Financing Our Retirement

I've told you guys before that one of my hubby's biggest concerns in life is whether or not he'll have enough money to retire.  He gets boggled down with the idea that I haven't been working for the last (almost) nine years.  He is always telling me that I won't have any social security--although, who will, right?  He sees other families who are two-income families and thinks that they are better off than we are.  But, it really doesn't matter how well off anyone else is or isn't, because their finances mean nothing in our life.  What matters is that we are preparing the best way that we can for our future.  Here are some of the options that we are participating in and some options that we need to check out for the future.

 

1. Stock Market-- I know the words themselves scare a lot of people.  But several years ago, I decided that it was time for me to start investing in the stock market.  I thought it would be something fun to do and I would only put a small amount in at a time.  I figured if I only spent the amount of money that I would normally spend on eating out or coffee or whatever each month, then what would I really lose, even if the stock hit rock-bottom and became a loser.  Plus, I thought I was just going to invest in Blue Chip companies and I wouldn't have to worry about that anyway.  I did end up choosing a couple companies that went belly-up, but I didn't have that much money invested in them. 

 

Luckily, the year I decided to get into the stock market was 2008.  Right after I got in, the stock market crashed.  I bought up as much as I could then and now have quite a bit of "profit" to show for it.  It's not technically profit unless I sell right now.  There is of course always the chance that we could have another crash and all of my "profits" would disappear. 

 

2. Roth IRA--My hubby and I met with a financial planner with our insurance company the year after I started investing in the stock market.  We got life insurance and my hubby started a Roth IRA.  My hubby and I both decided that a Roth would be the track we would be more comfortable with.  We would rather skip tax benefits now to be able to have tax benefits in retirement when things might be tighter financially. The advisor told us that we should just open an IRA for my hubby and not for me.  He said that we shouldn't open my IRA until we were able to start maxing out my hubby's. 

 

Against the adviser's advice, I opened my own Roth IRA online. I was already investing in the stock market and one day I thought, "Duh!  Why am I investing in something that I'm going to be taxed on when I haven't maxed out my tax-free investments?"  I wasn't planning on cashing out my stocks in my taxed account anyway.    I like that I'm better able to control exactly what happens with my IRA without having to meet with an advisor. 

 

Together, with both of our IRAs, we're still only contributing about 33% of what we are allowed to contribute.  In 2013, the maximum amount that you are allowed to contribute is $5,500 per person.

Currently, an IRA can't be accessed without penalties until the age of 59.5.

 

3.  Annuities--I love that we can contribute to our IRAs and it will be tax deferred in the future.  But, since our IRAs have stocks in them, we could also lose money on them.  If there is a stock market crash before we have a chance to start switching stuff over to bonds, we could lose a lot of money in our IRA accounts.  The money isn't guaranteed to grow.  But, if we choose an annuity, we could have something a little safer.  This option would be one that we would look into further down the road.

 

What I didn't realize is that my hubby's pension is actually like an annuity.  But, they keep changing things on his pension and he's scared about whether or not it will be there at all by the time he retires. 

 

If we start our own annuity, we could try to find the latest annuity rates online and try to find companies with the lowest fees.  I've done a little looking around and most articles say to watch out for fees. 

There are two types of annuity--fixed rate and variable rate.  I would rather have a fixed rate annuity since I already have my IRA which is based on the stock market. 

From what I've read on sites like MarketWatch and Bankrate, an annuity is more like a budgeting tool.  You invest a large amount and then you get disbursements at set intervals. I actually thought it was something that you could pay into monthly now to receive as monthly payments later.  But, the more I read, the more it sounds like you pay a lump sum.  So truthfully, this one isn't a current option for us.

An annuity also can't be accessed until the age of 59.5, which would mean that if we get one, we should put it in my name since I'm three years older than my hubby.  His money is my money and my money is his money.  We would be able to get to it sooner that way. 


What do you have up your sleeve for retirement?
 



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