Want to knock him in the head...

**mombottoo** · 05-14-2010, 10:02 AM

but, I won't. I am giving up the battle of trying to get him to see that a lump sum payoff would be more beneficial to us than getting the monthly payment for the next 10 years (if he lives that long).

Him: How much of the money would you want to put into the IRA?

Me: None, why would we want to put any more money into something that still hasn't recouped what it lost? We still have almost $3000 less in that account than we invested out of our pocket.

Him: It would reduce our taxes.

Me: Taxes aren't an issue, we have to pay taxes on it every year anyway and right now we have an extra deduction that we may not have over the next 9 years.

Him: (silence)

**************Later

Him: Why do you want the lump sum?

Me: A bird in the hand is worth two in the bush. Nobody likes to think about dying, but if you die that money is gone. If we take the lump sum and invest it in easily accessible investments then if something happens to you, I will have money to live on until I reach SS age.

Him: (silence)
**************

You know what? I realize nobody likes to think about their own mortality. But, I'm a realist, he can't guarantee me he isn't going to die any more than I can guarantee him. I'm not bringing it up again...I know he wants to leave our kids money when we croak. I don't have an issue with them ending up with whatever we leave behind...but, I do have an issue of not living my own life so they can have it KWIM?

**mek42** · 05-14-2010, 12:51 PM

Originally Posted by mombottoo

...

Him: How much of the money would you want to put into the IRA?

Me: None, why would we want to put any more money into something that still hasn't recouped what it lost? We still have almost $3000 less in that account than we invested out of our pocket.

...

Erm, from just an investment perspective, independent of any other arguably better uses for the cash (i.e. debt reduction) the time to buy securities and other investments is when the market is in a slump and previous investments are at an unrealized loss. By waiting until the previous investments have returned to be an unrealized gain, you're spending more money to buy the same amount of securities.

As an aside, completely unrelated to this thread

feel free to let me know if you ever decide to be in the market for a handmade maple mallet.

**mombottoo** · 05-14-2010, 01:14 PM

I know it's a good time to invest, but like I said we are still out $3000 that we originally invested...so we are behind and haven't gained a cent over 7 years. He is going to be 55 next month, now is not the time to be putting money into an unstable market due to our ages. If we were in our 30's it'd be different...

I just might take you up on the mallet, although I do have a hammer around here somewhere...

**Greebo** · 05-14-2010, 01:21 PM

Originally Posted by mombottoo

I know it's a good time to invest, but like I said we are still out $3000 that we originally invested...

No you aren't.

Not unless you sold the shares already.

**mombottoo** · 05-14-2010, 03:15 PM

@Greebo...I know it's only on paper...but, at our ages it wouldn't make sense to invest any more of our money into something that has not regained its losses yet...even if it's only on paper.

Time to look at safer investments, I don't need to die wealthy...I need to know that I won't die poor...

**Greebo** · 05-14-2010, 04:08 PM

If I read your bio right, you're 51.

You're saying that you don't think in the next 15 years or so that the stock market, which is made up of THOUSANDS of companies all with the same motivation - to make a profit - will not recover?

That in the next 15 years, we'll still be doing as badly as we are in this very small recent time scale?

Man - thats very pessimistic of you...

**McD** · 05-14-2010, 04:56 PM

Out of curiousity, what type of vehicle would you place the lump sum in?

**mombottoo** · 05-16-2010, 11:39 AM

Part in a regular savings so it's easily accessible if needed and the rest into cds.

Greebo there is no guarantee that I'm going to live for another 15 years and if the last almost 10 years is any indication of how the stock market is going to do then yes I guess I am pessimistic about it.

My mom died at the age of 58, does that mean I'm going to die young, nope...but, once you hit your 50's you know that time is becoming more limited due to age. My dh's health is not good, if it were perhaps I'd feel differently. Once again, if he dies I have no income...none...nada. The IRA is worth about 48,000 right this second. $48,000 isn't going to get me very far and surely wouldn't last until I became old enough to tap into other resources.

My issue with my dh is that he doesn't seem to care that I won't have an income if he dies. Now, I know "if" is a really big word for only being two letters...but, "if" he died tomorrow I would be screwed to put it mildly. A bird in the hand is worth two in the bush and like I said if he doesn't want to lump sum it, fine. But, he is going to miss doing all the things he does now...because, that money is going to disappear into a savings account or some other savings vehicle to insure that I will have money, if he up & dies on me.

**mek42** · 05-16-2010, 01:21 PM

Lots of healthy dividend paying companies are on sale right now. Not as steep a discount as last March, but still on sale.

Your unrealized losses are a sunk cost and as such are economically irrelevant. You are saying that you would rather take a record low interest rate gain, likely below 1%, while letting someone else take a 30% gain. Then when someone else has taken that 30% gain you'll consider paying full retail price.

As a real world example, let's say that last month you saw something you really wanted a second one of at a garage sale, new in the box, for $20 when normal retail is $100, which is what you paid for the first one. At the time, you had a valid reason not to buy it, so you passed on the deal. Now, the same item is on sale at the discount store for $70. What I am reading is that even though you have the $70 to buy it now, you'd rather wait until it is at full retail price of $100 next month because if you bought it for $70 today you'd feel bad about having bought the first at $100.

**mombottoo** · 05-16-2010, 03:00 PM

Originally Posted by mek42

Lots of healthy dividend paying companies are on sale right now. Not as steep a discount as last March, but still on sale.

Your unrealized losses are a sunk cost and as such are economically irrelevant. You are saying that you would rather take a record low interest rate gain, likely below 1%, while letting someone else take a 30% gain. Then when someone else has taken that 30% gain you'll consider paying full retail price.

As a real world example, let's say that last month you saw something you really wanted a second one of at a garage sale, new in the box, for $20 when normal retail is $100, which is what you paid for the first one. At the time, you had a valid reason not to buy it, so you passed on the deal. Now, the same item is on sale at the discount store for $70. What I am reading is that even though you have the $70 to buy it now, you'd rather wait until it is at full retail price of $100 next month because if you bought it for $70 today you'd feel bad about having bought the first at $100.

Say what? You lost me, because if I wanted a 2nd one of something & found it new in box for $20 at a yard sale when the 1st one cost me $100 I'd buy it.

What I'm saying is I think he should take the lump sum and then we will figure out what type of savings vehicles to use which will keep the funds somewhat liquid. I don't want the money invested into any vehicle where I am going to have to be a certain age before it can be tapped for living expenses. Is that a little clearer?

**MomToTwoBoys** · 05-16-2010, 09:50 PM

I hate to use you as an example, but your situation isn't exactly what I want us to be in when we get to be older. It's why we set a firm time frame to start investing when DH hits 35. That's one year from the 28th of May. I don't want to be getting to where we're 10 years out from the OAS and CPP age limit (which I believe is 65, though I may be wrong) and we're struggling to hit the $700k mark.

We'll always have OAS and CPP and my VA Pension, but having a comfortable lifestyle really is out of the reach of those three sources of income.

I totally see your point of view on having something more liquid. I would too if I was in your situation. They always say there's two certain things in life: death and taxes. If your DH is just looking at death, he needs a good dose of the taxes portion.

**mndtrp** · 05-16-2010, 09:55 PM

You're concerned with him dieing prior to the withdrawal age, and you not being able to support yourself until your own retirement, correct?

Does this plan not have a disbursement when your husband dies? If you are concerned about future losses with the market, are you not able to move the funds into something safer within the IRA, like bonds? That way, you aren't taking any penalty now, and the money you still have will be safer until you do retire.

Personally, I would leave it in the IRA, but start moving the funds to something safer until retirement or death.

**Greebo** · 05-17-2010, 06:50 AM

In your situation, I suggest you look into Variable Rate Annuities with a Life Income rider (minimum growth). They'll do MUCH better than your CD's/Savings plan and have a guaranteed "NO LOSS" provision.

Nationwide offers a vehicle along those lines that was really not too bad. Nowhere near long term as good as strong mutual funds - but in your case, since those are out in your mind...

**TheRootedNomad** · 05-17-2010, 07:38 AM

Originally Posted by mombottoo

My dh's health is not good, if it were perhaps I'd feel differently. Once again, if he dies I have no income...none...nada. The IRA is worth about 48,000 right this second. $48,000 isn't going to get me very far and surely wouldn't last until I became old enough to tap into other resources.

I can't seem to move past this section. While where/how you invest always makes a difference unless this is a VERY substantial amount of money it appears to me that if something happens to your husband you need another source of income at some point anyway. Unless there is a reason you can't work my personal reaction would be to be looking for a job now (or training for one) to build that savings for later regardless of my husbands situation. Maybe I missed something,

or another thread about your situation, or could be I just need more coffee

this morning but that is whats jumping out at me.

**mek42** · 05-17-2010, 09:29 AM

Is it possible to roll it into a Roth IRA? You can withdraw principle amounts from a Roth at any time without penalty, though I agree with TheRootedNomad to look for other income streams instead of relying solely on this possiblity.

Your reaction to my other post proves my point. Investments that you have unrealized losses on right now are effectively selling at a discount to when you bought them the first time. Why is it different to think of buying a tangible item at a discount vs. buying an investment security on sale?