Retirement within 1 year

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Topic Author
grndcomm
Posts: 49
Joined: Sun Jul 12, 2015 11:52 am

Retirement within 1 year

Post by grndcomm » Sun Jul 12, 2015 12:29 pm

Wanted to post to get some advice here. I have local radio shows wanting listeners to come into their office and sit down to get a retirement analysis. I have 3 in my area (Greenville/Spartanburg SC) that I have heard on Sunday mornings. Before I picked one to visit, I wanted to post my situation here before going one on one with these professionals. To be honest I had planned to visit all 3 at some point to get diversified opinions on all the options. Thanks in advance for any and all advise

Emergency Fund: $25,000
Debt: None
Tax Filing Status: Married filing jointly
Tax Rate: Do not know. Our combined income is $69,000 from employment.
State of Residence: SC
Age: 66
Desired Asset Allocation: No stocks. Unsure about bonds as I do not know too much about them
Desired International Allocation: None

Current Assets
Annuity: $212,000 paying 3% for life. Contract has been completed and money is liquid. No fees.
Ally Online Bank: $125,000
Home: $175,000

Current Income:
Me: $45,000
Wife: $24,000
My SocSec: $2047
My Pension: $1100

Future Income
Wife SocSec: $1200

Security of principle is 1st and foremost in any investment. Simple stated I am interested in what investment can produce
the highest yield. That may be my lack of investment knowledge, but as you can see I would like to retire within 12 months (or less) and have income that could come close to what I have now. I understand retirement from a paycheck will decrease income, but am looking to maximize return on my investment.

Any questions, feel free. I have tried to cover what I thought would be helpful.

Regards and Thanks
KD

itstoomuch
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Location: midValley OR

Re: Retirement within 1 year

Post by itstoomuch » Sun Jul 12, 2015 1:33 pm

IMO, YMMV, IDK
Keep what ever discretionary retirement funds "safe" and extremely liquid till you are retired 1 year and understand your retirement requirements.
Maybe even till after the 2016 Elections. In the interim time, think about what alternatives are available.
I'd rather get 1% in interest/dividends and avoid losing $$$$ in an ill-timed investment.
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

sport
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Location: Cleveland, OH

Re: Retirement within 1 year

Post by sport » Sun Jul 12, 2015 2:47 pm

grndcomm wrote: I have local radio shows wanting listeners to come into their office and sit down to get a retirement analysis.
No doubt, this analysis will result in someone trying to sell you something. I would be very careful and skeptical about taking advice from a salesperson who does not have a fiduciary responsibility to you. Their presentation will be slick, and it may even sound too good to be true. Well, you know how that usually works out.

RadAudit
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Location: Second star on the right and straight on 'til morning

Re: Retirement within 1 year

Post by RadAudit » Sun Jul 12, 2015 3:10 pm

Welcome to the forum.

Let's see if I understand this.

You and the wife are making ~$69,000 a year. With your pension and both of your SS your income would be ~$52,000. The annuity would pay ~$6,400 a year. So, you'd like to have another ~$11,000 in income.

You don't want to invest in stocks. You aren't sure about bonds. You have ~$125,000 in the bank.

I agree with
itstoomuch wrote:Keep what ever discretionary retirement funds "safe" and extremely liquid till you are retired 1 year and understand your retirement requirements.
I interpret "safe" to mean a FDIC insured account at a bank. And, when you decide to invest, please don't chase yield alone. Investing only for the highest yield leads to trouble in some cases.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

22twain
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Joined: Thu May 10, 2012 5:42 pm

Re: Retirement within 1 year

Post by 22twain » Sun Jul 12, 2015 3:41 pm

Will your wife continue to work for the time being, and if so, how long?

What are your actual total expenses? Hopefully you're not spending all of that $69K.
My investing princiPLEs do not include absolutely preserving princiPAL.

NightFall
Posts: 269
Joined: Wed Mar 12, 2014 4:38 pm

Re: Retirement within 1 year

Post by NightFall » Sun Jul 12, 2015 8:17 pm

Note that you probably won't need the same level if income in retirement due to taxes. For example, you'll no longer pay FICA on your income, which is about $5k on $69k of income. So that's now $64k. In addition, at that level of income, it's unlikely that much if any of your social security income will be taxable at the federal level. So you may not be as far off as you think.

I will say that it is likely that your annuity and maybe your pension won't be indexed to inflation, which could cause problems in the future depending on inflation. Social security is automatically indexed to inflation.

The Wizard
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Re: Retirement within 1 year

Post by The Wizard » Sun Jul 12, 2015 8:24 pm

If the OP has never owned any stock index funds over the past several decades, I would say that now is probably not the time to push him into any.
Way too much chance of a bad reaction when the next downturn happens...
Attempted new signature...

Dantes
Posts: 290
Joined: Wed Feb 25, 2015 6:38 pm

Re: Retirement within 1 year

Post by Dantes » Mon Jul 13, 2015 6:25 am

Viewing your numbers simplistically, with $69K current income and standard deductions and exemptions you are currently the middle of the 15% federal tax bracket, with an effective tax rate of just under 10%. South Carolina SIT would be about half that. So your current after tax income, taking out federal and state income taxes and social security would be roughly 54K.

Pension and joint social security are 52K. If/when they were your only sources of income then you would be basically free of tax - look for on line calculators for help on determining how much of social security is taxable, and what your future income taxes will be.

The point is your after tax income will be very close to your current after tax income. Which is a good thing because the two statements

Security of principle is 1st and foremost in any investment. Simple stated I am interested in what investment can produce the highest yield.
Are basically incompatible. The investment that can produce the highest yield is the least safe investment.

Your posting does not really have enough information to confirm that I am correct about your current and future tax situation; wife's age, work plans, are all of your savings in taxable accounts, is the now liquid annuity money still paying 3%, and so on. I would suggest
* Do nothing right away. Nothing in your post shows any reason for you to be in a hurry to make any changes.
* Come up with two numbers: how much do you absolutely need in retirement to maintain a tolerable lifestyle, and how much would you reasonably like to have to live on in retirement (this second number is, one hopes, larger than the first!).These numbers will tell you what you must have for income and what you want to get for income. Its asking for trouble to not have a specific goal for you investments.
* Go to the social security website, and get estimates of you and your wife's social security with various filing ages, decide if there is any possibility of your deferring filing for any period of time.
* Be very very careful about taking advice on your finances from a financial advisor - they have nothing to lose but their fees - what do you have to lose?
* With an aversion to stocks and bonds you *might* be a candidate for an annuity, but because of the current low interest rates and no obvious immediate need to spend from savings there is IMO no reason to consider an annuity yet - it would be more valuable in, say, 10 years, when the pension, if non-COLA'd, will be less helpful and an joint life immediate annuity would pay more.

JW-Retired
Posts: 7154
Joined: Sun Dec 16, 2007 12:25 pm

Re: Retirement within 1 year

Post by JW-Retired » Mon Jul 13, 2015 7:56 am

grndcomm wrote:
Age: 66
Desired Asset Allocation: No stocks. Unsure about bonds as I do not know too much about them
Current Assets
Annuity: $212,000 paying 3% for life. Contract has been completed and money is liquid. No fees.
Ally Online Bank: $125,000
Home: $175,000
What sort of annuity is this? It sounds like you just bought it. I mention this because your "3% for life" annuity appears to be paying only $6,360/year. Is this correct? If so, something seems wrong. Currently, $212,000 will buy an age 66 male a joint & survivor immediate annuity paying $12,470/year. https://www.immediateannuities.com/
JW
Retired at Last

JW-Retired
Posts: 7154
Joined: Sun Dec 16, 2007 12:25 pm

Re: Retirement within 1 year

Post by JW-Retired » Mon Jul 13, 2015 8:06 am

grndcomm wrote: Tax Rate: Do not know. Our combined income is $69,000 from employment.

Current Income:
Me: $45,000
Wife: $24,000
My SocSec: $2047
My Pension: $1100

Future Income
Wife SocSec: $1200
Could you explain your income currently. Are you drawing the SocSec and Pension monthly amounts now in addition to your $69,000 from employment? Or are these estimates for when you retire?
JW
Retired at Last

indexonlyplease
Posts: 1571
Joined: Thu Apr 30, 2015 12:30 pm
Location: Florida

Re: Retirement within 1 year

Post by indexonlyplease » Mon Jul 13, 2015 9:12 am

Besides what has been said above stay away from the financial planner until you understand investments. The financail planner is there to make money even if your money goes down. There are some good ones but you really have to be careful. Also, why take the risk..

You will pay someone at least 1+% to handle your money. Post with the group here and they will teach you how to invest and save yoou a lot of money.

Also, time to start reading the books recommended on this site.

Like the other poster stated. Could you handle a loss now in your investments.


Cliff

Topic Author
grndcomm
Posts: 49
Joined: Sun Jul 12, 2015 11:52 am

Re: Retirement within 1 year

Post by grndcomm » Mon Jul 13, 2015 7:38 pm

JW Nearly Retired wrote:
grndcomm wrote: Tax Rate: Do not know. Our combined income is $69,000 from employment.

Current Income:
Me: $45,000
Wife: $24,000
My SocSec: $2047
My Pension: $1100

Future Income
Wife SocSec: $1200
Could you explain your income currently. Are you drawing the SocSec and Pension monthly amounts now in addition to your $69,000 from employment? Or are these estimates for when you retire?
JW
Yes I am drawing SS and Pension now in addition to the $69,000. I am working on posting my expenses. Debt free, but I have a condo out of town that has $110 monthly dues and utilities, cable bill, Satellite TV bill and assortment of other monthly expenses. Really appreciate all the advice I have receive here. It is not going unnoticed. I just don't get back here every day.

Topic Author
grndcomm
Posts: 49
Joined: Sun Jul 12, 2015 11:52 am

Re: Retirement within 1 year

Post by grndcomm » Mon Jul 13, 2015 7:43 pm

JW Nearly Retired wrote:
grndcomm wrote:
Age: 66
Desired Asset Allocation: No stocks. Unsure about bonds as I do not know too much about them
Current Assets
Annuity: $212,000 paying 3% for life. Contract has been completed and money is liquid. No fees.
Ally Online Bank: $125,000
Home: $175,000
What sort of annuity is this? It sounds like you just bought it. I mention this because your "3% for life" annuity appears to be paying only $6,360/year. Is this correct? If so, something seems wrong. Currently, $212,000 will buy an age 66 male a joint & survivor immediate annuity paying $12,470/year. https://www.immediateannuities.com/
JW

I got the annuity June 27, 2008. It paid 4.5% for 5 years then reverted to a base of 3%. I have looked at some annuities and I did not see any above my currtent 3%. I will check out the link you posted. Thanks for your input

Topic Author
grndcomm
Posts: 49
Joined: Sun Jul 12, 2015 11:52 am

Re: Retirement within 1 year

Post by grndcomm » Mon Jul 13, 2015 7:51 pm

itstoomuch wrote:IMO, YMMV, IDK
Keep what ever discretionary retirement funds "safe" and extremely liquid till you are retired 1 year and understand your retirement requirements.
Maybe even till after the 2016 Elections. In the interim time, think about what alternatives are available.
I'd rather get 1% in interest/dividends and avoid losing $$$$ in an ill-timed investment.
Thanks, good advice

Topic Author
grndcomm
Posts: 49
Joined: Sun Jul 12, 2015 11:52 am

Re: Retirement within 1 year

Post by grndcomm » Mon Jul 13, 2015 7:54 pm

sport wrote:
grndcomm wrote: I have local radio shows wanting listeners to come into their office and sit down to get a retirement analysis.
No doubt, this analysis will result in someone trying to sell you something. I would be very careful and skeptical about taking advice from a salesperson who does not have a fiduciary responsibility to you. Their presentation will be slick, and it may even sound too good to be true. Well, you know how that usually works out.
After hearing you and others recommend to stay from these financial analyst, I just cancelled my appointment for this Thursday. He had 101 questions as to why when I told him I was not interested in rescheduling. On the radio he was promoting something called "RAFT" and "PPP"

Topic Author
grndcomm
Posts: 49
Joined: Sun Jul 12, 2015 11:52 am

Re: Retirement within 1 year

Post by grndcomm » Mon Jul 13, 2015 7:55 pm

RadAudit wrote:Welcome to the forum.

Let's see if I understand this.

You and the wife are making ~$69,000 a year. With your pension and both of your SS your income would be ~$52,000. The annuity would pay ~$6,400 a year. So, you'd like to have another ~$11,000 in income.

You don't want to invest in stocks. You aren't sure about bonds. You have ~$125,000 in the bank.

I agree with
itstoomuch wrote:Keep what ever discretionary retirement funds "safe" and extremely liquid till you are retired 1 year and understand your retirement requirements.
I interpret "safe" to mean a FDIC insured account at a bank. And, when you decide to invest, please don't chase yield alone. Investing only for the highest yield leads to trouble in some cases.
Yes I am ultra conservative now and would not touch stocks at this time. Thanks for your input

Topic Author
grndcomm
Posts: 49
Joined: Sun Jul 12, 2015 11:52 am

Re: Retirement within 1 year

Post by grndcomm » Mon Jul 13, 2015 7:58 pm

22twain wrote:Will your wife continue to work for the time being, and if so, how long?

What are your actual total expenses? Hopefully you're not spending all of that $69K.
I had to ask her that question and she said hopefully 4-5 more years. She is 65 and she really likes her job. I think she can do it if health doesn't become an issue

I am working on putting together all my expenses. Out of town tonight but will be back tomorrow. Should have expenses ready by end of week. Thanks for your input

Topic Author
grndcomm
Posts: 49
Joined: Sun Jul 12, 2015 11:52 am

Re: Retirement within 1 year

Post by grndcomm » Mon Jul 13, 2015 8:00 pm

NightFall wrote:Note that you probably won't need the same level if income in retirement due to taxes. For example, you'll no longer pay FICA on your income, which is about $5k on $69k of income. So that's now $64k. In addition, at that level of income, it's unlikely that much if any of your social security income will be taxable at the federal level. So you may not be as far off as you think.

I will say that it is likely that your annuity and maybe your pension won't be indexed to inflation, which could cause problems in the future depending on inflation. Social security is automatically indexed to inflation.
Very interesting figures you have posted. You are correct pension and annuity are not indexed to inflation. Thanks for your input

Topic Author
grndcomm
Posts: 49
Joined: Sun Jul 12, 2015 11:52 am

Re: Retirement within 1 year

Post by grndcomm » Mon Jul 13, 2015 8:10 pm

Dantes wrote:Viewing your numbers simplistically, with $69K current income and standard deductions and exemptions you are currently the middle of the 15% federal tax bracket, with an effective tax rate of just under 10%. South Carolina SIT would be about half that. So your current after tax income, taking out federal and state income taxes and social security would be roughly 54K.

Pension and joint social security are 52K. If/when they were your only sources of income then you would be basically free of tax - look for on line calculators for help on determining how much of social security is taxable, and what your future income taxes will be.

The point is your after tax income will be very close to your current after tax income. Which is a good thing because the two statements

Security of principle is 1st and foremost in any investment. Simple stated I am interested in what investment can produce the highest yield.
Are basically incompatible. The investment that can produce the highest yield is the least safe investment.

Your posting does not really have enough information to confirm that I am correct about your current and future tax situation; wife's age, work plans, are all of your savings in taxable accounts, is the now liquid annuity money still paying 3%, and so on. I would suggest
* Do nothing right away. Nothing in your post shows any reason for you to be in a hurry to make any changes.
* Come up with two numbers: how much do you absolutely need in retirement to maintain a tolerable lifestyle, and how much would you reasonably like to have to live on in retirement (this second number is, one hopes, larger than the first!).These numbers will tell you what you must have for income and what you want to get for income. Its asking for trouble to not have a specific goal for you investments.
* Go to the social security website, and get estimates of you and your wife's social security with various filing ages, decide if there is any possibility of your deferring filing for any period of time.
* Be very very careful about taking advice on your finances from a financial advisor - they have nothing to lose but their fees - what do you have to lose?
* With an aversion to stocks and bonds you *might* be a candidate for an annuity, but because of the current low interest rates and no obvious immediate need to spend from savings there is IMO no reason to consider an annuity yet - it would be more valuable in, say, 10 years, when the pension, if non-COLA'd, will be less helpful and an joint life immediate annuity would pay more.
Wife's age 65. She plans to work 4-5 more years. All savings in the annuity and Ally bank. So yes they are all taxable. Yes annuity pays 3% interest annually. Interest posted daily and as of today the exact amount of annuity was 212,158.09. I started SS at 62. Long story but due to some medical bills and wanting to help family, I decided to start at 62. My wife is 65 and has not started her SS. Currently if she retired today, her SS would be 1095 per month. She wants to wait until at least 66 (full retirement for her) to start. She will be 66 April 2016. Thanks you very much for you input as your and other advice about staying away from Financial advisor has been well received and I cancelled the appointment just today. He tried to reschedule but I told him I would call if I decided to make another appointment. Unfortunately he has my number, so likely he will be calling me.

JW-Retired
Posts: 7154
Joined: Sun Dec 16, 2007 12:25 pm

Re: Retirement within 1 year

Post by JW-Retired » Mon Jul 13, 2015 8:35 pm

grndcomm wrote: Wife's age 65. She plans to work 4-5 more years. All savings in the annuity and Ally bank. So yes they are all taxable. Yes annuity pays 3% interest annually. Interest posted daily and as of today the exact amount of annuity was 212,158.09. I started SS at 62. Long story but due to some medical bills and wanting to help family, I decided to start at 62. My wife is 65 and has not started her SS. Currently if she retired today, her SS would be 1095 per month. She wants to wait until at least 66 (full retirement for her) to start. She will be 66 April 2016.
The perfect SS strategy for your wife is to take spousal benefits at 66 (her FRA). Once she is FRA then claiming spousal no longer forces her to apply for her own benefits at the same time. Plus there is no increase in spousal benefits beyond her FRA. The age 66 spousal benefit would be 1/2 your PIA, .....I think that would be 0.5x(2047/0.75) = $1364/month, which would be more than her own benefit at her FRA. This would leave her own benefit to grow from delayed credits (and additional work years) all the way to age 70. If her own SS at age 65 would be $1095 then an estimate for her maximum delayed SS at 70 would be about 1.07x1.32x1095 = $1546. Plus maybe a little more from extra years.

It's a total no-brainer for her to take spousal at 66 and delay her own SS to age 70.
JW
Retired at Last

User avatar
patrick013
Posts: 2796
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Re: Retirement within 1 year

Post by patrick013 » Mon Jul 13, 2015 8:48 pm

Very good staying away from any advisor's as you have well
decided to go fixed income 100%.

Whatever taxable bonds or high rate CD's you may buy stay of course in
the AA and higher category with 1 to 2 year maturities. When
rates rise in several years increase the maturity. Everybody is
waiting for 3 to 5 year bonds that pay 4 to 5 per cent and not get
stuck with low interest long term bonds or CD's.

There isn't any high yield fixed income ideas except 3 years out and
longer before going long term with a large investment.
age in bonds, buy-and-hold, 10 year business cycle

Topic Author
grndcomm
Posts: 49
Joined: Sun Jul 12, 2015 11:52 am

Re: Retirement within 1 year

Post by grndcomm » Wed Jul 15, 2015 3:47 pm

JW Nearly Retired wrote:
grndcomm wrote: Wife's age 65. She plans to work 4-5 more years. All savings in the annuity and Ally bank. So yes they are all taxable. Yes annuity pays 3% interest annually. Interest posted daily and as of today the exact amount of annuity was 212,158.09. I started SS at 62. Long story but due to some medical bills and wanting to help family, I decided to start at 62. My wife is 65 and has not started her SS. Currently if she retired today, her SS would be 1095 per month. She wants to wait until at least 66 (full retirement for her) to start. She will be 66 April 2016.
The perfect SS strategy for your wife is to take spousal benefits at 66 (her FRA). Once she is FRA then claiming spousal no longer forces her to apply for her own benefits at the same time. Plus there is no increase in spousal benefits beyond her FRA. The age 66 spousal benefit would be 1/2 your PIA, .....I think that would be 0.5x(2047/0.75) = $1364/month, which would be more than her own benefit at her FRA. This would leave her own benefit to grow from delayed credits (and additional work years) all the way to age 70. If her own SS at age 65 would be $1095 then an estimate for her maximum delayed SS at 70 would be about 1.07x1.32x1095 = $1546. Plus maybe a little more from extra years.

It's a total no-brainer for her to take spousal at 66 and delay her own SS to age 70.

Just so I am clear on this. My wife at 66 (FRA) can call Soc Sec and start process for her to setup spousal benefits? And she will keep accruing until 70? And she would receive half of my benefit and I also would continue to draw my full $2047?
Thank you for your time.
JW

JW-Retired
Posts: 7154
Joined: Sun Dec 16, 2007 12:25 pm

Re: Retirement within 1 year

Post by JW-Retired » Wed Jul 15, 2015 7:47 pm

grndcomm wrote:
JW Nearly Retired wrote:
It's a total no-brainer for her to take spousal at 66 and delay her own SS to age 70.
JW
Just so I am clear on this. My wife at 66 (FRA) can call Soc Sec and start process for her to setup spousal benefits? And she will keep accruing until 70? And she would receive half of my benefit and I also would continue to draw my full $2047?
Pretty close, but the spousal benefit will be even better than what you state above as "half of my benefit". She will get half of your PIA (primary insurance amount), which is what you would be receiving if you had delayed until 66 yourself. You started at 62 so you get only 75% of that amount. So if my math is right her benefit as your spouse will be 0.5x4/3 = 2/3rds of your current benefit.

Your $2047 won't change because of her claim. It will continue to increase yearly from the annual COLA (as will her spousal benefit).

Her own unclaimed benefit will continue to increase from both the delayed credit and the cola until age 70, when I think it will be $200-$300/month more than the spousal amount. At that time she can call up SS and tell them she wants to switch to her benefit.

I did exactly these steps when I delayed my own SS until 70 myself.
JW
Retired at Last

Topic Author
grndcomm
Posts: 49
Joined: Sun Jul 12, 2015 11:52 am

Re: Retirement within 1 year

Post by grndcomm » Thu Jul 16, 2015 9:00 pm

JW Nearly Retired wrote:
grndcomm wrote:
JW Nearly Retired wrote:
It's a total no-brainer for her to take spousal at 66 and delay her own SS to age 70.
JW
Just so I am clear on this. My wife at 66 (FRA) can call Soc Sec and start process for her to setup spousal benefits? And she will keep accruing until 70? And she would receive half of my benefit and I also would continue to draw my full $2047?
Pretty close, but the spousal benefit will be even better than what you state above as "half of my benefit". She will get half of your PIA (primary insurance amount), which is what you would be receiving if you had delayed until 66 yourself. You started at 62 so you get only 75% of that amount. So if my math is right her benefit as your spouse will be 0.5x4/3 = 2/3rds of your current benefit.

Your $2047 won't change because of her claim. It will continue to increase yearly from the annual COLA (as will her spousal benefit).

Her own unclaimed benefit will continue to increase from both the delayed credit and the cola until age 70, when I think it will be $200-$300/month more than the spousal amount. At that time she can call up SS and tell them she wants to switch to her benefit.

I did exactly these steps when I delayed my own SS until 70 myself.
JW


JW, I can't thank you enough for this information as I would never have known about this had you not posted. Still working on putting up expenses to see if I should move funds out of Annuity and Ally, but with this factor of SS, I will not make any decisions until I can post better info for you and posters to analyze. Thanks again for your time and help.

JW-Retired
Posts: 7154
Joined: Sun Dec 16, 2007 12:25 pm

Re: Retirement within 1 year

Post by JW-Retired » Fri Jul 17, 2015 9:55 am

grndcomm wrote: JW, I can't thank you enough for this information as I would never have known about this had you not posted. Still working on putting up expenses to see if I should move funds out of Annuity and Ally, but with this factor of SS, I will not make any decisions until I can post better info for you and posters to analyze. Thanks again for your time and help.
You are most welcome. SSA does post this info on their web pages but it's sometimes hard to find. Just for the record so you don't have to rely only on an anonymous poster, this is a clear SSA explanation.........
SSA wrote: If your spouse has reached full retirement age and is eligible for a spouse's benefit and his or her own retirement benefit, he or she has a choice. Your spouse can choose to receive only the spouse's benefit when he or she applies online and delay receiving retirement benefits until a later date. If retirement benefits are delayed, a higher benefit may be received at a later date based on the effect of delayed retirement credits.
https://socialsecurity.gov/planners/ret ... .html#a0=1
JW
Retired at Last

Topic Author
grndcomm
Posts: 49
Joined: Sun Jul 12, 2015 11:52 am

Re: Retirement within 1 year

Post by grndcomm » Fri Jul 17, 2015 8:51 pm

Here is update with more information.



Current (Monthly)

All income figures are NET, not GROSS

Income: Wife>>$1410
Myself>> $2600
My Soc Sec>> 2047
Pension>> $1100
Annuity Interest>>$522
Ally Interest>> $125

INCOME TOTAL: $7804

Expenses: Church>> $540
Natural gas (Util budgeted) $100
Electric (Util budgeted) $100
Savings>>$1395**
Condo Electric (Util budgeted) $50
Verizon Cell Phones >> $200
Groceries (budgeted) $400
Vehicle Gas (budgeted) $240
Storage bldg. rent $65
Condo HOA $110
Satellite TV $140
Internet Service $60
Water/Sewer $50
Medicare Supplement $132
Personal Cash withdrawal $400

** I have multiple categories this $1395 is allocated to. For example vehicle insurance, Medical, vacation, vehicle maintenance, property taxes, Christmas fund, and a few others expenses that are not monthly. For example my property taxes are right at $1000 per year, so I set aside $85 a month (part of the $1395) in the property tax category. When the taxes have to be paid in January, I do a transfer from savings to my bank to pay them.

TOTAL EXPENSES: $3982

I only have investments in Ally Bank and a Principal Annuity. Ally= .99% and Annuity 3%

I am 66, wife is 65. Annuity is fully liquid, so seeking info if there is a better investment than Ally and Annuity. Stock Market is not an option.

Thanks for any and all input

KD

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Peter Foley
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Re: Retirement within 1 year

Post by Peter Foley » Fri Jul 17, 2015 11:35 pm

I won't make any recommendations as to how you should invest. I will point out that it is important to understand that there are two types of risk, market risk and inflation risk. You seem to be focused solely on market risk. You should also ask yourself, "How do I protect myself from inflation?"

cherijoh
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Re: Retirement within 1 year

Post by cherijoh » Sat Jul 18, 2015 7:13 am

Dantes wrote: Pension and joint social security are 52K. If/when they were your only sources of income then you would be basically free of tax - look for on line calculators for help on determining how much of social security is taxable, and what your future income taxes will be.
How did you come up with the OP having $52K of income tax-free?

epictetus
Posts: 560
Joined: Sat Mar 10, 2007 6:43 pm

Re: Retirement within 1 year

Post by epictetus » Sat Jul 18, 2015 7:22 am

just wanted to echo several of the other comments:

definitely don't go to the financial planners. i'm afraid they would get your head spinning and you'd likely make an expensive mistake of some kind.
figure out how to maximize the social security benefits
given what you have said re: risk tolerance it might be best just to do a CD ladder.

i'm really glad you came here. the people here are wonderful and have really given you some good info and guidance.
Focus on what you can control

Topic Author
grndcomm
Posts: 49
Joined: Sun Jul 12, 2015 11:52 am

Re: Retirement within 1 year

Post by grndcomm » Sat Jul 18, 2015 8:06 am

epictetus wrote:just wanted to echo several of the other comments:

definitely don't go to the financial planners. i'm afraid they would get your head spinning and you'd likely make an expensive mistake of some kind.
figure out how to maximize the social security benefits
given what you have said re: risk tolerance it might be best just to do a CD ladder.

i'm really glad you came here. the people here are wonderful and have really given you some good info and guidance.
I have cancelled an appointment I had last week with a financial planner. Found this forum just days before I was scheduled to meet with him.
My head is easy to spin (LOL) at this point in my financial life. Retirement is something that seems so far away, and then one day it's knocking at your door. With the help of JW, I feel I have a plan in place for SocSec. That advice and many others has been studied and made this site even more valuable. Interesting to read posts here as some are similar to my situation. Thanks for your welcome and advice. I have a few family members who will be retiring later than I, and I have referred this site to them.

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patrick013
Posts: 2796
Joined: Mon Jul 13, 2015 7:49 pm

Re: Retirement within 1 year

Post by patrick013 » Sat Jul 18, 2015 11:58 am

Interest rates are supposed to be 3% higher than today for
national rate CD's in 3 years. But that is not an annuity
just the rate on a standard CD. So, your choice.
age in bonds, buy-and-hold, 10 year business cycle

derosa
Posts: 464
Joined: Wed Jul 24, 2013 5:18 pm

Re: Retirement within 1 year

Post by derosa » Sat Jul 18, 2015 12:55 pm

You want security with no risk and highest return. Unfortunately the financial markets don't work that way. To get any return at all you have to take risk - there is no other way. No risk = no return.

You can see that with your savings account. You are earning virtually nothing in a savings account. All cash accounts do is keep your money the same as it is today. You are earning nothing - 0.1% maybe?

Bonds take a little more risk. But as you have seen and read for the last years interest there is very low. The yield on BND is around 3.5%

Risk is rewarded in equities. Yes you can have good and bad years but over the longer term it remains good - well above cash and better than bonds.

The point is to do some research on what an all cash and bond portfolio produces over the next 20 or 30 years. The testing tools will show you that a portfolio of only cash and bonds will have a very tough time of lasting that long when you are withdrawing each year. You will never get "ahead." I would strongly encourage you to do some reading and research on portfolio survival.

On place to look as a start would be the lifestrategy funds.

Dantes
Posts: 290
Joined: Wed Feb 25, 2015 6:38 pm

Re: Retirement within 1 year

Post by Dantes » Sat Jul 18, 2015 2:37 pm

cherijoh wrote:
Dantes wrote: Pension and joint social security are 52K. If/when they were your only sources of income then you would be basically free of tax - look for on line calculators for help on determining how much of social security is taxable, and what your future income taxes will be.
How did you come up with the OP having $52K of income tax-free?
I was guessing, based on the original post. If the only income was pension (13,200) and combined SS (38,964) then the taxable amount of the social security would be nearly nothing - calcxml.com gives it as $341. That and the pension combined are less than the standard deductions and exemptions for a couple filing jointly.

Workinghard
Posts: 369
Joined: Fri Apr 04, 2014 4:56 am

Re: Retirement within 1 year

Post by Workinghard » Sat Jul 18, 2015 7:17 pm

grndcomm wrote:
epictetus wrote:just wanted to echo several of the other comments:

definitely don't go to the financial planners. i'm afraid they would get your head spinning and you'd likely make an expensive mistake of some kind.
figure out how to maximize the social security benefits
given what you have said re: risk tolerance it might be best just to do a CD ladder.

i'm really glad you came here. the people here are wonderful and have really given you some good info and guidance.
I have cancelled an appointment I had last week with a financial planner. Found this forum just days before I was scheduled to meet with him.
My head is easy to spin (LOL) at this point in my financial life. Retirement is something that seems so far away, and then one day it's knocking at your door. With the help of JW, I feel I have a plan in place for SocSec. That advice and many others has been studied and made this site even more valuable. Interesting to read posts here as some are similar to my situation. Thanks for your welcome and advice. I have a few family members who will be retiring later than I, and I have referred this site to them.
It takes time. I joined a year ago in April and have learned about the 3 fund portfolio, SS, Medicare, taxes, Roth conversions, RMDs, and other things. I still have a LOT to learn, but I've come a long ways thanks to the input and patience of people here.

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