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what to do with savings after retirement

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ncolello
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what to do with savings after retirement  Reply with quote  

Folks - My in-laws are both retired with my F/L at 78 collecting a traditional pension while my M/L at 68 with a 401k. Both are collecting Social Security. My M/L is not yet collecting on her 401k. They rent and otherwise have no debt. They are comfortably making do and do not have expensive tastes. two cruise vacations a year. They have about 100k in savings and an employee profit sharing account and would like to invest in something better than a bank. I don't know yet what the 401k is invested in. They do not have any long term growth investment plans and would like access to at least some of their money. I was thinking of 1/2 in CD's so that they would expire at 6 month intervals. Any thoughts on this idea? What are some of the options you may have for them.
Post Wed Aug 13, 2014 3:05 am
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oldguy
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Bank products - savings, money market, CD - are designed to provide safe storage of wealth, they don't build wealth. (Actually, most lose wealth - inflation is 2% and savings pays 1% so you lose about 1% of purchasing power each yr).

We're in about the same demographic group as your ILs - age 75/67, SS, pension, 401k. We use a no-load fund company and buy the SP500 Index and a Bond Index.

They can adjust their risk level to their tastes. At 100% SP500/ 0% Bonds the risk/return goal is about 11%/yr. At 0% SP500/ 100% Bonds the risk/return is about 4%/yr. They can dial in any number between those extremes - eg, 50%/50% has a risk/return of about 7.5%/yr (the average of 11% and 4%). If they want more risk they can go to 75/25, if they want less risk they can go to 25/75. (we're at about 50/50).
Post Wed Aug 13, 2014 3:29 pm
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ncolello
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Thanks Oldguy (with respect) - I've read some of the other threads and your advice on other subjects. Should they move most of their the money from the bank savings accounts to an IRA or just an investment account? Transfer the M/L 401k to the same IRA, invest using your advice and take withdrawals when they need the money? I don't think my F/L has a 401k so there won't be a mandatory withdrawal if in the M/L for a few years.
Post Wed Aug 13, 2014 4:31 pm
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oldguy
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"Should they move most of their the money from the bank savings accounts to an IRA or just an investment account?"

I don't think they can go to an IRA, IRA contributions are limited to $5500/yr and that needs to be earned income.
We use an investment account at ar no-load fund company (Vanguard). A couple times a year we sell some and put it in our checking account.[/quote]
Post Wed Aug 13, 2014 8:28 pm
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Wino
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If the MiL is no longer working at the place where she held her 401K, she can convert it to an IRA. Online help or chat help on Vanguard will help her if she doesn't know how to do it herself.

I would never hold my retirement in CDs or moneymarket accounts. You are guaranteed to lose purchasing power over time in such vehicles.
Post Thu Aug 14, 2014 1:01 am
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