Pensions

I also know people that retired and their 401k were worth a fraction less because of the crash, and a lot of the companies that made up some of the funds he was in went bankrupt.

You said you draw out the interest on your 401k.......that's until you turn 72. At that point you have to draw out every penny.

My pension is pretty well diversified though. It isn't 100% suceptible to market volatility like a 401k or IRA.

I'm not saying there are no risks with pensions or they are the end all be all of retirement. I am saying they ate better than 401ks in many ways an i would rather have a pension.

But I don't depend on one solely. I have a good pension 401k and IRA. And a house that will be paid off by then.
I don't think me and your father share the same opinions when it comes to pensions and retirement.

 

Fair enough. As for drawing it all out at 72, yes, but it can be reinvested into other non-retirement funds such as a basic mutual fund or even real estate. Personally I like investment real estate, it seems to be the most stable of all investments, although everything does have a risk. I never do individual stocks, always a mutual fund with a long history of making money. Even with the crash in 08-2010 I have averaged over 8% (adjusted for inflation actual about 10%), although I did lose big time when it first crashed, but I stayed in and rode it all the way back up. Had I been close to retirement age I would have been more worried, may have even moved a chunk into something boring like a municipal bond to cover the immediate future.

The biggest problem is most people are not active in planning for their future, they just expect it to be done for them, whether it is a pension or an IRA you have to actively plan and participate to insure your future. You get that, which puts you way ahead of average.

Here is a thought for you since you understand how diversity is important. I have an IRA fund that is self directed and invests into income producing real estate (including owning our shop and rental properties). This is about as safe as it gets, as long as the real estate market doesn't crash hard, and I am in a very stable area without much resort type properties, my investments keep growing. It also shelters the real estate as it is owned by a trust and not subject to bankruptcy or seizure if I did something wrong with my business or was subject to a law suit. Lastly, it shelters some of my income as I pay myself the rent on the properties , but it goes into my own retirement and is tax deferred, and in one fund after tax so it grows tax free.

 

Not true. At age 70.5 you have to begin drawing from your 401(k) if you haven't already. There's a formula for how much you have to withdraw. The withdrawals are called Required Minimum Distributions.

 

Don't forget diversification. If I had not took some sage advice and diversified around 2000 I would be having to depend on Social insecurity today.

 

I get what you are saying but there are problems with savings and returns on them.

I lost enough money with 401k, 403b, Ira and so on, ignoring my education so I ended up with two things, one is tangible ownership which returns revenue and a selfdirected ira. Between those two, I could retire today and have enough to survive on for the next 40 years. The ira was a hard thing to be convinced to go into, mainly because it is a pre-taxed investment vehicle which most don't return good results and you pay in many cases too much in taxes.

I won't get into the details because it isn't something everyone can do.

 

Best decision I ever made. I won't say what my deposits are, but they pay all my bills and over 50% of my food AND I still am able to put some away and not hit the corpus of my savings too hard. I am not married and am not in debt. If nothing crazy happens I should be set for life!

 

My IRA is made up of mutual funds. I had a brokerage account that I used to play aron with buying stock. Sold most of them when the economy tanked.
When the economy started to recover I started to increase my IRA and haven't played with stocks since.
I would like to get back in and start short selling as I think the markets are over valued right now. But the risks associated with that are holding me back.

But I like what you're doing. Revenue generating assets like real estate are great investments.
My father made a ton from holding an apartment building for decades and selling it for huge gains.
He was able to retire on it.

 

It's been a while I had to do a search and refresh my memory. But you're right. You just have to start drawing at 70.5.
I stand corrected.