn't empty all winter. Of course, it then becomes just an investment and you don't have the use of it. I am planning to sell my house and just buy another one when we get closer to moving there. Although I have had good luck with my tenant for the last 5+ years, she has vacated the house and I am afraid the law of averages will catch up with me and I'll get a lousy tenant. If you are trying to look out for your wife if you die you also need to consider whether she would be better off with a real estate asset (which would be both difficult and expensive to sell) or stocks/bonds/mutual funds which she could sell with a phone call.

Since you are now retired, you will have plenty of time to research some of these questions and I think you should do so before you act. There is a wealth of information on the Retire Early Home Page discussion board on the MF as well as on the site to which I gave you a reference above. Hope this helps; I'm just about your age, retired once and looking toward becoming fully retired before too long. Maybe we'll run into each other on the Cape!!!

jtmitch

PS If you want to take any discussion of the pros and cons of Cape real estate off-line, fee free to email me by checking "e-mail this reply to the author" and unchecking "post this reply to the boards."

Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post Back To Top
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Next Thread
Advertisement