How Much Do You think You Need to Retire/What Age Will You/Spouse Retire: General Retirement Issues (Part 2)

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4550

Have you asked him to draw up some various scenarios? We ask our guy to run different numbers (rates of return and inflation). At this point, I’m most worried about inflation so I’ve had him run those pretty high. That picture isn’t pretty. But even low returns are ok with me.

I also bring a print out of the stock returns for the dates he is showing us so I can compare and ask questions. I have a whole list of questions and do make him go through each and every stock. Hey they are making quite a bit so I want to know how and why they are investing in each stock.

Our guy is totally counter to both our personalities. He is very steady state. This has proved to be a good third opinion. We usually follow what he says but not always.

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4551

It’s funny speaking of costs decreasing after the kids are out, maybe when they are gone to university, your in house costs decline, but once they are around, especially with grandkids, I see costs going up and up. From groceries for all the family meals with local kid families to travel costs for those far away, there is no end to the ways I can spend on grandkids.

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4552

We planned for the same “expenses” in retirement. But of course that excludes the large amounts we used to set aside for 401k, college savings/expenses. Also we got the mortgage paid off prior to retirement. which helped. We did need to add back for medical (previously we’d had payroll deduction) and make a plan for car purchase (which we do rarely, with cash). The reality though is that some years we may spend even more due to travel, home renovations etc. We have resources to cover that.

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4553

This is a big year for expenses for us. Major renovation. Wedding. Daughter moving back to our coast whose stuff burned in the moving van. On the flip side, only two vacation-y trips (and one of those is definitely tax deductible). I wonder what next year will look like.

@colorado_mom, I have never thought retirement will be less expensive. Just some categories that would have been paid for my company (which I own) will now be paid for by me individually.

An investment advisor once described retirement as consisting of the Go-Go Years, the Slow-Go Years, and the No-Go Years. I think one trades off things like traveling (to visit kids and have great times with one’s spouse and/or family) for help in doing stuff. Less help in the Go-Go Years (we hire gardeners etc.) to more help in the Slow-Go Years to probabiy a fair amount of help in the No-Go Years.

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4554

If you start out the meeting with the Financial Advisor saying we have some things to interject first about changes (like your monthly spending - including money you want for travel and other extra expenses for the year), and have FA show how these change projections. If FA needs another meeting, so be it. We have some cash build up in our checking account, which we are comfortable with.

Our FA will show us everything we want, answer all our questions.

We get ‘state of the market’ updates twice a year in groups. I usually schedule our FA appointment a bit after this presentation so information from the state of the markets is somewhat fresh.

Sounds like your FA is giving a ‘standard spiel’ that satisfies most people. Hard to tell how well this FA ‘knows’ you and your financial plans.

Things are in a much changed situation this year. The inflation as a start.

‘Our money is doing fine.’ That is good. But you do need to tell him about any changes in spending, and drawing off the money you want to draw off - along with a discussion – and him real time showing how you can spend more money and still be OK with the long projections. (Some of this may be a need for husband/wife discussions so the two of you are on the same page). FA should be advising you on where to draw the money off of and have a way to do so for you.

We have access to being able to pull up info from our data with a log in going into FA’s software. DH does print out a monthly summary (1 page).

We are ‘riding out’ the stock market situation in our 401k - the January 2022 downturn had us looking at making any changes – but already had a decline and also don’t want to miss the best trading days/increases. FOMO - fear of missing out.

FA is managing risk (focus on managing drawdowns) and capturing opportunity – so our money with FA is under more managed care; hoping to minimize losses and maximize gains.

However the largest portion of our retirement funds are in 5 different annuities (we are drawing off monthly retirement income), and in our 401k (not under our FA). We have spun off funds from 401k to purchase the annuities - when the timing has been ‘right’ for specific annuities. I don’t like our 401k to get too large - because we need to have some of that money in ‘safer’/less risky investments. So when the timing is right to purchase an annuity - that is done. July 2021 we purchased a $250K annuity. Previous years we drew off money from 401k for annuity purchase in 2013, 2015, and 2018. Our 5th annuity is with spouse (me) from IRA funds. The difference in our 401k between 1-1-2021 and 1-1-2022 was $192K (showing how the annual return of 15.2% for 2021 made up some of the difference with the $250K withdrawal).

In mid-July 2022 we had our state of the markets presentation. Gave a lot of facts and data. I am a note taker, and took 4 pages of notes. In the past, we sometimes were given a hand out of the presentation, and I am sure one can get them emailed. I learn by writing down and then reading through my notes.

We do not have any pension income, so our annuities provide that kind of safety source of retirement income.

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4555

I like this. I have a close friend whose parents planned very well for retirement. They planned travel 65-75, Slowing down 75-80 and no go (one is still active the other died). The great thing was, their plan included spending a lot for travel upfront.
For us, we’re slowing down on Go-go spending
( thing like weekly cleaning, the full gardening services which got extremely expensive when inflation reared it head, and even buying cars frequently.). Our goal is to make sure we have enough for our retirement given hyperinflation.
If inflation goes back down in a few years and we feel more confident about the state of the market and economy, we might spend more on these nice to haves.
For the moment, our goal is paying for college. Then we’ll see where we are. We are in our 50’s so in very good shape. But also realistic that inflation could be a huge hurdle. So having no debt, fully paid education for kids and fully funded retirement is key.

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4556

I quit looking at my 401k for a couple of months because it was depressing when the market was down and I wasn’t going to change anything so why bother. I didn’t need to track the carnage, you know? Finally, after an upturn in the market, I went back to check and I was within $1,500 of where I was when I quit looking. lol And now, I’m back to April’s numbers. People are funny. Well, I am anyway.

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4557

Interesting. What would get you to change something? Or are you someone that leaves it in the hands of the professionals? I have a friend who never opened 401K statements from 2008-2010. I could just never do that.

4558

Only an immediate need for money would get me to change something. Our FA has said that we never need to touch the 401k so I have it more heavily invested in stocks than someone my age probably should, but I see myself having a long runway with that money so I’m OK with the risk. It just got depressing seeing it drop and drop and drop this spring and summer.

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4559

So interesting. I’ve never touched any of our 401K or “retirement stocks” in 40 years. But I do play with moving stuff around within the 401K.

I keep a folder that has all of the totals for each account per month. I graph it every six months. A couple of times (like this Spring) the numbers have gone down, but then back up.

We also have most invested in stocks. Our runway is also long. IF I could buy muni bonds directly and some tax free bonds I would and hold them. I’m not that interested in bond funds, though we do have some.

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4560

I should say that I had a plan to shift a chunk of the money out of stocks to bonds when I hit a certain threshold. No lie, I was $1,200 from that number when things went south this spring. ARGH!!! But I’m not moving it now so …

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4561

What you don’t need to touch, if you have children to inherit, you may want to slowly have some of the 401k money go into Roth IRA during low earning years (easier on the taxes). Talk to FA about what to do to meet goals like this.

We moved some money into Roth IRA in preparation for RMD when we hit 72 (we are 65/66 now).

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4562

It is wise IMHO to review the funds and see how they do - at least maybe quarterly. I realized two funds did well even through downturns, so I had a bigger percentage in those two funds (each fund is a group of investments).

Be ready to do some oversight.

4563

What does everybody think about purchasing Longevity annuity. I know one guy from Bogglehead bought his when he was 80, I forgot his name, and now he’s 98. I’m thinking when DH turns 80 to buy this and get over with. No more watching the market. No more peeking. It’s who cares at that stage.

4564

We are postponing our Grand Europe Viking cruise in September due to the drought. It has become more of a bus tour instead of a cruise. Rescheduling for next spring will be more expensive but worth it for us.

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4565

That’s a bummer.

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4566

Annuities have a place in a retirement portfolio, but note that they are not inflation-protected. Taking $$ out of the equity market today to purchase an annuity has an inflation risk. (Equities tend to do ok during times of inflation, not so bonds.)

Also, annuities work well for folks with long-lived genes. People who purchase annuities tend to be in good health; insurance companies know this with certainty, so they price the annuity against an actuarial pool of healthies. To “win” with an annuity, you have to live longer than the average of the already healthy pool). If you are not in excellent health, the annuity only enriches your FA/broker – large, up from commission – and the company selling the annuity.

btw: you are probably thinking of Taylor Larrimore on BH, (but note he also has a government pension, so he has a lot of flexibility with his retirement portfolio.)

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4567

Thanks @bluebayou, that’s the person I’m thinking of.
I’m not thinking of today, but in the future, my husband is 71 and is in good health. His dad and uncle lived until 91 and 96 respectively. I’m also thinking when he gets to 80, so not buying now, plus I’m waiting until interest rate to go a bit higher. I plucked in some preliminary numbers and male has better longevity pay out than female, I wouldn’t get the same amount as my husband even at the same age. This portion is not Roth, he has Roth IRA that will be invested in stocks. But frankly all of his pensions have COLA, but not big pensions though.

4568

Yep, we do quarterly reviews. I adjust after talking to the FA. Usually just a few things but helpful and I think we’ve gotten better returns that way.

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4569

My father’s family has extreme longevity. A 99, 102, 100 and even my three pack a day grandpa lived til 93. But I’m sure these days that all that info is available online. They probably price it in, no? Anyway, my issue with annuities is why give it to an entity. I prefer to manage it and leave it for heirs if we don’t spend it all. But then again, if I was really old it might be worth it.
All does depend on the numbers though. If inflation were low as it had been for decades, I’d lean more into this product.

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