How did I get here from there? Perhaps it was dumb luck. Or maybe it was thoughtful common sense towards saving and planning, although in all honesty I can’t really give myself credit.
I have to come to the conclusion that, after working for 15 years at the age of 35, I took a modest plunge into my employer’s 401(k). I had no oversight from the company and surely no guidance from my parents. Dad was a farmer. Although he worked long and hard days and at times in the dark of night to maintain his dad’s and granddad’s many years of building the family assets, profitability was much less than it had been during the past generations. In part, our family’s financial security was reliant on the glory years of small farmers.
I am now semi-retired, having made an early exit from the stresses of dealing with a corporate mindset that takes a good chunk out of personal tranquility. Rather than accept a monthly retirement check, I chose a full payout of all of the moneys due me. There was no dipping into the funds for some frivolous spending. An agent with Raymond James provided me with a variety of options for investment. I felt comfortable with all of his recommendations as I pointed out my financial goals. His assurance that they were attainable as he explained the choices gave me comfort that I could realize a sense of security as I continue to age. A quick call to the agent to review the investments would result in a little tweaking in the direction that suits the mood of the financial markets.
During the same period in time, I was able to make the final payment on the mortgage of my home with the help of an inheritance from both of my parents’ deaths some 10 years prior. The sum was not huge considering five children in the family; I made sure not to squander the funds.
Rather than taking pride in the achievement of being nearly debt-free, it was a feeling of relief knowing the largest financial weight was off my back. Sister Sue commended me with the statement, “I don’t know anybody who doesn’t have a mortgage.”
For the time being living in Spring Hill, FL, in a new investor-built home after having sold the home in Orlando, squeaking by financially as my budget has been redirected from what used to be some discretionary spending to buying just the “basics” of living as we know it in America. There’s some minor debt but nothing that can’t be resolved in a reasonable amount of time with some thanks for those 1.99% introductory interest rates on a credit card.
It’s always those unexpected expenses that lead to the temptation, and eventual use, of plastic money. Property insurance and property taxes aren’t really what you’d call unexpected but they still have to be paid on a payment plan.
With all of this taken into consideration, I don’t feel secure in my long-term financial reckonings. The investments of the past five years have done very well, ranging from 12% to 20% of increased moneys. The downturn in the economy has eaten away a good chunk of those earnings but the overall picture still finds me with reasonable gains.
So, with my modest acquisition of savings and investments, including an annuity, I find myself in a unique and disbelieving situation where I am in a class with the so-called well-to-do citizens in these United States. I am among the segment of 12% of the population with the most funds for retirement.
Other figures from the 2008 Retirement Confidence Survey are extremely alarming for Americans. Roughly 61% have less than $50,000 in funds. In 2007, the figure was somewhat less at 58% and 2006 showed 65%. Today, a whopping 69% of existing retirees fit into the category.
I place myself among the 21% of workers who are “Not Too Confident” of having enough money to live comfortably throughout retirement. 43% are somewhat confident and a mere 18% are very confident. The remainder who are not at all confident is 16% - realistically I’m among this group of citizens.
This website will give you a multitude of survey results:
http://www.ebri.org/pdf/briefspdf/EBRI IB 04-2008.pdf
Wednesday, May 27, 2009
Me, Mr. Moneybag
Whoopee! I’m in the money! It was a good news week when I received the April Raymond James’ Retirement Account Summary report. I had to contain my joy as I realized that my investment funds were back to where they started in June 2004.
And to think it was just a short while back in September 2007 when Rick and I had our monthly chat on the economy and he brought up the fact that ‘we’ had reached the goal set up when I spooned over my cashed-out pension fund and the 401(k) account with my ex-employer.
Last month when I called Rick to query any recommended changes in the direction of investments, he assured me the current allocations would be good for the short-run, to which I assumed was another way of saying there aren’t any safe bets in the markets right now.
In normal times it would be odd to be relieved that after five-years the value of your retirement savings is at near zero in gains, but these past 18 months of economic distresses are anything but typical. I struggle with resigned acceptance and remain doubtful the recession nightmare will soon be over as predicated by guru economists still floating their boasts on an overcrowded magic carpet.
It seems foolish that people rejoice when economic indicators aren’t as bad they could have been, especially when April’s figures put another half million workers freshly beating the pavement in the chilly climate of hiring freezes and more gotta-let-ya-go’s. It’s strange days on high-ballin’ Wall Street and lonely nights for the homeless in the back alleys off Main Street.
Therefore, as I’ve done quite often, I ponder the thought of aggressively invading my retirement account on a hunch that the next big dip in the markets will again deflate my financial ego. Even a low interest-bearing MMA or CD (FDIC insured way beyond my funds) would be better than what I perceive lies ahead. If I don’t act now, I’ll have to invent a time machine, go back to 2007, retroactively clear out a huge chunk of money, bury it in the back yard and get an automatic assault weapon to protect my non-investments. Oh well, the SEC, IRS and ATF would be on me faster than Obama can take ownership of yet another private enterprise.
No, it’s not a good idea to take out funds from a 401(k) or IRA. It’s the 10% penalty on an early withdrawal that keeps me from acting foolishly, as if I were a rich man. Although there are withdrawal penalty exemptions prior to reaching the age of 59.5, the tax bill still comes due.
Retirees and those with disabilities got some bad news this past week when an announcement confirmed Social Security recipients won’t be getting an annual cost of living adjustment (COLA) increase next year. The Congressional Budget Office forecast also indicated the same for 2011 and, with inflation expected to remain low over the next few years, an increase might not be given until 2013, although President Obama’s budget calls for a 1.4% increase in 2012. The 5.8% increase received in January will have to suffice for a very long time for the more than 50 million Americans on Social Security, many who will be faced with higher monthly premiums for Medicare Part B and prescription drugs. The grim situation could be resolved if the government stopped raiding Social Security and paid back the $2.5T that’s already been confiscated from the fund, over $200B in 2008 alone.
Individuals on SSD/SSI will receive their share of Obama stimulus package with a $250 payment this month. They’re pretty much tapped out on their retirement accounts so it won’t last long or go very far in easing their personal financial crises.
Consider the prospect of presently ineligible Americans being able to withdraw funds from their IRA’s without penalty. The Katrina Emergency Relief Act of 2005 did just that, allowing those affected by the hurricane damage to withdraw up to $100,000 of their retirement savings without penalty. That’s quite a big chunk of change when the typical account value is $45,000.
There are murmurs that Obama should consider this same action to ease the financial devastation that’s fallen on most American households, perhaps avoiding foreclosures and bankruptcies. According to a recent study by consulting firm Watson Wyatt, early withdrawals rose from 15% in October 2008 to 44% last month.
There’s $2.5T waiting to be purged from retirement accounts nationwide. Two years ago Americans had $4.5T in those same accounts. So, why wait until it’s gone as never before? What the heck, let’s all withdraw every last penny from each of our retirement accounts and have one great big final WHOOPEE! And save a few bucks for a whoopee cushion – you’re gonna need it.
And to think it was just a short while back in September 2007 when Rick and I had our monthly chat on the economy and he brought up the fact that ‘we’ had reached the goal set up when I spooned over my cashed-out pension fund and the 401(k) account with my ex-employer.
Last month when I called Rick to query any recommended changes in the direction of investments, he assured me the current allocations would be good for the short-run, to which I assumed was another way of saying there aren’t any safe bets in the markets right now.
In normal times it would be odd to be relieved that after five-years the value of your retirement savings is at near zero in gains, but these past 18 months of economic distresses are anything but typical. I struggle with resigned acceptance and remain doubtful the recession nightmare will soon be over as predicated by guru economists still floating their boasts on an overcrowded magic carpet.
It seems foolish that people rejoice when economic indicators aren’t as bad they could have been, especially when April’s figures put another half million workers freshly beating the pavement in the chilly climate of hiring freezes and more gotta-let-ya-go’s. It’s strange days on high-ballin’ Wall Street and lonely nights for the homeless in the back alleys off Main Street.
Therefore, as I’ve done quite often, I ponder the thought of aggressively invading my retirement account on a hunch that the next big dip in the markets will again deflate my financial ego. Even a low interest-bearing MMA or CD (FDIC insured way beyond my funds) would be better than what I perceive lies ahead. If I don’t act now, I’ll have to invent a time machine, go back to 2007, retroactively clear out a huge chunk of money, bury it in the back yard and get an automatic assault weapon to protect my non-investments. Oh well, the SEC, IRS and ATF would be on me faster than Obama can take ownership of yet another private enterprise.
No, it’s not a good idea to take out funds from a 401(k) or IRA. It’s the 10% penalty on an early withdrawal that keeps me from acting foolishly, as if I were a rich man. Although there are withdrawal penalty exemptions prior to reaching the age of 59.5, the tax bill still comes due.
Retirees and those with disabilities got some bad news this past week when an announcement confirmed Social Security recipients won’t be getting an annual cost of living adjustment (COLA) increase next year. The Congressional Budget Office forecast also indicated the same for 2011 and, with inflation expected to remain low over the next few years, an increase might not be given until 2013, although President Obama’s budget calls for a 1.4% increase in 2012. The 5.8% increase received in January will have to suffice for a very long time for the more than 50 million Americans on Social Security, many who will be faced with higher monthly premiums for Medicare Part B and prescription drugs. The grim situation could be resolved if the government stopped raiding Social Security and paid back the $2.5T that’s already been confiscated from the fund, over $200B in 2008 alone.
Individuals on SSD/SSI will receive their share of Obama stimulus package with a $250 payment this month. They’re pretty much tapped out on their retirement accounts so it won’t last long or go very far in easing their personal financial crises.
Consider the prospect of presently ineligible Americans being able to withdraw funds from their IRA’s without penalty. The Katrina Emergency Relief Act of 2005 did just that, allowing those affected by the hurricane damage to withdraw up to $100,000 of their retirement savings without penalty. That’s quite a big chunk of change when the typical account value is $45,000.
There are murmurs that Obama should consider this same action to ease the financial devastation that’s fallen on most American households, perhaps avoiding foreclosures and bankruptcies. According to a recent study by consulting firm Watson Wyatt, early withdrawals rose from 15% in October 2008 to 44% last month.
There’s $2.5T waiting to be purged from retirement accounts nationwide. Two years ago Americans had $4.5T in those same accounts. So, why wait until it’s gone as never before? What the heck, let’s all withdraw every last penny from each of our retirement accounts and have one great big final WHOOPEE! And save a few bucks for a whoopee cushion – you’re gonna need it.
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