Retirement Question

curlysueFebruary 15, 2003

I'm 41 and i need some financial advice please. I contribute 6% to my 401K and my employer matches 3%. Not much i know but that is all i can do right now. I want a brighter financial future. I want a comfortable retirement. What is the single most important thing i can do right now to make that happen? I am new here but have been lurking long enought to know how smart you people are. Please give me some advice Joyfulguy. Thanks I know i waited kind of late in the game but tell me i didn't wait to long.

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I would check out On his radio program last week he mentioned the advantages of the Roth IRA. You 'd be able to take out your money if you needed it later without penalty. I don't know all the ins and outs but it would be something I'd look into if I was still working.
Also check your Social Security status and see what the projected amount you'd be entitled to would be.
Keep your credit standing good by paying bills promptly and try to not build up a large credit card balance. Get used to paying it off each month.

    Bookmark   February 15, 2003 at 8:17PM
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Yes, the Roth IRA is a good safe solution. Our one regret is that we did not put more money in the the IRA fund when we could have. We invested in a regular bank IRA CD. no stock market, no bonds, no frills, just a plain IRA CD.

The IRA limitations make it seem as not worth while, but by the time you retire, it will have added up to a nice sum. The beauty of an IRA is that when you start taking the manditory amount, the balance continures to earn interest and for quite a while. the amount earned will be more than you take out.

    Bookmark   February 16, 2003 at 1:40PM
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The single most inportant thing you can do is talk to some one who "IS" a financial planner....what works for one person doesn't necessarily work or meet the needs of another. A bulletin board is certainly not the place for "real" financial advice. My husband and I were accumulating some savings but really didn't know how to go about making any money...We have been fortunate in finding really good people to help us....and at this particular moment we are getting such good advice.

Find a planner that you can trust and let them help you...Talk to several if need be and select the one that you think is best.

    Bookmark   February 17, 2003 at 9:10AM
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I think the question is How and Where do you find a planner and how do you know who to trust. I got some good advice years ago from the guy (CPA) who did my taxes but he wouldn't be classified as a Financial Planner.

    Bookmark   February 18, 2003 at 12:22AM
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Hi all,

How to pick a financial planner?

Choose one who is well trained. In Canada, until recently, financial planners were not regulated - the argument being that most such were sales people of either mutual funds or insurance, both of which were regulated.

Sellers of mutual funds have had to pass a fairly simple exam to become qualified. The Canadian Securities Course, (which I took 21 years ago) - the one that stockbrokers take - is much tougher.

Recently much more demanding restrictions have been implemented, including governing financial planners, as well.

Some in the industry worked toward becomng a Certified Financial Planner, a six-segment course that's tough. I took all six, passed only 5. To achieve it now, I'd have to start from scratch, as the course has been fully revamped. At age 74 - I don't think so.

Ask detailed and precise questions about how much training your candidate has taken, that was required - and what additional non-mandatory training. That is, does the person want to improve his/her skills - or is s/he willing to coast along at minimums? You want someone who sets high standards for him/herself, I think.

How much financial experience does the person that you're considering have?

For example, the first Templeton mutual fund, started in 1954, has a chart showing that if one had invested $10,000. then, it would have been worth $1 million in '84, when I sold mutual funds - about $5 million, recently.

When I ask some of the smart-ass young financial planners if they know how much $10,000. was worth in '54, they're not too sure - "quite a bit" they may say.

"You could get a good house for $10,000. in '54," is my reply.

They are usually very surprised, often almost shocked. Hard to believe.

Then - some say that if I'd put $10,000. into a house in '54, it wouldn't be worth 5 million now.

I tell them to wait a minute - if I'd bought the home, I'd have lived in it for nigh on fifty years.

If I'd put the $10,000. into the Templeton flagship fund - and withdrawn the amount of my rent for almost fifty years - it wouldn't be worth 5 mill now, either.

If we discuss apples, let's stick to apples, not change the concentration to oranges.

Further - in '54, if I'd had $1,000. - 1,500., I could have bought a $10,000. home.

If I'd had only $1,500. cash to invest, the bank would have lent me - only $1,500. So I could have had only $3,000. invested. Unless I had some extra funds available to pay the bank in case the market went down, to keep their commitment to half of the smaller value - they'd have sold some of my asset.

So - I'd have been unwise to have chosen to have invested the full amount apparently available. To be fair - over the years, as the total value increased, I could have chosen to have borrowed much larger amounts without too heavy risk - if I chose.

But - how many people, as they get their house mortgage paid down, go and increase its amount, again?

Which might be a viable option, if they used the money to invest, i.e. to increase their capital, rather than to pay bills, or spend on consumer stuff.

To be fair - most aren't being deceptive. They just lack the experience.

You need someone with broad experience of life in general, as well, I think.

You need to pick someone who's compatible, not only in terms of financial ideas, but you need to feel comfortable with one another on a personal level, as well.

You'll be dealing with very personal issues related to your life - and over a number of years.

If the person sells financial goods, you want them able to sell a wide variety of products - for they'll only want to sell you the (maybe limited) selection of goods that they offer.

Know precisely and completely how your financial planner is to be compensated - entirely commission on the products sold, and, if so, are there trailer fees that the product manager pays to the planner annually, later. Or, (likely lower) commission plus fees, as some do.

Best to deal with a fee-only planner, (says I - that's what I've chosen to be for over fifteen years) who doesn't have a conflict of interest. Isn't trying to get you to invest in one product rather than another, whether because s/he can't sell that product, or, among the ones that s/he can sell, one pays a much higher commissin than the other. Doesn't care what you buy, how much, or when - as his income doesn't depend on it.

You don't want someone who thinks almost as you do - if so, how long will you be willing to pay that person to give you financial advice not much different from what you know?

Or someone whose ideas are very different from yours - for you'll feel the chill of frigid air when you hear his/her recommendations, pull your coat around you and ask yourself, "Do I want to trust the management of my precious money to *that flake!!!*

I think that you should choose someone who prefers to have you work toward learning a lot more about how to manage your own money - someone who enables you to become more knowledgeable, not someone who prefers to have him/her largely make the decisions, to be rubber-stamped by you. That's up to you.

As I told a psychiatrist who wondered whether he could retire early, and I painted several scenarios for him, when he asked me just to make a recommendation to him, "No one cares as much about your money as you, Doc, not even I, who don't make money on the products that you buy. If the value of your assets goes down $8,000., I can't come along to offer to pick up $4,000. of the loss".

That should be enough for now.

Your comments, please?

ole joyful

    Bookmark   March 5, 2003 at 1:33AM
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