If someone on here is a financial advisor then I would love to hear a professional opinion on this. Right now, treasuries are yielding 3.5%+. Once could set up a T-ladder and preserve capital while getting a very good return. A more sophisticated strategy could be adding on some TIPs to hedge against inflation.
I am still quite a bit away from retirement but always good to hear from people like @SOSConcern that are dealing with it right now.
Per the ladder comment above, @SOSConcern - ask you planner if it would make sense to pick two different terms (5year, 10year) for the new annuities.
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Right now I have some money in SWVXX (Schwab Value Advantage Money Fund). The 7 day yield is 4.27%, and I can access my money immediately or change it into something else if I choose to. Iām hard pressed to find anything better than that right now, with the yield and flexibility. Itās nice not to be locked into anything right now, as you never know when you might want access to your money, when you hadnāt planned for it. We just closed on 33 acres of forest/timber land nearby, that wasnāt even on our radar a couple of months ago. I wouldāve hated to borrow for that, at current rates.
Trying to respond to @1dadinNCās post.
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The 10 year product is a good pick, and we donāt need the capital in the next 10 years (or even more).
We have a 401k that typically has grown and grown - and we āspin offā from that, with annuities that provide us some cash flow ā we donāt need a lot. We increased our monthly draw from one annuity $800/month just to build up some money in our checking account for projects/home. Our 401k is recovering some from 2022, but is at a very comfortable level for us.
We can always draw off funds from a number of our funds. We have Roth IRAs for example.
We are both 66, with fairly good health, and plan to be in our home at least another 10 years. However we have a fair number of annual MD visits to specialists including our twice a year visits to PCP. I just added another specialist - at least for an initial visit. We found out we both have cataracts but they are not currently affecting our vision. When we do move, consideration on the physician/medical care is big for us. DD and I are both BSNs and know what to look for.
The one thing we are looking to do is to help (some) with DD2 home acquisition in a few years when she saves up more and maybe when interest rates are better - she is not in a rush as she is single and rents a condo below market prices (her rent only went up $100/month last year) - the condo is close to work and in a safe area.
DD1/spouse are years away from being in their more permanent location.
It all depends what one has as plans for travel etc. and how much their lifestyle costs them. DH has no desire to travel - he traveled enough with work. I may travel just a little - it usually involves travel to family or family events. DH does come with the family events, and I am going to spend a fair bit of time with DD1/kids while her H is away with training. Sometime in 2023, DD1ās whole family will have a move to her Hās permanent duty station (Army) - 4 young children can use the grandparents. When they live further away the trips may be less frequent and also take more planning.
One does need some thought into how one is going to structure their retirement funds, and what is comfortable for them as far as their level of involvement (managing themselves or utilizing financial services).
Our financial advisor had presented something over the years that has worked out for us. Our āriskā number is at a comfortable level for us - and the way we got our risk down was with annuities, and also the funds financial advisor manages (we continue to manage one sizable 401k).
We started with annuity products in 2013 - thus the two maturing this year (10 year products). We only began taking cash flow from annuities one year ago.
Last yearās numbers with the 401k actually had an impact on the 10 year return in the 4 fund groups we were in - we shall see how the markets do this year and next year. A new paradigm. Our risk is spread with those four fund groups, but the two that have had excellent returns have not had much lower downturns than the other two funds on the downturn. A few years ago I had noticed this and changed from 25-25-25-25 to 10-10-40-40.
We are fortunate in that our home is in a highly desirable area, and the job growth in our area continues to be high. DH is involved in an area activity that he doesnāt want to move away from for a while. I will want to be near the grandchildren when the parents are in their final career location ā because that will be quite a move, with downsizing and getting rid of a lot of stuff we donāt want to move. Will look to time our purchase and sale. We have 9 more years with a 2.5% interest rate on a portion of our homeās worth (I actually wish I had drawn out more, but we also have a low monthly mortgage payment). That money is also another ābucketā of money which can be used, if needed, w/o a problem.
Thinking more about āestate planningā. With a small family (just two DDs), we do have some additional thinking to do on this.
We like to keep things not too complicated.
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Argh!! My state used to have a tax break for public pension payments, which was repealed in the last administration. The current administration wants to reinstate the tax break, extending it to all pension payments. But not for 401k/IRA distributions. 401k/IRA distributions were part of it initially, but somehow that got left behind on the way to the floor. There are a lot of us who donāt have defined pensions ā¦ how is it fair to just leave us out of the tax relief? Weāre more vulnerable than those with guaranteed pensions! I realize lifeās not fair, but this stinks.
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@busdriver11 - Itās good to hear youāve closed on a timber parcel. Good luck with it. To satisfy my curiosity I looked into timber sales and it turns out they can be treated as (long term) capital gains. So doing it outside of your retirement account should work well.
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Thank you for looking into that, I hadnāt even thought about that aspect. They estimated that we could cut mature timber down right now and after costs, it would cover almost half of the sales price. But itās a beautiful property, within commuting distance of Seattle, so we definitely wouldnāt clear cut it, just thin it out. Now you have me thinking about a way we can wrap this into our tiny property company and write off some of the new tools my husband is purchasing to clear paths on the land. Hmmā¦thanks for giving me some ideas!
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I donāt know anything about the timber harvesting business but I expect that a harvesting company would want to clear cut the land and pay you a fraction of what the timberās really worth, and if you were to do it yourself, selectivity, you could maximize both the value of the land, and the return on the timber. All while finding a nice deductible way of paying for some fun equipment.
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Funny, my husband wanted to cut down some timber himself when we first put an offer on this, as heās pretty handy with a chainsaw. I nipped that one in the bud immediately, mentioning the liability, danger and logistics of cutting down huge 62 year old trees. Do we really want to expose ourselves to those kind of problems and spend our retirement days that way? Nope. A logging company might prefer to clearcut, but weāll get a forester to help us identify the trees we wish to cut down, and I certainly donāt expect anyone to work for free. The logging trucks and equipment, the manpower and skill provided is worth paying for. Iām too old, lazy and risk adverse to become a logger!
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What is it with men and power tools. Weāve got a large property (3.5 acres) and my H bought himself a log splitter. We have an area that we want to clear for gardens. H had the tree guys take down the trees, cut them up, and grind the stumps. H now is using this splitter to make fire wood. Honestly itās a scary piece of equipment and H loves it. I just keekp picturing his hand cut off or something. H says itās his way of dealing with stress???
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All our annuities have done well, except the Allianz which did fair/less than fair - IDK exactly how they could determine/calculate their cap rate, but it was well below what was expected. So, advance warning to stay away from Allianz annuities.
The annuity we just went into - another company had a bit better āpictureā - but their administration has been slow/nonresponsive to getting an annuity processed.
Along the way with retirement assets, one has to think risk - return - liquidity - personal risk level - plus lots of individual circumstances.
Have a few things I want to think about, and action items ā and as a retiree, will work with the things I want to work on w/o stressing about a short time line. Heck, DH or I may kick the bucket and leave a lot of loose ends, but there is plenty of assets and the kids will know we did very well by them.
No kidding. My husband is always looking for an opportunity to use his array of battery-powered chainsaws! Freaks me out. Heād be all over a timber parcel purchase to keep busy in retirementā¦ shhhā¦ donāt give him an idea! 
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Oh yep, got one of those battery powered chainsaws. They actually seem pretty safe and easy to use, donāt worry! Youād better not tell him about this one, itās probably less than 40 min from your house. And I think thereās another 40 acre parcel for sale about a mile from ours, but itās clear cut, so no need to worry, heād be bored with that, no cutting off body parts involved. Maybe doing something like this would finally get him to completely retire, though?
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Logging is one of the most dangerous jobs in the US, according to Top 25 most dangerous jobs in the United States | ISHN
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Loggers are among the top three professions with highest job satisfaction and happiness.
https://www.washingtonpost.com/business/2023/01/06/happiest-jobs-on-earth/
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Yep, definitely a happy bunch:
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I canāt post a gift link; I ran out of them.
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I thought those Allianz annuities were supposed to pay ver well? Their cap rate should be very clear and easy to figure out, so if youāre getting the runaround and earning much less than you expected, I would take a deep dive into the fine print and follow up on this. I would also talk to whomever sold you the annuities and ask them what happened here. Donāt let anyone get away with scamming or lying to you, as an ethical concern, if not concerned about the money.
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We did get an explanation. I believe Allianz was able to manipulate certain things so that the information leading to the cap rate kept our earnings down. This was a discovery process with Allianz - and our FA will never trust Allianz again on what is in print and how they can manipulate things so they follow what is in print but not really provide the return expected from them. Some people found they needed to get out and get into something better - and even with the forfeiture fees made out better getting out. We were within a year of maturity, so our forfeiture was just under $1000 on one and under $900 on the other. We are going to higher cap rates that are proven with another company (Midland National) - but there are about a dozen products under Midland National. We reviewed all the info with our FA.
All our other annuities (3) are doing very fine. Our Midland National are 10 year, and we are back up to 5 annuities once we get the contract acceptance back from Midland National.