Thread: My IRA

Welcome Dave! Retirement planning isn't my strong point so I'll let the ones who know about that respond. I just wanted to welcome you and thank you for joining us!

Tom

Dave

This is where you need to discuss your financial position with your accountant.

Dave

Got a break. Sounds like you got the start of a good plan. Learn all you can from the OPM web site. Download their brochures. Check out institutions that have IRA's. Itemize, or std. deduction with the IRS?
Waiting until you are ready to retire trapped me. Learned that mistake the hard way.
5 years, you have a good time frame.

Dave,

Glad to have you here. It is a great site and you are in good hands with these people. Lots of ideas so be prepare to choose wisely. :shock:

Dave M wrote:

I just discovered this site, looks like a good place to learn about things.



Before I joined the federal service I established a traditional IRA. After I joined the federal service I ceased to make contributions to the IRA (no longer tax-deductible) and instead put my $$ in the TSP. So there stands the IRA, growing slowly on its own, awaiting my retirement.



In about five years I will be eligible to retire. My plan is to roll the TSP into the IRA and make withdrawls from there as necessary. My thinking has alwaysbeen that I couldgrab all the earnings each year plus a small percentage (say <5%)of the principle, if needed.



Sound good? Here's another question: My equity in my home is becoming comparable to the value of my TSP+IRA account. How should Iinclude my homein my retirement planning?



Dave

Hello Dave,

I didn't see your last paragraph the last time so I was not able to comment on it. I like real estate alot but I am beginning to close pay attention to my TSP account since I found this site. If I were you, i'll stick to this place. To answer your question pertaining to your home equity, my answer is that you can't include them in you retirement planning unless you are factoring the following: 1) You will pay off your home mortgage so that you will not have any mortgage pmt when you retire. 2) If you plan on borrowing from your equity (second mortgage) or refinance without cashout (lower monthly mortgage) 3) Or you will refinance all the way to maximum allowed in your equity and then reinvest that money to purchase another real estate that will provide you passive income. I like option 3. However, you can't just buy property without knowing how to be a landlord. Just like TSP, there are lots of rules and regs that you have to know. Be inform and network. Hope you luck with your endeavors. I have several properties like 14 unit commercial building, 8 unit apt. a duplex, and a condo. I am in the process of closing another 3 bedroom house for rental. I've alsoformed a corporation (just for tax purposes) so I think I know a little about real estate. However, when it comes to TSP, You'll havethese guys to help you out. They are very helpful and very patient (at least with me).:^

Pyriel

Thanks guys. There is a lot to learn, that's for sure.

I'll say this, if you are into investing in real estate, Key West is the place. My twenty years of patient contributions to the TSP have been outraced by the accumulation of equity in just five years of home ownership here, due to the market. I have never experiencedanything remotely like it.

Dave

Dave M wrote:

Thanks guys. There is a lot to learn, that's for sure.

I'll say this, if you are into investing in real estate, Key West is the place. My twenty years of patient contributions to the TSP have been outraced by the accumulation of equity in just five years of home ownership here, due to the market. I have never experiencedanything remotely like it.

Dave

You are right about that. I have not jumped in outside of my area of operation. I've done my research in Hawaii and the cash on cash return is just not there. My planning factor is 15-40% per year. I definitely don't buy a property that will not give me a guranteed return for that percentage year after year... Just to let you know, I am also a buy and hold when it comes to real estate property. Those passive income is just too hard to let go.:^

Spaf,

You are sure getting snippy. Why even bother to reply with a post like that?

Dave - it is wise NOT to factor in your home equity in your retirement planning. You still need a place to live. Besides when interest rates go up your home equity will drop like a rock. Better to be out of sight out of mind with regards to that. Because when the rock hits the water you do not want to play the "what if game".

Rule of thumb. 1% increase in the 30 year treasury equals to 10% lose in home value. Remember the tech bubble. Right now we have a housing bubble. That is next to pop. 40% of loans right now are ARMs. Lots of pain moving forward.

Take care!

Bill (I am a CFP by the UFL). And will not charge you $300 an hour to say it is not wise to count your current home equity for your retirement planning purposes. I believe here in five to eight years people will owe money to get out of their houses. This pattern happens every 12-15 years.

OK Spaf lash me and wring your hands.

Spaf wrote:

Dave

This is where you need to discuss your financial position with your accountant.

MarketTimer: I agree. However, if someone does need to factor in the equity oftheir house for retirement purposes, there are newer mortgage products that my help. They may want to research "reverse mortgages" as well as "interest only" mortgages. They may also be in a position to downsize at the time of retirement, and able to harvest equity in the process while consolidating other debts.

Many times people will want to maintain a larger house to accommodate visits from their now adult children and families. It may be better use of monies to purchase a smaller home, and put visitors up at a nearby motel (with pool ), everyone gets a break!

Downsizingmay also be more economical than maintaining an oversize residence, i.e. taxes, utilities, maintenance, etc. This also has the advantage of making a return home of adult children to live a less attractive option, as can be the case for some :?.

What say you? <><

Chap (charley)

Reverse mortages are extremely expensive. You have to pay a fee each month to hold that type of mortgage. Plus if Dave is on this board he probably is not near death. Which is the only type that product makes sense.

Also what happens when you have a reverse mortgage, the housing bubble pops and your house price goes down 50%?

Yes that is correct. You have no more reverse left and they mortgage holding will jettison you to the sideway. That is not the way to spend your golden years.

A reverse mortgage is worse then an ARM in my opionion.

That should NEVER be an option. How can you live day to day hoping the housing bubble does not pop while holding a reverse mortgage. The lender will not say oh sorry you have no home equity left (assessment) and you can stay in your home rent free. Heck no they are going to say GET OUT OF OUR HOUSE.

Good luck! Reverse loans should be called Annuities Part II.

MT

Sorry for the spelling...got to get ready for work. What a mess!

Please, please do not do a reverse mortage it is a receipe for disaster. You have to pay 2-6% (depending on the risk) per month of the amount they give you back to them for their sucker fee.

Do not utilize your home equity for any planning because it may not be there later on. If you do and have $200K or something in five years from now your $200K goes to $40K you are just going to pull your hair out.