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Where to put my retirement money, at the age of retirement.

I am 71 & am finally going to retire. I have about 60,000.00 Nonqualified that I want to put somewhere. I will need to withdraw a monthly som. I am looking at the Vanguard Target Retirement Income Fund (VTINX). have very little else besides SS & a small pension (under 350 a month).

May 17, 2013 by Rita from Hannibal, MO in  |  Flag
7 Answers  |  8 Followers
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7 votes
John P. Duncan Level 18

How much are looking to withdrawal monthly? What is the longevity in your family and how is your health? Do you have consumer debt or a mortgage? May want to consider putting half in an annuity to guarantee payments for life and then invest 20k in a high dividend etf fund and 10k in the money market for emergencies. Unfortunately 60k is not what it used to be and will not provide much of an income or cushion for health issues, etc. If you own a home without a mortgage, you may even consider a reverse mortgage to create more access to funds. Would need to know more about your situation to render a more complete answer.

2 Comments   |  Flag   |  May 17, 2013 from Mesa, AZ
Rita

Will need $400. I have almost outlived my parents family. My health is not good. I have no debt.

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Flag |  May 18, 2013 near Hannibal, MO
Rita

I mean $400 a month! And I know I dont have enough money. However I seriously doubt I will live more than 12 years. If I am careful, my money will last that long. After that, Obama can take care of me.

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Flag |  May 18, 2013 near Hannibal, MO

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6 votes

Take your time! Before you can properly invest your $60,000 of savings you need to fully understand your monthly expenses. Compare your monthly expenses to your monthly income which seems to be just social security. Now if your expenses exceeds your income, the difference is your monthly short-fall amount. I would take this amount and multiply it by 24 months and determine the amount of un-investable funds that should be maintained in a cash account. review annually and increase from the investment account.

Now deduct your amount of un-investable funds from the $60k to determine your available funds to become investable funds. Now you have to determine your risk appetite or risk tolerance before you can invest. I would expect it to be maybe a 50% stock and 50% income mix. This is critical to determine before you invest any dollars in any investment(s).

Also before you invest any money in any funds review the operating expenses or costs of what you invest in. You may not control the market results but you do control where you invest and the related costs of investing!! Low cost ETF's may be your best option.

No professional can make an investment recommendation for you based on the limited information you have already provided. But please be careful before you invest your life savings because the risks and costs vary widely.

1 Comment   |  Flag   |  May 18, 2013 from Milwaukee, WI
Rita

Thanks for taking the time to help me. My SS is $800, then I have a small pension $300. There is a 403B that I have not found out yet how much it will pay there is about 23,000 there. I have a cash emergency savings. So the $60,000 is the last one I need to consider. There it is, my whole story!

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Flag |  May 20, 2013 near Hannibal, MO

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5 votes

Hi Rita, Congratuations on your retirement. To preserve your $60,000, and if this is the only money you have to work with, consider an immediate annuity where your beneficiaries receive whatever you have not received from the $60,000 - if you outlive the annuity, it will pay the monthly income benefit for your life. At your age, you should be able to find a company who will give you at least $400 of income per month for life, I'll be happy to help, give me a call.

Comment   |  Flag   |  May 20, 2013 from Grand Blanc Township, MI

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3 votes
Herbert N Glass Level 18

Rita,

As you know, at your age you have to be very careful what you do regarding investing your money for your retirement. Unlike a younger person, you can not afford to make a mistake primarily because you will not have enoughy time to recover any losses you may experience.

So, first I need to say that because you can not afford to lose any of your $60,000, you should only consider putting your money in the most conservative investments. Only problem is that conservative investments will not give you a very high rate of return on your money, although your principal will be very safe and you should not have to worry taking a loss.

My specific recommendations for you to consideration would be for you to put some of the $60,000 into a government insured bank CD or if you think you will want to spend some of that money soon, consider placing some of it into a bank money market fund. Check a few banks in your city to get the best rate you could find.

Another choice for you to consider is to give some or all of your money to an insurance company and put your money into an annuity that can be used to supplement your $350 per month. Because there are many choices of the type and the terms of an annuity that you can get, I suggest that you find an annuity specialist that can explain your choices to you and perhaps even make a recommendation to you. The primary reason that I like the annuity option for you is because the annuity can be structured to pay you a monthly amount and even delivered directly to your checking account. And by the way, the monthly amount can be paid as long as you live. In other words, you can structure the annuity in such a way that you will not be able to outlive the monthly annuity payments.

Good luck to you.

Sincerely,

Herbie Glass,

Comment   |  Flag   |  May 17, 2013 from Franklin, MI

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3 votes
Rich Winer Level 20

Rita, The answer to your question depends on your financial situation (i.e. sources of income and assets other than the $60K you mentioned), lifestyle and expenses, health and family health history, investment knowledge and experience, risk tolerance and time horizon for various financial objectives. I would suggest you hire a financial advisor who will ask for this information and then be able to provide you appropriate and effective advice. As others have stated, at 71, you can't afford to make mistakes with your retirement savings. Working with a financial advisor should increase the likelihood that you will make the right decisions and be able to maintain your lifestyle, comfort and financial security throughout retirement.

Comment   |  Flag   |  May 17, 2013 from Woodland Hills, CA

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2 votes
David N. Smith Level 10

Do you know what is in the Vanguard Target Retirement Income Fund? There is a high probability that fund will experience a significant downturn at some point. Either the stock market portion will get it or rising interest rates will. That doesn't mean it is a bad fund, you just need to understand the potential for volatility. You might be better off purchasing the individual funds that make up your fund and drawing down from the specific assets over time. This is the beauty of dealing with no load mutual funds, you can get the economies of scale with a relatively small amount of money. Good luck to you and be flexible with your distributions.

Comment   |  Flag   |  May 18, 2013 from Miami, FL

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1 vote

Rita, I probably cannot tell you specifically what to invest in, based on a few short paragraphs about you.

I recommend you seek out a good financial advisor in your area. Find someone who is not trying to sell you the moon and the stars; someone you feel comfortable with, that is looking out for your best interests.

And this is why. You really should have a financial plan. You need to address income, safety and longevity, as well as possible liquidity concerns. You need to take a risk tolerance questionnaire so you more accurately know what level of risk you can tolerate. You need to know what it takes for you to be able to sleep at night.

I would expect you need some growth, but not above your personal comfort level. I would not recommend VTINX as your only holding, It is fairly conservative with relatively low risk. I would agrue that in a well managed and diversified portfolio as part of an overall financial plan, you can get greater diversification and performance without much difference in risk. And VTINX or something similar, could be a part of that plan

I know of $80,000 Non qualified and 23,000 Qualified. I don't know what is in your cash emergency savings. Though you would not actually co-mingle the monies, you can strategize the 2 accounts to come up with a plan. I am not so comfortable with you putting all your savings in an annuity. You would get a guaranteed income, but your money becomes illiquid. If you can work out a cash flow plan that works for you with a portion in an annuity, that makes more sense to me.

Without knowing details, I have concerns about you not expecting to live more than 12 years. Though it may be true, the possibility exists that you plan for 12 years, and then outlive all your money. Irony.

Again, without knowing all the details, I would try to set up with a financial advisor a low fee, well diversified, risk managed portfolio. I would try to be on a budget where you live as frugally as you comfortably can. Try to stretch those retirement dollars. Retirement planning and wealth management are important on any level. If you look, you can, and will, find an advisor that makes sense to you and will help you.

Comment   |  Flag   |  May 20, 2013 from Delray Beach, FL

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