MK: First of all, congratulations on being good savers! Since you don't need the Social Security now, if you're both in good health, then consider waiting. You can work with a fee-only financial planner to deterine the correct strategy. Meanwhile, you can look at the ssa.gov website and get familiar with the concept of file-and-suspend. Although it may not be the best financial decisio, depending on your mortgage interest rate, I would consider paying that off.
@MK - It's possibly that some or most of your Social Security will be offset by your government pension. You can verify this by contacting Social Security.
MK, this is a much more complicated question that it may seem AND you might not get good advice if you go to social security. I would suggest that you definitely consult an advisor before you do anything. Since you have other resources you have a lot of options. As yours will be the higher benefit, you MAY want to wait until age 70 to allow it to increase. In the meantime, you can draw on your spouse's benefit starting at your normal retirement age (50% of her benefit). When one of you dies, the survivor will get the higher benefit...which will be yours and it will be much higher if you wait. Like I said, a good advisor would be very helpful on this. You might also try maximizingmysocialsecurity.com.
MK: If you have the ability to "fund" your retirement from other savings (especially from taxable accounts), it may be in your best interest to defer SS benefits. Your benefits increase ~8% a year, each year you defer. Further, part of your SS benefits may be taxable, so if you can fund retirement from savings, if may be best to defer.
MK: good for you --TriCare is awesome! Russell, if MK has Social Security wages of significant years, maybe not. My other collects both a military and SS
MK, Bobbie is correct. SS benefits are much more complicated than meets the eye, and they offer many "options" that you may benefit from. I have heard that the folks at local SS offices have been quite helpful.
Not enough cash flow....paying off the mortgage would take large TAXABLE distributions from you retirement accounts. Such a large distribution would probably put you in a higher tax bracket. So I'm not sure this is a good idea. You do have resources. It would be great if you could work through this with a planner to see what would happen if you spent down those resources earlier allowing your social security benefit to grow.
Not-Enough-Cash Flow: If you can work with a fee-only financial planner, you can roll that 401(K) into an IRA and look at setting up a small income stream to meet your needs. If the forced retirement was due to medical issues, consider that taking Social Security early reduces your current benefit by 25% and widow(er)'s benefit as well
MK: not all Social Security offices offer correct advice so working with a knowledgeable planner might be a better idea.
MK, and to be truthful, not all planners are well versed in social security either so be sure to ask up front if this is one of their areas of expertise.
Not Enough: At this risk of sounding self-serving, you should sit with a planner. You should create a budget and then determine the best assets to draw from to meet the budget. The accounts you list are both qualified accounts, which means any distributions are taxable, so collecting SS although early MAY be beneficial.
Not Enough: Depending on how much you need to meet your budget needs, you could consider taking a reduced spousal social security benefit and letting the higher wage earner's benefit "mature."
@Gerald: Fidelity has an agreement with Mint. Several of our clients use Mint and are happy with it. That said, some Financial Planners, including our firm, offer software that aggregates their client's accounts so that they can see everything together
Gerald: I have heard good things about Mint, but because it is free, the user may be inundated with investment related junk/spam mail/email. Kiplingers may have a suggestion or even a service they provide?
Gerald, I have been using Quicken since 1990. With the memo feature and meticulous entry of receipts, even cash, I could tell you when I fixed the car window, how old the cats where (first bet bill), how much I spent on Christmas, when I last had skin rash. Then about 2 years ago, I stopped being so meticulous. I can't believe it as I am "one of those kinds of people" but I have loved it. So MINT may do everything you need. A lot of my clients use it and love it. Quicken is robust and will handle investments and just about anything you can think of. But if you do use it, I suggest you get a qualified person to help you set it up initially.
Gerald you might want to also check out www.mvelopes.com
@ Gerald Johnson - Mint is owned by Intuit - it's not a bad option but it has limitations. I know many of our clients use Quicken and swear by it. I've recently been hearing good things about LearnVest as well.
Kakam, you make a good point. I think people like a good dividend paying history because they have some reason to believe they will have income even if the market and the stock drops in price.
kakarn: You bring up a good point. Dividends are often paid as an incentive or "reward" to stockholders. Further, they are sometime paid when a company has an excess of cash and the Board may feel that some of the cash should be returned to the stockholders.
@ kakarn - You're right that dividends are not everything. But one argument for them is that the company may not make the best choices with that cash, as we've seen - they could use to buy businesses they know nothing about, buy back their stock at all time highs, or may just build up a huge cash position that's not earning anything. Sometimes returning it to shareholders is the best option.
Hi ginnyj: First of all, you'll need to set aside money to pay your income taxes on that $35K. CD ladders have fallen out of favor because they just don't pay. Your Dodge & Cox fund may be higher than your current risk tolerance. I would suggest you work with a fee-only financial planner because you have several options here. Short-term bond funds can provide you with income if you need it and a safer place to keep your two-years worth of income needs.
GinnyJ: It may be a good time to"dollar cost average" into a bond fund. As rates go higher, bond prices drop, so you'll be (potentially!) buying at lower price as time goes by.
Ginny J, it does seem like you have a lot in equities. I often discover when I run the numbers that clients have a BETTER chance of funding all their goals if they use more conservative investments (unless one of the goals I leaving a big sum to heirs). You could work it through with a planner to see just what kind of risk you need to take and what the subsequent target return would be. Laddered CDs are an option and would help hedge against rising interest rates. But so would laddered bonds which might return more but have individual bond risk. I suggest you diversify any fixed income allocation between all types of investments to include CDs, short-term bond funds, mid-term funds, inflation protected, GNMA funds (Vanguard has a great one), high yield bonds or bank notes, and even foreign bonds.
@ ginnyj - I would also add that you can look at a municipal (tax-exempt) bond fund, if it makes sense for your tax bracket.
Not Enough Cash: Check out the Garrett Planning Network. They offer planners at an hourly rate, so you could meet with someone to make sure you begin on the right track.
Not enough cash flow...many NAPFA advisors work on an hourly basis, fee-only of course. The Garrett Planning Network also offers hourly advice. Many advisors are members of both.
Not enough cash flow...as for the cost, the biggest expense might be if you do NOT talk to someone who can help you. Go make it happen.
Not Enough Cash Flow - XY Planning Network advisors don't have income or asset minimums and many are also either current NAPFA members or applying to become members. SO that might be a place to look too. (Disclosure:
I'm a member of both NAPFA and XY Planning Network)
nzweimer, I'm not sure if I understand your question but a deferred annuity in an IRA just doesn't make much sense in most cases. Why pay the usually high costs of annuities to get tax deferral when you are already in a vehicle (IRA) that gives you tax deferral? Why not use a low cost, discount brokerage and invest in low cost index funds or ETFs? Most active managers do not beat the indexes over time and the index investment expenses are much lower.
With us for the next two hours are: Bobbie Munroe, Timothy LaPean and Mark Wilson.