Home Forums Hunting & Shooting Hunter's Campfire Closing in on retirement and setting a budget

When my wife died 9 years ago, I considered doing that. Investments were paying a higher rate than my mortgage. However, I wanted to be debt free so I took her death benefit and paid off the mortgage. Less than a year later, the market crashed. If I'd invested it, I'd have lost much of it and still had the mortgage to pay. We are likely looking at a major crash in the next few years, especially if a Dem gets in the whitehouse again. Get out of debt while you can.

Bingo.

If you have the money to pay off your debts, including the mortgage, but instead invest it, you're essentially investing borrowed money. That's high risk and it can come back to bite you hard. That's what happened in the housing crash a few years ago. People were buying over their heads, borrowing on houses and thinking it was an investment. When the housing market crashed, millions got bitten hard. A lot have not yet recovered.

Yeah, but if you had a $400k mortgage on a $200k home like many folks ended up with during the crash(with little equity), it's easier to walk away from than a $200k home you "paid off" for $400k. There is a monetary advantage to NOT having your money tied up in an asset that takes a while to make liquid (like a home). For an interest rate that is LESS than inflation (real inflation, not the BS government #'s) I'm willing to keep a mortgage.

For that to actually pan out, it takes a considerable amount of money, to (attempt to) make money on based on the risk. Most people that have a mortgage don't have the additional assets to cover it should things go bad. Then they get really hurt.

I was an engineer for 30 years, working ~2 years at each company.

I would ask people, "Do you save money or live paycheck to paycheck?"

Half would say they save. Almost all of those said they were saving with maximum automatic 401k deductions from their paycheck.

My follow up question would be, "So you can't save without them taking the money and keeping it from you with penalties for early withdrawal?'

They all said yes.

But there are some who can save:
1) Bachelors
2) Really old engineers who's kids are gone, don't need to work, but work for fun.


So I went back to the normal people and asked why they cannot save. It turns out that one person spends more and the other saves more. But after a while, the saver finds out he gets nothing. After that, the two are in a race to see who can spend it first.

In 1988 I told the wife that I am not working any more, unless every after taxes penny I earn is invested, and not spent by her.

Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference. -Robert Frost

With this countries economic nightmare, we could easily go into a major depression at any time. The money you put into investments would be gone and you'd still have your mortgage to pay. If you're debt free, you wouldn't have any less in investments but you do have your house. It's assessing the risk and I'll vote for keeping my house.

Bingo!

I'd consider debt in retirement only if my investments were accruing more interest than my debt. Presently, even our bankers are apologizing when we make a deposit. We've never ever borrowed for toys, and I for sure don't want any debt attached to my home.

I keep hearing 15 to $16K being tossed about as average credit card debt in the US. If that's true, we're in a sad state indeed.

Retired here, not exploiting all of my potential income, and still saving $$ each year. We started planning though about 30 years ago.

I retired when I was 49 years of age.

The answer to your question is YES, but we did it in reverse. I kept a listing of every single dollar I paid out for stuff for three years. Then, I had a good handle on what we were going to need.

We had, and still have, literally no debt. All of our stuff is paid for when we buy it. Home, car & truck, stuff like that ... free and clear.

Invest long term and diversify.

Worked for me.

God Bless,

Steve

yes there is that and that is a genuine possibility. I feel for the people in the real estate bubble states that think their house is their investment. 700-1 mil house , 13k in property taxes and think these houses will only go up in value. Its cyclical. My parents bought a house in 1963 for 29k in 1985 it was worth 400k in 1995 it was at 300 who knows what it was worth in 2008 and today it is at 750k.

The only function of economic forecasting is to make astrology more respectable

The late Ezra Solomon

Investment forum?

+1......you'd be surprised how little you can live on if you don't have house/car/credit card debt.....I started collecting SS at 63 so I don't get the full amount but I live on it just fine without touching my nest egg......

Retired 10 years ago, wife retired 7 years ago.

We have no mortgage, never did - inherited family home. Had no children, too busy providing home medical care of sick parents while holding full time jobs, and I attended evening college classes to pass state license exams. I attended continuing education training for my 32 year career.

Saved every raise in 401(k) or 457(b) accounts. Wife's 410(K) had company match, so she maxed that portion.

I didn't take an actual raise for 20+ years, salting it away in the 457(b). Wife laid off, changed jobs, bought 5 years of "air time" to add to her new public employee retirement - cost $75,000 out of her 401(k) as she had to pay both portions. Now the money is protected and receives a 2% COLA on her pension. She lost a considerable portion of her 401(k) investments just afterward when the markets crashed, buying air time proved a great idea.

Paid off all debits prior to retirement, use credit cards as monthly accounts.

We receive 6 separate pensions, as I had to begin distributions from my 457(b) at age 70.5. She began collecting private pension from her second employer at age 65. Two of our pensions have an automatic COLA's, we keep pace with inflation.

She still has 401(k) balances in the six-figure range, just by saving $50 then $100 per payday, money we would have spent on things that wore out, became obsolete, or were discarded. All that needful stuff is a liability, savings are assets.

So if a person is willing to save, (it cost me $35 for every $50 I saved in the 547(b) offset by the tax reduction) and manage their money they will do alright. I bought one new truck in 1976 for $6,050 and drove it for 30 years (still have it and it runs) until 2006. Wife bought one new truck in 1986 for $14,000 and drove it 23 years until 2009. Every mile in a paid off vehicle is money in the bank. I didn't care if the neighbors had new fancy cars, they didn't pay my bills. I did my own repairs and maintenance.

When we retired our budget was the same as before we retired, a little less actually, as we no longer commuted saving on fuel.

My father died when I was age 10, left my mother with less than a quarter in her purse. She worked every day until her death at age 67. I vowed to never let that happen to me or my family. Bottom line is work, constant self-improvement, saving and frugality.

OrangeOkie: Congratulations on your upcoming retirement!
I hope you can "get along" on your anticipated retirement income during your trial.
My wife and I were lucky in that she sold her very successful business and I had two sources of income when we decided to retire.
I was 50 years of age and my wife was 46.
Plus we sold our home at the top of the real estate "boom" and we moved to a MUCH cheaper state to live in once retired.
I have been retired now for 19 years.
One suggestion I have along these lines is to not hesitate to move to a "cheaper" state to live in - this money (savings) adds up quickly and continually.
Again best of luck to you in your retirement.
Hold into the wind
VarmintGuy

It'd do better than that combo gun forum Flave talked you into that he never posts in!

That's a good idea for us 50 somethings Rick.

I'm all for it.

It's impossible to lay out one strategy for retirement. Everybody has different wants/needs for retirement. My wife and I are so cheap that we honestly couldn't cut anything from our budget in retirement. Our cheap living has enabled us to have a very nice lifestyle though with more "toys" bought with cash than people who make 2-3x more than us. My wife doesn't even work, stays home with the kiddos. We honestly cannot stand pissing away money, (my wife is cheaper than I am) and people don't believe us when we tell them what we live on. We do buy assets though, with cash. Cash means little, net worth means everything.

My plan is to get the house paid off ASAP. I could pay it off now, but have $ tied up in other things. Then, buy another house in Arizona, sun city, and then get that paid off ASAP. Buy a quality fishing boat in AZ while saving money. Meanwhile, I'll keep buying assets, whether they are in the market or boats, permits, etc. When retirement comes, life won't be much different than it is now. I will go fishing everyday until health wont' let me or I die.