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Money now/little later- where to invest?
Old 11-18-2012, 04:43 AM   #1
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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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Old 11-18-2012, 07:36 AM   #2
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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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Old 11-18-2012, 08:09 AM   #3
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.....Basically, she is making a big salary now, but will have a very small retirement. Is there a strategy/investment for this?
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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Old 11-18-2012, 08:14 AM   #4
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Old 11-18-2012, 05:20 PM   #5
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You might as well also read the sad stories in this book:

Getting by on $100, 000 a Year (and Other Sad Tales): Andrew tobias: 9780671255183: Amazon.com: Books
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Old 11-18-2012, 05:36 PM   #6
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You might as well also read the sad stories in this book:
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.
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Old 11-18-2012, 07:10 PM   #7
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Originally Posted by Senin View Post
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.

state pension plans a gazillion dollars in debt. heres why


LOL
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Old 11-18-2012, 07:44 PM   #8
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state pension plans a gazillion dollars in debt. heres why


LOL
Which Canadian 'state' to you refer to?
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Old 11-18-2012, 07:48 PM   #9
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Which Canadian 'state' to you refer to?

since i did not know it was canada i stand corrected. I guess canada is smarter than USA
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Old 11-18-2012, 08:01 PM   #10
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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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Old 11-18-2012, 08:04 PM   #11
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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.

cool. how did you go about it and how do you buy a pension. is it an annuity?
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Old 11-18-2012, 08:15 PM   #12
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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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Old 11-18-2012, 08:19 PM   #13
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cool. how did you go about it and how do you buy a pension. is it an annuity?
Yes. I bought 4 annuities. In my situation they made sense. No kids, no pension, and plenty of assets.
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Old 11-18-2012, 10:01 PM   #14
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Same here. I started to buy some annuities this year.
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In my situation they made sense. No kids, no pension, and plenty of assets.
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Old 11-19-2012, 12:18 PM   #15
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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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Old 11-19-2012, 01:06 PM   #16
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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.

senin says he has 100,000 PENSION. he'gets that every year.
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Old 11-19-2012, 02:04 PM   #17
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senin says he has 100,000 PENSION. he'gets that every year.


Got it. I based the $100k savings on his other post, 18 months ago - that Nords linked above.
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Either way - he's earning $130k now (based on his other post) and is wife is earning $200k now (based on this post). So they're used to $230k income.

So getting $100k pension might not cover their current spending.
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Old 11-23-2012, 04:32 AM   #18
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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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Old 11-23-2012, 04:47 AM   #19
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Deferred annuity in my case. I am 47, and no heir.
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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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Old 11-23-2012, 10:36 AM   #20
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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.
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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