At what age do you hope to retire/Personal Finance and Investing Thread

[FVBrewerFan]

With interest rates going up, I wonder if annuities make more sense these days? Every broker/ financial advisor I know says annuities a re bad idea- which tells me I'm on to something. I would never lock up all my money in annuities, even when I retire. But I've been flirting with the idea of putting a chunk in a deferred annuity if I can get the interest I need- thinking even 7% would be pretty appealing to me. I doubt they're up to 7% yet though.

[xisxisxis]

With interest rates going up, I wonder if annuities make more sense these days? Every broker/ financial advisor I know says annuities a re bad idea- which tells me I'm on to something. I would never lock up all my money in annuities, even when I retire. But I've been flirting with the idea of putting a chunk in a deferred annuity if I can get the interest I need- thinking even 7% would be pretty appealing to me. I doubt they're up to 7% yet though.

 

You might get 3.5% on a 5yr CD, but 7% is quite a few FED increases away... I heard AAA has financial options (banking, etc.) including Annuities with guaranteed no-loss that are pegged to a market index of your choice (S&P, Dow, Nasdaq, etc). While your return isn't as good as just investing in the index, you have downside protection (can't lose your principal).

[nodakfan17]

I think variable annuities are a great tool for people 50+ that are hoping to get more growth out of their retirement accounts, but want to limit downside risk. To me (but probably not Dave Ramsey), the extra fees are justified by the guarantees.

 

I wouldn’t touch a fixed annuity in a low rate environment. They are pretty restrictive and you’re probably better off shopping for CDs or a bond fund. The caveat here is that some fixed annuities will pay you a guaranteed rate for new money additions after the fixed annuity is opened. So if you open a fixed annuity in a high rate environment at 4%, you might be able to continue adding new money at 4% when rates are abysmal like they were 5-10 years ago. For that reason, I will probably open a small fixed annuity the next time we’re in a high rate environment just so I always have that guaranteed 4% bucket if (when?) the economy collapses again.

[nodakfan17]

RIP Jack Bogle

 

I hope he negotiated with the funeral home for no added fees.

[xisxisxis]

LMAO!

[FVBrewerFan]

I think variable annuities are a great tool for people 50+ that are hoping to get more growth out of their retirement accounts, but want to limit downside risk. To me (but probably not Dave Ramsey), the extra fees are justified by the guarantees.

 

I wouldn’t touch a fixed annuity in a low rate environment. They are pretty restrictive and you’re probably better off shopping for CDs or a bond fund. The caveat here is that some fixed annuities will pay you a guaranteed rate for new money additions after the fixed annuity is opened. So if you open a fixed annuity in a high rate environment at 4%, you might be able to continue adding new money at 4% when rates are abysmal like they were 5-10 years ago. For that reason, I will probably open a small fixed annuity the next time we’re in a high rate environment just so I always have that guaranteed 4% bucket if (when?) the economy collapses again.

 

Yea not interested at 4%. I just figured deferred fixed annuities may be getting towards 7% if CD rates have climbed to 3%. Dont know much about them yet, just figured they would give you a lot higher interest rates than a cd since the time period is so much longer.

[nodakfan17]

I just Googled fixed annuity rates and noticed they were a little over 4%, so the guaranteed rate for new money is probably about 3%. No, definitely not enticing enough to bite. 7% would do it, but I doubt we’ll get there in this current business cycle.

[nodakfan17]

[sarcasm]Add 3 years to whatever I said last time.[/sarcasm]

[PlayerHader]

[sarcasm]Add 3 years to whatever I said last time.[/sarcasm]

 

How many years can be taken off now?

[nodakfan17]

[sarcasm]Add 3 years to whatever I said last time.[/sarcasm]

 

How many years can be taken off now?

I probably got 2 of them back.

 

My variable comp and merit increase were significantly scaled back vs. 2019. My annual gross pay dropped for the first time in my adult life (by about 15%). I trimmed my 401(k) contribution back down to the match amount so that I could build up our cash reserves. Obviously, I would have been better off in the market, but my industry is highly cyclical. This is all trivial compared to the folks who really struggled in 2020, but it’s real nonetheless.

[nodakfan17]

Recently on BF, we discussed how it’s easy to get depressed if you measure your retirement preparedness against people on personal finance forums instead of the general population. Here’s a perfect example:

 

https://forum.mrmoneymustache.com/welcome-to-the-forum/i-want-to-quit-my-job/

 

The guy is 39 with a net worth of ~$900K, most of which is in liquid investments, and he wants to know if he can quit a job he hates.

[TURBO]

I turn 57 at the end of May. 1 week later, my final school year ends as I am retiring at the end of this school year.

 

[nodakfan17]

I turn 57 at the end of May. 1 week later, my final school year ends as I am retiring at the end of this school year.

 

So 57?

Congrats, Turbo!

[TURBO]

I turn 57 at the end of May. 1 week later, my final school year ends as I am retiring at the end of this school year.

 

So 57?

Congrats, Turbo!

 

yes, and thank you!

[madbad2000]

I'm targeting 59 which puts me at 30 years of federal service and both kids done with high school. I like what I do, so it's not really hard to imagine doing it longer if I want to.

[umphrey]

Recently on BF, we discussed how it’s easy to get depressed if you measure your retirement preparedness against people on personal finance forums instead of the general population. Here’s a perfect example:

 

https://forum.mrmoneymustache.com/welcome-to-the-forum/i-want-to-quit-my-job/

 

The guy is 39 with a net worth of ~$900K, most of which is in liquid investments, and he wants to know if he can quit a job he hates.

I'm 34 with about $600k and I wouldn't dream of quitting my job without something else lined up. Having negative cash flow for long periods of time would kill me.

[nodakfan17]

I value a steady paycheck as much as the next person (probably more), but if things became unbearable at work, I have enough savings to leave a toxic situation. And my net worth is nowhere close to $900,000. I call it my ‘ripcord’ fund.

[GAME05]

I won't be getting the full 30 years at my work (started late), so I kinda just have to keep working until I feel like I have enough saved up. Plus the longer I stay the higher my pension might be. Don't save a ton per month, maybe $500. And then with my side business which hasn't started yet, I'm expecting to have another $600/mo to throw entirely into retirement savings. Not sure how high small-income business taxes are yet, though. And if I stay in the US for at least summers (I have it in mind to retire in Belize) I'd be able to sell hot dogs now and again for extra income if needs be.

 

Hate paying 40% capital gains, but I'm expecting to retire before 59.5 years old and will need a new place to live upon retirement. I understand you can withdraw from an IRA early with no penalty if you're using it to buy a house, but more likely I'll be renting and not buying.

 

Saving $13k per year for the next 12-ish years isn't a huge lot of money, but at least it's there to supplement a pension of roughly $1200/mo. I'm figuring I'll need about another $1k per month to reach the point of being able to live not rich but comfortably enough. Well, maybe a few hundred more than that.

[wallus]

I value a steady paycheck as much as the next person (probably more), but if things became unbearable at work, I have enough savings to leave a toxic situation. And my net worth is nowhere close to $900,000. I call it my ‘ripcord’ fund.

 

I have always called it "Forget You" money because I wouldn't be forced to work unless I wanted to.

[nodakfan17]

I guess I differentiate between ‘forget’ you money and the ripcord fund. My ripcord fund would allow me to tactfully exit a situation that was taking a toll on me without burning any bridges. I’d hope to find another job in the industry ASAP. ‘Forget’ you money would allow someone to stick it to their boss without worrying about the consequences. I have ripcord money. I don’t have FU money.

[homer]

I won't be getting the full 30 years at my work (started late), so I kinda just have to keep working until I feel like I have enough saved up. Plus the longer I stay the higher my pension might be. Don't save a ton per month, maybe $500. And then with my side business which hasn't started yet, I'm expecting to have another $600/mo to throw entirely into retirement savings. Not sure how high small-income business taxes are yet, though. And if I stay in the US for at least summers (I have it in mind to retire in Belize) I'd be able to sell hot dogs now and again for extra income if needs be.

 

Hate paying 40% capital gains, but I'm expecting to retire before 59.5 years old and will need a new place to live upon retirement. I understand you can withdraw from an IRA early with no penalty if you're using it to buy a house, but more likely I'll be renting and not buying.

 

Saving $13k per year for the next 12-ish years isn't a huge lot of money, but at least it's there to supplement a pension of roughly $1200/mo. I'm figuring I'll need about another $1k per month to reach the point of being able to live not rich but comfortably enough. Well, maybe a few hundred more than that.

 

You might want to look into tax ramifications for working part-time overseas. You may find some cool gig in Belize that you do 20 hours a week to supplement your income.