No dividends, no cash comin' in

[Sparky]

Here's a thread for the those of us who planned carefully and bought bank, insurance and financial stocks to live off the dividends and who are now screwed.

Seemed like a good idea at the time.

Now, we have taken eating out off the table, no new clothes, no vacations, no more organic food, no renovations, no taking our moms out to lunch, bottomshelf wine and liquor.

The worst part is the regret - if only we hadn't eaten out so much, if only we didn't buy all that expensive wine, if only I didn't get the quartz countertops...

The part of the country that is living on COLA pensions are going, "what's the problem, why can't we go out to lunch like we used to?"

We have no way of knowing if things are going to work themselves out, or if we are, as the WSJ says, inside a 20% chance of this turning into a depression. Causing me to wake every night about 3 a.m. wondering how we are going to make it.

 

[Steve O]

How long can they hold interest rates at 0?

It sure would be nice to be rewarded for holding cash

 

[Martha]

I find myself with a bit of pension envy. I am sitting in an RV park and there are a number of pensioners here. I am glad I kept my law license and can scare up projects here and there from my old employer.

 

[Zoocat]

I'm sorry, Sparky, for your losses. I'm sure you have a lot of empathy here on the board.

For what it's worth: I have found myself having trouble sleeping lately but my remedy, hard exercise for about an hour, works great! Try it. Exercise will also keep those stress hormone levels down and keep you from gaining weight, if you are prone to.

Hope that interest rates rising in the next few years will help you out.

 

[bbbamI]

Now, we have taken eating out off the table, no new clothes, no vacations, no more organic food, no renovations, no taking our moms out to lunch, bottomshelf wine and liquor.

It could be worse.

We are on a budget that doesn't allow the purchases we made when DH was working. However, planning a night out will bring us anticipation and fun as we are "saving" for it. We won't take the extras for granted anymore.

The worst part is the regret - if only we hadn't eaten out so much, if only we didn't buy all that expensive wine, if only I didn't get the quartz countertops...

We make the best decisions we can with what we know and should be able to enjoy the fruits of our labor. I will never regret enjoying myself on a vacation, purchasing something on a whim or giving to others.

The part of the country that is living on COLA pensions are going, "what's the problem, why can't we go out to lunch like we used to?"

We have no way of knowing if things are going to work themselves out, or if we are, as the WSJ says, inside a 20% chance of this turning into a depression. Causing me to wake every night about 3 a.m. wondering how we are going to make it.

We have a non cola'd pension...but will it always be there? Will our medical benefits and ss always be there? Who knows? But for me at 51, the years are going by at the speed of light it seems and I intend to remain happy and content with what I have right now.

Even when I was very poor, I had all I needed and some of what I wanted. For me, I couldn't ask for more.

 

[FIRE'd@51]

How long can they hold interest rates at 0?

It sure would be nice to be rewarded for holding cash

You have been rewarded. Now you can buy 2.5 times as much stock as you could have in October 2007.

 

[Architect]

"as the WSJ says, inside a 20% chance of this turning into a depression"

There's no good definition of a depression, but a recession lasting more than two years should classify as one. This probably won't end until sometime next year, so it probably counts.

But that's just a name. It is what it is.

 

[Nords]

Some of us COLA pension recipients feel adequately compensated for the risks we took to survive long enough to reach the payout. Many pensioners spent years on lower salaries while envying others for earning the big bucks.

The only effective financial antidote for pension envy is an annuity.

 

[harley]

Some of us COLA pension recipients feel adequately compensated for the risks we took to survive long enough to reach the payout. Many pensioners spent years on lower salaries while envying others for earning the big bucks.

The only effective financial antidote for pension envy is an annuity.

I don't know. A raging bull market for 10 years would do it just fine too.

 

[innova]

Bottom shelf hooch?

Man we ARE having hard times

I'm in the total return investing theory camp - only down 50% or so. Stay the course!

 

[ziggy29]

The only effective financial antidote for pension envy is an annuity.

At least until someone invents the ability to go back in time and have a do-over about your career decisions.

 

[deserat]

With all due respect to the OP, and not knowing his total asset allocation nor investing theory, isn't diversification important? Yes, dividends are part of that, but I thought that having 2-5 years in cash available for immediate living expenses was de riguer for the course, i.e. provide near-term stability to allow for the higher amplitudes of the longer term investments in effect insulating your living response to the perturbations. Heck, we will have pensions and will still have the cash aspect. I guess I am a belt, supenders and elastic waistband type of person....

 

[FinanceDude]

The only effective financial antidote for pension envy is an annuity.

 

[MasterBlaster]

With all due respect to the OP, and not knowing his total asset allocation nor investing theory, isn't diversification important? Yes, dividends are part of that, but I thought that having 2-5 years in cash available for immediate living expenses was de riguer for the course, i.e. provide near-term stability to allow for the higher amplitudes of the longer term investments in effect insulating your living response to the perturbations. Heck, we will have pensions and will still have the cash aspect. I guess I am a belt, suspenders and elastic waistband type of person....

Yes diversification is important.

However if one were to have a Norwegian widow type strategy, They must be feeling the pain about now.

Hence the OP's post.

Even without such (Norwegian widow) strategy I suspect that everyone is feeling a little glum. That's the fear part of the fear versus greed corundum.

 

[FinanceDude]

Here's a thread for the those of us who planned carefully and bought bank, insurance and financial stocks to live off the dividends and who are now screwed.

Seemed like a good idea at the time.

Sorry to hear that...did you put ALL your monies in that one sector, I hope not.........

Now, we have taken eating out off the table, no new clothes, no vacations, no more organic food, no renovations, no taking our moms out to lunch, bottomshelf wine and liquor.

A lot of folks are belt-tightening, even those of us still w*rking......

The worst part is the regret - if only we hadn't eaten out so much, if only we didn't buy all that expensive wine, if only I didn't get the quartz countertops...

Human nature,but would you REALLY change some of the "fun" things in life? Probably not......

The part of the country that is living on COLA pensions are going, "what's the problem, why can't we go out to lunch like we used to?"

In this climate, a COLA'D pension seems like the Holy Grail. However, I am not one of those willing to take the crap the average govt employee has to take for 20-30 years to get the pension........

 

[deserat]

Materblaster,

I don't discount the Norwegian widow strategy, and in fact intend to add a bit of that to my portfolio, however, that part of the strategy could be perhaps part of the two year pot of money or later....or sugar added to the base of the cash position for immediate living costs.

Yes, I truly understand the fear and glum aspect-truly - that's real money I've lost in the last 6-8 months, not 'paper' losses. Smarts, really smarts. Add into that my fear regarding an underlying fundamental societal change regarding our responsibilities individually versus that which we endow our government and there is amplification of the fear and glumness. The rules of the game are being changed precipitously and many of us may not have time to adjust to those rules changes.

Man, I look at the above and sense that WSJ's Best of the Web would cite me for a metaphor alert award

 

[MasterBlaster]

The only effective financial antidote for pension envy is an annuity.

Ignoring insurance insolvency/PBGC issues...

I have a much better appreciation now for the value of a pension/annuity to ride it out, albeit at perhaps a lower standard of living - No matter what. And the value of the - No matter what - is worth something.

For those with a cash-out pension option perhaps those big plans for that cash should be reconsidered. Perhaps you can use your other stash to snowball. But just in case it doesn't you have something that will always be there. Just maybe your dreams of living large should be weighed against the worst-case dog-food diet lifestyle.

 

[ziggy29]

I have a much better appreciation now for the value of a pension/annuity to ride it out, albeit at perhaps a lower standard of living - No matter what. And the value of the - No matter what - is worth something.

For those with a cash-out pension option perhaps those big plans for that cash should be reconsidered. Perhaps you can use your other stash to snowball. But just in case it doesn't you have something that will always be there. Just maybe your dreams of living large should be weighed against the worst-case dog-food diet lifestyle.

I think this is why, depending on solvency and then-current interest rates, I might consider taking out an SPIA in retirement. There's certainly something to be said for a guaranteed lifetime income stream.

I wouldn't do it now because interest rates are so puny that the annuitized payments are too low. It would be nice to have some "floor" in terms of how bad things could get in terms of cash flow.

 

[FinanceDude]

Ignoring insurance insolvency/PBGC issues...

I am less worried about large stable companies like Prudential or MetLife than I am about PBGC. FDIC is underfunded, and PBGC is 1-2 large pension failures away from blowing their line of credit at the Fed and will then grovel like the automakers in front of Congress.......

For those with a cash-out pension option perhaps those big plans for that cash should be reconsidered. Perhaps you can use your other stash to snowball. But just in case it doesn't you have something that will always be there. Just maybe your dreams of living large should be weighed against the worst-case dog-food diet lifestyle.

My uncle went against my advice and took the lump sum option. Now he asked me what he should do.......

 

[haha]

My uncle went against my advice and took the lump sum option. Now he asked me what he should do.......

I knew a lot of retired guys in the 70s. You can bet they wished they had taken the lump sum.

Out attitudes are almost always backward looking. It is hard to muster the imagination to realize that tomorrow may be vastly different from today.

My first guess would be that for anything but a full COLA governemnt pension, today it would be best to take the money and run. Discount rates are low, so cash-outs are often high. Prospective equity returns are high. An excellent combination.

Ha

 

[unclemick]

Norwegians come in a variety of sizes. However circa 1992 mine was:

electric utilities
big oil
telephone
food

and then an eclectic mix of big pharma, banks, div paying mfg, REITs, insurance. And a minor heart throb for water utes and gas utes.

Note that South American debt made many a bank a no no and later Hilary didn't help big pharma. Over the years my water utes went private/got merged a lot.

It's always something. However - in my super cheap period 40% of income was dividends - ie I cut expenses way back.

Since I have lasted long enough(since jan 93) to get a non cola, pension at 55, and early SS plus did some temp work around 95 plus sold and ate the duplex very early in ER - I can offer no great advice except try to stay:

mobile, agile and hostile.

heh heh heh - I still like my pssst Wellesley razz as a benchmark. And to search for sectors with divs holding up and good earnings coverage.

Oh and bye the bye - BAC, C, JPM, UBS-Ag, STI held in amuounts large enough to count as a reasonable spanking.

 

[Dennis]

Well, I've read stories like this Several times in past bears..And I decided not to base My Income on Divs and Ylds. Only..
With 70% in 3 Balanced Funds provide Low Ylds, but twice the Rtns and I just
1. Keep 3 yrs Cash in various MMkt/Short Term Funds to draw on
2. Let the Balance Funds do their Job
3. If I need to sell some issues? So be it.. they have gained 3% more apy past 9 yrs than I planned on , ( 9.1% apy)

so as the guy Falling off a 40 story building said at the 30th floor
.. Well? So far So Good..

Some Friends took a Cash out With their Jobs and Invested it in the same Port as I have and are far better off because of it.. and have the confidence to leave alot more $ to their Kids as well. But, IAD.. on what you plan to do with it and how good you are doing it..

Another cashed out and She Divorced him 3 yrs later and Beforehand? She Blew alot of it! He says he can be a Country singer now , after Loosing his Wife, His Home and His $...He works at Wal mart eversince..

 

[clifp]

As I've said many times, I am dividend guy. In my first 28 years of investing never experienced a dividend cut. With recent recent cuts by Wells Fargo, and US Bank I am up to around dozen in the last year or so. Still I have a few increases in the last month MMM, and a couple of my oil pipeline. Over all my interest and dividend income is down about 15%, bad but not horrendous. My biggest worry/mistake was my letting my cash reserves drop to a 6 month level.

 

[Sparky]

Sorry to hear that...did you put ALL your monies in that one sector, I hope not.........

A lot of folks are belt-tightening, even those of us still w*rking......


Human nature,but would you REALLY change some of the "fun" things in life? Probably not......


In this climate, a COLA'D pension seems like the Holy Grail. However, I am not one of those willing to take the crap the average govt employee has to take for 20-30 years to get the pension........

Yes I put everything in the banking sector... I inherited alot - hell, I was growing my port by around 10% per year, so it seemed like a good idea, for about 10 years.

Did the old widow's rule - got laid off in 2003 - waited a year or two, sold my property, bought, renovated and still had cash to burn. We went out to dinner, on vacation... Now it all looks like a big mistake.

I'm not looking for sympathy - I'm looking for ways to make this okay. I've dumbed down cable, phones, heat, internet, groceries, liquor, cars, taking our moms out for lunch.

I just don't know if we can make it or not; I feel like I CAN'T know yet. It all feels so uncertain. I've applied for a job - haven't heard anything.

 

[FIRE'd@51]

Sparky,

If you need dividend income, you might want to consider selling the common and buying the preferred stock of the same bank. It's still risky, but less so than the common, and some of the preferreds offer pretty high yields. They've also been beaten down far enough, that many have nearly as much upside as the common, IMO. I think it may be at least a couple of years before the stronger banks that have cut their dividends will restore them, as they will have to repay the TARP money first.