Retirement Planning: Help me sort this out

[Hud3]

Lippysyd,

You might want to sign up for the Early Retirement forum. It's a sister site of CF, part of the Social Knowledge family.

Lots of knowledgeable folks there who, I'm sure, will give you good advice without the lectures.

[barnakiel]

IMHO best retirement plan is own property (e.g. small apartments close to a Uni area, etc.) and rent it out or have cash in interest bringing 'risk free' (or nearly) and diversified portfolio.

Both options give you cash and with cash you do what you want, be it sailing, living aboard or drinking beer.

My two cents,
b.

[lippysyd]

Originally Posted by Kenomac

Yeah right, these people who made a decision 15 years ago to intentionally go on government/employer unemployment benefits for four months of each year and collect over $150,000 instead of working... basically scamming the system. And I'm the bad guy for saying what most others are thinking.

I stand by my original post.

No, you're the bad guy for talking about things you know nothing about.

Fifteen years ago, fresh out of college, my husband and I took jobs with a national school photography company. For the next 10 years we worked on average 2000 hours a year in about 9 1/2 months. It's school photography. Our job is to make kids smile and it is incredibly fun. Our corporate culture was one of 'family' and the bosses recognized that there was a three-year learning curve with this job. They knew it was in their best interest to keep as many good people as they could year after year. Fifteen percent raises yearly were the norm and our down time was much shorter. We got mileage reimbursement well over what was spent, and 20 paid days a year to fill in on short weeks. They happily paid into unemployment on our behalf because it was smart to keep the vets coming back. I've never worked at a place where I thoroughly enjoyed working with all of my co-workers as I have this one. Why would I ever want to leave?

And then it all changed...

Here in Michigan, they changed the time frame for state testing, moving it out of late winter (when we were slow anyway) into October. Schools don't want picture day on testing day, so they all want to go before that and so our seasons shrank. The economy hit us rather hard. And camera phones...ugh, don't get me started. The whole culture behind our business changed and, yes, we didn't change fast enough with it. We lost mileage reimbursement (essentially a pay cut) and lost our PTO. Our seasons got shorter and the layoffs longer. Now there are only a handful of us that stay year round and they hire fresh each season. These rookies are morons and it shows. This is hurting our business too.

So now I feel...stuck. I still love my job, and I'm very good at it, which makes me proud. Each year I sit down with a job counselor from the unemployment office, trying to figure out how to translate my skills to something else. She's stumped, and it's her job to know these things. I do look for another job. I've had interviews. The job market being what it is here, most places want direct job experience or a specific degree. I haven't had much luck unless I want to take a job making $6 less an hour.

Explain this to me: My employer pays into unemployment on my behalf. I've earned those benefits-that's what they're for. If my current unemployment doesn't really cover the cost of living, how is taking a job making less just because it's a job, helpful? How is this a scam?

[Kenomac]

You're the one making excuses to justify hanging around, refusing to work for less than you believe your time is worth, or less than the unemployment benefit pays. Have you ever even considered obtaining a new set of marketable skills? 15 years ago, when I found myself unemployed with two small children... I picked up a paint brush and went to work as a house painter... I was 43... the oldest guy on the jobsite... no unemployment games, B.S. or excuses. I didn't sit on my ass for five years expecting some government insurance program to take care of me. Jeez... you've been playing the system for 15 years... and you have the nerve to come on this site and ask for advice on how to buy a larger boat???

You also stated that you have bad credit... does that mean you also have a habit of not paying for things that you use?

Or... is that also someone else's fault? Tell me... don't you ever get tired of making excuses to justify being lazy?

[onestepcsy37]

Originally Posted by barnakiel

IMHO best retirement plan is own property (e.g. small apartments close to a Uni area, etc.) and rent it out or have cash in interest bringing 'risk free' (or nearly) and diversified portfolio.

IMHO the worst investment is real estate, unless you're willing to make it a full time career, which leaves you no time to go cruising. JMHO. The last time I looked at my investment portfolio was when the BP gulf oil spill drove its share price from $65 to $25. You bet I bought BP....

[letsgetsailing3]

First of all, don't panic.

You're not in an impossible situation, but there are thing you can do to improve your position. Your finances aren't that complex, and you have managed to save something. You obviously have a decent check on your expenses. I'm not sure if you're better off than 2/3 of American families as one poster said, but comparing your situation to others isn't really what you need to do. What are your savings outside your retirement plan? That is important as well. Experts recommend 6 months of income as a target, but 9-12 would be better.

Second, it does make sense to look for other employment during those other 4 months a year, if you eventually would like to retire full-time. You are only currently working 2/3 of the time. I know unemployment seems to be more profitable in the short term, but it is likely costing you in the long term. The retirement plan you're currently working towards is continuing to do what you're doing now indefinitely. To retire full-time, you're going to need to consider your other options. You are your own best investment. While your current career choice is working for you, it's not helping you build up an adequate nest egg for retirement. It's all about making the choices that work for you, but if you want to be able to retire, you need some element of course correction. $200 K isn't going to cut it if your expenses are 50K a year. Your investment will grow, but so will inflation. You have another 20 years before retirement, so it's a good time to start now.

Third, all of your eggs are in one basket. You're really putting a lot of stock (pun intended) in one company. If something happens to that company or the economy in general, your retirement is at risk. Any diversification of investment at this point would be a good idea, but you may be limited in what you can do with your ESOP. You can, however, invest outside of your ESOP, in an IRA or Roth IRA for example. You might consider putting some of your voluntary contribution in a different place.

You can see a financial planner if you want (fee based is better), but just reading a couple of financial planning books might be just as good initially. Suzie Orman, or Ric Edelman, for example.

You're right to be thinking about this now. It's not a cruising question, however -- it's a retirement question. Check out retirement forums as well. Good luck, and do get this squared away so you can enjoy some cruising time in your retirement!

[colemj]

Originally Posted by Kenomac

Yeah right, these people who made a decision 15 years ago to intentionally go on government/employer unemployment benefits for four months of each year and collect over $150,000 instead of working... basically scamming the system. And I'm the bad guy for saying what most others are thinking.

I stand by my original post.

They stated they made $50,000/yr, not $150,000.

You are describing a US congressman. And an autoworker. And the people who work for lawn services in northern climes. And a forester in northern climes. And a farmer. And lots of other jobs where the people do not work a full year, collect some unemployment - yet they are valuable and much of the economy depends on that type of work (OK, maybe not the congressman).

It is unrealistic to expect guaranteed random short-time jobs in between one's regular job. They said they grabbed work where possible.

Mark

[nimblemotors]

I agree with most advice, particularly only employer esop is dangerous.

I would only add start to learn about boat engines, plumbing, electrical, fiberglass work, etc, and use some of your off-time to learn boat repairs. Might earn some money with these skills, but at least you'll better be able to afford to keep the boat working.

[lippysyd]

Originally Posted by Kenomac

You're the one making excuses to justify hanging around, refusing to work for less than you believe your time is worth, or less than the unemployment benefit pays.

Well, gee, I do think it would be wise to make enough to pay all my bills. Do you honestly think I'm living high on the hog with my unemployment?

Have you ever even considered obtaining a new set of marketable skills? 15 years ago, when I found myself unemployed with two small children... I picked up a paint brush and went to work as a house painter... I was 43... the oldest guy on the jobsite... no unemployment games, B.S. or excuses. I didn't sit on my ass for five years expecting some government insurance program to take care of me.

From Michigan's UIA Website:

A reimbursing employer does not pay quarterly taxes to the UIA . But if unemployment benefits are paid to former employees, the reimbursing employer must repay UIA , dollar-for-dollar, for unemployment benefits paid out.

So if they're reimbursing the state dollar for dollar, where exactly is the scam?

Jeez... you've been playing the system for 15 years... and you have the nerve to come on this site and ask for advice on how to buy a larger boat???

Nope, not asking how to buy a bigger boat. Asking which direction to go with my retirement.

You also stated that you have bad credit... does that mean you also have a habit of not paying for things that you use?

Yes, I did, when I was young and foolish. I learned my lesson and have made better choices, and have still made mistakes along the way, but it's a work in progress. I guess what I should have said is my credit is improving slowly, but I'd rather not finance if possible.

I tell my European friends of this sort of behavior and at first ... they simply don't believe me and say, "how can this be, it makes no sense?" Then they always reply.... "I want to move to America, so I won't have to work."

Europeans? Oh, you mean the ones that get (on average) paid 30 vacation days a year? They're lazy too.

The sad part is, you came in here and picked this fight and I never did anything to you. I gotta learn to not feed the trolls.

[colemj]

Originally Posted by Kenomac

I tell my European friends of this sort of behavior and at first ... they simply don't believe me and say, "how can this be, it makes no sense?" Then they always reply.... "I want to move to America, so I won't have to work."

Your Greek and Spanish friends tell you this? And your French ones also?

Mark

[letsgetsailing3]

Originally Posted by lippysyd

The sad part is, you came in here and picked this fight and I never did anything to you.

Like most financial advice or advice in general, better to choose which responses can help you in your current situation.

A philosophical discussion on past life choices may not be your highest priority, since you've already made those decisions.

[lippysyd]

Originally Posted by letsgetsailing3

Third, all of your eggs are in one basket. You're really putting a lot of stock (pun intended) in one company. If something happens to that company or the economy in general, your retirement is at risk. Any diversification of investment at this point would be a good idea, but you may be limited in what you can do with your ESOP. You can, however, invest outside of your ESOP, in an IRA or Roth IRA for example. You might consider putting some of your voluntary contribution in a different place.

Thank you for your very helpful post. Up until now I had proceeded under the illusion that our ESOP alone would be enough. Then lately I started suspecting otherwise. But what now? You made some very good points (many of you have) and a lot to consider.

So here's what I'm thinking: You're right about having all my eggs in one basket. With the rules of my ESOP I cannot pull anything for any reason until 2021. (and we're not allowed to contribute) At that point, we can pull 10% and roll it over into some other retirement vehicle without penalty. In the meantime, a financial planner sounds expensive and may not be useful at this point, so I'll wait until we're closer to 2021. But what I am going to do is talk to my credit union about opening some type of IRA. We don't spend much on entertainment most of the year, just our little cruising fund for the summer. But it is time to take another look at the budget and see where I can cut back to funnel some money into retirement. I'm sure there are areas where I'm overspending and it may not make a huge difference, but every little bit helps.

[Kenomac]

Originally Posted by colemj

They stated they made $50,000/yr, not $150,000.

You are describing a US congressman. And an autoworker. And the people who work for lawn services in northern climes. And a forester in northern climes. And a farmer. And lots of other jobs where the people do not work a full year, collect some unemployment - yet they are valuable and much of the economy depends on that type of work (OK, maybe not the congressman).

It is unrealistic to expect guaranteed random short-time jobs in between one's regular job. They said they grabbed work where possible.

Mark

Check your math. She said they collect $10,000 per year X 15 years = $150,000 over a 15 year period. They took and accepted the jobs knowing it is an 8 month job, then expect others to pay their bills for the remaining four months per year. It's no different that a school teacher accepting an 8 month job at a fixed salary, then going on public assistance or unemployment... basically living on others, for the remainder of the year. I'm not saying all or most teachers do this, but I do know of some who do.

I don't buy into the game/scheme, where people believe that their employer pays for the benefit, therefore collecting is the right thing to do. Nor do I believe the vast majority of the people on this forum believe it to be the right thing to do. Unemployment benefits were and are intended for people to get back on their feet after loosing a job.... they are not intended to fund a lifestyle... and larger boat.

Ken

[Kenomac]

Originally Posted by lippysyd

Europeans? Oh, you mean the ones that get (on average) paid 30 vacation days a year? They're lazy too.

You've been getting 120 paid vacation days per year, courtesy of the unemployment insurance agency.

[letsgetsailing3]

Originally Posted by Kenomac

You've been getting 120 paid vacation days per year, courtesy of the unemployment insurance agency.

I interpreted her post as saying that her employer paying the full value of the benefit. Don't know if it's true or not, but if you're going to knock it, you may need to investigate it first.