Ask MetaFilter questions tagged with Money and retirement

Where to go for a Humble Retirement

Anonymous — Sat, 22 Aug 2009 08:41:29 -0800

In twenty-five years i'll be retiring with my minimal social security benefits and medicare to keep me briefly going. I've got no savings right now, but I'm almost done paying my debts. I rent. I want somewhere tiny, a bungalow with a kitchen, perhaps a tiny garden, stonking bandwidth, maybe near a lake, maybe near a wood, but really not so much. I just want to whittle sticks, greet neighbours, not climb stairs, and hack on code. I don't mind renting again until i die. Where should I move in the US, and when? (My daughter will be grown up and, touch wood, supporting herself by then. My parents will almost certainly be dead and will have left me a $100,000 or so, I imagine.

Financial Advice for Dummies.

ElmerFishpaw — Fri, 06 Mar 2009 11:15:17 -0800

This has my parents spooked. Tell me how to ease their financial fears. I guess what was supposed to be safe ("FDIC Insured") is no longer so safe in their eyes. Are they right? They have pretty much their entire savings in an ING savings account and are way spooked. Can you link me to something saying ING is safe and FDIC insured means "Youre all good Mom, dont worry."?

Unless, of course their fears are actually valid. Then what should they do? What should any of us do?!

Should my recession dollars go into my 401k, or my wallet?

logovisual — Tue, 17 Feb 2009 15:03:38 -0800

Where is my money doing me, and the world, the most good right now: going into a 401(k), or going into my wallet and getting spent? I'm in my mid-twenties, in a stable but low-paying job that I expect to be in for a while (he said, in a fashion that he hopes does not prove ironic). I am basically living paycheck to paycheck in NYC -- not starving, but not really saving in any meaningful way whatsoever beyond my company 401(k), which has quite a good matching program. For the last couple of years, I've been paying the maximum match into my account, and had built up a reasonable little stash (about a third of my annual salary) only to, of course, watch it take a 30%+ hit over the last few months. I only have a couple thousand dollars in credit card debt, which I would like to pay down/off, but the tight squeeze for what's left over from my paycheck doesn't really allow for that.

I was rebalancing my 401(k) into some less aggressive investments today -- I know that I am young, and there'll be plenty of time for a rebound, but there's no sense in wasting money when you know the market is probably still on its way down -- and began to wonder where my dollar is doing the most good for the economy: going into investments, or going into my wallet to be spent on consumer goods? And yes, that definitely is where it would go if I reduced the percentage of my paycheck that goes into my 401(k): food, home goods, etc.

Thoughts on this matter? I am obviously loath to give up much of the "free money" that comes from a company match, but I am also loath to watch every dollar I put into my 401(k) turn into sixty-five cents when it could turn into a dollar's worth of food, or furniture, or entertainment. And on the larger scale, do I help America more by buying a new couch instead of another share of a mutual fund? Should I reduce (not eliminate) my contribution to my 401(k)? Or stick to business as usual and try to make my budget work another way? I'd like to hear some thoughts that go beyond the conventional wisdom of "you should never ever stop paying into your 401(k)," unless you can make me see that argument in a whole other way.

Lesser of two tax burdens?

al_fresco — Sat, 13 Dec 2008 15:40:17 -0800

My partner and I need to pay off some debt, and unfortunately we need to dip into our retirement funds. Our tax accountant is on vacation and we can't find the answer to our question. We have two sources–either sell some stock or cash out a couple of short-term IRA CDs. Which is the lesser of two evils? The service charge on either transaction would be about the same (~$50). We understand that the painful part would come in the form of the taxes on the amount we receive. Is there a difference in how the two types of transactions would be taxed? If we took a theoretical amount of $10k from either transaction, which would be taxed at a higher rate? What is the tax rate on either of these. I'm in California, and we'd need to do this before the end of 2008. If it matters, the money would go directly to pay off credit cards, car, student loans.

And it always makes sense to pay off debt before saving for retirement, right? (Higher interest rate on debt than retirement fund, blah blah). Oh, and we're living paycheck to paycheck.

Thanks in advance!

30-year investment portfolio which has to start before the end of the year and wants to be left alone afterwards?

Anonymous — Fri, 05 Dec 2008 08:59:37 -0800

If you had a very strong incentive to invest money before the end of the year with a 30-year outlook, and a further strong incentive to not adjust your investment strategy over that timeframe unless absolutely necessary, what kind of portfolio would you assemble? I live in Germany, which has an effective 0% capital gains tax on long-term capital gains from financial instruments. The government has finally decided to end this peculiar state of affairs and will start to tax long-term capital gains at 25% or more starting in 2009. Investments made before 1/1/2009 and held for more than a year will continue to be (un)taxed under the old system. But, naturally, if you redistribute the portfolio at any point, what was redistributed will come under the new law, so there is a strong incentive to leave it alone if at all possible. I don't see this as a suicide pact, and would make changes that were necessary without sweating the tax too much, but I am trying to design a portfolio to put a little money in now that has decent odds of not requiring rejiggering and having acceptable performance over the long timeframe which is available.

Personality and background: I consider good money management to be an obligation but not a pleasure of life or inherently interesting, so I believe in keeping things as simple as possible, within reason. Past experience has taught me that if the workings of a financial vehicle aren't clear to me after one good and comprehensive explanation, I'd do best to avoid it. I have invested for the (shorter) long-term before and I've had good outcomes, and I've been lucky enough to have received my lessons about active short-term trading and speculation at reasonably low prices. My general financial health is healthy and the investment seed is extra money. I'm able to purchase many (but not all) US and other international securities/ETFs/funds/bonds without too much of a markup, so let's just assume for simplicity's sake that I can purchase any of them. This will be retirement money, but not the only source of retirement money.

I've read the Scott Adams article, lots of Warren Buffett, and several good books on index fund investing, and now this is my AskMe gut-check/brainstorm request before proceeding: what would your 30-year fire-and-forget portfolio look like? I would love to hear your ideas and advice if you wouldn't mind sharing. Thank you!

What to do with my small 403(b)

HuronBob — Mon, 15 Sep 2008 10:22:01 -0800

Should I transfer my retirement assets (403b) from a mid-level risk money market fund ? The fund (through principal financial group) has lost nearly 10% since last june. I have the option of moving it into a fixed 3.95% income account...... Given the situation, do I eat the loss and move it, or hang in hoping that the market will recover?

I wanna be a woman of independent means... for more than a few months.

Anonymous — Sun, 14 Sep 2008 14:01:15 -0800

Okay, so let's say you're a broke, middle-aged single female creative professional who infamously sucks with anything involving numbers. You do have expensive tastes, but you're generally quite frugal and like to shop at the 99¢ Store & swap meets. Even so, much to your own annoyance, you have just never done *well* with money when you've had it or ever done much grown up "long-term life planning"... but now you're about to come into a one-time windfall (possibly a six to seven figure sum in all). Oh Lordy. Time to grow up. You have no real retirement or savings and you've never owned property or real investments of any kind, really. You definitely have an entrepreneurial mind and some great business ideas and you *could* be a great businessperson, but haven't progressed because unbeknownst to most people you are insanely insecure about your ability to succeed so you've a history of sabotaging yourself or talking yourself out of pursuing things. You never take your business ideas as far as you want to, instead always going back to doing work for hire jobs as a freelancer, making your wealthy employers wealthier while you're living paycheck to paycheck. It definitely doesn't help that you've never had any good role models financially. (Other people in your immediate family are even more irresponsible and messed up than you are, and you're terrified of this being your self-fulfilling legacy too.)

Now that you're going to suddenly come into some money, you don't want to screw up this one opportunity to provide for your future and open doors. You want to make good, intelligent investments of your time and money and stop being afraid of success so you can fulfill your potential in life and finally feel secure financially. You want to make your future a great, happy, relatively carefree one and to FINALLY become smart about these things and secure your status as a responsible, successful, happy adult... rather than fulfill your worst nightmare: that you'll end up a drunk old baglady whining about how she once had a gazillion dollars but let it slip through her fingers (Pass the Thunderbird please).

Sooooo, what should your gameplan be?

I've heard many a tale of people who won the lottery or inherited huge amounts and ended up fucking it all up. I REALLY don't want to be that stereotypical loser. I'm thinking it would be good to invest this money and live off the interest eventually, but I'm not sure how to make that happen realistically. I feel so freaking clueless on this stuff! There are things I would LOVE to do besides sit all day at my day job (travel, pursue business ideas, buy some new clothes, etc.), things that would make me happy and be fun... it would be great to have the financial freedom to do those things but I don't want to regret any choices so I'm hesitant. Unfortunately, knowing myself, while I stand around wondering what I should do with the money, it'll disappear. I just can't let that happen. I need a plan.

I want to look back and be proud of myself instead of hitting myself upside the head with profound regrets in my old age. Your insights, please. Thanks. (Oh, and I live in Southern California, if that matters.)

Am I better off with Wachovia Securites or should I jump ship to UBS?

TwilightKid — Mon, 11 Aug 2008 11:12:08 -0800

A.G. Edwards / Wachovia Securities vs. UBS. Which is the way to go? For the last 7 years, I have had an account with AG Edwards (now Wachovia Securites).... All of my 401k's, Roth IRA's, and future retirement accounts...I am satisfied with the performance of my portfolio during the good times, and not thinking of jumping off a ledge while the economy is being really rocky right now either....

My agent has recently resigned from Wachovia / AG and moved on over to UBS, and is trying to get me to come over with him... He mentions with the instability of the banks and what not, UBS provides a more secure foundation for my money and interests, than Wachovia can....

(mind you, I am not an expert in any of this, and a lot of what he tells me is french to my ears.)

I like the guy...He is easy to get a hold of... Responds to my questions and needs efficiently. He is the 4th guy I who has been my agent since I started my account back in 2001.

So, I am questioning whether to transfer over my accounts to him and UBS. He said that UBS will pay all transfer fee's and credit my account should I be hit with any kind of penalties.... He said that the fee's will most likely remain the same as they are currently....

Is UBS a better place to have my money? With all the uncertainty going on with banks and such, should i not be associated withthe likes of a Wachovia?

OR, do you guys feel that this guy is just looking to build up his portfolio and business with his new bosses, and is not really having my best interests at heart...

My basic question is, in the long run, is my money better suited staying put with Wachovia Securities or should I jum,p ship to UBS (www.ubs.com)?

Your thoughts and advice are welcomed! thx.

Alternatives to super when the economy isn't doing so great?

wingless_angel — Mon, 28 Jul 2008 09:23:48 -0800

What should I do in addition to super to have any hope of retiring several decades from now? So according to the Sydney Morning Herald superannuation returns in Australia are way down . I've long been sceptical of being forced to put so much into super since it is more volatile than we've been led to believe. I'm wondering what alternatives there are.

I'm 30, work in the government, I have two different government super schemes. I'm currently contributing 8.5% of my pretax income along with my employer's 17%. I am in a defined benefit fund which I think will screw me in the long run. I have no assets but am saving for an apartment downpayment.

I would like to live overseas for a year on and off here and there, and maybe have kids and this is going to put all kinds of breaks into my contributions. And I'm also wondering, what else shoud I be saving up for to contribute to especially with the economy the way it is. What are the alternatives to super? Should I be watching for the market to bottom out and buying index funds? Buy into property? Put cash into online savings accounts?

I do want to retire someday, and I'm really not sure that super is going to cut it.

Why can't I close out and withdraw from my 401k? Any way out?

Anonymous — Mon, 09 Jun 2008 19:02:16 -0800

I want to close out my 401k (and pay the necessary taxes) so I can pay off some debt. My 401k says I'm not allowed. Why not? Can I change anyone's mind? I have relatively minor credit card debt n. I have meager 401k savings n. (I am only 23). I would like to pay off my credit card, and be putting the money I'm currently putting toward monthly credit card payments toward more immediately accessible savings. Additionally, my company has as of last month decided to start matching 401k contributions, so I'd rather be putting matched money in than letting the $n sit there doing not much in the stock market while I continue to accrue credit card interest. However, I can't put money in until I'm not worried about paying off credit cards.

So I called my 401k people (Fidelity) to ask to take the withdrawal. They said I can't. I said, are you seriously telling me I can't have my money? And they said that since I'm still at my current company, I can't do anything with it until I'm fired or leave voluntarily. I've got a while before I'm planning on either of those. What the hell? It's my money, isn't it? We wants it :(

The other option is to take out a loan, but I'm only eligible to take out loan n/2, and paying back loan + interest plus paying off the other half of credit card debt won't really solve my problem. My goal is to wipe out the debt, be able to start contributing small (matched) amounts to retirement, and separately do a better job of keeping an accessible savings account with monthly contributions.

So, question 1: Why can't I take out my money? What's the reason behind this? And is it likely that by arguing in a different way I could get it? I'm fully aware of and willing to pay the necessary taxes if they'll just let me get at the money.

Question 2: Any other options for what I'm trying to do?

(Anonymous because I don't want this connected to the real name I use on here)

Safety for a 401K

Freedomboy — Mon, 28 Apr 2008 15:33:49 -0800

Aged 65, still working, have 401K, worried about it, can I move the funds to a self directed IRA money market fund?

Utility of variable annuities?

kanuck — Thu, 17 Apr 2008 11:41:46 -0800

Help me analyze a variable annuity as a tax-deferred retirement savings option. I'm considering a variable annuity as an additional vehicle for tax-deferred retirement savings, and could use some help with a "first approximation" analysis.

I'm already maxing out 401k and IRA contributions. The annuity I'm specifically considering is Fidelity's Personal Retirement Annuity. This is a variable annuity with a 0.25% annual annuity charge, no surrender charges, no death benefit, no sales charge, and the ability to select from some 30+ mutual funds as the underlying investment instruments.

Let's say I've got a chunk of money I'd like to invest for retirement (so not looking to cash out until then), and to do it via tracking the S&P 500. The two options I'm comparing look something like this:

1) In a variable annuity, invested in the S&P 500 index fund option they offer (Fidelity VIP Index 500).
2) In a normal brokerage account, invested in an S&P 500 ETF.

I'm choosing an ETF for option #2 because I gather it ought to minimize annual exposure to capital gains tax (although dividends will still be taxed). Is this roughly correct?

Seems like what's going on here is that in return for paying 0.25% a year in the annuity, all growth (capital gains and dividends) is tax deferred, so if that 0.25% is less than the amount of annual income tax I'd pay on the dividends coming out of the ETF investment, then I'm ahead. Am I missing something big here?

(I'm concerned that there doesn't seem to be any guarantee that the 0.25% annuity charge won't increase -- if that were to happen, I could see it eventually wiping out the advantage)

Please help me decide between Fidelity and Vanguard.

salvia — Sun, 06 Apr 2008 16:37:09 -0800

Questions about opening a Roth IRA -- particularly, does it matter where I open it? If so, Fidelity vs. Vanguard? I want to open my first Roth IRA. I've read past questions and some online resources, but I still have some questions.

- First, does it even matter where I open it? If I figure out I screwed up, how hard is it to switch from one of these to the other?

- I will (very soon) have a 403b with Vanguard through my employer. Does that tilt things in favor of Vanguard for an IRA? Would I be able to "pool" these funds? It sounds nice to make one phone call rather than two. But is there some reason that tilts things in favor of Fidelity? Would it be better to have them both as options? Then I could hold, say, some of both group's target retirement funds.

- To make a good decision, do I need to figure out where I would invest the money first? They have different expense ratios even for their S&P 500 index funds (VFINX is .15% vs. FSMKX is .10%). I realize this isn't much of a difference, but if they differ on the simplest index fund, they're going to differ by more in other things, right? (I'd be deciding between S&P 500 index funds, some index fund with non-US companies, or a target-date retirement fund.)

- If you do think I should decide where to put the money first by actually looking at fees, how do I find that out? There are these scare stories (eg) about hidden fees. Are they still hidden if I look at Morningstar's front load %, back load %, and expense ratio? Or is there a better place to find all this out?

- All over the web people are saying that Fidelity's customer service is better and more informed. This has me leaning toward Fidelity. Do you think this still holds true?

- Lastly, what does this comment from jak68 mean, "Also -- in case you didnt know -- there is a small difference between buying funds via a trading account at a brokerage house (as with fidelity, schwab, ameritrade etc), VS. buying the fund directly from the fund family's website (vanguard, etc)?" Should this influence me in some way?

Thanks for your help. I'm interested in learning more over the long term, but I also have the feeling that I'm making this too complicated and should find a way to make this simple.

Did the ant and the grasshopper both retire comfortably?

chickletworks — Tue, 19 Feb 2008 00:21:08 -0800

At what age did you start saving for retirement? At what age do you recommend starting to save for retirement? I know that the smart, responsible answer is "As soon as possible," but guess I'm asking whether you can put it off for a while and still be okay-- and whether average people do.

I'll talk with a financial planner, but I wanted to get a sense of how other people have made retirement savings decisions. Thanks in advance!

Recommendations for a financial advisor/accountant for a young couple?

scazza — Wed, 30 Jan 2008 13:51:24 -0800

Recommendations for a financial advisor/accountant for a young couple in NYC? We've read a lot about finances, but I would like to sit down with a person. I'd prefer someone who can do it all; to slog through all of our financial life, to ask questions of, to plan, to do taxes, not just someone interested in investing. I don't know if it should be someone who specialises in freelancers (arts and computing) if there is such a thing, and I think I'm looking for someone independent because I don't want to worry about prejudiced advice.

We both have irregular careers: his as a specialized-but-underpaid programmer doing both freelance work and a day job that changes every couple of years; hers currently studying but eventually working in a performing art that involves lots of travel and work accomodation (apartments) paid out of pocket (but tax-deductible) and pay on a performance-only basis.

With this in mind, we have no idea how to achieve our goals. We are relatively good at our basic budgeting and financial management but need help with saving for retirement (IRA) and a baby someday, managing his 401K (503b), improving credit, buying a home as soon as practicable (we feel like we're throwing money away on NYC rent), affording travel to stay close to family on three coasts of the US, plus the UK and NZ, and very necessary vacations. A wedding would be nice too but it seems too complicated already.

Thanks!

HSA's = tax-free retirement account?

MrBCID — Wed, 16 May 2007 17:21:06 -0800

Health Savings Accounts (HSA's) ... Can they be used as just another tax-free retirement account after you max out your Roth IRA? I usually max out my Roth IRA and contribute to a 401(k) ... I just came across this Newsweek article that got me thinking about opening an HSA.
I used to contribute to a Flexible Spending Account and understand that the money in an FSA is lost if not used within a year...
An HSA on the other hand would let me keep that money in there kind of like a Roth IRA correct?
Do I have to be enrolled in a High Deductible Health Insurance policy to be eligible?

I am 22 years old and don't need my medical insurance for anything more than a yearly check-up.

Any advice would be really helpful. Thanks in advance.

Where to stash retirement funds?

cschneid — Thu, 01 Mar 2007 10:05:20 -0800

I'm an employee at a small business. I need retirement fund ideas beyond the Roth IRA? I have been working for a small company for the past few months, and am about to finish paying off debt, so I need to start looking at really saving some money for retirement.

Currently I have a Roth IRA, which is going to be fully funded this year, but I want to save more than the $4000 allowed in an IRA this year.

I seem to be stuck in a weird middle ground between self employed and big company. The company I work for doesn't offer any sort of retirement fund of any sort, but I also don't seem to qualify for any of the self-employed options, since I am not self employed.

Is there a good personal plan that I qualify for, or do I need to convince my employer to setup a 401k or similar to make any of this work?

How to Diversify Retirement Account

ThePinkSuperhero — Mon, 15 Jan 2007 08:54:27 -0800

I'm planning to diversify my retirement account in the next 5-7 years. I need some advice on the best way to do this. I have a Roth IRA with Vanguard. I currently have one fund in my account. I'm planning to add 3-4 more funds in the next 5-7 years (I already have my asset allocation planned out, so no suggestions are needed). Here's my question: does it make more sense to make monthly deposits to the one fund I'm currently in, and then buy new funds from that fund, or to withhold monthly deposits, and buy new funds with cash? Or does it matter? I feel like it must matter on some level, but the math of it is beyond my skill level.

Can I invest my retirement money in my own mortgage?

portabella — Mon, 25 Sep 2006 11:02:08 -0800

Can I invest my retirement money in my own mortgage? Is it possible for me to invest my own retirement funds in my own mortgage? My wife and I have something like $200K in retirement accounts. Our mortgage is $320K or so. Can I somehow invest the money in my own mortgage, pay off the bank, and then undertake to pay myself back (with interest, of course)? Without paying the IRS a huge penalty?

I know that you can borrow up to $50K from retirement accounts, but as you can see from the numbers, that's just not going to do it in this case.

how do I find a great financial advisor?

krautland — Mon, 28 Aug 2006 12:00:59 -0800

my new employer is offering a 401k package via fidelity investments that is, dare I say it, overwhelming to me. I am especially bothered by the fact that the only advise available on said fidelity investment choices is via the nice folks from fidelity investment. so I looked for financial advisors - but how to judge them? how should I know that whoever is passing themselves off as knowledgeable actually is just that? I want to get good advise but I don't know where to look. any ideas what I should do?

oh yeah, if it matters: I am in my late twenties, single and just moved to chicago. I graduated two and a half years ago and already am well in the top 5% income bracket, so I think I can take a couple risks with my 401k. but again, I am clueless and that bothers me...

Any experience with American Funds?

Señor Pantalones — Tue, 25 Jul 2006 13:49:42 -0800

Any experience with American Funds? Could use some opinions about financial planners, too. I recently met with a principal investor for Foothill Securities, Inc. in an effort to get organized and buy a house in the bay area this year. We have two active 401ks , one stagnant (non-rolled-over) 401k and one stagnant 403b from previous employment (sum of these is <$25k). We also have some money in individual stock investments.

The financial planner is interested in taking us on as clients, and wants to move us to American Funds (managed funds where the clients pay a commission and make more overall, versus no-load funds where you don't and make less). She told us to do some research, so we did. I've read as much as I can google about this and found good (Motley Fool community seems to love them) and bad (SEC investigation along with all the other brokerages), but I would love some outside opinions from experienced MeFites.

While we're at it, any opinions about Foothill Securities if anyone here has used them for financial planning and investment? I've been a Motley Fool community and rule breakers reader for two years now and I am completely sick of managing my money this way. I don't have enough of it to justify the opportunity cost and would rather let a professional do it.

401(k) woes, big time

selfnoise — Mon, 26 Jun 2006 18:15:33 -0800

Having trouble with my 401(k) direct rollover... how screwed am I? Here's the deal. As far as I know, I have to complete a 401(k) direct rollover within 60 days of requesting it. I requested it from previous employer: previous employer sent me the check and paperwork, made out to my current employer's plan. Current employer told me I needed to send A, B, and C with the check to ensure it was accepted. I sent A, B, and C along with the check.

A week later, I get the check BACK from Current Employer. They now want paperwork D,E, and F. I request this from the previous employer's plan... they send it. I just overnighted the check back to my current employer's plan.

My question: my understanding is that there is a 60-day time limit for these transactions. The check was dated 05/11/2006, which I think makes this day 44. If I can't convince my current employer to take the damn check, do I then owe the IRS 20% as withholding? Is this penalty the same regardless of the plan the money was in? Is there any way I can get around this? I really can't afford to pay 20% of my retirement savings in taxes right now (or ever) and am starting to wonder if my current employer could really screw me by not accepting the check a second time.

How do I choose a bank for my IRA?

scazza — Wed, 22 Jun 2005 07:05:14 -0800

I want to open a Roth IRA account. How do I choose the bank? These threads have been helpful, but I'm still wondering about the IRA specifically. I've been wondering about this a long time, so any feedback, experiences would be helpful. What banks have mefites had good experiences with their IRAs? Should I just stick with the bank that has my checking account and have it all in one place? Or is investigating other bank's track records with investments imperative? Are there resources for comparing banks' IRA packages other than just visiting their websites and comparing? Why doesn't ING offer IRAs?

Please help this financially ignorant person, and be easy with the snarkiness, I'm an easy target.

Factchecking my financial advisor on mutual funds

ajr — Thu, 30 Dec 2004 09:40:39 -0800

I am presently working with a financial advisor to select mutual funds for my retirement plan. He has explained the differences between Class A, B, and C funds to me, and also suggested that Class A is probably the best option. Is he correct? [more inside] I don't expect to frequently shift fund selections, but the idea of keeping all of the same selections for five years does not seem right.

Investing $100K

stavrosthewonderchicken — Tue, 23 Nov 2004 18:26:29 -0800

If you had US$100,000 drop into your lap (I wish), and you were employed and debt-free, how would you put it to work to make a bigger nest egg or retirement fund? How would your strategy differ if you had high or low aversion to risk? A related question might be: what's the best source of information on this kind of investing you've seen?