What steps are you taking to secure your financial future?

[AARPLynne]

What is the best change you have made to how you handle your finances now to help ensure a more secure future? Share what's worked for you, plus learn what others are doing. Thanks for contributing to the discussion!

[vr3219]

I am working on that as we speak!  My first concern is to get my salary back that I lost when I was laid off in 2014.  I used all of my savings and retirement to live on until I started working again in 2016.  My first job back in the work force did not pay what I was earning before the layoff and created a big set...bankruptcy.  I am still trying to recover even with a better paying job at the end of 2016.  I am $17,400 short of what I need to live on comfortably.  Without the additional income I will not be able to secure my financial future.  Living with mom and dad to save money is not an option since neither of them are around.  I will probably end up working for the rest of my life like my dad did unless a better paying job comes through. 

[RonMesnard]

Tell me about it!  I always made 10-20k less than I made in 2008.  Since jobs were very hard to come by I never nogotiated salary.  Once I took  a 30k cut from the top salary.  Lucky I did.  I didn't even see another opening for 6 months in my town. I could have relocated. 

Luckily my expenses are dwindling and my wife works.   We are putting away max 401k and IRA contributions. Due to good investing and the biggest longest bull market in history we are beyond fine. We met our financial goals years ago.  We are still socking it away while the sun shines.  I will likely be retired this time next year.  I am already working FY 2019 for the government.  I doubt I will be renewed for FY 2020.

[RonMesnard]

BTW... I retired after 70 and we are in great enough shape my wife retired at 62.  We don't have to move for retirement even though we are always in the top 10 counties for taxes in the US in the last 20 years.

[DoryAnne2]

I live in New York and would NOT be able to retire if I stayed here, with the high taxes.  The only way we'll be able to retire comfortably is by selling our home in NY, moving to Florida where we can buy something without a mortgage, and we'll have very low taxes.  Hopefully if you can relocate you can actually have a retirement. 

[s804940b]

I live in NC and we get a lot of people that went from the north all the way to FL, only to find out that the change was more than they could get used to.  They are called half backs.  I would suggest you try out several states to the south of NY prior to deciding on FL.

[DoryAnne2]

Thank you for the warning.  We bought a small place in a 55+ community Florida 5 years in anticipation of my retirement and we vacation there 2-3 times a year.  I'm due to retire in 2 years.  I already know I love Florida except for summer.  We plan on traveling and visiting in New York during the hottest three months, although people I know down there say they get acclimated and many of them don't even mind the summer. 

[RonMesnard]

Apparently, your blood thins.  I was in South FL during the coldest snap in 50 years.  The news showed many wearing parkas.  However, every now and then you could also tourists in shorts.  It might have been 50 during the footage.  To the long time natives the cold was brutal. You will acclimate to the warmer weather.  I wore shorts but also wore a sweat shirt for warmth.  Peak temp for the day was in the 60s so I needed shorts.

[RonMesnard]

FL is a great place to retire!  You picked very well.  Retirees are a major source of income for them so the make life easier for retired.  FL has no death taxes and there are other big benifits for seniors. In senior health.  Half their business is seniors. They tend to have plenty of health care and Drs are all well informed  The weather is the biggest benifit.  You can be active in the winter.  The keys exteneded both my parent's lives 10 years.

My parents lived there.  They lucked out when dad died.  Their old state wanted half of dad's estate.  They had 2 houses and lived in each about half the year.  The tie breaker was dad always filed income taxes from FL so mom kept all her money. File in FL! 

[retiredtraveler]

Wife and I tracked our expenses, to the penny, for about 3 years before retiring. We used Excel spreadsheet, created about a dozen categories of expenses, and were religious about entering the data every month. We mostly put everything on a credit card, so made this pretty easy.

   We then tried to amortize expenses that people don't plan for. The $8000 roof your house will need eventually, the $600 set of tires and $800 struts and shocks the car will need, house maintenance, health care costs, etc.   We then had a really good picture, and projection, of future expenses. Not perfect, but over 3 years you get some really good ideas of expenses you will incur as expenses come up you may not have thought of.

   Then you start looking at future income, investments, another whole set of numbers...........

[RonMesnard]

Planning is essential!  I never made a spread sheet for retirement because the 2 biggest factors when I die and the stock market are completely unknown.  We just saved as much money as possible.  Fortunately, for the last few years we could save the maximum amount allowed. We were at 70% stocks until covid.  We dumped most of our stock before the covid crash then bought back what I hoped were covid helped stocks in May.  They were amazon, and a few vaccine producers at 90% of our wealth.  In September, we dumped all that stock and resumed our managed funds with hundreds of thousands extra,  We did go 50/50 stacks and bonds. Even though my plan was a good one, I was fearful that we might lose most of our wealth, so I quit while we were way ahead.  Now, with the market the way it is, I am thankful that we have the minimum stock involvement.  We can't go below 50/50 for our managed funds. 

I could never planned that windfall.

[RonMesnard]

I found this good advice on MSN - Money

http://www.msn.com/en-us/money/savingandinvesting/9-moneymaking-tips-even-seasoned-investors-can-use...

I have added some comments to some of the advice.

2 Invest based on when you’ll need the money

I don’t buy this for a second. A good buy should be bought no matter what or when you will need the money. There are always exceptions to every rule. The one here would be don't lock into something for 20 years when you will need the money in 10 years but that is common sense. Who cares if you need the money in 20 years and the investment will make you lots of money for a year or 2. You sell it and invest in something else and you are ahead!.

3 Keep your costs down

Yes

5 Diversify, but don’t di-worse-ify

This is a more advanced tip. You need to understand which stocks fall into different categories. Most 401ks give you options to automatically balance. This is a good way to go if you have this option. This is protection for 8.

7 Once you win the game, it’s okay to stop playing

It is always smart to reduce risk after a long bull market. I am already packing some money away. Each year I will pull out more funds and either keep them as cash or buy bonds.  Interest rates are not high enough to buy bonds unless they are closed end bonds. You get x amount of cash on a specific date. If it is open ended bonds, you will lose money just like stocks. If you buy an openended bond for 1,000 at 1% interest rate. Your open-ended bond will be worth 500 if the interest rate goes up to 2%. That is because a new 500 bond will generate the same interest as your 1,000 bond. Money or this author doesn’t understand bonds or just didn’t explain their advice very well.  I do agree that you should reduce your risk exposure once you met your goals.  It is OK to die with money in your investments.  I recently got advice from a MD who has been retired for over 20 years.  Things often cost more than you will plan for.  He must have retired with a great deal of money and is now wishing he stayed working for a few more years.  He probably figured he would be dead by now but is as healthy as a horse.  It is commonly believed if you are 65 and healthy you will likely live into your 90s.  The advice is keep 50% in stocks while interest rates are low.  My nest egg is 30% cash 20% defensive stocks and 50% growth stocks.  A defensive stock is "Defensive consumer stocks are those that deal with staples. They pay a dividend and tend to be less susceptible to market pullbacks. ... The companies in the consumer defensive category sell products that are always in demand"

https://www.investopedia.com/investing/consumer-defensive-stocks/

Now is a good time to buy defensive stocks since everyone is trying to make a killing.  ATT is another good defensive stock. These are safer than open ended bonds right now and pay better too. 

8 Remember, stocks also go down

This is saying buy low and sell high advice. Bargains are mostly found when the market is in trouble.  It is more advantagious to buy stock in a depressed market.  Now or in a year or 2 is a good time to reduce your risks.  Remember, the DOW made 20% compaired to a bond making 1-2% last year.  You are being paid handsomly for your risk.  The longer you can hang in the more money you make as your risk continues to rise.  The trick is to have most of your investments into something stable before the market crashes.  The predictions are maybe 2 to 4 years until a crash from now but no one knows for sure.

[RonMesnard]

An update, the market may correct next year.  At least that is what my portfolio manager says.  I picked him because he has a nose for when the market is going to change and moves things accordinly. 

If you buy bonds try buying 1 year T-bills.  Once bonds get up to 3% then you can start buying openended bonds.  They will increase in value if the market corrects.  Right now they are still losers because interest rates continue to rise sharply.

[RonMesnard]

Anyone ever look into 10 10 IRAs? 

It is likely an annuity with an insurance company. 

I would read the bail out clause VERY carefully.  In the current stock market giving you 10% back on your money would be very easy.  I have made over 10% on the market every year for the last 5 years. I averaged more than 10% over the last 10 years. The insurance company would have done much better.  The DOW rose 20% last year. If the market changes they will need to bail out.  Do you get ALL your principle back?  That is fair since you will be getting checks for your 10% every year while the market does well.  When you get your money back you can buy bonds or CDs. 

[2Papa]

Switch from your brick and mortar bank to an online bank and reap interest rates on checking and saving that are MUCH higher!  💵

[s804940b]

I have matched up the rates at both. I do better with the small branch banks here. Seems they are always having odd month specials. Thanks anyway.

[RonMesnard]

My wife talked me into looking for a job when I was 66.  The extra few years has done wonders for my nest egg.  I am upping my SS benifits and am able to contribute max savings into my 401k.  As our expenses dwindle, by working we can max out our savings.

We all need to pay more attention to finacne and investing. I started at 50 as a resolution.  I subscribed to Money and have listened to financial programs on talk radio.  Year by year I have gained understanding.  I now can see about half my friends are terrible investors.  They will run out of money in their 70s even though they made about the same money that I did.

[DoryAnne2]

My husband and I both will get Social Security but only I will get a pension. Initially I was going to take a reduced pension so that if I passed away my husband would continue receiving it. However, it was suggested to me that I take my full pension and instead buy a life insurance policy on myself that would cover my husband if I die. The premiums are less than the pension reduction would have been, and I can cancel the policy if my husband predeceases me. We'll be saving close to $200 a month on the difference between the reduced pension amount versus the life insurance premiums. I'm in good health, on no medication, which made my rate affordable. I'm 63 and my husband is 61. I plan to retire in a little over two years, with my husband following me the following year.

[RonMesnard]

It is refreshing to see persons planning so carefully for their future.  That is rare if you review stats of persons getting reddy for retirement. 

Insurance is super easy to cancle.  Just miss a payment...

My advice is get a payment schedule until you are 90.  You will likely live longer than that.  Your insurance might be less than $200/month in your early 60s but it will increase usually evey 5 years.  Insurance claimes you will be dead before 85 while scientists think you will pass 90.  Insurance companies make up the death tables because they don't want to lose money.  I bet your insurance will be prohibitive by 80.

If you dely retirement you can continue building your nest egg with your  and your SS increases by about 8% every year you delay. That is accumlative so if you delay 6 years you may gain 50% more in benifits. SS usess the insurance death tables which are likely wrong.  I will retire at 70 with 44k in SS benifits.  My wife is much younger than me and can collect mine after I die.  She is the one with a pension. We will gambol that I will die first. She will not have insurance.  Your savings is also accumlative.  I am worrth more than I would have ever dreamed.  50% more than what I had at 65. I am mostly in the stock market and have been doing unbelivably well.  I have averaged 8 times better than CDs in those 5 years.

[DoryAnne2]

I agree that many people don't plan adequately for retirement.  I have my budget and income/expenses worked out pretty well.  Of course, all you can do is plan, you never know what's going to come up. 

As far as the insurance goes, I'm getting a 20-year term so the rates will never go up.  I'll cancel if my husband dies.  I'm not planning more than 20 years into retirement...LOL  

[RonMesnard]

@DoryAnne2, it sounds like a decent plan.

Anyone on this blog will likely have above average plans.  We are activly seeking info.  The true problems are lazy and complacent people who just hope for the best.

[gr2646]

Unfortunately, I had to divorce my wife who never understood the importance of being truthful and honest about our finances. A wonderful woman otherwise!

[eman244]

Amen. I know the feeling!

[RonMesnard]

One other point I would like to bring up. 

I long time retired. MD told me retire later than what what makes sense.  When you are only living off savings it may dwindle faster than you planned.  The older you are the more impossible it is to get a job and impossible to get something paying more than minimum wage. 

[carlk730703]

You didn't have to divorce your wife. You wanted to and that was the excuse you used

[RonMesnard]

I suspect the divorse was due to extreme dissrespect. 

I feel I need to trust my spouse.  That is solid grounds for divorse if it is infidelity or spending all your money.  That person doesn't really care about you more than they care about themselves. 

[s804940b]

It sounds more like an extreme lack of communication or understanding about how money is handled. Spending all your money says a lot here. Was all of the marital money yours? Also, I do not think you can compare infidelity to money issues.

[s804940b]

I agree with you. They could have had separate finances. Many couples do and it can work out well