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Frequent Social Butterfly

Re: Retiring early - share your experience! Please!

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Message 1 of 151

 

@o8ibelieve, CDs are a poor investment but not a terrible one.  CDs return less than bonds and bonds have returned less than the dollar devaluation to both the straight dollar devaluation and inflation.  Any loan type investment that has an end date is much safer than ones that do not in times of growing inflation. 

 

The rule of thumb has changed.  Last century wise money converted stock to bonds/CDs as you neared retirement and to not own any stock by the time you retire.  For the last 18 years CDs and bonds have not kept up with inflation so they have actually lost value.  That coupled with we may live into our 90s means anyone using the old rule of thumb may go broke before they die.  The new rule of thumb is 50 % stocks 50 % CDs or bonds.  There have been articles in AARP that have explained this in great detail.  If you are not doing what the experts advise you need to figure out why that warning doesn't apply to you

 

None of this matters if you can live on your interest and not go into savings.  If you are going into savings you need to figure out how to stop or minimize your loss of finds.

 

The investments that are the kiss of death are loan type investments without an end date when interest rates are quickly rising.  These bonds lose value if you sell them when the interest rates are higher than when you purchased them.  Interest rates have gone up about ten times over the last 2 years (.25% to 2.5%) so those bonds have lost most of their their value and will do even worse in the next 12 months.  You will likely lose 60-90% of their value which is even worse than a stock crash. It is all the more damaging since you have been slowly losing value over the last 20 years.

 

Lastly, FDIC Only has about 2 billion dollars to insure the banking industry.  Back in 2008 a tiny bank , 5 branches, in Philadelphia went belly up and  there wasn't near enough money in the FDIC to cover it so the other local banks each bought  branch and assumed their responsibilities.  This has happened a few times this century.  In every case there wasn't enough money to bail out the bank.  When the next crash occurs and t will it will be curtains.  I know a retired bank auditor for the Fed; her specialty was making sure the banks were not going to fail. She claims the Frank Dodd law will not protect the banks from failing. She is likely more expert than our law makers and the special interests influencing them. Since she is usually a liberal I am sure politics wasn’t part of her statement.

 

@uechapa, a little correction.  Unless you had some very old and long-term CDs you are not going to make 3% on CDs.  The main banks were getting an interest rate of .25% on average for the Obama years. That means your bank could get money from a main bank for .5% or less.  Why would they pay you 3%?  Really long-term CDs have better rates since the Fed can raise rates at any time while the CDs are locked in.  Right now, the banks are making money on CDs because you are locked into a very low rate and they can loan it out for a much higher interest rate.

 

As for the market making 6%, it made 22% last year and did better than 10% for a few years before that.  If you had 100k in the market when it crashed in 2008 you would have lost at least half of it.  However, if you didn't sell like you are told you would have over 200k today.  It is only the persons that sold at the bottom of the crash who lost big time. Because stocks are part of a tangible asset, inflation and dollar fluctuations automatically raise the value of the assets and your stock.

 

I agreed enough with the rest of your comments to give you a kudo.  Planning is not rocket science but if you don't do your research carefully and thoroughly you will be up the creek without a paddle.  Many of my friends did just that, about half of my 30 friends who retired.  You would consider them well educated haves but they will become have nots in the next decade or 2. Even though most were making about 6 figures if they need to go back to work they will only make minimum wage. There will be no way to recover any wealth now.  They need to sell their house and buy a trailer to live in to conserve their funds.  

 

Anyone who plans to avoid the market long term probably didn't do enough research.  You at least need to understand why the rule of thumb is that way.  Maybe that rule doesn't apply to you. 

 

I am neither a pessimist or an optimist.  I hope for the best and plan for the worst.  I agree with Dilbert, the cartoon character.  You always get snagged with that one possibility you didn't plan for.

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Gold Conversationalist

Re: Retiring early - share your experience! Please!

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Message 2 of 151

@pattyecalling Hi, Pattyecalling! Congratulations on your retirement.  I am just soooooo thrilled for you!!! I'm so glad you got the message I was trying to share.  Thank YOU!  

I couldn't agree with you more...when you are Blessed with people in your life who care about you, Love you, and are nurtured by you, and you are Blessed to receive the same gift in return, you cannot put a price tag on that. Pattyecalling, you are, indeed, a Very Wealthy Woman!

I wish you and those privileged to have you in their lives health and happiness in your life journey together!...

Fey Lady
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Info Seeker

Re: Retiring early - share your experience! Please!

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Message 3 of 151

Thank you! I am the originator of this blog and many people have responded.  I have since retired April 1, 2018!!  Yahoo!  I appreciate everyone's feedback but your's has meant the most.  I love what you said, "The single most powerful insight I experienced being around them is that my life is not a measure of comparison or competition with anyone else.  Living my life well means owning my own perspective of what a successful retirement is."!  That is EXACTLY what it is all about, and thank you for the reminder that owning my OWN perspective of what a successful retirement looks like what really counts, not comparing myself to this person or that person!  Amen!! I am thoroughly enjoy my retirement - the freedom is amazing!  I am not wealthy (financially) but will get by just fine, however, I AM WEALTHY being blessed with many wonderful, close friends and my beautiful grandchildren (ages 2 to 16) that love me to pieces!  I won't be doing much travelling that so many retirees talk about and I'm ok with that (I don't really like to fly anyway). Thanks again for your words of wisdom. I hope more people will be open to it.  Take care!

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Re: Retiring early - share your experience! Please!

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Message 4 of 151

In an April 26, 2018, post, I wrote:

 

”The retirement fearmongers constantly harp on money, money, money...we ALL know we need to have a FINANCIAL plan in place. The real challenge is planning for the emotional/social realities of a lifestyle different from our career/work lifestyle.”

 

I have my awesome mentors to thank for this retirement reality check perspective.  As I’ve stated in previous retirement-related posts, these men and women (all successfully retired in their late 50s to 92 year old Fiercely Awesome Mr. Harvey) graciously allowed me to hang out with them while I was in my late twenties/early thirties.  You know, people come into your life at just the right time to guide you where you need to go when you are clueless and floundering.  However, you have to be open to receive what they have to offer—even when it bruises your think-you-know-it-all ego.  Fortunately, I was more than ready to inhale whatever advice and guidance they so graciously and generously offered me.  I am forever humbled and grateful for their nurturing lasting impressions and life affirming impact they had on my work career and my personal life.

 

The single most powerful insight I experienced being around them is that my life is not a measure of comparison or competition with anyone else.  Living my life well means owning my own perspective of what a successful retirement is.  My mentors taught me well.

 

It’s not easy being a Single Independent (sole income) in this world.  Assumptions are made that have little to nothing to do with your actual life experiences.

 

I was able to successfully retire early (at 58) three years ago because I retired on MY terms and MY Single Independent perspective of what I considered to be living a life well lived. 

 

As the Italian philosopher, Cicero said, “To be content with what we possess is the greatest and most secure of riches.”

Fey Lady
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Gold Conversationalist

Re: Retiring early - share your experience! Please!

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Message 5 of 151

@KalyanR567384, Hi!, Please know and be forewarned that I am a confirmed practicing optimist.

 

If you can stand the positivity along with my reality check perspectives I've experienced in the last three years, I'd be happy to email you directly.

Fey Lady
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Re: Retiring early - share your experience! Please!

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Message 6 of 151

1-Be sure to check the little box for: "Would you like to have VOLUNTARY TAX WITHHELD from your Social Security Benefits?" on your SSA application.  Leaving it blank means that zero tax will be withheld, and the results could be a surprise in April of the next year.

 

2-Try an disassociate yourself from any credit card affiliated with CITI (Costco, Home Depot....).  CITI is worthless for customer suport, returning calls, and any action when needed.  Recommend cards through Bankamerica, American Express, Diners, Chase, Barclay, etc instead, if you hope to get service/help when necessary.

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Re: Retiring early - share your experience! Please!

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Message 7 of 151
$6,000 interest is just from the annuities—I didn’t make that clear.
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Re: Retiring early - share your experience! Please!

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Message 8 of 151

FYI- your taxes are still deferred with IRA CD’s. No paying taxes until you withdraw money, just like regular IRA’s, plus we get a slightly higher rate. We weathered two bad stock markets, but at our age we cannot do that again, so we have the majority of our funds in tiered CD’s and annuities that pay over $6,000 compounding interest yearly. If you can withstand losing half your savings in a volatile stock market, that is an option, but most of us cannot. I would not recommend it to anyone less than 10 years away from retirement. We no longer have the stress, knowing our savings are insured, and what amounts we can count on. We achieved this through hard work, saving for retirement starting at an early age, married to the same person for 47 years, no health catastrophes, and the luck of buying a home in CA while they were still affordable. Labeling people haves and haves not is deceptive and not at all helpful to those considering early retirement.

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Re: Retiring early - share your experience! Please!

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Message 9 of 151

There is never 'enough' money; however, one must make do with what one has.

 

I've read several submitted comments along with numerous financial stats pertaining to retirees and from what I gather it seems that the fortunate retirees are those that planned ahead and had above average incomes throughout their working careers.

 

The reality is that we live in a world of the Haves and the Have-nots, as it's always been and will always be even if the entire world succumbs to socialism or communism which seems to be the emergent trend.  At any rate, the ranks of the Haves prepared for retirement and chose when it was most advantageous for them to do so while the Have-nots aren't/weren't ready and will continue to suffer plus be a chronic burden on society, unfortunately.  This, of course, is nothing new.

 

I've also read many comments on folks who bailed on the investment market, yanked their money, paid the taxman and shoved their cash into meager CDs paying less than 3.5% APY while forfeiting the opportunity to make 6%+ yields in the market because they were unwilling to weather an occasional recession.  Those that stayed the course continue to make good returns, providing their portfolios are well diversified and they're investment savvy.

 

My advice to my kids is simple:  Prepare now for what you want when you retire.  It's not rocket science.  Be self-reliant and independent and don't rest your hopes and dreams on 'the government' because 'the government' has never been able to manage itself out of a paper bag primarily because of too many moochers and parasites that rely on it.  Prepare for the worst but continue to hope for the best.  Be a saver, an investor and be 100% debt-free when you retire.

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Re: Retiring early - share your experience! Please!

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Message 10 of 151

If you are considering retiring early, you should have a plan in place first. I retired at 56 and my husband waited to full retirement age at 66. He gets social security and I get a state teachers pension. Teachers and administers can retire at 55 in CA as long as you have a lot of years in, so I went to a preretirement conference and found that my load of unused sick leave counted for an extra 1 1/2 years of retirement, so I took it. I retired right before hundreds of teachers were laid off during the recession. I was an assistant principal at the time, and making more than I was in the classroom, my position was eliminated, and if I went back to the classroom, I would have taken a big hit in my retirement allotment, so it was a no brainer for me. We also had our home and debts paid off, which is essential to retiring early, and over half million in IRA and TSA’s.

 

It is not cheap to retire in CA, so we made sure this would work for us. We travel when we want, buy what we want, and don’t worry about money. If you worry about money, don’t retire. We are both healthy & take no prescription drugs—that’s another factor to think about. Are you healthy? I had a 6 month gap between a Cobra and Medicare, which cost me $600 a month for practically no coverage. Our home is worth upwards of $750k, which will buy years of assisted care if we need it. If not, it will go to our kids. Do you have something to fall back on? We take beach walks 3x a week, and love life. During the years my husband worked after I retired, we continued to sock away money. After having two hits in the stock market, one in 2000 and one in 2008, we decided we could not take another, so we moved it all to CDs. We take a draw once a year if we have some big project. This year we had solar installed—no more electric bills of $400 a month, so it will pay for itself in four years. So, if you’re not a millionaire, sit down and get the hard figures on exactly what your pension will be, what are your expenses, what do you want out of retirement, and if it adds up, go for it. I’ve never regretted a day of my retirement.

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