Retirement Salvage

[Doodles]

I would ask around and find a good financial advisor, one that you pay by the hour.

[capngeo]

Originally Posted by Doodles

I would ask around and find a good financial advisor, one that you pay by the hour.

I did that... She said dollars and cents, I should bail and take the stipend now. With the COLA and 50 years, I'll come out way ahead. She thinks my fears of the State reneging are unfounded. I read a lot of history.... History says otherwise. I suppose if I were to do it, and they did pull the rug, I'd be party to a class action. But you can't get $$ from a bankrupt entity!

[Doodles]

Originally Posted by capngeo

I did that... She said dollars and cents, I should bail and take the stipend now. With the COLA and 50 years, I'll come out way ahead. She thinks my fears of the State reneging are unfounded. I read a lot of history.... History says otherwise. I suppose if I were to do it, and they did pull the rug, I'd be party to a class action. But you can't get $$ from a bankrupt entity!

If you feel that strongly about your reading of history then I think you have all but eliminated option #1, so its just between #2 and #3. If it were me, I'd take the 401(k) route and then roll it into a IRA when I finally retired. That way you shouldn't lose anything when you leave.

[Hud3]

I'm not sure why your option 3 has to be taxable. When I retired, I had a choice of taking a monthly pension or a lump sum payout. I took the lump sum and rolled it over to an IRA at Vanguard. Taxes are deferred until I make withdrawals from the IRA.

[lorenzo b]

Just as many Central and South Americans are coming to the USA for a better life and opportunity, many retired citizens of the USA are going South for a better climate and a much better standard of living then their pensions could afford them here in the USA. If I lived in Florida, and I do, I would consider Newark, NJ a step up.

[chris_gee]

Doubtless pension schemes can and will change. However I think your concern that the changes would be retrospective is unwarranted. That would be the same as retrospectively cutting your pay and wanting it back. Your pension is no different it is bought and paid for by your past labour. However jaundiced your views on government and the courts, enforcing past deals ie contracts is central to capitalism and their interests.

[smurphny]

Taking a lump sum payout and getting nailed for a huge tax penalty is certainly not the way to go. The government gets enough of your money already. In addition, right now there is no good place to park money and get any kind of safe return. The stock market: forget it right now unless you want to day trade, which is an option if you want to enter a steep and costly learning curve. The market has gone straight up for the last 2 years-NOTHING EVER goes up like that without coming back to earth. Buying into stocks or stock funds at this time could be a big mistake. Stocks, for most people who trusted "buy and hold" strategies, have been a loser over the past ten years and longer. I keep no money exposed to the market overnight. As we all learned in '08, the stock market is no longer a place to invest but rather like a rigged casino.

If it were not a government pension, there would be reason for worry. I know a couple of people who have lost everything in bankrupt company pension funds. If government pensions default, we may as well get on our boats and get far from land because the s#$t will hit the fan as everything collapses. It's about as safe as you can get. I have a state pension and am betting it will continue at least as long as I do. There is no doubt we are entering a protracted period of financial instability and it is very easy to make a large, costly mistake with these kinds of things. There are no crystal balls.

[capngeo]

Originally Posted by lorenzo b

Just as many Central and South Americans are coming to the USA for a better life and opportunity, many retired citizens of the USA are going South for a better climate and a much better standard of living then their pensions could afford them here in the USA. If I lived in Florida, and I do, I would consider Newark, NJ a step up.

Ever been to Newark? Port au Prince is a better city!

@Murph..... Have you seen there was a bill in congress to allow states to declare bankruptcy? Fortunately it went nowhere... But it was a toe in the water just the same. Just say the State of Florida, decides to spend the $250 billion or whatever the value of FRS is.... What keeps them from defaulting on pensions? Or, what if all the private sector DEMANDS that old pensions be terminated? Kind of a "I lost mine, you should lose yours" mentality.

Right now FRS is fully funded, and in reality costs the taxpayer nothing for retirees, as the payouts are funded by investment gains. The politicos have spun it the other way, and the populace is buying that idea.

[hpeer]

Originally Posted by smurphny

If government pensions default, we may as well get on our boats and get far from land because the s#$t will hit the fan as everything collapses.

I agree with this assessment. There is a thread for a shtf boat.

I don't know about Fl but NJ has been deeply underfunding their retirement funds for several years. I believe that there are a number of other states in similar situations. Here is some good news and bad news. Florida may be one of only a very few that are OK. Feb. 2010 date.

The Trillion Dollar Gap - The Pew Center on the States

Key Findings From Pew's Pensions and Retiree Health Care ReportRetirement benefits provide a reliable source of post-employment income for government workers, and they help public employers retain qualified personnel. For states that have not been disciplined about fulfilling their obligations, the financial pressure builds each year.

• • In 2000, just over half the states had fully funded pension systems. By 2006, that number had shrunk to six states. By 2008, only four—Florida, New York, Washington and Wisconsin—could make that claim.
• • In eight states—Connecticut, Illinois, Kansas, Kentucky, Massachusetts, Oklahoma, Rhode Island and West Virginia—more than one-third of the total pension liability was unfunded. Two states—Illinois and Kansas—had less than 60 percent of the necessary assets on hand.
• • Nine states were deemed solid performers, having enough assets to cover at least 7.1 percent—the 50-state average—of their non-pension liabilities. Only two states—Alaska and Arizona—had 50 percent or more of the assets needed.
• • Forty states were classified as needing improvement, having set aside less than 7.1 percent of the funds required. Twenty of these have no assets on hand to cover their obligations.

[hpeer]

Originally Posted by capngeo

Ever been to Newark? Port au Prince is a better city!

I live across from Camden, even worse.

But....I think he was comparing it (favorably) to areas in Florida.

[mrohr]

Financial advisor? Finance is the art of moving (your) money from place to place until it dissapears! Get on u tube and check out what Gerald Celente or even Jesse Ventura has to say about where your money is disappearing to.
The truth will hurt,but in the end it can make you free.

[Doodles]

Originally Posted by mrohr

Financial advisor? Finance is the art of moving (your) money from place to place until it dissapears! Get on u tube and check out what Gerald Celente or even Jesse Ventura has to say about where your money is disappearing to.
The truth will hurt,but in the end it can make you free.

You get financial advice from Jesse Ventura?

[lorenzo b]

If you want to laugh for hours, just google Jesse Ventura.

[Charlie]

Originally Posted by capngeo

Option #2 has all the inherent investment risks/gains BUT the principle is mine and can be passed on.... The problem is the retirement program is top-loaded and if I were to leave early, I would miss out on the best gain years. Also I'm not sure I trust the financial system right now.

#3 comes with about a 38% hit for taxes and penalties, but at that point the money is mine to do with as I see fit.

My financial/investment savvy is about zero; that said.... I have made good money investing in real estate, and understand that one area well. Being a landlord and cruising are difficult to manage at best... but doable with a good local manager and timely communications and transportation.

United Airlines among others took the pensions of their employees in bankruptcy. A pilot who was expecting a six figure pension all of a sudden is stuck with the max out of the Pension Guaranty Corporation of $45k
The states have underfunded their pensions so not having confidence in the pension plans is a reasonable conclusion -- I wouldn't consider it a conspiracy theory. Religion & Ethics NewsWeekly . COVER STORY . United Airlines Pension Termination . June 17, 2005 | PBS

If you understand Real Estate that is a good place to invest. If you understood metals that would be a reasonable place to invest. Rule #1 -- Understand what you invest in.

There are IRA's that allow you to invest in Real Estate. Just Google it. I haven't done so in awhile but did find some that would do it. Kiplinger.com Here is an article from Kiplingers. It is quite dated having been written in 2005.

For Real Estate you need a good property manager and you need to learn how to manage that PM. This is a big step for many small investors. Use the same keys that you used to buy other rental properties and then figure out if they work when you hire out the maintenance and management. You need to do this in order to cruise.

Property Inspections are key to good management so when you are in Guatemala for huricance season it is a good time to schedule your annual property inspection. Your RE investment should provide you with airfare and accommodations to facilitate your inspections. Be sure to take lots of pictures and document everything that the property management company has done right and or wrong. File a report with the company showing what they have done well at and where they need to improve.

Since you are going to have to come back to inspect your properties make sure that you purchase them in a place that you feel is worth coming to visit. This works out in two ways. One you have a pleasant stay when you come and two If the place is worth coming to this will keep demand high and that increases the potential for appreciation.

The entire key to investing in RE for cash flow is to buy it as an investment. meaning that when you buy the property you are able to see a monetary reward at the end of the year.

[s/v 'Faith']

Just one bit to add to the discussion....

.. WRT COLA, the federal gov. decided to remove energy costs from the CPI (which decreases the costs of increased COLA from reflecting the inflation in the midst of the recession)...

It is not unlikely that this will continue to be the case, and COLA adjustments (like the lack of increase in the last couple years) may well become a significant issue in the future.