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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.
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
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.
@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.
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.
I found this good advice on MSN - Money
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
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"
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.
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...........
"...Why is everyone a victim? Take personal responsibility for your life..."
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.
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.