8 years from retiring at 70

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Nyc10036
Posts: 571
Joined: Wed Oct 05, 2016 6:29 pm

8 years from retiring at 70

Post by Nyc10036 »

Just had lunch with a friend, and I agreed to "look over" her finances in 2020.

What I know so far:
1. She is 62 and plans on working until 70. She has no pension.
Don't know if she has any IRAs.
2. Her husband who is older works for the US Postal Service and will retire with a pension.
He has worked his entire career with USPS and I am guessing he plans on retiring at 70 also.
3. Their mortgage is paid off.
4. Children are independent and do not require any assistance.
5. No grandchildren.

I am concerned that if I suggest putting some of their savings into the stock market
and the inevitable correction occurs with them so close to retirement,
they would curse me. :-/

Any general suggestions? Thoughts?
User avatar
JoeRetire
Posts: 5786
Joined: Tue Jan 16, 2018 2:44 pm

Re: 8 years from retiring at 70

Post by JoeRetire »

Nyc10036 wrote: Sun Dec 15, 2019 10:40 pm Just had lunch with a friend, and I agreed to "look over" her finances in 2020.

What I know so far:
1. She is 62 and plans on working until 70. She has no pension.
Don't know if she has any IRAs.
2. Her husband who is older works for the US Postal Service and will retire with a pension.
He has worked his entire career with USPS and I am guessing he plans on retiring at 70 also.
3. Their mortgage is paid off.
4. Children are independent and do not require any assistance.
5. No grandchildren.

I am concerned that if I suggest putting some of their savings into the stock market
and the inevitable correction occurs with them so close to retirement,
they would curse me. :-/

Any general suggestions? Thoughts?
I suggest that you don't make any suggestions until you know a lot more about their financial situation and risk tolerance. Remember: you break it, you own it.

Do you have some relevant expertise?
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
mortfree
Posts: 2404
Joined: Mon Sep 12, 2016 7:06 pm

Re: 8 years from retiring at 70

Post by mortfree »

I would start off with stating “the market goes up, the market goes down”

If they don’t understand that, then I probably wouldn’t offer too much advice.

A couple years of expenses in cash. Anything left in lifestrategy fixed income or similarly conservative target date fund. Assuming a conservative couple.
User avatar
Watty
Posts: 20709
Joined: Wed Oct 10, 2007 3:55 pm

Re: 8 years from retiring at 70

Post by Watty »

Nyc10036 wrote: Sun Dec 15, 2019 10:40 pm I am concerned that if I suggest putting some of their savings into the stock market
and the inevitable correction occurs with them so close to retirement,
they would curse me. :-/

Any general suggestions? Thoughts?
You could suggest that she read the book "The Bogleheads Guide to Investing" and suggest that she check out this board and ask her questions here herself.

https://www.amazon.com/s?k=Bogleheads&t ... ads.org-20

There is also a getting started wiki that she could check out.

https://www.bogleheads.org/wiki/Getting_started
User avatar
whodidntante
Posts: 9137
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: 8 years from retiring at 70

Post by whodidntante »

Not enough information. You might mention this website as a reasonable source of free and sort of decent advice and to request a review of her situation here. I would be concerned about a market chicken investing in equities, too.
Dottie57
Posts: 9203
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: 8 years from retiring at 70

Post by Dottie57 »

Watty wrote: Sun Dec 15, 2019 10:50 pm
Nyc10036 wrote: Sun Dec 15, 2019 10:40 pm I am concerned that if I suggest putting some of their savings into the stock market
and the inevitable correction occurs with them so close to retirement,
they would curse me. :-/

Any general suggestions? Thoughts?
You could suggest that she read the book "The Bogleheads Guide to Investing" and suggest that she check out this board and ask her questions here herself.

https://www.amazon.com/s?k=Bogleheads&t ... ads.org-20

There is also a getting started wiki that she could check out.

https://www.bogleheads.org/wiki/Getting_started
Great place for friend to start learning. Don’t give advice. Give her the power to learn enough to maintain any portfolio they have. Fortunately the USPS pension should be pretty good.
User avatar
Watty
Posts: 20709
Joined: Wed Oct 10, 2007 3:55 pm

Re: 8 years from retiring at 70

Post by Watty »

One more thing. You could talk with her about how 99% of "investment advisors" are really salespeople that will try to sell her expensive investments to make money from her and while they might seem to be nice people they are really dangerous to her financial health. She really needs to be careful is someone tries to sell her something like an annuity.
Topic Author
Nyc10036
Posts: 571
Joined: Wed Oct 05, 2016 6:29 pm

Re: 8 years from retiring at 70

Post by Nyc10036 »

So, the only safe suggestion is to tell them that they can earn 1.7% with an online savings account vs 0.01% at Chase?
msk
Posts: 1470
Joined: Mon Aug 15, 2016 10:40 am

Re: 8 years from retiring at 70

Post by msk »

Does she need to invest? Does her husband's pension not cover her? Very possible that both are very well set up for life...
rich126
Posts: 2011
Joined: Thu Mar 01, 2018 4:56 pm

Re: 8 years from retiring at 70

Post by rich126 »

When it comes to any kind of help or advice I rarely give a direct answer unless it is a clear factual answer. Instead I ask a variety of questions such that the person often decides the issue themselves. It works well and keeps me off the hook. Not to mention everyone have different priorities in life.
HomeStretch
Posts: 4991
Joined: Thu Dec 27, 2018 3:06 pm

Re: 8 years from retiring at 70

Post by HomeStretch »

Agree with the many good suggestions you have received. Another option is Vanguard Personal Advisor Services.
MathWizard
Posts: 4346
Joined: Tue Jul 26, 2011 1:35 pm

Re: 8 years from retiring at 70

Post by MathWizard »

ROTH IRA, using Vanguard Money Market VMMXX is earning 2.2% right now, which is about as conservative as you can get short
of CDs.

A friend who was investing quite conservatively, asked me how I was investing. I showed her my results over the years. I told
her that I could not guarantee these results, but why I invested the way that I did.

To me, just show examples, don't advise, and don't recommend.

I did advise my 80 year old MIL not to get into the stock market, since most of her income was from share cropping.
I told her she already had plenty of income variability with the farm income, she didn't need any more.
curmudgeon
Posts: 2094
Joined: Thu Jun 20, 2013 11:00 pm

Re: 8 years from retiring at 70

Post by curmudgeon »

Nyc10036 wrote: Sun Dec 15, 2019 11:04 pm So, the only safe suggestion is to tell them that they can earn 1.7% with an online savings account vs 0.01% at Chase?
I would suggest leaving investment suggestions to the last. Start with more basics of income and expenses both now and what they might look like in retirement.

Find out if they (one or both) are eligible for SS, and what the benefit would be. Estimate what the Post Office pension would be. See if there is any other income. Have they been saving into TSP or other retirement accounts.

Estimate expenses (largely based on current expenses). Look at what medical premiums will be in retirement. Allow for dental expenses if dental coverage will stop. Allow for lumpy expenses (roof, car) as well as typical monthly ones. Expect potential inflation, but if the main income sources have COLA, that is less critical.

Perhaps biggest concern: look at what happens to income if one of them (most likely husband) dies. Pension and SS may be significantly lower in that case, while expenses may drop less.

Only after working through that process would I give any consideration to what savings they have and whether they should be invested differently. Maybe they should consider LTC insurance. Many people in their situation just stick with CDs from local banks or credit unions.
User avatar
goodenyou
Posts: 2373
Joined: Sun Jan 31, 2010 11:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

Re: 8 years from retiring at 70

Post by goodenyou »

I try not to ever offer investing advice to anyone who is not willing to put a minimal effort in educating themselves on investing.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.
User avatar
JoeRetire
Posts: 5786
Joined: Tue Jan 16, 2018 2:44 pm

Re: 8 years from retiring at 70

Post by JoeRetire »

Nyc10036 wrote: Sun Dec 15, 2019 11:04 pm So, the only safe suggestion is to tell them that they can earn 1.7% with an online savings account vs 0.01% at Chase?
That is indeed safe.
Whether it meets her needs or not depends on, well, her needs and goals.

You don't have anywhere near enough information to suggest anything. And we have even less.

Why is she asking you? Maybe you should offer to accompany her to talk with a professional?
Last edited by JoeRetire on Mon Dec 16, 2019 7:46 am, edited 1 time in total.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
Billionaire
Posts: 339
Joined: Sat Jan 04, 2014 3:05 pm

Re: 8 years from retiring at 70

Post by Billionaire »

How did the topic come up and what made her ask you for advice? Understanding why they both want to work until they are 70 would also be good to know. Others have given good advice and I would also avoid giving detailed investment advice.
Mr.BB
Posts: 1408
Joined: Sun May 08, 2016 10:10 am

Re: 8 years from retiring at 70

Post by Mr.BB »

Instead of recommending financial information, why don't you recommend educational materials that can do on their own. You'll find numerous books they could read listed on the boglehead site.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."
User avatar
tennisplyr
Posts: 2691
Joined: Tue Jan 28, 2014 1:53 pm
Location: Sarasota, FL

Re: 8 years from retiring at 70

Post by tennisplyr »

As others have said, I wouldn't tell her what to invest in specifically but rather where get could educate herself. I had a similar situation with my mom who only held CDs, glad I held off recommending anything as this was right before 2008. Sounds like their situation is pretty good, maybe she's looking for some positive reinforcement.
Those who move forward with a happy spirit will find that things always work out.
Smawink
Posts: 15
Joined: Sat Dec 14, 2019 4:02 pm

Re: 8 years from retiring at 70

Post by Smawink »

In addition to these suggestions, I wonder if OP’s friend might benefit from the Ballpark Estimator page on OPM’s site. This will force her friend to face the reality of what her spouse set aside (or did not set aside) in the government’s defined contribution plan TSP. Also, she may feel some relief about the defined benefit plan estimate as her spouse might be in the old plan rather than FERS and that may be in their favor. The ballpark estimate calculator also has a section for social security. Your friend may have not shared particulars about her situation because she simply doesn’t know and the process of going through OPM’s tool will force the couple to make their situation more concrete.

https://www.opm.gov/retirement-services ... estimator/
bugleheadd
Posts: 334
Joined: Fri Nov 29, 2019 11:25 am

Re: 8 years from retiring at 70

Post by bugleheadd »

MathWizard wrote: Sun Dec 15, 2019 11:18 pm ROTH IRA, using Vanguard Money Market VMMXX is earning 2.2% right now, which is about as conservative as you can get short
of CDs.

A friend who was investing quite conservatively, asked me how I was investing. I showed her my results over the years. I told
her that I could not guarantee these results, but why I invested the way that I did.

To me, just show examples, don't advise, and don't recommend.

I did advise my 80 year old MIL not to get into the stock market, since most of her income was from share cropping.
I told her she already had plenty of income variability with the farm income, she didn't need any more.
i dont see ticker symbol VMMXX?
delamer
Posts: 10544
Joined: Tue Feb 08, 2011 6:13 pm

Re: 8 years from retiring at 70

Post by delamer »

curmudgeon wrote: Sun Dec 15, 2019 11:37 pm
Nyc10036 wrote: Sun Dec 15, 2019 11:04 pm So, the only safe suggestion is to tell them that they can earn 1.7% with an online savings account vs 0.01% at Chase?
I would suggest leaving investment suggestions to the last. Start with more basics of income and expenses both now and what they might look like in retirement.

Find out if they (one or both) are eligible for SS, and what the benefit would be. Estimate what the Post Office pension would be. See if there is any other income. Have they been saving into TSP or other retirement accounts.

Estimate expenses (largely based on current expenses). Look at what medical premiums will be in retirement. Allow for dental expenses if dental coverage will stop. Allow for lumpy expenses (roof, car) as well as typical monthly ones. Expect potential inflation, but if the main income sources have COLA, that is less critical.

Perhaps biggest concern: look at what happens to income if one of them (most likely husband) dies. Pension and SS may be significantly lower in that case, while expenses may drop less.

Only after working through that process would I give any consideration to what savings they have and whether they should be invested differently. Maybe they should consider LTC insurance. Many people in their situation just stick with CDs from local banks or credit unions.
This is excellent advice.

I’d also raise the issue of “what if you can’t work until 70?” at some point.
User avatar
David Jay
Posts: 9411
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: 8 years from retiring at 70

Post by David Jay »

MathWizard wrote: Sun Dec 15, 2019 11:18 pm ROTH IRA, using Vanguard Money Market VMMXX is earning 2.2% right now, which is about as conservative as you can get short
of CDs.
2.2% is a few months old, currently down to 1.71%
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
User avatar
dratkinson
Posts: 5039
Joined: Thu Jul 26, 2007 6:23 pm
Location: Centennial CO

Re: 8 years from retiring at 70

Post by dratkinson »

Suggest having them read public library books:
--How to Make Your Money Last, Quinn.
--The Bogleheads' Guide to Retirement Planning.

See what ideas and questions are sparked.

Then help them create and post their forum review. That way you are not the "bad" guy as the forum helps them understand their options from the readings.
d.r.a., not dr.a. | I'm a novice investor, you are forewarned.
Pu239
Posts: 316
Joined: Mon Dec 17, 2018 6:24 pm

Re: 8 years from retiring at 70

Post by Pu239 »

OP - You don't know enough about their finances to make any recommendations. They already may have stocks in IRAs or husband's TSP. Is the husband covered by FERS or the older and better CRS pension system? With SS for both and husband's pension, all adjusted annually for inflation, and no debt, they might be in pretty good shape. Why take on additional risk when they may not need to?
Between the idea And the reality...Between the motion And the act...Falls the Shadow - T. S. Eliot
3funder
Posts: 1458
Joined: Sun Oct 15, 2017 9:35 pm

Re: 8 years from retiring at 70

Post by 3funder »

How much money have they saved?
Post Reply