View Full Version : 10 Years from Retirement - Assset Management
At 55 years old, I am either 9 or 13 years away from retirement. In 9 years, I'll be 65 and in 13 68 years old. In looking over what is put away for retirement, I have a majority of assets in TIAA Cref at $73,600. In allocations, 77% is in guaranteed, 23% in bonds. The quarterly report says I may have $542 per month when I start to draw which could be in 2025. I have no idea if this is invested wisely. I can make allocation changes on the 23%. I'd like to grow this a bit more. I am not making any contributions.
My current job has a retirement plan at $11,000 with everything in bonds. A contribution is made monthly at 10% of annual income.
I don't know what SSN would return but I seem to recall it depends on what age you start to draw. I plan to get this exact number.
I am trying to understand what is in the future money wise. I lack skills in being able to understand where this is financially and where this will be at retirement. Where do I start to make any changes if any are needed? I kinda hope it will all work out somehow and that's just fiction.
My other asset is my house. I've been a home owner for 6 years and intend to stay in it as long as I can. It's doing okay and there are no major problems with it structurally. Of course, I would love to remodel and make it more comfortable as I get older. I keep thinking to do something with it now but that would require more debt. I have a 30 year mortgage. I will sell the house someday. I currently owe $118,000. What's the house worth? I changed insurance carriers and have their number. What would I sell for? No answers on this.
My salary is modest at $40,275 gross income
I have $7K in a MM fund but otherwise, no other tangible assets to work with.
Would appreciate comments. Whenever I speak with a rep from the investment companies, they tend to push me toward stocks which I am generally not comfortable with. They paint these lovely potentials but I am not happy with the risk that comes with it. I have no idea who to talk with to get an answer on what is best for me.
In retirement, I have a picture of settling into a quiet town in the downtown area. Somewhere that I can walk to all the things I need to do, grocery, library, parks, etc.. I think I should consider going without a car, that's a challenge to me now but cars cost $$. I prefer a warmer winter but probably will stay in Massachusetts. I have always had a quiet life and imagine it will be the same. I look forward to being able to read, write, Tai chi, maybe continue with school as seniors get a very reduced rate, finally continue with piano lessons, lots of plans.
Retirement is closer than I realize and time to make plans toward that.
iris lilies
3-25-16, 11:30am
Good for you to start this thinking about 10 years down the road.
If I were youl I would sign on to the Social Security website at ssa.gov to calculate your income after retirement. It may not be exact, but I believe it is pretty close.
Honestly, without looking carefully at your numbers but just doing an gross overview,it seems that your old house, no matter how small, may be a bigger expense than you can afford considering the harsh climate of Mass. I think Mass is just generally expensive anyway.
The old, conservative rule of thumb is that you may borrow 2.5 times your gross income on a mortgage. You are already in deeper than that, and after after paying down a mortgage for some years.
How much are real estate taxes? I cant help but think you should use this next ten years to aggressively save for retirement, and this house may be bleeding you. But then, you also may have a fair amount of equity in it, impossible to know without numbers.
The SSN Estimates per month are: 63 years old $973, 67 years old $1,424 70 years old $1,741.
I forgot to say, besides the mortgage, I have no credit card debt or car loans. The monthly mortgage is $689 which includes tax. The exact number I don't have. I never thought of my house as bleeding me. I know I won't retire with a mortgage. I refinanced within the last year and was happy with this payment. The interest is 4.5%. I cannot do better. The last market analysis had it at $135,000.
I did install a high efficiency oil furnace with a MassSave loan in the last four years. The payment is $101 per month. The payoff is at $2600 right now. It heats the house and hot water. I burn maybe 300 - 400 gallons of oil a year. Yes, Mass is expensive generally.
Teacher Terry
3-25-16, 1:39pm
Are condos in your area cheaper? Then you could downsize to one if they were and still own. If you took a 30 year mortgage you could have a low payment. The other option would be senior apartments that take a third of your income for rent. The 2 biggest expenses are housing and cars. IL is right that the SS website is pretty good with their calculators. The other issue is how long do you want to work? My MIL took the bigger SS at age 65 instead of retiring at 62 but died 2 years later and did not even enjoy those 2 years getting a life threatening illness right after retiring. She never had any time to have fun.
iris lilies
3-25-16, 6:30pm
OP, one place to start is to think about your mew retired life and the incident me you willhave on it. Making the assumption that you retire tomorrow at the age of 65 (I know this is not your age, but this is a place to start) you would have annual income of about $23,500. (With 9 more years for compounding interest, it will be more, this is the bare bones, but it is a place to start.)
I came up with this figure using these approximations:
TIA Creff generated income based on your description: $6,504
Soc Security --my ballpark estimate based on your numbers for ages 63 and 67: $14,400
Workplace retirement, estimate of income from from $51,000 @5%: $2,550
The above totals $23,454 or about $23,500
What can you do with $23,500?
Ths assumes you will use this annual income to live on and will sock away, as your emergency fund and mad moeny, the $17,000 you get from selling your house plus the $7,000 in cash.
This financial plan is tight. But there are a lot of peole livIng on $25,000 and thereabouts.
You say that you wont have a mortgage when you retire. Will you rent, then? You dont have a lot of assets that pay outright for a property, not sure that would be a good idea.
I hoe s Mecomes al Ng who can do better at projecting into the future with compound interest tables, although it remains to be seen if those additional amounts would keep up with inflation.
The rule of thumb is you pull 4% out of your retirment funds per year and that lasts you 25 years. Your total funds right now gives you $3640 per year or $303/month. Plus your social security. Can you live on that? How much will that total value grow over the next 10 years?
Your investments choices depend on your income goal at retirement. My gut is to invest like CRAZY in your retirement. Take at least moderate if not high risk for the next 5 years and then back down 50% of that. Your compounding years are behind you and you need to make up for lost time.
Questions: you say you wont' have a mortgage. Are you selling and then renting? Are you selling and will have enough cash to pay cash for a home/condo downtown? You need to think about what will give you the lowest cost of living post retirement.
If you made the housing move and the car change now, would it save you $ over the long haul that you can invest in retirement? If your home will need improvments to sell in 10y perhaps selling now is going to save big $.
is your employment such that you have pre-tax contributions? or do you use IRA vehicles? Roth IRA to protect post tax income investment?
My strategy works for me and it may not fit you. I am 55 and plan to retire at 60. I've been seriously pounding every possible $ into growth funds and over time I've done well. I'm not backing off because when the market drops I buy more with the same dollars. When it goes up? Well, I celebrate.
I encourage you to do some online reading and educate yourself moderately so you make decisions that are good for you
rosarugosa
3-25-16, 8:14pm
I live in MA too, but I am a bit north of Boston and I think you are further west from here, right Cypress? Property prices are clearly cheaper where you are, but I still think you would be hard-pressed to rent more cheaply than what you're paying for a mortgage. That sounds like a reasonable price for anywhere in MA. However, there are costs associated with maintaining a home that you wouldn't have as a renter. Would you ever consider taking in a boarder, like SiouzQ does?
Do you usually get a substantial tax refund? If so, that might be a place where you could "find" some extra money to save for retirement.
You really might want to think about putting some of your assets in the stock market. I don't think any of us like the riskiness of the market (or at least most of us probably don't), but it is one of the only ways to make your assets grow at a faster clip. I would not suggest that you put everything in the stock market (you do need to be able to sleep at night), but it doesn't look like you have anything in there, so I think there could be some middle ground.
rosarugosa
3-25-16, 8:20pm
If you are interested in learning more about investing, I highly recommend these two resources:
John Collins' stocks series: http://jlcollinsnh.com/stock-series/
Bogleheads: https://www.bogleheads.org/wiki/Getting_started
When I get to 62 years old, I had planned to apply for senior housing. There is a lovely place right in town. The only problem is the grocery store is one town away and needs a car to get to. Everything else fits in with the ideal if I stay right in this town. I am not sure how long the wait list is but I'll put the house on the market at that time. I don't want to be shoveling snow anymore. The rent is a % of income. I have always heard it's best to not retire with a mortgage. My guess is I'll have to work until 67. If my health is okay, I'll go to 70.
Thanks for your help, I appreciate the feedback.
rodeosweetheart
3-26-16, 8:30pm
When I get to 62 years old, I had planned to apply for senior housing. There is a lovely place right in town. The only problem is the grocery store is one town away and needs a car to get to. Everything else fits in with the ideal if I stay right in this town. I am not sure how long the wait list is but I'll put the house on the market at that time. I don't want to be shoveling snow anymore. The rent is a % of income. I have always heard it's best to not retire with a mortgage. My guess is I'll have to work until 67. If my health is okay, I'll go to 70.
Thanks for your help, I appreciate the feedback.
A lot of towns have buses for the senior housing, or county buses that run a shuttle, or a dial a ride--in the county north of mine, you can dial a ride for 2.50, or take the shuttle from many towns to and from the big shopping/hospital town. So you could definitely live car free up here and go with the shuttle or dial a ride.
Teacher Terry
3-27-16, 11:56am
Uber is pretty cheap to use. WE found it is about half price from what a cab charges. I think the senior housing takes a third of your income for rent.
Cypress, You can make an appointment with a TIAA CREF rep and ask them for projections based on your current risk tolerance. I have been with TIAA CREF for my whole career and have always found them helpful with the financial counseling, however, you have to bear in mind that your withdrawals from investments/savings will be taxed--unless you have a Roth IRA.
Will you have job-provided health insurance after you retire? There is a lot that Medicare does not cover or only covers minimally, esp. dental care and hearing aids. Is there any way at all that you can contribute to your savings on a regular basis? You mentioned you are not adding anything right now. I would consider investing in a ROTH IRA (talk to TIAA CREF about this) -- you can choose the type of investment and ***it won't be taxed when you retire***** and you can also use it as an emergency fund because you won't pay penalties if you have to withdraw from it before you retire.
That senior housing option sounds really good. I wouldn't let the car issue be a dealbreaker. Buddy up with a neighbor to do weekly grocery shopping with Uber or look into trading baby sitting for an occasional car ride.
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