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Hi from San Antonio
Old 08-01-2012, 04:31 PM   #1
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Hi from San Antonio

I'm a 60 year old (just a couple of days ago). I have been retired for about 10 years. Both the wife and I are retired military. We both had second careers. Her teaching and me as a subject expert for a FFRDC.

We are more than comfortable with our military retirement having a house that is fully paid for and savings from our second careers. I converted my 403B to a roll over IRA upon retirement and gradually moved it over to a Roth IRA calculating the value to convert each year based on what would take me up to the next tax bracket. That conversion is completed. I took that money off the market a couple of years ago. Philosophy is that I have already paid the taxes on it and I don't trust the economy at the present time.

The other funds were in CDs that yielded good profits from the ladder I set up several years ago. However CDs over the last few years are not offering good rates. So I have just moved these funds to savings accounts. Both the Roth IRA and the savings are not even keeping up with inflation, but they are safe as I have stayed below the insured limit at each institution. Presently we are putting money into savings in retirement (I know, unheard of). The money would be used for either spouse should the other die to supplement income if needed. What is not used along with insurance money will be taken into a trust upon the death of one spouse with the exception of the Roth IRA.

I keep an extensive spread sheet of past, present and future values taking into account potential movement of assets, death of a spouse, expenditures in categories, inflation on those expenses, and tax situations. Even with the poor economy, potential tax changes, and changes in our life, I feel we will be comfortable. What I can't predict is what inflation will do in the future and what is the most advantageous investment route is to insure our financial situation continues to improve. Right now my philosophy is to just wait it out as future risk is unknown at best and most likely risky.

Any thoughts?
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Old 08-01-2012, 05:53 PM   #2
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Greetings WWDog,

Welcome here.

I agree with you on inflation. There is not much to do, but guess @ a number and hope you get close. I use 3% FWIW.

You seem to have done well and that's pretty good in this financial environment. Just pick an AA that fits your deal, rebalance regularly, and sleep well.
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Old 08-01-2012, 06:12 PM   #3
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I wish I had known about this site when I first started to look at retirement. I had to figure out for myself if I had enough to survive in retirement. It basically boiled down to when lines on the graph crossed (more money than I owe, more coming in than going out in projected retirement for both people and for one, owe nothing etc.) The difficult part comes when you have to project into the future and guess at values like inflation. The current economic situation though makes projections into the future difficult and new forms of potential risk seem to popping up every day.
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Old 08-01-2012, 06:18 PM   #4
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Welcome!
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Old 08-02-2012, 02:36 AM   #5
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Welcome, WWDog.
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Old 08-02-2012, 07:03 AM   #6
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Sounds like you have a comfortable retirement and very safe method going forward -- most likely if inflation picks up there will be better interest yields available to take advantage of to compensate ---
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Old 08-02-2012, 07:39 AM   #7
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You're facing what we all face......uncertainty.

Youve done a great job which should make you feel very secure. But.....like you, I should feel very secure but don't. OK, get a "cheap" professional opinion. I like Vanguard and also have money at Fidelity.

Vanguard will give you a professional opinion on your portfolio, without cost, if you have enough invested with them. Check them out on their web page and decide, if you haven't already, if you want to invest with them.

On a practical side, I've been getting higher dividends in REITS. they've gotten expensive but they pay high dividends and are partially tax free. But....before you invest check them out.....make sure they fit your plan and they add certainty rather than uncertainty to your future.

Good luck.
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Old 08-02-2012, 08:49 AM   #8
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Originally Posted by WWDog View Post
What I can't predict is what inflation will do in the future and what is the most advantageous investment route is to insure our financial situation continues to improve. Right now my philosophy is to just wait it out as future risk is unknown at best and most likely risky.
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Originally Posted by mickeyd View Post
I agree with you on inflation. There is not much to do, but guess @ a number and hope you get close. I use 3% FWIW. Just pick an AA that fits your deal, rebalance regularly, and sleep well.
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You're facing what we all face......uncertainty.
I also agree there isn't anything you can do with certainty. Uncertainty is part of life, doesn't end with retirement even if we wish there was some guaranteed path. My AA is roughly 50/40/10 and would be under most any economic/political circumstances, though admittedly cash isn't keeping up with inflation and bonds will take a NAV hit when interest rates rise (they will, but whether it's next year or next decade remains to be seen). I plan on a 1-2% real return and don't focus on inflation or investment returns.

You have a substantial floor income so you have less risk than many of us.

My parents are ex-military retired in SA, though they're both 90 years old. Other than the extreme heat & drought, they've enjoyed their retirement there. Best of luck...
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Old 08-02-2012, 01:37 PM   #9
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Thanks to all for the welcome. I see two major types of risk in the immediate future. The first is the combination of low returns combined with inflation that erodes what you have in savings. The second is directly the opposite in that if you go with the market there is a very real risk of loosing a lot very quickly should a large drop in stocks occur. These are not the only risks out there but the major ones I can see. Until the threat to major markets dies or does occur, I'm taking the slow erosion mode and countering that with saving some to counter the erosion.
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Old 08-02-2012, 01:46 PM   #10
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Another point I a just beginning to ponder is what to do with Social Security (SS). I have always leaned to both the wife and I taking what we can get as early as possible. Most of the money columnists I have read suggest that waiting as long as possible is the best route due to the increases being much greater than can be achieved in any investment. My thoughts are that I will take it while it is still there to be taken.
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Old 08-02-2012, 02:38 PM   #11
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Another point I a just beginning to ponder is what to do with Social Security (SS). I have always leaned to both the wife and I taking what we can get as early as possible. Most of the money columnists I have read suggest that waiting as long as possible is the best route due to the increases being much greater than can be achieved in any investment. My thoughts are that I will take it while it is still there to be taken.
As investors we know there are no guarantees, but one sure thing is for every year past age 62 that you delay filing, your SS pension increases by about 8%, through age 70. This increase is in addition to COLA and can be an important part of risk reduction for many retirement plans.
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Old 08-02-2012, 03:03 PM   #12
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Originally Posted by WWDog View Post
Another point I a just beginning to ponder is what to do with Social Security (SS). I have always leaned to both the wife and I taking what we can get as early as possible. Most of the money columnists I have read suggest that waiting as long as possible is the best route due to the increases being much greater than can be achieved in any investment. My thoughts are that I will take it while it is still there to be taken.
The breakeven point for Soc Sec at 62, FRA & 70 is about 78-80 years old last time I looked. Unless you are certain you won't make it to 80 (some people unfortunately do know due to family history or existing health issues), you are giving up a lot if you take it early. Rather than repeat all the analysis, if you Google 'when to take Soc Sec' there are dozens if not hundreds of articles on the topic. I'd encourage you to read a few from sources you trust to help with your decision.

Of course modifications to Soc Sec are possible in the decades ahead, and we all have to decide for ourselves if that will impact the decision. Best of luck...
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Old 08-02-2012, 07:25 PM   #13
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we all have to decide for ourselves if that will impact the decision.
Midpack makes a great point here. Each of us has their unique situation to factor in. What works for me (DW takes SS @ 62, I piggyback on her act and delay until age 70, then we both switch over to my SS acct) won't necessarily work for you and yours.

As I see it, SS offers many options and it rests on us to decide which road to Dublin to travel on.
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Old 08-02-2012, 08:32 PM   #14
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I'm six years away from SS and plan to have an analysis of our optimal claiming strategy done by socialsecuritysolutions.com or some similar service prior to making a decision (and I hope that I'll be smarter about optimal claiming strategies by then).

I'm actually more concerned about the corrosive effect of inflation over time than a steep and prolonged market drop, but I believe that a balanced portfolio will serve me best no matter what happens.
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Old 08-04-2012, 04:22 PM   #15
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Any thoughts?
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Originally Posted by WWDog View Post
Another point I a just beginning to ponder is what to do with Social Security (SS). I have always leaned to both the wife and I taking what we can get as early as possible. Most of the money columnists I have read suggest that waiting as long as possible is the best route due to the increases being much greater than can be achieved in any investment. My thoughts are that I will take it while it is still there to be taken.
Welcome to the board, WWDog.

Keep in mind that you're getting at least three inflation-fighting pensions... one military and two from Social Security. So you're partially insulated against inflation, and a lot better insulated than most of the posters on this board.

To say nothing of Tricare and Tricare For Life offering more protection from the inflation of healthcare costs. My advice would be to complain about that privately to me via PM or e-mail, not publicly on this board.

As for Social Security, one option would be for you to file/suspend* at age 62 so that your spouse could start collecting her spousal benefits when she turns age 62. Then you start collecting your benefits when you turn 70.

If you die before breakeven, you could take solace from the knowledge that your spouse will have max SS survivor's benefits from your earnings record, as well as your military Survivor Benefits Program.

*[I'm pretty sure that I'm using the vocabulary correctly, but I may be mistaken on the ages and the precise benefits. One of the board's more experienced Social Security experts will be along shortly to validate my info or correct it.]
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Old 08-04-2012, 04:42 PM   #16
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Nords - Actually we have four inflation-fighting pensions with my wife being retired military also. Then there is what each of us get from VA. Me, not a lot, my wife quite a bit more than me. And the VA $ is tax free. The Tricare Prime and Tricare for Life is another discussion I plan on starting soon.

I have been leaning toward both of us taking our SS at 62 but I haven't run the numbers yet. I would be more likely to take it early and have the wife start her SS later. Her relatives have a tendency to live to quite old age and mine died fairly early. As far as how we approach the SS is something I have a couple of years to figure out. I guess there are a lot of options to look at.
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