Poll:What are your sources of retirement income?

[Mulligan]

In MA state workers make 9% (or 11% if they earn over $35k) mandatory contributions to the state pension plan. MA kicks in 5%. Medicare tax is also taken out of the paycheck, but not SS tax, so MA state worked do not receive federal SS when they retire.

Same boat, I had between 11%-14% contributions which was matched by employer, no SS. But because I amassed 15 plus years working in PT SS jobs, I will get about $100 a month at 62 in 14 more years (the WEP gave it a helluva haircut). Current pension provides about 120% on my income needs as I have become a professional "saver" now in retirement.

 

[W2R]

A minor point, I think you mean the 1970's W2R. The 1980's were characterized by a great stock market and real bond rates that we will probably never see again. Plus rates were coming down making for bond capital gains. Actually the good times started in late 1982.

Yes, it is minor, but still a good point to discuss.

the great inflation of the 1970s, which began in late 1972 and didn't end until the early 1980s.

http://www.investopedia.com/articles/economics/09/1970s-great-inflation.asp#ixzz1xJfk7aQS Someone retiring in the early 1980's would have experienced a longer period of inflation than someone retiring in the early 1970's, seemingly endless inflation by that time, so that sounds pretty scary to me and that was what I was saying. Which is not saying that retiring in the 1970's would have been a piece of cake either! In a way, your point supplements what I was saying by providing an additional example of a time in which it took a lot of guts to dare to ER.

 

[Mulligan]

Yes, it is minor, but still a good point to discuss.
http://www.investopedia.com/articles/economics/09/1970s-great-inflation.asp#ixzz1xJfk7aQS Someone retiring in the early 1980's would have experienced a longer period of inflation than someone retiring in the early 1970's, seemingly endless inflation by that time, so that sounds pretty scary to me and that was what I was saying. Which is not saying that retiring in the 1970's would have been a piece of cake either! In a way, your point supplements what I was saying by providing an additional example of a time in which it took a lot of guts to dare to ER.

Just having a little fun with this, not criticizing or anything, but if I had a self sustaining nest egg, and was a very conservative investor, I would think that the 80s were the perfect decade for retirement. Double digit inflation was broke, but CDs and govt. bonds stayed stubborningly high, above the CPI. Kind of the opposite of today in a way.

 

[W2R]

It has been tough for early retirees at various times in my lifetime, IMO, for various reasons. Can you imagine retiring early during the crazy, seemingly out of control and endless inflation of the 1980's? I think that would have taken more guts than I can summon. I have great respect for anyone who managed to retire at that time, just as I have for our present members who had their expected pensions frozen or yanked just before they qualified for them, and others too who have had monumental obstacles of all sorts to overcome. Early retirement is not any easy path to follow.

Just having a little fun with this, not criticizing or anything, but if I had a self sustaining nest egg, and was a very conservative investor, I would think that the 80s were the perfect decade for retirement. Double digit inflation was broke, but CDs and govt. bonds stayed stubborningly high, above the CPI. Kind of the opposite of today in a way.

That is a very good point. I think the 90's would have been terrific, too. However the point of my post kind of got lost in thread drift, I suspect so I quoted it to make sure we are talking about the same things. I was talking about times during which people thinking of retiring might have been reluctant to retire, not about what actually ended up happening during their subsequent retirement, just to be clear.

I think it would have taken a lot of guts to retire in the 1980's, because a potential retiree wouldn't know the future and wouldn't know if this inflationary period was nearly over, or if inflation was just beginning to ramp up before really taking off to the moon. Granted, yields were higher at that time, but the future of our economy seemed uncertain and as in most things in life, there was no guarantee that yields would remain permanently high. Besides, by the time one gets these yields they might not be worth much if they were eaten up by runaway inflation that we kept hearing about in the media at that time. The gas lines of 1979 were still fresh in everyone's mind as well. So these are some of the reasons why I think it would have taken guts to retire in the early 1980's. YMMV but I felt a lot better about retiring in 2009 than I think I would have felt retiring in 1980-1981, for example.

 

[Mulligan]

That is a very good point. I think the 90's would have been terrific, too. However the point of my post kind of got lost in thread drift, I suspect so I quoted it to make sure we are talking about the same things. I was talking about times during which people thinking of retiring might have been reluctant to retire, not about what actually ended up happening during their subsequent retirement. I think it would have taken a lot of guts to retire in the 1980's, because a potential retiree wouldn't know the future and wouldn't know if this inflationary period was nearly over, or if inflation was just beginning to ramp up before really taking off to the moon. Granted, yields were higher at that time, but the future of our economy seemed uncertain and as in most things in life, there was no guarantee that yields would remain permanently high. Besides, by the time one gets these yields they might not be worth much. The gas lines of 1979 were still fresh in everyone's mind as well. So these are some of the reasons why I think it would have taken guts to retire in the early 1980's. YMMV

+ 1! I think our views are shaped by our ages, too. I was young and oblivious to the 70s. I went to college in the early 80s and maxed out three straight years of student loans and rolled them into CDs. The interest alone paid for my senior year in college. So the bank and the government gave me a free year of schooling. I thought high interest rates were awesome especially since I had no loans other than the low cost subsidized student loans. Concerning today, many people ( forum members excluded) I believe are not sophisticated investors. That is why I feel sorry that this generation of retirees at present time have had the CD option in essence taken off the table for them. Many may chase yield in bonds and not understand the potential repercussions of this.

 

[W2R]

Concerning today, many people ( forum members excluded) I believe are not sophisticated investors. That is why I feel sorry that this generation of retirees at present time have had the CD option in essence taken off the table for them. Many may chase yield in bonds and not understand the potential repercussions of this.

Yes, some of the investments that are asked about here are enough to curl one's hair.

I just wish my crystal ball was in better working order! Then I'd know for sure what my retirement would be like, in advance.

 

[Chuckanut]

Which is not saying that retiring in the 1970's would have been a piece of cake either! In a way, your point supplements what I was saying by providing an additional example of a time in which it took a lot of guts to dare to ER.

Had one bought some of those 30 year Treasury Bonds yielding about 10% back then, I think ER would have been very nice indeed.

 

[W2R]

Had one bought some of those 30 year Treasury Bonds yielding about 10% back then, I think ER would have been very nice indeed.

If we all had a functioning crystal ball, then what really was to happen thoughout the years of retirement would be identical to what a potential retiree would face in making the decision to retire. But alas, that is just a fantasy. I wish it wasn't!

With high inflation rates (11.3% in 1979, 13.5% in 1980, 10.3% in 1981, for example) I would not have felt too secure with just 10% return. But in the 1970's when purchased the inflation rates were lower I think.

 

[JOHNNIE36]

In retrospect, things were goofy back in the 80's. I transferred to a different plant and a new job in 1980. Friend of mine had just gone to the same plant and was telling me about housing, where to buy, prices, etc. Told me he had to pay 15% to get mortgage. I found a brand new house in a new area for sale by the builder and he got me financing for 9%. I thought I'd robbed a bank. Also, we had just come off the gas lines where you could only get gas on certain days of the week, I think by license plate number. Strange times the late 70's and early 80's.

The fact that I retired in 1988 with a package to die for was unbelieveable.
I've already posted about GM doing away with the salaried retirement program. Another era passing away. No more defined benefit pensions for GM. Ford is already going that way. Pretty soon there won't be such a thing. Maybe it will get better, but I feel sorry for my grandkids. I think I'll write them a joint letter explaining how we got to where we are and what they will have to do for themselves to protect their interest for the future.

 

[Mulligan]

In retrospect, things were goofy back in the 80's. I transferred to a different plant and a new job in 1980. Friend of mine had just gone to the same plant and was telling me about housing, where to buy, prices, etc. Told me he had to pay 15% to get mortgage. I found a brand new house in a new area for sale by the builder and he got me financing for 9%. I thought I'd robbed a bank. Also, we had just come off the gas lines where you could only get gas on certain days of the week, I think by license plate number. Strange times the late 70's and early 80's.

The fact that I retired in 1988 with a package to die for was unbelieveable.
I've already posted about GM doing away with the salaried retirement program. Another era passing away. No more defined benefit pensions for GM. Ford is already going that way. Pretty soon there won't be such a thing. Maybe it will get better, but I feel sorry for my grandkids. I think I'll write them a joint letter explaining how we got to where we are and what they will have to do for themselves to protect their interest for the future.

Johnny, as one who has survived retirement for a long time, I would be curious to how your budget expectations and income have played out for you the past 25 years. Did you have a COLA pension? Has it held up well? Did you have other levers of income you lived off of? Expenses go up appreciably? I really don't have anyone except my neighbor who retired at 58 and is now 83 that has experience in a long term retirement that I hope to have. He has a union pension from an electric company. All he said was he didnt have a "pot to piss in " when he retired, but he has more money now than he ever did in his life.

 

[Lsbcal]

That is a very good point. I think the 90's would have been terrific, too. However the point of my post kind of got lost in thread drift, I suspect so I quoted it to make sure we are talking about the same things. I was talking about times during which people thinking of retiring might have been reluctant to retire, not about what actually ended up happening during their subsequent retirement, just to be clear.

I think it would have taken a lot of guts to retire in the 1980's, because a potential retiree wouldn't know the future and wouldn't know if this inflationary period was nearly over, or if inflation was just beginning to ramp up before really taking off to the moon. Granted, yields were higher at that time, but the future of our economy seemed uncertain and as in most things in life, there was no guarantee that yields would remain permanently high. Besides, by the time one gets these yields they might not be worth much if they were eaten up by runaway inflation that we kept hearing about in the media at that time. The gas lines of 1979 were still fresh in everyone's mind as well. So these are some of the reasons why I think it would have taken guts to retire in the early 1980's. YMMV but I felt a lot better about retiring in 2009 than I think I would have felt retiring in 1980-1981, for example.

I think you are making a good point here W2R. I recall interview comments by both Buffet and also Templeton (now passed away) that suggested more inflation might lie ahead.

Right now we see plenty of pessimism. Quite different then the year 2000 turn of the century views.

We may be in a "whee..." moment here regarding equities.

 

[Meadbh]

The pensipn is very large ( mid 6 figures) and will represent about half our spending. .

Wow. Congratulations!

No pension here, just my portfolio, which includes equities, fixed income, rental properties and precious metals. And about 40% of that came from an inheritance. Without the inheritance there would be no possibility of ER for me.

 

[Nords]

Pretty soon there won't be such a thing. Maybe it will get better, but I feel sorry for my grandkids. I think I'll write them a joint letter explaining how we got to where we are and what they will have to do for themselves to protect their interest for the future.

I think pensions are yet another artifact of the 20th century.

I bet your grandparents (and my great-grandparents) thought pensions were for sissies...

 

[JOHNNIE36]

I think pensions are yet another artifact of the 20th century.

I bet your grandparents (and my great-grandparents) thought pensions were for sissies...

I can only speak for my fathers side of the family. Both my father and his father worked for the same company and both retired with pensions. I'm not sure if they contributed to those pensions but I would say no. My father retired after working for that company for 47 years and got about $900/month pension. That plus SS got my folks through for 26 years of retirement, not bad for a couple of people that new nothing about investing except for CD's. I think the thing that got them through was the fact they were a cash only couple. Never did anything on credit.

Mulligan, real estate investing got us to where we are. In the last couple years before I retired, we bought a six unit apartment. Upon retirement, both DW and I had real estate licenses so we dabbled in real estate for a couple years. Bought more then we sold. Rented them out and eventually sold them on land contracts at 11% interest. Many times a buyer wanted to purchase a house but had to sell theirs first. We would buy it on the spot, got the commission on the sale and then rented that house out. Made money on the rent and eventually resold that house at a profit, made money on the contract and later got cashed out by some other buyer of that property.

If we had to do it all over, the only thing I would change would have been to buy more real estate. I still think it's the best investment in the world. From what I read now about real estate, renting will be the thing in the future. To this day, I still think about picking something up for $50-60k, fixing it up and renting or reselling. Carry the mortgage myself. But, I'm too old to go through all that and my business now is to enjoy the rest of my life.

Mulligan, I do have a pension from GM but not COLA'd. Been drawing it since 1988.

 

[Nords]

If we had to do it all over, the only thing I would change would have been to buy more real estate. I still think it's the best investment in the world. From what I read now about real estate, renting will be the thing in the future. To this day, I still think about picking something up for $50-60k, fixing it up and renting or reselling. Carry the mortgage myself. But, I'm too old to go through all that and my business now is to enjoy the rest of my life.

I think it's interesting that some people are cut out to be landlords, and the only exit strategy of most landlords seems to be probate. Once in a while I still feel like scooping up a rental bargain or two, and I should be [-]old[/-] experienced enough by now to know better.

Other people are cut out to be homeowners or renters... but not landlords.

 

[nun]

I think pensions are yet another artifact of the 20th century.

......like child labour laws.

I bet your grandparents (and my great-grandparents) thought pensions were for sissies...

My great-grandfather died in a mine accident and my great-grandmother was very thankful for the widows pension she received which was a benefit that was hard won by the union and reforms enacted by the Liberal party.

 

[Quantum Sufficit]

No pensions for us--->we eat what we kill

 

[JOHNNIE36]

I think it's interesting that some people are cut out to be landlords, and the only exit strategy of most landlords seems to be probate. Once in a while I still feel like scooping up a rental bargain or two, and I should be [-]old[/-] experienced enough by now to know better.

Other people are cut out to be homeowners or renters... but not landlords.

How true that is Nords. It's not for everyone. Worked for us.

 

[Sue J]

Just having a little fun with this, not criticizing or anything, but if I had a self sustaining nest egg, and was a very conservative investor, I would think that the 80s were the perfect decade for retirement. Double digit inflation was broke, but CDs and govt. bonds stayed stubborningly high, above the CPI. Kind of the opposite of today in a way.

My Dad did this. He retired in 1985 at age 59.5. He and Mom lived off the investments and later added the SS income. They kept their cost of living low and were comfortable enough.

He's 86 now and when Mom died last year he lost her SS income and his expenses have skyrocketed due to medical costs and paying out of pocket for a home health aide while he recovers from a broken hip. I think this is probably the first time in his adult life that he has not been able to live below his means.

It's the old "the last 5 years are the most expensive" concept.

 

[obgyn65]

No military pension, no federal or state pension, no SS, and no inheritance for me. Just a relatively small pension (less than 10 years working in the US). All the sources of income will come from private investments from age 47 to 95. Wish me luck.

 

[vttlarry]

Pension w/small cola, savings, deferred comp, IRA, 401k, and SS in 2 years. I also have retiree health insurance paid for by employer. Lucky, I know.

 

[Goonie]

I have a public pension that has an annual COLA of 3% of the original, first year amount. It is currently just a few bucks shy of $3,000 per month. That far exceeds my monthly expenses. I also have two IRA's, a Roth IRA, a bunch o' CDs, and a savings account. Plus I'll have SS to add to the mix. I pay 25% of the monthly premium to stay on my former employer's health & dental insurance plan, which also has prescription coverage. It will become secondary coverage when Medicare kicks in.

(BTW, this public pension plan is quite healthy, very well funded, and wisely invested. It also doesn't depend on any money from the State budget. It's run by Trustees elected by participating employers, employees, and retirees....and NOT by politicians!)