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Another Viewpoint On What Retirement Savers Can Do...

Sunday, June 23, 2013 - 7:52 PM

Retirement savers: It’s not too late for stocks - Robert Powell's Retirement Portfolio - MarketWatch

"Delay taking Social Security and pensions

Speaking of interest rates, Chris Cordaro, chief executive officer and chief investment officer of RegentAtlantic Capital, says it pays to defer Social Security in a low interest rate environment.

Let’s say you are 66, the normal retirement age for Social Security. If you defer taking benefits, your benefits will increase by 8% a year, he said. “Where else can you get an 8% government guaranteed return?” Cordaro asked.

Similarly, you may want to defer taking employer-sponsored pensions. “If you have a cash balance plan most plans credit interest at the yield on the 30-year U.S. Treasury rate with no price decline if interest rates rise,” Cordaro said.

Set aside three years of living expenses

Besides delaying Social Security, Shott Miller, a senior vice president of investments for Merrill Lynch, said retirees ought to set aside a three years of living expenses in liquid money market securities. “This keeps (them) from having to liquidate securities in a down market,” said Miller. “Usually (they) can wait it out with a three-year cushion.”"

Wow, this means one need to live very long beyond 70s to make the trade worthwhile for social security claim.

This also means that one needs to be filthy rich (setting aside three years of living expenses) or at least loaded with cold cash when one retires.

In sum, one should be a real old and real rich person for retirement planning purposes.

What is wrong with this picture?
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
1. Sunday, June 23, 2013 - 8:29 PM
Ack! More of the same from these guys with great ideas until the next great bust occurs. "If you defer taking benefits, your benefits will increase by 8% a year, he said. “Where else can you get an 8% government guaranteed return?” Cordaro asked." All this sounds great unless you are already retired and getting zilch on your deposit accounts thanks to Chairman Ben. Forget this pundit.
ShorebreakShorebreak2,671 posts since
Apr 6, 2010
Rep Points: 14,501
2. Sunday, June 23, 2013 - 10:11 PM
You get 8% increase a year when you delay  SS because you are collecting for fewer years. You are not making 8% interest. You are not a getting an 8% return on your money. That 8% is taking that money you are delaying and pushing it out over your expected lifetime.  

Interest rates are low but so is inflation. When CD rates were 15% in the 80's so were mtg's and commercial loans were 21%.  Inflation was much higher also. 

What does hurt the retirees is when the things they use go up faster than their investment or interest on their CD's. We like our children cannot expect everything to be easy all the time. 

But we still have it better than our parents and if we keep pushing wages down we will have it better than our children also. If we can we need to help our children out as much as we can. 

When our wages were higher CEO's did not have 100's of times higher wages than the employees. Ceo's made 30 times their employee wages. Why is this happening?  
Ally6770Ally6770930 posts since
Jan 16, 2010
Rep Points: 2,706
3. Monday, June 24, 2013 - 6:40 AM
What 51hh's question "what is wrong with this picture?" really means is that if one has to be really old and really rich for retirement planning purposes, then most of the general population will not be able to retire."One-size-fits-all" rules in financial advice are really useless, as individual needs and circumstances vary, and of course nobody has a crystal ball, planning for the future deals wtih probabilities, not certainties. Case in point, how many current retirees expected that they'd be getting a return of 1% or less on their retirement savings, unless they swallow the greater risk of investment securities that can lose principal? 
WilWil242 posts since
Feb 26, 2010
Rep Points: 1,285
4. Monday, June 24, 2013 - 9:47 AM
My Mantra when it comes to Social Security is "Take it while you still can get it".   I am tired of reading articles about how SS is going to have to cut benefits or won't be there after a certain date etc. etc.  I would rather have 20 years of whatever I can get at 62 than to find out at 65 or 67 there is nothing left to get or a lot less!    This is not charity we are receiving folks.  WE paid all our working years for this money and just because our gov ****ed up on us is no reason to let them get away without having to give us something back for as many years as we can get it. 
paoli2paoli21,398 posts since
Aug 10, 2011
Rep Points: 6,129