Retirement: Saving, spending, planning

Below is a transcript of the recent 'Retirement: Saving, spending, planning' online chat conducted March 31st on WAVY.COM.

11:57
Brooks KXAN: Hi, and welcome to Part II of our retirement chats! We'll start in three minutes.
11:58
Melissa Schenker, Work/Life: Hi. Ready when you are.
11:58
Brooks KXAN: Hi there! We have a financial expert joining us here in a few minutes - Jayne de Vincenzo - she's been here before, but it's been a while!
12:04
Jayne Di Vincenzo, Lions Bridge Financial: Good afternoon! Looking forward to hearing what concerns and questions viewers/participants have!
12:05
Brooks KXAN: Hi everyone! Thanks for being here! We have our financial expert Jayne from Lions Bridge, and our moderator/career coach/life coach Melissa Schenker from Work/Life Austin. Thanks for joining us everyone!!!
12:06
At what age do you plan to retire?
40-50
( 11% )
50-60
( 11% )
60-65
( 44% )
65-70
( 33% )
70+
( 0% )
Never
( 0% )
12:06
Melissa Schenker, Work/Life: Glad to be here, and glad you could join us Jayne. Last week's conversation generated a lot of financial questions.
12:06
Brooks KXAN: Last week, we talked about preparing your mind and life for the transition into retirement. THIS WEEK - we look at the money.
While we wait for our first readers to start commenting with questions, I'll start by posting some questions that came up last week....
12:07
Brooks KXAN: Here's one: "I am in my early 30s and am definitely worried about having enough retirement - already. What is the estimated amount a person retiring in approx. 30 years should have saved to retire 'comfortably'?"
12:07
Jayne Di Vincenzo, Lions Bridge Financial: The answer depends on several things...;
12:08
Jayne Di Vincenzo, Lions Bridge Financial: Depends on how you plan to spend retirement-- at home, traveling, starting a small business.
12:08
Jayne Di Vincenzo, Lions Bridge Financial: Recent calculations/estimates indicate that folks now in their 30s and 40s (depending on their goals and if have college to pay for) should be saving more like 18-24% of their incomes..
12:09
Jayne Di Vincenzo, Lions Bridge Financial: NOT just the old 10% or just the minimum-- a company match only.
12:10
JackieKXAN: CNN Money provides a nifty retirement planner! Check it out: http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp
12:10
Jayne Di Vincenzo, Lions Bridge Financial: Most folks retiring now need to have 1,000,000 in vested to give them $50k a year spending money (spending off just 5% a year so the portfolio lasts). Obviously, the more you hope to spend in retirement the bigger that number should be.
12:10
Brooks KXAN: That's $1m?
12:10
Brooks KXAN: Yikes.
12:11
Brooks KXAN: Here's another from last week: Retired Govt:
We sold our where we lived and put it in savings. It is enough to cover our house we purchased a few yrs ago in Tx. Should we use that money to pay our house we now live in retirement.
12:11
Jayne Di Vincenzo, Lions Bridge Financial: NEVER walk away from free money at work. If your company matches (as most plans do now), you need to contribute as much as you can to the 401K there and get ALL the match dollars.
12:11
Jayne Di Vincenzo, Lions Bridge Financial: If you use ALL your money to pay off your house, what will you live on??
12:12
[Comment From GuestGuest: ] Ha... I had 38K toward retirement... I retired last year at 65 and guess what? It was nearly gone. I only got 17K.... So what is the sense of investing? I should have put that $100 a pay into the bank and I'd still have all my money.
12:12
[Comment From MandiMandi: ] I guess I'll be the first to post a question. :) My hubby is retiring from the Navy in July and is currently working on entering into a Navy civilian career. We are both in our late 30s, & I participate in a SEP retirement plan through my work. We have 2 kids, 16 & 10 and a baby due in Aug. Since we already have one retirement pension 'in the bag' per say, at what age should we expect to retire comfortably?
12:12
Jayne Di Vincenzo, Lions Bridge Financial: Mortgage rates are at HISTORIC low levels. Right now HELOCs and Mortgages are in the 4-5.5% range. After deductions on your returns, you're really paying about 2% LESS than mortgage rate.
12:12
Brooks KXAN: Applause to Mandi and Guest! Thanks for chiming in.
12:13
Brooks KXAN: Jayne - guest has a great question. Lots of people saw their 401K shrink in the last couple of years - is he/she right? Is it lower risk/ better return to just stick that money into an account?
I'll make this observation - you don't get the free cash from work if you do that, do you?
12:14
Jayne Di Vincenzo, Lions Bridge Financial: To $38k Person. If that's all you had, you should have NOT been invested int he markets most likely. And, unfortunately, sounds like you got out at the bottom-- Feb or early March 2009. If you'd stayed in the market you'd probably have gotten back most of what you lost on paper.
12:15
Jayne Di Vincenzo, Lions Bridge Financial: Hi Mandi, you should save aggressively if you manage to get two incomes from spouse and your income. This could allow you to retire much earlier.
12:15
[Comment From GuestGuest: ] I didn't get anything from my work... I worked for the State.
12:15
Brooks KXAN: ah, ok. gotcha
12:16
Jayne Di Vincenzo, Lions Bridge Financial: Mandi, "Pension in the bag"-- that money may not grow as fast as inflation and may not be enough to support the type of lifestyle and retirement you hope for. Do you plan to pay for college for your children? Is that a savings goal?
12:16
Are you currently contributing to a 401K?
Yes
( 83% )
No
( 17% )
I would, but we don't have one
( 0% )
12:16
Jayne Di Vincenzo, Lions Bridge Financial: Many STATES offer PENSIONS if you work long enough. Have you checked the web site and talked to your HR person?
12:17
Jayne Di Vincenzo, Lions Bridge Financial: Many states and municipalities also provide the opportunity to participate in 457 plans that are like 401K plans... you defer some of your money and in most cases, the states DON'T Match.... but some may. See your HR benefits person.
12:17
[Comment From GuestGuest: ] Stay in the market? But the money was for retirement and I saw it shrinking and panicked... I need that money to pay off my house.... by the time I cashed it in and the government took their share I was left with only 17. Easy to say keep it in, when you need it and the purpose was retirement.
12:18
[Comment From MandiMandi: ] The grandparents have the college fund setup.
12:18
[Comment From GuestGuest: ] I just want to warn people about financial investing because I lost mine and it could easily happen again. What there should be is an insurance against losing it all... I have a pension but I still lost my investment.
12:18
Jayne Di Vincenzo, Lions Bridge Financial: For SHRINKING-- Again, shouldn't have put money at risk in first place, you probably would have been able to protect a lifetime income stream a little better with an annuity that offered LIVING INCOME benefits that are guaranteed. Must see prospectus to do and see if right fit for your situation.
12:20
Melissa Schenker, Work/Life: Jayne, Can you provide a little bit more info on annuities and how they work, what options they provide?
12:20
[Comment From ScottScott: ] I'm debating now between putting aside 'extra' money toward a college fund or creating a retirement account. Both I and my spouse have 401Ks and she has a small pension, but I don't think it will be enough. We've heard the argument "you can't take out a loan for retirement, but you can for education". Do you agree?
12:20
Jayne Di Vincenzo, Lions Bridge Financial: I'm biased of course, but I don't operate on myself (I'm not a surgeon) and I don't write prescriptions for meds (not a doctor), if you're serious about retiring, investing appropriately, interview 3 or so financial advisors and find one you like who listens to you. Too many investors go it alone and make huge (often EMOTIONAL) decisions that sabatoge their NEST EGS.
12:21
Jayne Di Vincenzo, Lions Bridge Financial: Hi Scott, very common question. Yes, loans are an option and often a very sensible one for college.
12:21
[Comment From JohnJohn: ] You talk about 18-24% savings (invested)...how do you do that when you're trying to pay bills you've had since before you had to take a pay cut from the economy and don't have the option to sell your house to even downsize because the market is so bad?
12:22
Jayne Di Vincenzo, Lions Bridge Financial: JOHN: Save what you can each pay day. If it's only 10%, then do that, and perhaps when your personal situation improves then you can bump up savings.
12:22
Melissa Schenker, Work/Life: Jayne - Do you have suggestions about what one should ask when interviewing financial advisors?
12:23
Jayne Di Vincenzo, Lions Bridge Financial: SCOTT: Good you're putting aside 401K money-- I think that retirement is a very important goal to save for and college secondary--afterall, we don't want to move in with our kids because we didn't save enough!
12:23
Brooks KXAN: Lots of us are in that same position, John - I've always been taught (no expert here, just family teachings) to PAY MYSELF FIRST out of every paycheck - even it's $25 - to put into savings. It adds up and keeps the habit going, is what I've found out.
12:23
Jayne Di Vincenzo, Lions Bridge Financial: SCOTT: Without knowing your specific situation, all the figures and college goals I can't advise specifically. But in geneeral the 529 College Savings Plan is a great vehicle to save for college costs in. Have you checked that out?
12:24
[Comment From MandiMandi: ] Thanks Jayne. Any certain percentage or amount we should aim for? The earlier retirement age the better, obviously. But it will be tough since we have a newborn entering the picture in August.
12:26
Jayne Di Vincenzo, Lions Bridge Financial: MANDI, if you want to replace the income you have now, for example, $80,000 a year between you both, and his pension is $30k of that, you need to save with an eye toward replacing the $50k difference. Again, I can't give specifics without knowing your whole picture.
12:27
Jayne Di Vincenzo, Lions Bridge Financial: MANDI and OTHERS: Pay attention to your social security statements--- make sure the annual income matches what was on your tax return/reported income.
12:27
Jayne Di Vincenzo, Lions Bridge Financial: Be sure to also READ the first page of your Social Security statement... currently Social Security is funded through 2017 and expected to be out of money if Congress doesn't act to fix, in 2041.
12:27
Brooks KXAN: Dumb-ish question - for those of us who have never looked at them, how do we find them?
12:28
Brooks KXAN: Great.
12:28
JackieKXAN: All about social security statements: http://www.ssa.gov/mystatement/
12:28
Jayne Di Vincenzo, Lions Bridge Financial: Go to www.SSA.gov and request a statement and they have a great calculator to see what your anticipated benefit would be.
12:30
Jayne Di Vincenzo, Lions Bridge Financial: For COLLEGE SAVINGS Info go to: http://www.savingforcollege.com/ they have a lot of info on 529 Plans so you can compare.
12:30
[Comment From MandiMandi: ] I do get what you are saying. Thanks.
12:30
Brooks KXAN: From Bella, last week: "I'm a little worried about the transition. For example, will I have enough money? Should I stay in the house I'm in or move to a smaller apartment for one? Very confusing stuff, eh?"
12:31
Jayne Di Vincenzo, Lions Bridge Financial: BELLA-- She definitely needs to talk to a financial advisor. If she doesn't know the answer how can she even consider retiring?
12:31
[Comment From GuestGuest: ] Jayne, if I have a large credit card debt, doesn't it make sense to put as much money toward that first -- before investing in my future?
12:32
Jayne Di Vincenzo, Lions Bridge Financial: BELLA: She needs to look at what the expenses she'll have in retirement are and what her income sources are. If she's going to be short money every month staying where she is, downsizing might be the smartest thing to do.
12:33
Jayne Di Vincenzo, Lions Bridge Financial: Credit Card GUEST: Credit cards can be like a bad habit-- smoking, over eating, gambling...
12:33
Jayne Di Vincenzo, Lions Bridge Financial: I've seen folks take money from their homes (cash out refinance) pay off credit cards and then GET BACK INTO DEBT a year later.
12:34
Jayne Di Vincenzo, Lions Bridge Financial: As a result I think you/most people should do both-- pay yourself and pay your debts down. That way you're building your net worth each month by lowering debts and increasing your savings. Again, don't know your entire situation so can't say exactly, but in general this is a good idea.
12:36
[Comment From GuestGuest: ] Jayne, would you recommend investing in your husband's book, "Buy Ketchup in May and Fly at Noon?"
12:36
Jayne Di Vincenzo, Lions Bridge Financial: Hey BUY KETCHUP IN MAY, FLY AT NOON guest: OF COURSE! It will save you money, make your smarter and save you time! :) And of course, I think it's a great read!
12:36
Jayne Di Vincenzo, Lions Bridge Financial: See my husband/his book at http://www.buyketchupinmay.com. OK, done with the plugs!
12:38
Jayne Di Vincenzo, Lions Bridge Financial: Do you know what a ROTH IRA is?
12:38
Brooks KXAN: CAN'T HAVE TOO MANY PLUGS. and while we're at it, Melissa Schenker is at www.worklifenow.com
12:39
Brooks KXAN: Wow, buy ketchup in May? Had no idea.
12:39
[Comment From GuestGuest: ] Are vacation homes with good rental possibilities still a good investment?
12:39
Jayne Di Vincenzo, Lions Bridge Financial: We get a tax break from the IRS this year-- you can convert your TRADITIONAL IRA to a ROTH IRA and push the taxes owed to paying in 2012 and 2013!
12:40
Jayne Di Vincenzo, Lions Bridge Financial: REAL ESTATE TYCOON with RENTAL: CAN be a good investment-- obviously depends on the cash flow-- did you over pay/get a good deal? What's your monthly payment? Condo fees? Maintenance? Can you realistically rent it out?
12:40
[Comment From davdav: ] I lost my job how can I put money a side for 401K?
12:41
Jayne Di Vincenzo, Lions Bridge Financial: There are some good breaks for owning/renting real estate. Would be good to talk to your tax advisor/CPA before buying if you're doing for tax reasons.
12:41
Brooks KXAN: I don't know what an IRA is but I'm guessing i don't have one.
12:41
[Comment From GuestGuest: ] If someone wins the lottery, should they take the lump sum or the annuity? What are the pros and cons?
12:41
Jayne Di Vincenzo, Lions Bridge Financial: If you're out of work you CAN'T CONTRIBUTE to a 401(k). That's only for current employees of the company sponsored plan.
12:42
Jayne Di Vincenzo, Lions Bridge Financial: LAID OFF: You can contribute up to $6k a year to a TRADITIONAL or ROTH IRA if you're over 50, if under 50 then $5k.
12:43
Jayne Di Vincenzo, Lions Bridge Financial: LOTTERY WINNER: LUMP SUM-- IF you can trust yourself/your advisor to come up with a better income stream than the lottery offers you. Unfortunately I've seen lottery winners (BIG WINNERS) spend and give it all away within just a few years and then they are broke again.... SAD!
12:44
[Comment From davdav: ] Ok I will look into an IRA, Thanks
12:45
Jayne Di Vincenzo, Lions Bridge Financial: DAV-- You can roll your employer sponsored 401K fund into a Traditional IRA and control/manage the funds or have your advisor help you invest them. Depending on the plan the fees in a 401K can be hefty.
12:45
Brooks KXAN: Another question from last week: "Have you heard of a government plan called "Guaranteed Retirement Account" or Universal 401k?"
12:45
Jayne Di Vincenzo, Lions Bridge Financial: LOTTERY: Most lottery winners have NOTHING LEFT after just 18 months!
12:46
Brooks KXAN: So someone who is likely to spend it should probably get the annual payments instead, huh?
12:46
Brooks KXAN: <---- pipe dreamin'...
12:46
Jayne Di Vincenzo, Lions Bridge Financial: I met a prospective client who went through $8 Million in a very short time period-- relatives and "friends" came out of the woodwork!
12:46
Brooks KXAN: oh man. awful.
12:46
Jayne Di Vincenzo, Lions Bridge Financial: Brooks: When you win the lotter you better call me and I'll help you make sure that it lasts your life time and longer!
12:47
Brooks KXAN: 15 more minutes let for questions!
12:47
Brooks KXAN: You got it! I'll go to you for financial planning and Melissa to make sure my head stays in check.
12:47
Brooks KXAN: I PROMISE I'LL BE THE SAME NICE PERSON I'VE ALWAYS BEEN! I won't let my riches change me.
12:47
Melissa Schenker, Work/Life: Brooks - Good thinking!
12:47
Brooks KXAN: LOL another word for it: WISHFUL thinking.
/Gotta play to win.
12:48
[Comment From GuestGuest: ] As for the Social Security goes, they want to control us. I was on SSD and needed money to pay of my 47,000 dollar teen crdit card debt. Once I started to work they take me off. I go stop work and they pay me to watch tv at home and do nothing. Should we make the money or take the governments money and put this country deeper in DEBT?
12:48
Brooks KXAN: Aaaand now we're getting political :)
12:48
Jayne Di Vincenzo, Lions Bridge Financial: SOCIAL SECURITY GUEST: I'm not sure WHAT you're asking! Sorry!
12:49
Brooks KXAN: I think guest is asking what your political position on social security is. PASS.
12:49
Jayne Di Vincenzo, Lions Bridge Financial: Did you rack up $47,000 in debt and then sit at home? If so, should be ashamed if it was on luxeries/trivial stuff. Different story if for medical bills or something serious.
12:49
Brooks KXAN: :) Nothing personal, but we're here to talk about personal financial planning! Got something more along those lines?
12:50
Brooks KXAN: *crickets*
12:51
Brooks KXAN: Let's get back to this one, Jayne:
Another question from last week: "Have you heard of a government plan called "Guaranteed Retirement Account" or Universal 401k?"
12:51
Jayne Di Vincenzo, Lions Bridge Financial: Having a WRITTEN Retirement Income Plan is key to successfully planning for it. Without a written strategy and savings strategy and investing strategy it's like going on a road trip to ALASKA without a GPS or road map! We'd never do that!
12:51
Are you in debt?
No
( 0% )
Slightly
( 100% )
BURIED
( 0% )
12:52
[Comment From PeterPeter: ] Social security disabilty is what I was on due to birth of epilepsey and 2 Brain surgeries in 86, 87 at Boston Childrens Hosp MA. Removal of 55% of my brain was all dead tissue. Making me frederal developmental Disabled. However I am normal and walk norm speak normal. It is a hidden disability
12:52
Jayne Di Vincenzo, Lions Bridge Financial: Americans (and maybe the world) spend more TIME planning VACATIONS than their retirements! Probably not a shock!
12:53
[Comment From PeterPeter: ] The government says they are in debt. Let us disabled work and make christmas, birthday money for gifts money
12:53
Brooks KXAN: I see. The issue is that if you work, you lose SSD benefits. Is that what you're saying?
12:53
[Comment From patpat: ] How do you find a good financial advisor for rtirement planning?
12:53
Brooks KXAN: Pat's question speaks to melissa's earlier - what are some good questions to ask a potential financial adviser?
12:54
Jayne Di Vincenzo, Lions Bridge Financial: 1) How long have you been in the business (you'll be surprised by some of the answers!-- like 1 year, etc....)
12:55
Jayne Di Vincenzo, Lions Bridge Financial: 2) How do you make your recommendations? What research/sources do you use?
12:55
Jayne Di Vincenzo, Lions Bridge Financial: 3) How do you get paid?
12:55
Brooks KXAN: Five more minutes, guys! Get your questions in!
12:56
Jayne Di Vincenzo, Lions Bridge Financial: 4) Ask your friends for referrals. Then INTERVIEW. Don't make a snap decision if you have a weird "vibe" like your name is Sam and he keeps calling you Ed, he's not listening.... listen to your instincts.
12:56
[Comment From patpat: ] Thanks for your advice and comments on all retirment planning issues!
12:56
[Comment From GuestGuest: ] I only have 3,500,000.00 set aside in a bank trust for retirement.
12:57
Jayne Di Vincenzo, Lions Bridge Financial: 5) Review the recommendations and hear how they explain them to you. If they can't explain in laymens terms, maybe they don't understand the investment they are recommending themselves!
12:57
Brooks KXAN: Uh 3.5 million? WHY DOES THIS SOUND LIKE A HUGE AMOUNT TO ME?
12:57
Jayne Di Vincenzo, Lions Bridge Financial: I think someone is kidding.... :)
12:57
Brooks KXAN: Guest: Are you single?
12:58
Brooks KXAN: <==== gullible.
12:58
Brooks KXAN: I was remembering what you said about investing 1m to have a $50k-a-year retirement lifestyle or whatever. OK. MOVING ON....
12:59
Jayne Di Vincenzo, Lions Bridge Financial: 6) Do they provide periodic reviews-- I try to see my clients annually if their situation isn't complicated, but perfer to do reviews quarterly.
12:59
Brooks KXAN: Time to wrap it up, everyone! That went quick! Thanks so much for all your questions, and to Melissa for helping moderate this week - and parrticularly to Jayne for her incredibly helpful information.
Got any closing thoughts you guys?
12:59
[Comment From patpat: ] I'M SINGLE!!!!!!!
12:59
Brooks KXAN: I'm not. GOTCHA!
12:59
Brooks KXAN: pat = gullible :) LOL
12:59
Brooks KXAN: :)
1:00
Jayne Di Vincenzo, Lions Bridge Financial: Marriage isn't a good savings plan, but STAYING married is! :)
1:00
Brooks KXAN: Did you hear that, JESSE JAMES?
1:01
[Comment From tanatana: ] some people find not getting married would have saved them more! :)
1:01
Jayne Di Vincenzo, Lions Bridge Financial: I'm finding that MORE and MORE of my clients are single... so most of us (52% of households in US) need to plan to take care of their retirement plan on their own.
1:03
Jayne Di Vincenzo, Lions Bridge Financial: TANA-- SO True, Sorry Sandra Bullock!
1:03
Brooks KXAN: No. Kidding.
1:04
Jayne Di Vincenzo, Lions Bridge Financial: Thanks Everyone! Lots of fun. Appreciate the invitation to participate today!
1:04
Brooks KXAN: We want to thank our panelists and our commenters for some fantastic info! Always, you can come back and read this chat for hte links and advice - it lives here forever right where you found us!!
See you next time!!!
OVER AND OUT.