Reality Check Q&A #16
Nov. 3, 2009
IRA
I am retired and if I represent the average, I have a modest sum in my IRA, administered by an Ameriprise agent; it lost 38% this past year and is just beginning a modest recovery. Should I be concerned about it being there at 70 1/2? I'm not well versed in the stock market and am really afraid I'll lose it if I try to invest by myself.
You can be sure that you will not be able to retire at all unless a rich uncle leaves you a huge amount of money.
Get with a CPA. Go over your total portfolio. He will tell you what I have told you. He will tell you that you will spend most of your portfolio within five years of your retirement. At that time you will be unemployable, or close to it -- no marketable skills.
You need to schedule this meeting as soon as possible.
Then you had better re-think retirement.
RETIREMENT
I'm a burned out pastor with little retirement, or social security. My wife and I have a house cleaning business (we do all the work). We are 58 ... with a little SS to use. Should we start at 62 .. or wait till 66 ... or even 70? Will there be any Social Security by that time?? What should we do? I quit pastoring 4 years ago because I was so burned out.#1 Goal: Influence my grandchildren to serve Christ.
How will the story of your career influence them to serve Christ?
You see the problem. You chose the wrong calling/profession. You waited until age 54 to bail.
Put at least 70 hours a week into your business. Everything else is marginal, economically speaking. You will be in poverty on Social Security's income. Pretend you are 35. Work as a person that age would work to get a business started.
Master marketing and advertising. This is crucial.
Tell your grandkids that it's never too late if you work long hours.
REAL ESTATE
We're a home educating family of 9 wanting to pay of our mortgage and get out of debt. Thinking of selling our home and buying a cheaper home in the country...but the drive to work for the daddy will be an hour or more one way. Timing...should we be selling now? Or should we wait a few months? Next Spring? Any advice? Should we stay close to town in view of what is coming...or is a move to the country a good idea? Thank you for your time.
If you are going to sell, sell now, while the $8,000 tax credit is still goosing the housing market. Start looking for the country property. Rent for a year or two if necessary. When the tax credit ends, you should be able to buy at a lower price.
INFLATION
Consumer demand for goods and services has declined substantially. What are the odds of serious price inflation in this environment?
Consumer demand has declined. I see. Because consumers no longer have money? No? You say the money is still there? Then why has demand fallen? For which goods and services?
If money is still in people's bank balances, why do you think demand for ALL goods has fallen? For SOME goods, yes. But how can the price of all goods and services have fallen?
Visit my site. Visit the department, Federal Reserve Charts. Monitor these charts.
RETIREMENT
Age: 28
Location: Tampa, FL
Occupation: Civil engineer
Retirement Date: 2046 (?)
#1 (Financial) Goal in Life: Owning my own company
Deadline Date: 2020Question: As someone who regularly puts about $300 a month into retirement (401(k) and Roth IRA), what do you recommend as an investment strategy?
You have a dream: to own a company by 2020.
You are 28 and worried about retirement. This is good. You know the problem.
Go to an on-line financial calculator. See what rate of return you must achieve at a savings rate of $400 a month, assuming there will be no inflation.
What have you invested in so far that has achieved this rate of return? If the answer is "nothing," you must reconsider your plan to have a functioning business by 2020. I think 2015 is better.
Don't defer pursuing your #1 dream. Use the 401(k) money to fund that dream. You need a business plan first. You should launch it on a Saturday basis. Test it. Develop marketing skills. When it becomes profitable, use your 401(k) money to capitalize it.
CAREER
I sold my family home to become mortgage free, now living in a small community with just over 60 grand in the bank. I'm 55 and self-employed. What do I do next?
Plan to be self-employed until age 80.
CPI
Does the CPI that the federal government uses for COLAs overstate or understate the true rate of price inflation?
Sometime it overstates it. Sometime understates it. That's why I use the Median CPI published by the Cleveland Federal Reserve Bank. It is less volatile. Monitor is here:
PORTFOLIO
Your age: 40
Your location: New Jersey
Your occupation: Finance/Accounting.
Your retirement date: Cut back number of working days by 70, but never retire
Your #1 goal in life: Start business (in FL/TX) after children are on their own
Deadline date: 202350% of savings is invested in single family homes (2 in OK City; 1 in Tulsa; 1 in Savannah; 1 in Charlotte - none hit very hard by downturn). 5% gold coins. 5% in 401k/IRA. 40% in company stock. Company is niche website (weddings) with 80% market share in its category. I am senior (VP) manager in Company and can closely monitor the company's prospects. What are your thoughts on my portfolio?
It's a lot better than most.
Sell all of the company stock. Buy more houses and more gold.
No one should have his retirement money in his company unless it really is his company -- no shared ownership. If the company dies, he loses his income and his capital. Don't risk this.