How are you planing for retirement?

[Jim in Anchorage]

There are some pretty sharp people here and I wonder how you are planing your retirement. I have very little in IRA's, I put all my extra money in rental property [Wonderful tax benefits, by the way.]

Background-53, figure 15 years to go.

[Celtic_soulja]

who plans for retirement?...just buy as many assets as you can and hope for the best...that's what I'm doing...

[Jim in Anchorage]

who plans for retirement?...just buy as many assets as you can and hope for the best...that's what I'm doing...

I said SOME pretty sharp people here.

[meazza]

I said SOME pretty sharp people here.

 

I'm trying to win the lottery. I figure, i have about another 40 years. The odds are on my side.

[Jim in Anchorage]

I'm trying to win the lottery. I figure, i have about another 40 years. The odds are on my side.

Thank God I came here for retirement advice. Never thought of the lottery[opps said thank God-will that disqualify me for a presidential run?]

[meazza]

Thank God I came here for retirement advice. Never thought of the lottery[opps said thank God-will that disqualify me for a presidential run?]

 

Not if you follow up with Allah Akhbar

 

Funny thing about the lottery. My ex-gf's uncle who happens to already be a really wealthy man won 2M. Reminds me of that episode on the Simpsons where Mr Burns wins the Van at the baseball game

[Jim in Anchorage]

Not if you follow up with Allah Akhbar

 

Funny thing about the lottery. My ex-gf's uncle who happens to already be a really wealthy man won 2M. Reminds me of that episode on the Simpsons where Mr Burns wins the Van at the baseball game

That seems to be the way it works.Friend of mine[loaded, but because of his wife, not anything he did] wins a $40,000 truck. Trades it in to upgrade his $35,000 boat to a $60,000 boat.

[meazza]

That seems to be the way it works.Friend of mine[loaded, but because of his wife, not anything he did] wins a $40,000 truck. Trades it in to upgrade his $35,000 boat to a $60,000 boat.

 

To answer your question though, I plan on simply putting as much in my RRSP's that I could. I'm assuming there is a similar system down south (tax deductible contributions)?

 

Besides that, I don't own any property, and unless I get married, won't buy any property.

 

 

Just make sure you don't have too much risk too close to retirement. Don't make liquidity become an issue.

[Jim in Anchorage]

To answer your question though, I plan on simply putting as much in my RRSP's that I could. I'm assuming there is a similar system down south (tax deductible contributions)?

 

Besides that, I don't own any property, and unless I get married, won't buy any property.

 

 

Just make sure you don't have too much risk too close to retirement. Don't make liquidity become an issue.

As far as I can figure, I have no risk unless people quit renting apartments altogether. That is the source of my income. But of course I will always need to be prepared for [expensive] property repairs, unlike a IRA. The units are the cash cow, and I can't just put a bucket under a roof leak.

[meazza]

As far as I can figure, I have no risk unless people quit renting apartments altogether. That is the source of my income. But of course I will always need to be prepared for [expensive] property repairs, unlike a IRA. The units are the cash cow, and I can't just put a bucket under a roof leak.

 

I know how it is. My mom has a house with 3 apartments attached and she lives off that plus a little work she does and her pension since she's 66.

 

That house will probably stay in my family and will eventually be split between us, (we're 4 siblings) but rental properties are always good. I'm assuming you will have it paid off soon? If so, you'll be much more comfortable.

 

People won't quit renting if they like the home. Sometimes that means not charging as much in rent if the client is good.

[Jim in Anchorage]

I know how it is. My mom has a house with 3 apartments attached and she lives off that plus a little work she does and her pension since she's 66.

 

That house will probably stay in my family and will eventually be split between us, (we're 4 siblings) but rental properties are always good. I'm assuming you will have it paid off soon? If so, you'll be much more comfortable.

 

People won't quit renting if they like the home. Sometimes that means not charging as much in rent if the client is good.

Correct. I have some long term renters that are paying under market value, but they are are a landlords dream. I am not going to upset their lives, and maybe create a new problem for me[if they move out] by raising their rent.

New people pay full pop.

[meazza]

Correct. I have some long term renters that are paying under market value, but they are are a landlords dream. I am not going to upset their lives, and maybe create a new problem for me[if they move out] by raising their rent.

New people pay full pop.

 

Well good luck.

 

I'd say you're fine. Have a good source of income post retirement and if the worst, you could sell your property and live off that.

[Jim in Anchorage]

Well good luck.

 

I'd say you're fine. Have a good source of income post retirement and if the worst, you could sell your property and live off that.

I am planning on when the property is sold it will buy a grand send off for myself, including a riderless horse and a Gold sarcophagus

[Live&DieBillsFootball]

A friend of mine was doing something similar. He had about 20 rental houses in Florida. About 6 years ago, his net worth was about $1.5 million. He ended up taking out home equity loans to buy some additional prepeties. Today, he is down to about 8 properties, most of which he is trying to sell through short sales. His net worth is now negative. In addition to the rental properties, he also operates a home repair business. Since the majority of his work has been done on his own houses, he has reported very little income from his business. As a result, he has paid very little social security taxes over the years. He's now in his late 40's, he has pretty much lost all of the rental property that he was going to use to retire on, and his projected soc sec benefits are squat.

 

Basically a reminder that we all need to diversify. Put as much money in IRA's and 401k's as you can afford. Try to save 10% of your income toward your retirement and start EARLY. Make sure that you diversify your investments. Take advantage of Roth ira's. There are a lot of benefits to Roths in addition to the tax free withdrawals.

[GG]

A friend of mine was doing something similar. He had about 20 rental houses in Florida. About 6 years ago, his net worth was about $1.5 million. He ended up taking out home equity loans to buy some additional prepeties. Today, he is down to about 8 properties, most of which he is trying to sell through short sales. His net worth is now negative. In addition to the rental properties, he also operates a home repair business. Since the majority of his work has been done on his own houses, he has reported very little income from his business. As a result, he has paid very little social security taxes over the years. He's now in his late 40's, he has pretty much lost all of the rental property that he was going to use to retire on, and his projected soc sec benefits are squat.

 

Basically a reminder that we all need to diversify. Put as much money in IRA's and 401k's as you can afford. Try to save 10% of your income toward your retirement and start EARLY. Make sure that you diversify your investments. Take advantage of Roth ira's. There are a lot of benefits to Roths in addition to the tax free withdrawals.

 

Your friend's plan was not a sound retirement plan obviously.

 

The key is to keep retirement funds separate from play money, or in his case growing his net worth. You should never ever borrow against your retirement account to fund to fund speculative ventures. Otherwise you run a good risk of ending up where your friend is. If he's young, there's still hope that maybe he'll recover some value, but people in their 50's shouldn't even think about doing what your friend did.

[finknottle]

Your friend's plan was not a sound retirement plan obviously.

 

The key is to keep retirement funds separate from play money, or in his case growing his net worth. You should never ever borrow against your retirement account to fund to fund speculative ventures. Otherwise you run a good risk of ending up where your friend is. If he's young, there's still hope that maybe he'll recover some value, but people in their 50's shouldn't even think about doing what your friend did.

 

This raises an interesting question about the culture of investing. What he did is only different in magnitude from what an invester does who shifts retirement funds from bonds to speculative stocks.

 

There is a pervasive belief that retirement portfolio's should be designed so that they become more conservative as you get closer to retirement, and this has led to the proliferation of retirement-date funds. Can anyone point me to a mathematical rationale of this stategy versus others? To my eye, they are underperformers in the sense of absolute return. You are gaining increasing certaintity as your retirement approaches, but at the cost of expected gain. That may be desirable for some, but it certainly isn't highlighted.

 

It is like advising poker players to reduce the stakes of the games they play as midnight approaches. It may be a valuable psychological strategy, but it questionable that it should be seen as poker strategy.

[Chef Jim]

As far as I can figure, I have no risk unless people quit renting apartments altogether. That is the source of my income. But of course I will always need to be prepared for [expensive] property repairs, unlike a IRA. The units are the cash cow, and I can't just put a bucket under a roof leak.

 

The challenge with rental properties is keeping them rented and the lack of liquidity. Many time during retirement you need a chuck of money for something. With rental properties you've created somewhat of a pension which is ok but only having an income stream and no principal to tap into could be a challenge through your lifetime. For me:

 

Between my wife and I we have two IRAs, two Roth IRAs, a SEP IRA, two 401ks, and two cash value life policies for additional tax free money. I'm also accumulating stock options with my company. I intend to be retired between 55-60. So when I was a chef I ate well, now as and investment advisor I plan well.

[finknottle]

There are some pretty sharp people here and I wonder how you are planing your retirement. I have very little in IRA's, I put all my extra money in rental property [Wonderful tax benefits, by the way.]

Background-53, figure 15 years to go.

 

My recipe is stocks and more stocks. Stop when the expected annual return is what I want each year in retirement.

 

Confidence in the target expected annual return is important. Confidence that the S&P will grow 6% annually, say, is greater than GE specifically. Confidence in what the real estate market will do long term is, for me, dangerously lacking.

 

As an aside, you have to think about how you handle a business after retirement. It is one thing if it is a revenue stream vehicle that will run itself, and you can be a passive owner getting periodic checks. It is quite another if you will still have to be involved day-to-day, are are assuming you can sell it off at some targeted price.

[Chef Jim]

This raises an interesting question about the culture of investing. What he did is only different in magnitude from what an invester does who shifts retirement funds from bonds to speculative stocks.

 

There is a pervasive belief that retirement portfolio's should be designed so that they become more conservative as you get closer to retirement, and this has led to the proliferation of retirement-date funds. Can anyone point me to a mathematical rationale of this stategy versus others? To my eye, they are underperformers in the sense of absolute return. You are gaining increasing certaintity as your retirement approaches, but at the cost of expected gain. That may be desirable for some, but it certainly isn't highlighted.

 

It is like advising poker players to reduce the stakes of the games they play as midnight approaches. It may be a valuable psychological strategy, but it questionable that it should be seen as poker strategy.

 

I never recommend target date or life cycle funds because the fund company chooses the equity to bond mix which does not take in to account the investors risk tolerance. So you want to retire in 25 years but you're a very aggressive or conservative investor the portfolio is not necessarily going to reflect that. And sure asset allocation is probably the most important tool for reaching your retirement goal but what's also very important is saving the right amount and dollar cost averaging.

[finknottle]

I never recommend target date or life cycle funds because the fund company chooses the equity to bond mix which does not take in to account the investors risk tolerance. So you want to retire in 25 years but you're a very aggressive or conservative investor the portfolio is not necessarily going to reflect that. And sure asset allocation is probably the most important tool for reaching your retirement goal but what's also very important is saving the right amount and dollar cost averaging.

 

Thanks - that's in line with my thinking. If your goal is X and you make sufficient allocations, you will meet or exceed X with high probability. But if your goal is to maximize your expected return (or minimize risk, or some other philosophy), it is not so good.