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Money now/little later- where to invest?
11-18-2012, 04:43 AM
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#1
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Dryer sheet aficionado
Join Date: Apr 2011
Posts: 44
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Money now/little later- where to invest?
I am 52, and I plan on retiring next year on a pension of $100,000. Yes I am in Fire/police.
My wife (51) was supposed to have a good pension too. But, she took several years off when our child was born. That interupted her years of service. Now her pension will suck big time! However, she makes a big salary currently (over $200,000).
Basically, she is making a big salary now, but will have a very small retirement. Is there a strategy/investment for this?
Money now, little later.
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11-18-2012, 07:36 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Jan 2011
Location: Fair Lawn
Posts: 2,936
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It's predominantly a question of your expenses, lifestyle, and current lifestyle. Without knowing more details, my question to you would be how long does your wife plan to work, how much excess $$$ you have now etc.
For what it's worth, my RE is this March (YAY!) and my wife will continue to work, by her choice. In the last year, we have made a concerted push to increase our already-significant savings rate to help fund my initial retirement years --- something you may also want to consider.
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11-18-2012, 08:09 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,204
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Quote:
Originally Posted by Senin
.....Basically, she is making a big salary now, but will have a very small retirement. Is there a strategy/investment for this?
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Is this question for real? To be candid, there are many couples that live very well in retirement on less than $100k, so you are all set. Congratulations.
Yes, there is a strategy for that- creating her own pension assets by saving as much as possible in a 401k, 403b or other tax-deferred retirement savings accounts (and taxable accounts) and then withdrawing from those accounts in retirement.
Also, if she works at the same employer as where she was going to get the good pension, it may be possible to buy pension credits for the years that she took off.
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11-18-2012, 08:14 AM
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#4
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,855
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__________________
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Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."
I don't spend much time here— please send a PM.
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11-18-2012, 05:20 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 17,134
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__________________
Comparison is the thief of joy
The worst decisions are usually made in times of anger and impatience.
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11-18-2012, 05:36 PM
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#6
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,855
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Quote:
Originally Posted by Chuckanut
You might as well also read the sad stories in this book:
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Take another look at the author of that thread. OP put it up 18 months ago, and I think it's a useful check on progress to date.
__________________
*
Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."
I don't spend much time here— please send a PM.
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11-18-2012, 07:10 PM
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#7
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gone traveling
Join Date: Mar 2007
Posts: 559
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Quote:
Originally Posted by Senin
I am 52, and I plan on retiring next year on a pension of $100,000. Yes I am in Fire/police.
My wife (51) was supposed to have a good pension too. But, she took several years off when our child was born. That interupted her years of service. Now her pension will suck big time! However, she makes a big salary currently (over $200,000).
Basically, she is making a big salary now, but will have a very small retirement. Is there a strategy/investment for this?
Money now, little later.
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state pension plans a gazillion dollars in debt. heres why
LOL
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11-18-2012, 07:44 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Nov 2005
Location: North of Montana
Posts: 2,768
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Quote:
Originally Posted by gerrym51
state pension plans a gazillion dollars in debt. heres why
LOL
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Which Canadian 'state' to you refer to?
__________________
There are two kinds of people in the world: those who can extrapolate conclusions from insufficient data and ..
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11-18-2012, 07:48 PM
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#9
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gone traveling
Join Date: Mar 2007
Posts: 559
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Quote:
Originally Posted by kumquat
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since i did not know it was canada i stand corrected. I guess canada is smarter than USA
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11-18-2012, 08:01 PM
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#10
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Recycles dryer sheets
Join Date: Sep 2012
Posts: 101
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Yes there are strategies. It depends on what you want from the money.
I have alot of savings and alot of investments. But neither I or my spouse have a pension. As a result I took about 20% of my money and bought a pension of $109K. It goes up to $133K if I need help at home and to $156K if I'm in a nursing home. However I will never see the principal again as I bought four of the highest lifetime income annuities I could find.
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11-18-2012, 08:04 PM
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#11
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gone traveling
Join Date: Mar 2007
Posts: 559
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Quote:
Originally Posted by Sun456
Yes there are strategies. It depends on what you want from the money.
I have alot of savings and alot of investments. But neither I or my spouse have a pension. As a result I took about 20% of my money and bought a pension of $109K. It goes up to $133K if I need help at home and to $156K if I'm in a nursing home. However I will never see the principal again as I bought four of the highest lifetime income annuities I could find.
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cool. how did you go about it and how do you buy a pension. is it an annuity?
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11-18-2012, 08:15 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 4,366
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Save a lot, spend less now and later. How many years of service did you wife lose to trash the pension that bad? No chance of working a few extra years to recover? Did it depend on continuous service?
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11-18-2012, 08:19 PM
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#13
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Recycles dryer sheets
Join Date: Sep 2012
Posts: 101
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Quote:
Originally Posted by gerrym51
cool. how did you go about it and how do you buy a pension. is it an annuity?
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Yes. I bought 4 annuities. In my situation they made sense. No kids, no pension, and plenty of assets.
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11-18-2012, 10:01 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
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Same here. I started to buy some annuities this year.
Quote:
Originally Posted by Sun456
In my situation they made sense. No kids, no pension, and plenty of assets.
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__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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11-19-2012, 12:18 PM
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#15
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Moderator
Join Date: Apr 2012
Location: San Diego
Posts: 14,140
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The strategy for preparing for your wife's smaller pension, with her big salary now, is to save/invest a LARGE percentage of her big salary while she's still working.
This will do two things.
1) increase your nest egg for when she does retire.
2) get you both used to living below your means.
No matter how you slice it - if you only have 100k or so in savings, despite $230k in income you're not good savers.
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11-19-2012, 01:06 PM
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#16
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gone traveling
Join Date: Mar 2007
Posts: 559
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Quote:
Originally Posted by rodi
The strategy for preparing for your wife's smaller pension, with her big salary now, is to save/invest a LARGE percentage of her big salary while she's still working.
This will do two things.
1) increase your nest egg for when she does retire.
2) get you both used to living below your means.
No matter how you slice it - if you only have 100k or so in savings, despite $230k in income you're not good savers.
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senin says he has 100,000 PENSION. he'gets that every year.
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11-19-2012, 02:04 PM
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#17
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Moderator
Join Date: Apr 2012
Location: San Diego
Posts: 14,140
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11-23-2012, 04:32 AM
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#18
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Thinks s/he gets paid by the post
Join Date: May 2011
Location: St. Paul
Posts: 1,847
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sun and obygn, may I ask what kind of annuities--SPIAs?--you bought and how far you are from retirement? I am still mulling this one over.
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11-23-2012, 04:47 AM
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#19
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Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
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Deferred annuity in my case. I am 47, and no heir.
Quote:
Originally Posted by Marita40
sun and obygn, may I ask what kind of annuities--SPIAs?--you bought and how far you are from retirement? I am still mulling this one over.
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__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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11-23-2012, 10:36 AM
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#20
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Recycles dryer sheets
Join Date: Sep 2012
Posts: 101
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Quote:
Originally Posted by Marita40
sun and obygn, may I ask what kind of annuities--SPIAs?--you bought and how far you are from retirement? I am still mulling this one over.
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I'm 45. I bought deferred annuities (3 indexed and 1 variable). I don't plan to start taking money until I'm 65 but I have the option to start earlier.
If you do decide on annuities it is a large project to learn about them. It took me about a year to get comfortable with pulling the trigger. There is alot of reading involved as you must read and understand all the materials.
No one sales person has access to all the plans so you have to contact quite a few. Almost all the sales people are marginal at best and many have no problem lying to you so you have to be on your toes and look after your own best interests.
One tip I read which was very helpful is that the annuity firms define their own terms so when one company uses a term you have to look up the definition in their paperwork as it may not mean the same thing as when another company uses the same term.
I found it very helpful to keep a spreadsheet documenting the points that were important to me, both pro and con so that I could compare them.
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