On Sep 30, 3:53*pm, jIM <noreplysoc...[at]hotmail.com> wrote:

- quote -

The OP has a $500,000 non-retirement account so he doesn't need to
have 6-12 months of cash for emergencies since some brokerages allow
one to borrow against that type of account. The OP could also sell
those funds that aren't depressed and have a large tax impact.

--
Ron

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On Sep 27, 4:46*pm, mn.d...[at]yahoo.com wrote:
- quote -


I think your details suggest you have the accumulation aspect of
retirement planning down.

I second the advice to get a will.

I would look at the following aspects to improve situation:
1) Make sure you have 6-12 months expenses in cash (emergency fund)- I
did not see this mentioned.
2) You need to start thinking of withdraw techniques. This has tax
implications on many levels and over the next 5-10 years this might
suggest what you buy or invest in.
3) I would make sure you have a good handle on retirement expenses.
Will travel increase? Will spending increase? Health care costs?
Moving?- if so will property taxes and maintainence change?
4) 2) and 3) kind of go hand in hand. Withdraw techniques can suggest
how much you need to save, the budget suggests how much earnings you
need from investments each year. If you chose to live off dividends
alone (a good early retirement plan- as dividends tend to keep up with
inflation), you might want to increase what you send to the DRIPs now,
as well as liquidate some of the company stock for this as well.
5) If you chose a more conservative allocation going forward, I would
advise to use muni bonds because of 28% fed tax rate and I assume a
high amount of state taxes too.

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A quick annuity calculator here:

http://www.immediateannuities.com/

Some people might put a portionof their savings
(say 1/3) in annuity to generate baseline living expenses
and invest the rest more aggressively.

Annuities pay slightly more than 30-year treasuries (6%)
if you are under 60, then increase with age.

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On Sep 29, 7:14*pm, BreadWithS...[at]fractious.net wrote:

- quote -

For a lifetime annuity purchased in a taxable account, the purchase
cost is amortized over 360 months for under 56, 310 months for 56-60,
260 months for a 61-65 year old, 210 months for 66-70, and 160 months
for 71 and older. That will reduce the taxes from the annuity.

--
Ron

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Chip <chip.wood[at]ieee.org> writes:
- quote -

The thing is that pensions are more complex than such a
simple rule of thumb can account for. To come a lot
closer, I'd say to go get some quotes for current prices
for immediate annuities. The values, you'll note, depend
on variables such as current interest rates, your age,
your sex, if it's a second-to-die (and then, on your
spouse's age and sex, too, of course), if it's inflation
indexed or not, etc.

But for what it's worth, a 65yr-old man in my state
can get single-life income, no payments to beneficiaries,
no inflation adjustments annuity paying around $675/mo
for $100,000. That's $8100/yr, or about 8%.

The same annuity for a 45-yr-old man pays only about 6%,
and even less if it's a woman instead of a man.

You'll probably need to talk to an insurance agent to
get quotes for more complex situations (ie. specific
companies, inflation-index, etc).

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mn.door[at]yahoo.com writes:
- quote -

If you're comfortable with that risk - I see no reason to hurry
to pay down a mortgage on which you are paying 4.5% -- as long
as you are still saving otherwise. If that mortgage rate
resets to a rate you don't like, make sure that if you want
to, at that point, you can pay it off in cash. You may still
be able to refinance when that time comes, but while a low mortgage
rate may be an incentive to save in higher-yielding instruments,
in order for that to work, you still have to be doing that saving.
(which, it sounds like, you are doing plenty of)

- quote -

I wouldn't dump it.

- quote -

Until you have nobody dependent on your *income* - ie. if
you are fully retired and have stopped saving and have
enough assets to live off of and for your dependents to
live off of - you need insurance. You're asking the
right question - if I die, then what happens to the
wife and kids? If you die tomorrow, and your plan is
for you to work for another 5 to 10 years to save for
your retirement, until you've finished saving, you
have folks whose well-being depends on your ongoing
income. And, frankly, even if the plan is to have
saved enough in 5-10 years, your insurance coverage
should last longer than that - it's entirely possible,
even likely, that it'll take you longer than you
originally planned. And $350/yr for half a million
in coverage is a pretty good deal. You should certainly
do some up-to-date comparison shopping, but that's
certainly not a lot of money for your coverage.

Do make sure you have *disability* insurance, though.
You're more likely to be disabled in the next 5-10 years
than you are to die. I just went back and checked your
original note and it looks like you have decent coverage
from work - make sure that the policies are portable
if possible (ie. if you leave that employer, you may
be able to take them with you), and that they cover
you the way you think they do (ie. own-occupation, etc).

- quote -

I wouldn't bother with them, either. Consolidate to a low-cost
brokerage. You should be able to have the custodians of the
various drips transfer the shares to a Fidelity or similar
low-cost brokerage, and if you still want the dividends
reinvested, most of them will do that for you for no additional
cost, too.

- quote -

Depending on how big a part of your portfolio they are,
maybe it's easier just to leave them as they are, especially
if you intend to keep buying into them automatically like
that. But I'd rather see you buy into a high-quality, low-cost
*diversified* fund automatically instead. DRIP or not, you
are managing a portfolio of individual stocks by hand, and
in a manner which makes it very cumbersome to rebalance or
adjust.

- quote -

As I said above.

- quote -

Let me repeat for you, then: GET A WILL!

You do NOT want the state deciding what happens to your kids
if you and your wife both unfortunately die. You have enough
assets that you should be considering a family trust to
hold them in the event of both of your deaths and for the
benefit of the kids. And you want to be sure that they go
to the guardian of your choice. You should be able to get
a competent lawyer to draw up the appropriate documents -
you and your wife *both* needs wills, and likely, at least
a trust or two (especially if you expect your family assets
to increase enough that you'll be retiring at 45-50), and
while you're at it, probably a couple of durable powers of
attorney, health-care proxies and HIPAA release forms.
The whole collection of things shouldn't cost more than
a thousand or two, depending on what trusts you set up.
Even if you aren't doing any trusts and just do simple
wills, POAs, etc, it's worth a few hundred bucks to have
a lawyer draw it up (and likely, notarize when witnesses
sign it and all). Do get and read the Nolo books as
appropriate - their "Plan Your Estate" book is quite good.
But you'll likely still want to get a lawyer. Do not
wait. Start to think about guardians and possible trustees,
discuss with your wife (and with the potential guardians, etc),
and get moving on this.

- quote -

If it's possible to diversify them out, do so. If it's not
(ie. you may not be able to sell), see if you can hedge it
out somehow. This is not the sort of thing it's easy to
give advice about here or without a whole lot more information
and it's probably worth seeing someone at a brokerage with
more expertise for this. In many cases, if one has a heap
of a single stock, it's just best off to bite the bullet,
pay the cap gains and sell off to diversify. There are
some other strategies which may be possible with publicly
trade stocks (ie. an exchange fund (note - NOT an ETF), for
example, but you'll need to see a specialist for this sort
of things and you will pay for it!)


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"joetaxpayer" <joetaxpayer[at]nospam.com> wrote in message
news:JISdnTrSwobETELVnZ2dnUVZ_qXinZ2d[at]comcast.com...
- quote -


- quote -

Moons ==> Months.
"a year or so ago" ==> 12 months.
12 months ==> 12 moons ==> "many moons".

Q.E.D.


BTW -- the single last year equates to (depending
on when you're reading this) about a negative 25%,
wiping out much more than your last year's worth
of growth.

dapperdobbs wrote:

- quote -

This is interesting. Can you give me a cite or URL where this is
spelled out? I have heard of a 12X mult of the yearly pension, but this
exact figure is new to me.

Chip

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"joetaxpayer" <joetaxpayer[at]nospam.com> wrote in message
news:JISdnTrSwobETELVnZ2dnUVZ_qXinZ2d[at]comcast.com...
- quote -


- quote -

Moons ==> Months.
"a year or so ago" ==> 12 months.
12 months ==> 12 moons ==> "many moons".

Q.E.D.


BTW -- the single last year equates to (depending
on when you're reading this) about a negative 25%,
wiping out much more than your last year's worth
of growth.

You need to analyze for expected expenses
and have at least 20 - 25 times that before
social security age and 12 - 16 times after.
I'm guessing you are spending about $10K
a month based on your income and fairly
agressive savings.

The largest overlooked expense is health insurance.
People age 60-65 pay about $600 a month apiece now,
but rates are doubling about every 5-7 years.
I'd budget at least $3000 a month in your case
for you and your spouse in your 60s.

So with $13K a month in expenses, you'd
need 3-4 million in the bank. You are
about a third the way there which is good for your age.

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On Sep 29, 5:12*am, mn.d...[at]yahoo.com wrote:
- quote -

I had to ask to cover all the possibilities.

Do you want to continue working after you retire either in a part-time
basis or in a different job?

I think that your investment earnings need to exceed your current
expenses by a comfortable factor to make retirement feasible.

--
Ron

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On Sep 28, 12:51*pm, Ron Peterson <r...[at]shell.core.com> wrote:
- quote -

PENSION? Surely you are kidding. Not only my company does not have any
pension, none of my friends' companies have any pension. In fact, I
don't know anyone younger than 45 whose job has pension (I know there
are such jobs, such as postman, bus driver, etc.) But certainly none
in the professional areas, in silicon valley.


- quote -

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"Elizabeth Richardson" <erichktn[at]worldnet.att.net> writes:

- quote -

If you go back to my post, I did say that some people do have jobs
where having a car is a necessary part of it.

- quote -

Indeed, this is one example of a person who not only needs a vehicle
in the course of actually doing their work, but is also most likely
constrained to living in a rural area.

- quote -

Here in the Boston area, construction workers are usually driven to
the job site in a truck owned by the contractor. I'll bet a very
large fraction of them don't have cars of their own.

FWIW, I'm an engineer, and in the almost 30 years I've been in this
business I've literally *never* lived where I couldn't walk or take
public transportation to work and to shopping and other places I
need/want to go on a regular basis. This includes having lived in the
Seattle, St. Louis, Salt Lake City and New Haven in addition to
Boston. (You mentioned hardware stores -- there are two within a
10-minute walk of where I live now, plus a Home Depot a few miles away
on a direct bus line.) I contrast that to how I grew up; my dad was
also an engineer, but we lived in such deep outer suburbia that he
drove about 40 miles each way to work every day. Living like that was
my dad's choice, not a necessity of his job. It was a luxury, as much
as the mini-mansion and parking lot full of late-model cars that he kept.
1970's Detroit thinking, as I said, when gas was cheap and the economy
ran on the automotive industry. Nowadays the economy runs on the
Internet, and the Internet has made it possible for a lot of people
not to have to "go" to work at all.

Since I'm not tied to working in any particular location, I'm not sure
I want to stay in Boston indefinitely, but there are plenty of other
walkable cities with decent public transportation out there, as
previously noted. The car-sharing services have really been catching
on in many cities as well. Zipcar is super-convenient for the cases
where I do need a car -- to get somewhere that public transportation
doesn't go, to take the cats to the vet, to bring landscaping supplies
home from the aforementioned Home Depot, etc. While I did own a car
for many years even when I didn't need one on a daily basis, after
having used a car-sharing service instead for several years now I
don't really ever want to go back to being a car-owner again.

Anyway.... I'm not claiming that nobody needs to own a car -- only that
it's not a given that *everybody* needs to own one. And if you don't
need a car, it's not an "investment".

-Sandra the cynic

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"Sandra Loosemore" <noreply[at]frogsonice.com> wrote in message
news:m3ej34rv0z.fsf[at]frogsonice.com...
- quote -

This is about as ignorant a comment as I've read here. Most jobs that are
really necessary to be performed cannot be done telecommuting. As a
consumer, you should really learn where those things you consume come from,
other than China. Most farmers actually need a reliable vehicle, for
instance. Just going to the hardware store might be a necessity some days.
Very few construction workers have jobs within walking distance of their
homes, and public transportation probably doesn't get you to the
construction site either. Those are two rather common jobs for whom a
reliable vehicle is a necessity. Oh, maybe a doctor should have a car, too,
just in case. Over-consumptive? Give me a break.

Elizabeth Richardson

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On Sep 27, 3:46*pm, mn.d...[at]yahoo.com wrote:

- quote -

You probably won't have enough net worth to comfortably retire without
working at age 45.

- quote -

Your house has to be worth more than that. Get a formal appraisal and
get a building inspector to find things that might need to be repaired
so that you will be able to put it on the market.

- quote -

That's good, don't pay off early unless your rate goes to 7% or more.

- quote -

That's good. Remember that Social Security averages the highest 35
years of earning, so if you can stretch your working years out it will
help. (I know SS doesn't pay that much, but it helps.)

- quote -

You have a good balance between retirement and non-retirement
savings.

- quote -

As your net worth increases, you may not need LTC insurance, but you
need it now.

- quote -

Private companies are valued conservatively, so keep the stock until
you leave your job.

Once you retire, medical insurance may be a major problem.

Rather than completely retiring, your wife and you should consider
getting other work such as new company start-ups, research, or
academic teaching.

How soon does your pension become vested, and when can you start
getting your pension?

--
Ron

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- quote -

Not more than a year or so ago, CDs were near 5%. Rates seem to go up
faster than they drop. There's a (mortgage) rate where I'd agree 100%
with you, but it's a bit higher, maybe 6-7% as the grey area.

At 4.5% mortgage rate, 28% bracket, a return (based on 15% div and cap
gain rate) of 3.81% or higher is the OP's breakeven. DVY (the iShares
Dow Select Dividend ETF) is currently pushing a yield of 4.75%. If the
market remains flat to down slightly for the next decade, this choice
will break even for this situation. Not risk-free, but not using a long
term return assumption (of 8-10%), either.

Joe
www.blog.joetaxpayer.com

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"John A. Weeks III" <john[at]johnweeks.com> writes:

- quote -

Certainly, some people would have a very hard time earning their
living without a car, either because it's the nature of their job or
because they have chosen to live and/or work in an area with few
alternative forms of transportation available. OTOH, it's getting
easier and easier for folks to get by without owning a car, as
telecommuting becomes more common and car sharing services like Zipcar
are catching on.

Back when I got my first job out of college, I bought a new car and
drove it to work even though it was easy walking distance, because I
grew up in the Detroit area back in the 60's and 70's thinking that's
what grown-ups did when they got jobs. It wasn't until my last
"beater car" died of old age several years back that I realized that,
hey, I don't really need a car anyway! I telecommute now; in my
previous few jobs, even when I still owned a car, I walked or took
public transportation to work.

Anyway, my point here is that telling folks they need to "invest" in a
reliable car is 1970's Detroit thinking. Nowadays, not every working
adult really needs to own a car -- and for those who don't, a car is
an unnecessary expense, not any kind of investment. Moreover,
choosing to live in an area where you need to drive 10 or 20 miles to
get to the places where you need to go every day seems to me to be as
pointlessly over-consumptive as buying the mini-mansion or late model
car lot in front of it.

-Sandra the cynic

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In article <m3iqsgs2it.fsf[at]frogsonice.com> ,
Sandra Loosemore <noreply[at]frogsonice.com> wrote:

- quote -

I use the definition of an investment to include a tool or machine
purchased with capital to be used to earn a rate of return. That
includes stuff like a punch press at a factory or a roller mill
at a steel plant. In my case, and in many cases that I know of,
I sell my time to make money. If I cannot get to the jobsite, I
get no paycheck. As a result, a reliable working vehicle is an
essential tool in my manufacturing operation where I convert time
into pay. Yes, a little different way of looking at it.

My point was, investment or expense, is that you don't want to lose
a $250,000 a year job over a beater car that won't start a few times
a week, or makes you late for work on a regular basis. At the same
time, one does not need to run a late model car lot in front of
their house with a vehicle for every day of the week, and payment
books to match. Just make sure that you have one reliable car so
you don't put the big picture at risk over small change.

-john-

--
================================================== ====================
John A. Weeks III 612-720-2854 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

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On Sat, 27 Sep 2008 22:33:40 -0500, dapperdobbs
<GeorgeCFL[at]hotmail.com> wrote:

- quote -

I really enjoy your posts, but it has been many moons since we could
earn 4.5% risk-free "elsewhere". I suspect that most of the folks who
have been investing while running a mortgage are in a serious hole.

(I say "risk-free" to keep this apples and apples since the choice we
are discussing is investing vs. paying down/off a mortgage.)


-HW "Skip" Weldon
Columbia, SC

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"John A. Weeks III" <john[at]johnweeks.com> writes:

- quote -

A car isn't an investment; it's an expense. Because of insurance and
maintenance costs, it eats money even when you're not driving it.
The same is true of owning a house. OTOH, I've found I can get by
just fine without owning a car (between walking, taking public
transportation, and using ZipCar); I'd have a harder time getting by
without having a place to live. ;-)

Anyway, yeah -- I'm certainly happier having a modest home that is
100% paid for than having to fork over huge mortgage payments on a
mini-mansion every month. Housing is most people's biggest expense,
and once you're free of that mortgage payment it makes a huge
difference in your cash flow situation.

-Sandra the cynic

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