Retirement questions....What are you doing to prepare?

[disneysteve]

Re: Retirement questions....What are you doing to prepare?

Sounds like a good plan, CJ!

[Frugal Father (tm)]

Re: Retirement questions....What are you doing to prepare?

Straight to the point. We down sized from house to a condo, smaller mortgage and low fees( it cost us more to up keep our house up becuase of arthritis and respitory issues, in a condo for a small fee its done for you) that savings goes towards debt. Cut some utility costs that savings goes to debt, cut cable costs,lowered food bill,forgo gifts etc- all goes to debt. Bring debt payments over to next debt ( will be our mortgage) to pay off or lower significantly. paying off debt is the best return on money.
We invest , my wife has a nice 403b I manage, she also has 2 pensions plans that are private and not subject to the same things other people had to go through in recent years.
We invest/dollar cost average into several T rowe Price mutual funds and rebalance as needed - we did lower the amount going into the funds to pay over and pay down debt as well.

Not ccounting on social security. we are counting on moving at retirement possible into a rental community ( like a condo but you rent, no mortgage) Grandma set up a Ed IRA for our daughter and we set up a fund for her future. will contribute till a certain amount and then let compound/ Scholarships or online college maybe in the fure for our kid.


Thats it for now, T rowe isa great company and no load/low fees.

[jmjj215]

Re: Retirement questions....What are you doing to prepare?

Right now I'm keeping it simple, maxing out the match on the company 401(k), maxing out mine and my wife's roths, and putting anything extra toward the house downpayment.

[Cheetahwoman7]

Re: Retirement questions....What are you doing to prepare?

Ok, contacted another one of my mutual funds. It's actually doing pretty well. Up over 14% this year. Can't say the same for the other funds. Anyway, they're sending out the quarterly report next week and I'll take a closer look at that fund as well.

The funny thing (or neat thing, depending on how you look at it) is the fund that's doing so well is also one that's offered through my 403(b) program.

I can't wait to look through and see where to put my investments. I've been surfing around the net trying to find out more about allocating a certain percent of my funds into specific areas, like bonds, small and large caps, international, etc. I even tried out the Vanguard Allocation site that was recommended in this thread. It said that I should have 60% in mutual funds (although not specifying which), 40% in bonds and 0% in cash, which surprised me.

Like I said before, once I get all the info and have a chance to read it, I'll contact the Allocation Specialist that provided by one of my funds so I can have a better understanding of it all.

CJ

[meaghanchan]

Re: Retirement questions....What are you doing to prepare?

Ok, contacted another one of my mutual funds. It's actually doing pretty well. Up over 14% this year. Can't say the same for the other funds.

You've learned something very important- the highest-performing funds of today are the low- to average- performing funds of tomorrow. (paraphrasing John Bogle; I can't find the exact quote at the moment.) In your case, it was the high-performance funds of yesterday that, with the exception of one, are the low-to-average performing funds of today.

Buy on fundamentals, not past performance.

And once you get the quarterly report and begin looking at the funds you have in more detail, make sure you're comparing them to the appropriate indices. If you own a bond fund or a balanced fund and it didn't go up 14% this YTD, that's not because it's a bad fund- it's because its growth potential is less than an all-stock fund (but its risk is lower too). If a fund only grew 5%- but it did better than its index- you're doing great. If a fund grew 14% but its index grew 20%- it's not a great fund.

Anyway- now that you have a target asset allocation, you can begin constructing an investment plan that fits within the allocation. Are you happy with the 60/40 split Vanguard gives you? Remember that it's a starting point, not a final answer. You may choose to be more aggressive or more conservative than that. Also, keep in mind that this is just for your retirement portfolio- they're not saying you shouldn't have cash in your emergency fund.

The 60/40 split Vanguard reccommends isn't necessarily mutual funds/bonds; it's stocks/bonds. The balanced funds you have might be 60/40 already. You can use a service like morningstar.com's portfolio analyzer (the free part, of it- no need to pay the premium services fee) to find out your current stock/bond split. Then you can begin tweaking what you have to meet your desired allocation. (Or, if you have a lot of expensive, underperforming funds, just sell 'em and build a portfolio from scratch! Remember that just because you have an IRA with one company doesn't mean you can't move it!) If you want to own some international equities, make sure that fits in your allocation too... a 60/40 stock/bond split can become a 40 US stocks/20 foreign stocks/40 bonds split, just as an example.

Just one more link: A discussion on a morningstar.com forum, entitled "Long-term investing and planning concepts . Covers some of the basics- and not so basics- very well. I'd also like to reccommend a book I've been reading a lot of lately- "The Bogleheads' guide to investing" by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf. I've learned a lot from both these sources. And while I'm just getting started and really don't even have the money to put together my desired asset allocation plan yet, I have a plan and am confident of it, and for me, that's really important.

[disneysteve]

Re: Retirement questions....What are you doing to prepare?

Ok, contacted another one of my mutual funds. It's actually doing pretty well. Up over 14% this year. Can't say the same for the other funds. Anyway, they're sending out the quarterly report next week and I'll take a closer look at that fund as well.

Just wanted to point out that since you obviously have internet access, all of that information is available online. I never call any of my fund companies. I handle everything entirely online. Each fund family has a website that lists all of their funds, prospectuses, performance data, fund holdings, etc. They also tend to have general finance info, calculators, planners and more. You should check out and bookmark the sites for each fund you invest in.

[MonkeyMama]

Re: Retirement questions....What are you doing to prepare?

What is the minimum income amount you think you'll need monthly to retire comfortably or in the manner to which you're accustomed?
This is hard for me to answer because we are young still. I would guess today we could live pretty comfortably on 30k. But that is assuming mortgage is paid off, kids self sufficient, etc., etc. When we retire in 30-40 years - who knows. I Assume a lot more.

What are your specific retirement goals/plans? For now I am trying to set aside as much as possible. That was my only goal until recently. Today I am really focusing on my investments - making sure I Am investing wisely and getting a good return, etc. I originally envisioned us retiring closer to 50, but these days I am not sure how long my husband will be out of the workforce and that is a big factor. For now I am just doing the best I can to set aside the most we can. There are too many what-ifs today to do much else. Of course we want to have the mortgage paid off well before we retire, etc.

Do you have your money in various types of saving programs? If so, which and why those particular programs? 401k, profit sharing and IRAs. I like the IRAs the best as we have the most control over them. Just cash and stock mutual funds for now. 401ks and profit sharing beause they were offered by employers.

What are some of your concerns when it comes to retiring? My biggest concern is healthcare. We may not be able to retire until we are eligible for mediare. We have never had very good (if any) coverage through our jobs and I Can not imagine at 50 covering the costs as they stand today - say if we could retire at 50. Though part of my strategy is to maybe geta healthcare job - if you can't beat them, join them. OR get a government job that has good benefits. For now I love my job too much, but in a few years it will probably be gone and my hubby will be looking for work so we are taking that into consideration with our next jobs.

What things will need to happen for you to get there? A lot - LOL. All the unforessen future scenarios strike me as big stumbling blocks to retirement.

Will you downsize your home?
Move to a different location?

Probably. I hesitate to make our home part of our plan, though as it stands now we could sell ane move out of state and retire at 50 easy, if not sooner. So it is there in the back of my mind. We will certainly downsize as we don't need such a big home once the kids are out of the house.

We have relatives that originally planned to move out of the Bay Area as a significant part of their retirement - our parents both own $1 mil homes outright, which they paid little for ages ago. BUT surprisingly both of our parents look like they will settle where they are. It amazes me they are willing to give up that potential income particularly because my mom has always wanted to move back home to Colorado, etc. For this reason as nice as an emergency or backup plan it is to cash out the house, I do not make it part of my initial strategy. Anything can happen.


Anything Else?

I don't consider social security a potential income source. IT will be nice if it is there, but not coutning on it.

[disneysteve]

Re: Retirement questions....What are you doing to prepare?

our parents both own $1 mil homes outright, which they paid little for ages ago. BUT surprisingly both of our parents look like they will settle where they are. It amazes me they are willing to give up that potential income

It isn't "income." It is their home. Big difference. I think far too many people today are looking at their homes as investments and counting on the value of their homes for retirement income. It doesn't work that way. We become very emotionally attached to our homes. It's where we've lived, where we've raised our families, where we've celebrated and grieved. Selling it just to get the money out isn't an easy decision.

My 76 year old mother recently moved from the only house she and my father had ever owned, since 1955. Finances had nothing to do with her move. The house was just too big for her to manage anymore and the neighborhood was going downhill. Still, it was a very, very difficult decision. She debated it with us for about 2 years before finally doing it. She loves her new place, but there is still a great deal of sadness about losing the house, even though she is financially far better off without it.

So I think a lot of people who are looking at their house as a big chunk of their nest egg are going to have problems down the road when they realize they love their home and don't want to leave it, but are forced to because they need the money.

[MonkeyMama]

Re: Retirement questions....What are you doing to prepare?

Cheetawoman - I think I am on par with you. I am just looking at my investments as I haven't really paid any attention in the past. We put a lot of money aside - but means little if it is not managed well. We're 29 & 30.

Someone recommended Suze ORman's YF&B book on my blog which I happened to have laying around and had some good initial advice on mutual fund investing. On asset allocations AND mostly she recommends index funds. I just bought a couple of other books, but I imagine most of my portfolio will end up in index funds.

Our investment advisor & brokerage are out the window. Best thing I have learned since joining these boards. Our investments have averaged 1% in the last few years, that is before fees. We bought mostly at the peak in 2000 or so, so it is good we have not lost any money. but looking back if we just did it ourselves we would be way ahead today. I guess we are lucky we are breakeven with all the fees.

Ah, it feels good to wake up and take control over my financial future.

Good Luck!!

[MonkeyMama]

Re: Retirement questions....What are you doing to prepare?

I think that is why I am so amazed DisneySteve - both our parents have always said they would move right up until recent years, because they wanted to move back closer to their own families, etc. and now that they probably aren't I Am learning from them. If they aren't going to do it, what are the odds we will?

[Cheetahwoman7]

Re: Retirement questions....What are you doing to prepare?

Hi MonkeyMama,

I have a couple of Suzi's books too. Been way too long since I read them (or did I read them? maybe just skimmed?). Time to take them out and have another looksie. I'm like you in regards to trying to look at my investments are REALLY find out how I can make them work for me.

In recent years so many things have happened in my life that make me realize I need to get EVERYTHING in my life squared away...not just the finances. Having watched my mom die in a very slow, bit by bit way over a two year period and then having to deal with all of her stuff after her death, it kind of woke me up out of my slumber through life. I'm already trying to downsize the things that I have. It's taking some time because I have to decide piece by piece. Like DisneySteve was saying about his mom, there's a lot of emotional attatchment that you have to work through, whether it's a house or "stuff" you're deciding to get rid of.

All in all, it's a long, difficult process for me. I don't have a husband or significant other to support me in all of this. I guess y'all are my cheerleaders, helping me take a step each day towards my goals. I'll get there and having the support makes all the difference.

Anyway, thanks to all,
CJ

[Ima saver]

Re: Retirement questions....What are you doing to prepare?

I have planned to sell my house and use some of the money for retirement. I want a smaller house on a wooded lot with little maintenance. I bought some of my mutual funds about 18 years ago. I still have a few of them, but I am leaning towards going more into index funds! I have all my IRA's in Index funds, but no non-retirement funds are in Index's. I think i will open another Index fund and start making non retirement investments into that.

[MonkeyMama]

Re: Retirement questions....What are you doing to prepare?

I just remembered when our parents decided not to move away - when they had grandchildren. The time seems to coincide - LOL. They looked forward their whole life to move back home, and decided they had lived so long without their parents, better to stay with their grandkids I guess. Just thought it was cute when I put 2 and 2 together. Though no telling where we will end up.

[disneysteve]

Re: Retirement questions....What are you doing to prepare?

I just remembered when our parents decided not to move away - when they had grandchildren. The time seems to coincide - LOL. They looked forward their whole life to move back home, and decided they had lived so long without their parents, better to stay with their grandkids I guess.

This is pretty common, actually. I know a few people that this happened to. Retirement plans can change, even once you are in retirement. That's why it is so important to save adequately. Money doesn't buy happiness but it most certainly buys options and opportunities.

[amberbamber]

Re: Retirement questions....What are you doing to prepare?

[QUOTE=Cheetahwoman7]

What about everyone else?

I think about retirement ALOT!

What is the minimum income amount you think you'll need monthly to retire comfortably or in the manner to which you're accustomed?

Right now I would say around $1800, but probably more like $2000-$2500

What are your specific retirement goals/plans?

I haven't thought about specifics yet. We plan to retire when my DH is 55. So 25 more years.

Do you have your money in various types of saving programs? If so, which and why those particular programs?

My DH has a 401(k) and we both have IRA's and I have a roth IRA. DH's company matches his contribution 3%. We were putting $50 a month into each IRA but stopped about 6 months ago to get our debt paid off. Probably not the smartest thing, but right now we need the debt paid off.

What are some of your concerns when it comes to retiring?

Healthcare and Social Security being around. (not that we plan on living on it)

What things will need to happen for you to get there?

Saving, saving, saving!

Will you downsize your home?

We have already. Hopefully we'll be able to UPSIZE in 5 years or so.

Move to a different location?

Not sure, we'll move wherever our kids are