End of 2014 Report

Photo compliments of Christmasstockimages.com

The end of the year is time when we take stock of where we have been and where we are going.  2014 was a year of changes in our financial management.  I inherited money from my father and we switched from managing all of our own investments to hiring a financial adviser. I'm not going to give out dollar values but we believe our portfolio is on track to lead us to a comfortable retirement.  Here is what we have and how it is invested, along with the changes we've made this year:

My 401k:

This is a substantial account as I have been with the same firm for twenty years.  For quite a few years the firm has contributed 5% of our salary to the 401k; prior to that, they contributed 4%.  I've been contributing 15% of my pay for quite a few years but I really increased the value of this account this year.  I got the first installment on my inheritance in June, so I had about that much money withheld from my pay and put into my 401k, in essence living off that tax-free money and shielding my paycheck from income taxes by investing it for retirment.  The 401k is with Hartford Retirement and the funds I own are Delaware US Growth A (DUGAX), Franklin Total Return A (FKBAX), Janus Triton A (JGMAX), MFS Aggressive Growth Allocation A (MAAGX), and MFS Growth A (MFEGX), I put about one-third of the money in Franklin Total Return (basically a bond fund), and split the rest among the stock funds.  Between dividends and increased value, I earned over 6% last year.

My husband's 401k:

This is a relatively small account.  He has been at his job for about ten years but has only participated in the program for about five.  The fees are high and the investment choices are low.  I finally talked him into switching from investing in a money market fund to investing in a stock fund and of course the market then went down.  Still I think the long-term potential is better with stock and the whole point of a tax sheltered account is to grow it.

Our Roth IRAs.:  

We've had these account for several years and while we haven't often maxed them out, they are no longer a small part of our holdings.  They are invested in Vanguard 500 Index Admiral Share (VFIAX) which went up over 15% last year.  

Our Regular IRAs and other Mutual Fund Holdings:

Our IRAs were started years ago when neither of us could contribute to a plan at work.  They were invested in the hottest funds of the early 1990's and had not been substantially changed since that time.  Life and children got in the way of keeping up with the funds, and in general, they went higher every year, so things must have been ok, right?  Upon doings some research, I realized that there were better options out there.  We also made the decision to hire a financial adviser.  He/his company put us into a portfolio of twenty-three different mutual funds.  Looking at what they did, I can see where each fund plays a different role in the portfolio but I'm not going to list them all simply because typing all that would drive me up the wall.  We bought into that portfolio in August and the share prices fell shortly thereafter.  While dividends meant we earned a little money on this large portfolio, the share prices are not back to where they were when we bought.  That, coupled with the fees we pay, makes me question the wisdom of using this adviser.  We'll give it another year or two but if I don't see better results, we will go back to doing it ourselves.

Peer-to-Peer Lending:

My investment in Lending Club started out as a toy. I read about it online somewhere, thought the idea sounded good, and made a small investment.  I tried some different strategies and read a lot and became more convinced this was a good idea.  Before the end of the year I had also opened an account at Prosper.  Between July and December, I earned $124 from money that had been sitting in a savings account earning almost nothing.  

Savings Account:

We have a savings account at our bank, which, like most bank accounts, isn't paying much of anything.  At the end of the year we had about two months living expenses in that account, which is about where we want it right now.  

Wandering the Web: 3/2915

Most of us in our 50's are racing towards retirement--we aren't there yet but what used to be a far off goal or dream is now within view.  This article tells us how much we should be saving.   Once we've saved it, we need to invest it, and Vanguard is a favorite fund family for many.  The author recommends three Vanguard funds for retirees. This author tells us the best way to invest for retirement.   Before we retire, here are some things to consider.  

Once upon a time, retirement meant a pension--income that your former employer guaranteed would be there until you died.  Today's 401(k)s don't make any guarantee but there are ways to make those funds a guaranteed source of income.    Everyone likes to think the rules don't apply to them.  This article is about rules the author doesn't think apply to anyone anymore.

One investment style that is in vogue now is looking for dividend-paying stocks.  With interest rates at the low levels we now see, stock dividends can be a reliable source of income, without losing the possiblility of price appreciation. Here are some suggestions for finding the best dividend paying stocks.  

Did you read anything about investing or preparing for retirement that caught your eye this week?  Share it with us in a comment?  Any comments on these articles?

Wandering the Web: 3/22/15

What have I found this week?  Well, Financial Samuri wrote about Motif Investing.  I just invested some money there and I'm in the process of writing about it.  For now, you can read what he says.

Most people want more income, not less, and Motley Fool writes about how to get more income in retirement.  Robo-Advisor, Future Advisor gives advice about how to invest $500,000.

People often compute their needed retirement income based on the idea that they won't need as much income after they retire.  Market Watch discusses the high cost of retirement.  One way to guarantee there will be a certain sum there to meet your needs is to purchase an annuity.  This article suggests appropriate sizes for annuities.

Finally, for those of you caring for older relatives, as well as those of us planning for our own old age, elder financial abuse is a topic about which we need to know.

That's it for me for this week.  More links next week.

For where your treasure is, there also will your heart be.

Taking It With You?

As we approach retirement, we spend time looking at calculators, checking our portfolios and wondering if we will have enough money to make it through our lives and to leave something to our children because, as the old saying goes (notwithstanding the picture above) "Have you ever seen a hearse pulling a UHaul?"  We can't take it with us, and I've noticed a real temptation in my life to see retirement as a time for ME to do WHAT I WANT TO DO, particularly as I will have very happily spent twenty eight years as the mother of minor children.  For me, vague retirement plans include lots of travel, time to read and hopefully, time with grandchildren. We are saving money now to make those dreams a possibility in the future.   However, as Matthew tells us "For where your treasure is, there also will your heart be".  This periodic feature (I'm aiming for a few Sundays per month) will look at retirement and planning for it from the viewpoint of my Catholic spiritual values.

The main problem I'm having with this post is trying to figure out how to prepare, spiritually speaking, for retirement.  I have plans of what I'd like to do, spiritually, in retirement and those plans include time for daily Mass and perhaps volunteering a church.  Other than that, I guess I see retirement as a chance to prepare spiritually for the next step, which of course, is death.  

Our Financial History

While this is primarily a blog about where we are going financially, and how we hope to get there, I think it is important for readers to know our history as well.  When my husband and I married, we were both paying our bills every month and neither one of us had any debt.  He had some savings; I had none, but I made more money than he did.  He had always lived at home; I had been on my own (pretty much) since college graduation.  I was 28 when we got married; he was 33.  

About the time we got engaged, we began looking for a house.  We settled on one that cost about as much as we made in a year.  It cost about $30,000 less than the bank said we could borrow, and the total payment, with taxes and insurance, was only about 1.5 times as much as the apartment rent I had been paying.  The electric bill was less than I paid for the horribly inefficient heating/cooling units in my apartment.  Given our combined income, we were able to invest, and did so.  That was back in the era when bank CDs were paying more than our mortgage cost.

We were able to get a good start on investing before we had our first child.  While my job at that time offered a profit-sharing retirement plan, there was no provision for employee contributions.  My husband's job had no pension plan at all.  At that time we did our best to make the maximum contributions to IRAs.  Not long after I had my first child I switched jobs to one that offered a 401(k) and I started contributing to it.  While we did not get the earliest start to saving for retirement, we have saved something every year since then.  

When it comes to budgeting, saving and lifestyle, it is our basic philosophy that if you take care of the big things, you don't have to watch the little things as much.  We have always lived in houses that cost significantly less than what we were told we could afford.  We have never had a new car.  We take vacations, but could easily spend twice as much to go to the same area.  We don't have cable TV.  On the other hand, we buy what we want at the grocery store and pizza from Papa John's is a regular family treat.  When our last computer broke, I went to the store and bought a new one.  Because our lifestyle  choices in housing and transportation are below our means, we can splurge a bit on non-essentials (and cut back on them easily if necessary).

We are now in our mid-fifties and looking forward to retirement.

Wandering the Web: March 14, 2015

Hi, it's nice to have you stop by!  Tax day is only a month away.  Have you started on yours yet?  It looks like I have four returns to do this year:  Mine, my son's, my daughter's and my father's.  I have my son's done and the refund is in his pocket.  I need to talk to my daughter's college about some questions I have about her scholarship income and the tuition expenses; until I know those answers, I can't file for her, but I don't think she'll owe money so that's not a problem.  I'm still waiting on a form for my dad; to get it, I had to get my siblings to send in some paperwork that I thought I could do for them.  As my brother said "Dying sure is a lot of trouble and paperwork".  I think I have what I need for ours now; it's just a matter of sitting down and doing it.

Oh, you came for the links?  Ok, here is what I found this week:

What's with Gillette?  It is a company Motley Fool says you can hold forever, the type of stock that belongs in your retirement portfolio.  Many people are high on dividend investing--buying stocks that pay good dividends--as a way of investing.  This article recommends some.  If you want one dividend stock to hold forever, read this.  Annuities are one of those things that people love to hate.  However, I think they do have thier place and this explains why.  Another thing people love to hate are hedge funds; the comments are an interesting part of this article. 

Everyone has their favorite ways to consume content.  I like reading blogs.  Some folks are Twitter addicts; others like podcasts.  If Twitter is your thing, here are some personal finance experts to follow.  If you like podcasts, try this article.   Still you need to make sure the advice you are getting is good; here is some bad advice, according to the author.  

For most of us, Social Security will be our retirement base.  This article talks about what you gain and don't gain my waiting to take different types of benefits. Want four strategies to increase your Social Security?   Hopefully we will have a nest egg to draw on and this article from Forbes has some suggestions about how to handle your nest egg as retirement approaches.  Motley Fool names twenty-eight things you should not do. 

One of our biggest retirement issues is making sure we have things set to take care of my autistic son, if he needs it (and right now it looks like he will, though things are moving in the right direction).  This Forbes article talks about how our Social Security decisions will affect our son.   There is so much to learn about taking care, financially, of disabled adults.  I'll be writing more about this topic in the future.

Wandering the Web

I plan to write a "Wandering the Web" post weekly, linking to articles that caught my eye during the previous week.  I invite you to comment on the articles or on my choices of articles, or about any finanicial articles that have caught your eye this week.

Social Security will be the base for most retirees.  This article gives Four strategies to boost Social Security benefits.

Stocks and bonds are backbone of most people's investements, but are there other alternatives?  This article discusses hedge funds. 

I've recently begun investing in peer-to-peer loans.  30 experts give their three top tips for people considering this invesment.

Most of us are looking for good advice, but recongizing bad advice can be as important as taking good advice.  Here are eight pieces of bad advice. 

Used with Permission

We have all heard the jokes about adult kids living in their parents' basements.  Unfortunately, supporting adult children (some of whom clearly don't need it) has made saving for retirement difficult for some parents.  

Like most other things, retirement works better if you have a plan.  Here is a "to-do" list.

Saving for retirment is tough enough if you make good money.  If you don't there is a tax credit that can help.  

That's all for this week.

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Introduction

By U.S. Air Force photo by Staff Sgt. Jonathan Steffen [Public domain], via Wikimedia Commons

Hi!  I blog under the name "RAnn" and I'd like to welcome you to my new blog, Racing Towards Retirement.  Who am I?  I am a 53 year old woman who has been married to her first (and hopefully only) husband for twenty-five years.  My husband is 58.  We are the parents of three children.  My son is twenty-two and still lives with us.  Because of his autism, we do not expect him to move out or become self-supporting any time soon, but there is always hope.  He is currently working in food service at the Superdome.  My nineteen year old daughter is a sophomore at Northwestern State University of Louisiana.  My ten year old daughter (yes, I have a ten year old) is a student at our Catholic parish school.  My husband sells seafood to restaurants and I work as a paralegal.  Our lifestyle is comfortable but not extravagant.  Though most of our friends have the empty nest in view, our nest will be full until we retire.  

I have been a book blogger for many years and if you enjoy romances, Christian fiction, books about Catholicism or women's fiction I invite you to peruse This That and the Other Thing to help you find your next read.  I decided to start this blog when I started researching ways to invest my inheritance. I spent a lot of time researching investments when we were first married.  Our newly combined incomes gave us investable money for the first time and we wanted to make the most of it.  As our family and our expenses grew, and as our jobs provided 401(k) plans, the money available for investing outside those plans became rare and our lives got busier.  Investments were no longer an area on which my husband or I spent a lot of time.  Now, all of the sudden (I don't think it matters how long your parents are sick, they seem to die all of the sudden) I had this pile of money.  The death of my last parent (and my children's last grandparent) was a strong reminder that my husband and I were not as young as we used to be and that retirement was not as far away as it once was.  This blog is an attempt to document and share the things I've learned and the decisions we have made as we race the final laps toward what we hope will be a fulfilling retirement.  

I invite you to subscribe to this blog.  I am going to share information about investment options, describe our experiences with a financial planner, share links to interesting blog posts and review books on investments and retirement planning.  Come run with me!