# What is your approach in retirement funding?



## Sippican (Jan 2, 2023)

With all the articles you read these days, and retirement calculators, there is still one number you can't fit into any equation to figure out if you have enough...when you will die.
I am an active investor in the markets and these days with the craziness of the economy, I find (in opposition of my financial advisors) that safe money is the right choice these days. I'm finding that a 4% return is a good return in these crazy times. So, I'm in Money Markets, and CD's. I'm getting 4.29% in MM, 4.25 & 4.50% in two CD's.
I get it, I may miss the upswing if/when the market turns, but I don't like timing the bottom and would be ok with catching stocks on the upswing.
Also have annuity, individual in-market stocks, pension, 401K
What are other folks doing, and is it working for you?


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## StarSong (Jan 2, 2023)

When working on retirement calculators for DH & me, I figure on us dying at 95 with a fair amount remaining to leave our beloved children.        

We are extremely risk averse and have almost no money in the stock market.  We lost a lot of principal in market downturns and have no stomach for another trip on that roller coaster.  Our funds are exclusively in FDIC backed CDs, I Bonds, and similar.  Don't need more than a 4% return.  

Presuming there aren't numerous years of double-digit inflation, our principal alone should carry us through.


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## Knight (Jan 2, 2023)

Sippican said:


> Also have annuity, individual in-market stocks, pension,
> What are other folks doing, and is it working for you?


My wife & I have that plus two soc. sec incomes.  27 years retired with more coming in than going out. 

I wonder if others plan for expenses they won't have in retirement.


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## Sawfish (Jan 3, 2023)

StarSong said:


> When working on retirement calculators for DH & me, I figure on us dying at 95 with a fair amount remaining to leave our beloved children.
> 
> We are extremely risk averse and have almost no money in the stock market.  We lost a lot of principal in market downturns and have no stomach for another trip on that roller coaster.  Our funds are exclusively in FDIC backed CDs, I Bonds, and similar.  Don't need more than a 4% return.
> 
> Presuming there aren't numerous years of double-digit inflation, our principal alone should carry us through.


Gosh.

This reads like *I* wrote it: risk averse; using a high age estimate, etc. Asset classes are a bit different. They are segmented and "silo-ed" based on expected year of initial distribution. Almost all are now Roths.

The age thing is funny. My wife has 100+ female longevity in both paternal & maternal sides of her family. Only my mom lived pretty old (94), and it looks to me that physically I'm much more like my dad, who made it to 76. Plus, my wife is 9 years younger, s the planning is based around her projected age.

So the calculations are for 105, based on her.

For now, we are living basically on income from rental properties plus my SS, with only a small RMD from one of my IRAs that we had not converted to a Roth. It is 6K. We do not expect to take my wife's SS until her max payout at 70.

I want to be able to pass the Roths along, as much as possible, to our daughter, after my wife passes away.

But who the hell knows, huh? Goals are good...


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## Sawfish (Jan 3, 2023)

Knight said:


> My wife & I have that plus two soc. sec incomes.  27 years retired with more coming in than going out.
> 
> I wonder if others plan for expenses they won't have in retirement.


Any kids?


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## Sawfish (Jan 3, 2023)

It's interesting to read back thru the Financial board here at SF. It is a litany of people having taken future needs seriously.

Really, that was pretty much all it took, too.  ALWAYS "paying" yourself first from incoming checks, with automatic deductions to retirement and various savings accounts (household slush fund, education, new car, etc.), and then staying within the remaining amount month after month.

We're not spontaneous people, however. If this is troublesome (very regimented planning, etc.) maybe it would be harder.


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## JustDave (Jan 3, 2023)

I was never an active planner.  For many years, I didn't make enough to be an active planner.  My career required a big chunk of my paycheck to be taken out for retirement, and another big chunk taken for Social Security, and way back when, I worked at a university that took money out for retirement, which I could not get back until I reached retirement age.  It wasn't much, but unlike Social Security, it drew interest, and when I finally realized I could actually get it back, it had grown by a factor of 20.  So I've got 3 sources of income, which gives me all I need and then some.  I also have a large savings invested mostly in iBonds that I just sort of ended up with, and I don't have to dig into that at all.  Not that I may end up just kissing it all good bye if I end up in a convalescent home for a couple of years.  But by that time, I probably won't care.

I remember when I started my teaching career, and the district's business manager was coaching everyone of us new employees about putting away just $100 each month, and by the time of retirement, we would have like a zillion dollars.  I think he made a lot of money, but probably had no comprehension of what new teachers made.  I believe my take home salary was less than $300/month, and saving $100 was absurd.  But over the years, I did other things, spent money wisely (more or less), and ended up with more than what I thought possible.


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## Liberty (Jan 3, 2023)

We have money both in the market with funds not individual stock ownership and with fixed incomes.  This year, even though the market was way down we were up and of course happy about it.  Like that compound interest...lol.  Einstein said it was the "8th wonder of the world".


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## mathjak107 (Jan 3, 2023)

Retired 7-1/2 years .

diversified portfolio of equity funds , bonds and gold ….

35% equities…..plus some pension income and social security.

no guessing or market predicting needed


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## Knight (Jan 3, 2023)

Sawfish said:


> Any kids?


Yes 3 sons.

Part of planning included 

1. Not feeding, not clothing, not providing for the care of 3 sons. By age 55 they would be out on their own. They all were. 
2. Not needing the expense of  two cars.
3. Mortgage free one year ahead of retirement at age 55.
4. Reducing the expense of clothing for jobs.
5. Property taxes reduced by 2/3 due to plan to retire in southern Nevada. 
6. Retirement home purchased 3 years before age 55 oldest son lived in it & paid mortgage.
7. Plan to use sale of 5 bedroom home on 8 acres of land to pay the outstanding mortgage on a 3 bedroom rancher. REALLY LUCKY Due to hot housing market in 1995 our home sold for 3 times more than we bought it. 
8. Sell everything so that moving expenses would be zero dollars. Use that money to buy all new furnishings & basic kitchen needs. Add to kitchen as needed once completely settled in. 
9. The unexpected large excess in #7 went into investments

It all fell into place. Now at age 81 & comfortable knowing our sons will get a decent inheritance we enjoy life.


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## Sawfish (Jan 3, 2023)

Knight said:


> Yes 3 sons.
> 
> Part of planning included
> 
> ...


Well done!

So my daughter was born when I was 50. She's now 25, currently living with us while completing her masters. She was in the workforce, out-of-state, for two years immediately after undergrad, didn't like her career path, so we offered to let her do the masters on the cheap.

Private schools all the way thru. No student debt.

No vacations such as anyone would recognize them, but that was fine with me due to cost.

No debt ever, outside of a) investment debt (RE); b) principal residence. No "consumer debt", ever.

The relocation plan, as I understand it (buy intended retirement home in advance of retirement, rent it out for break-even, sell primary residence, retire exiting debt on retirement home) was very similar to what we did in 99 for a place in Hilo. But after 6 years I realized that retiring there I'd not see my daughter as often as I'd like, probably, so we sold at a very large profit and did a 1031 into additional rental property.

Really, I just don't spend money, have no desire to do so any more.


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## Knight (Jan 3, 2023)

Sawfish said:


> Well done!
> 
> So my daughter was born when I was 50. She's now 25, currently living with us while completing her masters. She was in the workforce, out-of-state, for two years immediately after undergrad, didn't like her career path, so we offered to let her do the masters on the cheap.
> 
> ...


Sounds like similar pre planning.  Hope you live long in retirement & enjoy all the retirement years.


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## Lethe200 (Jan 3, 2023)

Started serious retirement planning in our late 40's, so 15 yrs later than we should have, LOL.

Spouse had lifetime employment with state agency with good pension and generous bennies. He retired with 42 yrs (5 airtime, 37 actual employment) at the age of 56. I also retired at 56 but a couple of years before he did, with small pensions, no bennies; but a fair amount of financial industry knowledge gained from my career.

We always assumed we would live on his pension and (in the future) sale of the house. My pensions and SocSecurity were planned to be "extra."

I did not want to continue taking care of our portfolio once retired. We then transferred it to the independent CFP firm we had originally hired to handle my MIL's portfolio. She had mild dementia so we spent efforts to get someone not only competent but also that she would like personally.

We have no children; if anything had happened to us, she and our heir/trustee would need a reliable and professional resource to trust. This firm has experience with elder clients facing declining physical and mental issues; they have been in business for forty years.

Our portfolio is in a 55/45 split of equities/bonds, reported to us on a quarterly basis (although I can always check it at Schwab's website). 60% is IRA (no Roths) and 40% taxable, from which our distributions come. We take a 3% distribution, which we use for charity donations, travel and dining out.

Between spouse's pension, my 3 small pensions which kicked in at age 65, and SocSec which I took at 66, we have a lot of discretionary income left over every month. Spouse will not take SocSec until age 70 due to a 60% WEP penalty which will reduce it to a few hundred/mo.

We are spenders. Always have been and always will be. We were advised to get LTCi when we started retirement planning and did so. I knew premium increases would occur as it was priced too cheaply. Fortunately our income has increased over the years that keeping it going was well worth it. Now our type of policies are no longer sold (too costly for insurers) and the premiums are much higher - but still far, far less than the cost of just one of us needing Skilled Care Nursing, Convalescent, Memory, or Home Care for a couple of months - and our policies have an *unlimited benefit period.* Benefits rise 5% compounded annually.

We live in a HCOL area so consider the LTCi in the same vein as our auto, homeowners, quake, and umbrella policies: they are there if we need them.

We had intended pre-pandemic to sell or rent our SFH and move into senior or condo apt, but the pandemic/lockdown knocked that plan askew. We have an older house with a continuing project list, so will continue to leisurely whittle away at that list until we finally do sell.

With the recent low interest rates, we took out a small mortgage to free up some equity at a 2.75% interest rate, with the approval of our advisory firm. Still have most of it left so should be able to get a lot of the maintenance/remodeling done without going out of pocket.

Why no Roths? Unfortunately the state pension mgmt was very slow about allowing Roths, so they were announced less than a year before Spouse retired. I ran the #s but it wasn't worth it then. Every few years the CFP firm runs the #s - they just did it a few months ago - and same thing: really not worth it, as our income is so much higher in retirement than when we were working, so our tax bracket essentially remains the same as before.

Of course, when one of us dies, the other is going to get socked with the "widow's tax", but that's the way it goes......

Better than having to eat dog food


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## leastlongprime (Jan 3, 2023)

Prior to retirement: Stocks & funds and property, that increases or has a good chance to increase. We saved very hard because our income was low and uneven. Time and compounding was a way to make the Dream to happen.

In retirement; In 2008,  came to a realization that future retirement depended on *Income* and *Income Flows* and not on the amount of shares or worth in the stock & bond markets or property.
Thus, Retirement Income is SS, some pension (fixed, 2010), bunch of deferred GLWB in both variable and fixed annuities, rental, and discretionary trading accounts. We have only have taken RMDs off the annuities but 2023, will take the allowed annuity payments because of increased LTCi  insurance premiums,  property taxes, HOA, and other general inflation impacted stuff. 73/76. 
Discretionary trading accounts are not included in our Income picture. Discretionary is 100% at risk, at all times.


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## Sawfish (Jan 3, 2023)

Several here mentioned pensions. This is outside of my personal experience. I was not aware of companies offer any such thing in my line of work, which was SW development.

There doesn't seem to be a downside to pensions and I hope my daughter works in a career that will still offer this.  It's an additional tool for your retirement toolkit.


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## leastlongprime (Jan 5, 2023)

Sawfish said:


> Several here mentioned pensions. This is outside of my personal experience. I was not aware of companies offer any such thing in my line of work, which was SW development.
> 
> There doesn't seem to be a downside to pensions and I hope my daughter works in a career that will still offer this.  It's an additional tool for your retirement toolkit.


@Sawfish 
Private pensions for the most part are not as beneficial as you would think. Older public pensions were pretty good. Both are not portable, little to no control of the investments, poor management, various laws and regulations sometimes hinder prudent fiduciary responsibilities which made them too safe and too conservative, reduced compensation. In other circumstances public  pensions became too generous that threaten the entire state services, future and past retirees, raised income or property taxes and just overall made taxpayers angry and jealous. 


A big drawback of pensions is their inability to react to inflation pressures. 
Wife's pension after 23 years of work at same company, started at $747/mn,  2010 and remains today @ $747/mn.


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## Alligatorob (Jan 5, 2023)

Sippican said:


> What is your approach in retirement funding?



Spend it before inflation takes it away...


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## 1955 (Jan 5, 2023)

I figure the older I get the less I'll need.  If I live long enough I probably won't even care!


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## Sippican (Jan 5, 2023)

Lethe200 said:


> Started serious retirement planning in our late 40's, so 15 yrs later than we should have, LOL.
> 
> Spouse had lifetime employment with state agency with good pension and generous bennies. He retired with 42 yrs (5 airtime, 37 actual employment) at the age of 56. I also retired at 56 but a couple of years before he did, with small pensions, no bennies; but a fair amount of financial industry knowledge gained from my career.
> 
> ...


Good idea taking out a mortgage at a low rate.
Nice write-up!


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## leastlongprime (Jan 5, 2023)

Sawfish said:


> Several here mentioned pensions. This is outside of my personal experience. I was not aware of companies offer any such thing in my line of work, which was SW development.
> 
> There doesn't seem to be a downside to pensions and I hope my daughter works in a career that will still offer this.  It's an additional tool for your retirement toolkit.


You can create your own pension by establishing annuities. Customizing your annuities can be very interesting.  Our annuities (all deferred)  represents ~25% of our income.


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## Blessed (Jan 5, 2023)

Gosh, most of that is over my head.  Always was a cheap B****..  Laugh if you want, was always a saver, married to the spender.  It was up to me keep things in line, to save and be prepared, even before retirement.  My husband died young at 51 but we/I was prepared just in case.  No, I am not rich by others people's standards.  My home is mortgage free, sent the son to a top college without student loan debt. Have funds set aside but currently living on social security without having to draw from retirement accounts.

Health insurance is provided by federal government, widow benefits. I pay a small amount after the government pension I receive.  That is available to me for life.  I am currently doing research if it would be a better idea to keep it as chosing an advantage plan supplement that might not give me the coverage at a better rate.

There is not a time that we don't have to look and compare what is best financially.  Does not matter how much we have tucked away.  The stock market and other investments change like the wind. So many that have retired think everything is okay until they find out they are in trouble.  This is not something to become relaxed about, be informed, check your investments, be proactive!


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## 1955 (Jan 5, 2023)

Blessed said:


> It was up to me keep things in line, to save and be prepared, even before retirement.


Good for you!


Blessed said:


> Health insurance is provided by federal government, widow benefits. I pay a small amount after the government pension I receive.  That is available to me for life.  I am currently doing research if it would be a better idea to keep it as chosing an advantage plan supplement that might not give me the coverage at a better rate.


The best insurance is preventative but it doesn't hurt to have the backup plan ready like you're doing.


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## OneEyedDiva (Jan 6, 2023)

I started being a die hard saver when I was 25. I didn't start investing until I was 37 and except for the Dean, Witter, Reynolds investing seminar I attended which started me investing in the first place, I am a self taught investor. I set a certain amount to save/invest each month and didn't deviate from it. I had gotten a healthy raise after switching from municipal to State payroll (same office, different position) and started putting away $1,100 a month. When I bought a new car in 1994, I reduced that amount by the amount of the car payments. Four years later, I took early retirement..reduced pension, no SS, so couldn't continue investing as much. 11 years later when I started collecting SS, I invested most of that.

About 17% of my investments are in utilities which hold up well in down markets. Most of my investments pay dividends and capital gains, with the exception of the ETFs and Apple stock, which pay divs only.  26% of my assets are in checking and savings so I never have to worry about withdrawing funds in down markets. Except for my RMDs, based on a small portion (7%) of my holdings. I don't have to take withdrawals; in fact, I'm still investing. I just can't put money in IRAs because I no longer work.  I'm a buy and hold investor and have never let market movement spook me.

Thinking about it further, I guess one approach to retirement funding was to make sure I kept a government job that offered the defined pension benefit and excellent health insurance coverage. The last two years before I retired, I also started putting the max (20%) into our deferred compensation plan. I wound up retiring earlier than I had originally planned.


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