Baby Boomers and retirement savings

My big retirement plan: I still own my house in the Bay Area. I make my grocery/bill money from renting it out (as well as doing a consulting job now and then, if only to keep my skills up to date). If my mutual funds, stocks, and IRA run out (which they shouldn't, but you never know), I can easily sell it and live off that money the rest of my life.

 

<div class='quotetop'>QUOTE(Schmika @ Jan 15 2007, 07:41 AM) [snapback]375820[/snapback]</div>

Congratulations on the retirement!

I looked at both annuities and REITs for my mother three years ago, and I have to tell you ... I didn't like either one. All of the annuities I looked at, even the low cost ones at Fidelity and Vanguard, have expenses that are not stated right up front (you really have to dig into them). Sure, the earnings are tax free, but if you pay more in costs than you would in taxes, why bother? The only time they look like they make sense to me is if you have a large taxable income coming in (I'm talking the top, 36% bracket, not the more common 26 or 28% bracket most of us find ourselves in). That's income, not savings, because we don't tax savings (except for those mandatory IRA and 401K withdrawals.)

Right now, I think low cost bond funds or balanced mutual funds look better than any of the other "safe" investments. There is still some risk, including having the rate fall below inflation, but there are some mutual/bond funds that plan for that and provide some safe diversification.

I like Fidelity's Strategic Real Return, FSRRX, for some inflation-protection and a respectable return from 4.7 to 4.8%. It invests in "a neutral mix of approximately 30% inflation-protected debt securities; 25% floating-rate loans, 25% commodity-linked notes and related investments, and 20% REITs and other real estate related investments" to balance out the vagarities of the market, and it has a relatively low expense ratio of .80%.

Look at the expense ratio closely, though, as it can really eat into a low yeild investment. And there's no reason to pay a load in today's environment with Fidelity, Vanguard and T Rowe Price offering high quality, low cost funds with no load. The "advertisements" for higher rates on funds and investments that are front loaded rarely include that load in the calculation (they have to in the prospectus, but if there's a sales guy earning a commission, he just might "forget" to tell you.)

I wonder if the "low savings rate" they talk about includes money in IRA and 401Ks (and the associated other funds like 403Bs)?

 

<div class='quotetop'>QUOTE(Godiva @ Jan 15 2007, 01:06 PM) [snapback]375902[/snapback]</div>

No medical insurance? NO problem. Need food stamps? rent money? SSI? NO problem. Your uncle George is working on getting you social security after only 18 months of employment in the US. The US govt. is your best friend. Unless, of course you were born here. Citizens don't get any freebies, but they do get to pay for illegal aliens. There are many homeless American citizens here in So. FL. It's truly sad to see people begging for money at highway exits and living under a bridge. Many of them are Vietnam vets.

I am relatively healthy except for high BP & diabetes, but at age 56 who knows. If my wife died I'd lose our medical ins. I have a close friend who has gone completely downhill in the last 10 months when he went into a hospital for a routine knee replacement. He ended up in that hellhole for 1 month and almost died because of their neglegence. This is real! He is now much worse off than before the hosp. exp. He told me 3 days ago he has to get an EKG on his head because his speech is sluuring. He never had a speech problem. About 3 weeks ago he fell down twice in the same week and hit his head hard on the wooden floor. His balance is quite bad since the botched knee job and he uses a walker. I've known him since 1990. He was a big, strong guy back then. I have seen his health go completely downhill in the last 10 months. We are the same age. The poor guy actually took out a loan for 10K to pay the fu***ng hospital. They almost killed him and they had the kahoots to threaten to sue my friend. I would have told them to get fu**ed! Besides, they have tons of money for uninsured people & illegals. My friend was worried about his credit rating. If I were in that situation I would have not paid that hospital. They really did f**k up big time. I know. I called my friend every night for a month. He told me several times that he just wanted to die as he had a raging fever on and off that he got in the hospital. Those people didn't document anything about the fever and infection so my friend was left holding the bag. It's no wonder why malpractice ins. is so expensive. So I suppose one could get homeless like you said. To me it's not right that this country won't provide for its down and out citizens, but they will spend billions on pestholes like Iraq for their needs.

I have a physical disability that prohibits me from being able to do any job that requires standing for more than very brief times. It makes me think alot about how easy I could end up homeless. I spent 4 years of my life earning 2 college degrees, but they're not worth squat. The "new way" is experience, exp., exp., and after wasting 1-10 years in entry/low level non college positions that any 18 year old could get then maybe one could use the Bachelor's degree for the good paying position/career it was supposed to buy. In 1998 I spent $20K on an accelerated fast track 1 year program that took me from an AS degree to a BS degree. At that time most employers wanted a 4 year degree for any professional position.

I've rambled enough.

 

I've been very worried about retirement for a long time, even though I'm far from actually retiring. All the horror stories you hear about baby-boomers who have not prepared...

I'm making sure that we will never be in any sort of position like that. Between the two of us we put away around $28,000 in 2006 for retirement, and plan on doing so every year from now till we retire. We both have IRA's, and my wife has a 401k through her group. I'm still a student, so no 401k for me, but once I do have one available, I plan on contributing the maximum at all times.

According to the retirement calculators, if we keep this up with no changes, we'll have a million saved for retirement in 13 years. Of course, I don't know what my future 401k will be like, so that may even be sooner.

I told a friend about it, and he was amazed at the number, but when you think that you need to live off it for potentially a LONG time, and also cover any number of unforeseen costs, it doesn't seem like that much.

Anyway, I'm trying to do as much as I can to make sure that if something DOES happen, it won't destroy us financially, and have to live off our children, like I've seen happen to too many elderly these days. Or even worse, have no children or children who are unable to provide any help.

There is nothing more important than ensuring your financial stability for the future. My brother, who is in his mid 20's is even putting away as much as he can into his 401k. THere are some who have the sense to do so, but unfortunately not enough. I see a looming disaster as we try and care for the millions who are coming close to retirement, and do not have the resources to do so...

 

<div class='quotetop'>QUOTE(DocVijay @ Jan 17 2007, 12:39 PM) [snapback]376827[/snapback]</div>

I did not feel offended by your post. I just wanted to present my scenerio. Believe me, I hope I can obtain a full time job soon so I can start saving money. Have a good day.