HOLY mackerel! The January statement for the IRAs came from the financial management firm. The large IRA earned as much in January as I make all year when I’m teaching the maximum load the District permits adjuncts to take on. Raining money, indeed. Wow…
In the past, when times were good (remember those times?), it would occasionally earn ten grand in a month. But this is ridiculous.
So why am I even being bothered to teach, or to do anything else, for that matter? As we’ve seen, it’s a question I’ve taken to asking myself more and more often.
Well, for one thing, under decent conditions I like teaching. I enjoy young people, and even though I don’t delude myself that I “teach” them anything (no one teaches anyone anything: you can take the horse to water…etc. The best you can do is serve as Virgil to the student’s Dante), I find it entertaining to watch them develop when challenged by whatever wacky stuff I throw at them.
And of course, the problem with a sixteen-thousand-dollar windfall is that it comes along once in a blue moon. Stock market investments can’t be relied on to generate any returns on a regular basis, and as a matter of fact for most months since the Crash of the Bush Economy (heeeee! :-D), returns have been negative. You can’t be pulling down what it takes to live on while your nest egg is steadily shrinking.
Hm. Speaking of money management, there’s still a chunk of money sitting in an old whole life policy. I’ve delayed rolling it over into a brokerage account because I haven’t wanted to trigger the tax on it. Plus it does provide my son with almost 40 grand worth of insurance, which would make him right-side up in the upside-down mortgage I got him into.
Financial Advisor and I have been engaged in a long-running disagreement over this little pot of gold. He wants me to draw it down to live on. I want to roll it into a brokerage account and put it to work, even though I’ll have to pay tax on it. Matter of fact, once the tax is paid, it could be used to fund the Roth IRA, which I’m not going to be able to contribute to for many more years.
Or, of course, I could use some of it to buy a much-needed new car.
Either of those, IMHO, would be better than letting it sit in the insurance policy, where it earns about as much as a bank savings account does. The thing returned $1,128 in 2011, plus an $888 cash dividend. LOL! I’ll never get out of the 99 percent at that rate!
February 11, 2012 at 7:47 am
Yes–at least for January, we have returned to the days when we might just open that statement. Isn’t it strange to think that there’s no such thing as a guaranteed return? Oh, for the halcyon days of the 5% bank account.
February 11, 2012 at 7:08 pm
A guaranteed return?
Buy Gold or silver?
Cash it in and buy rice and water and gravy and canned goods that you will eat.
February 13, 2012 at 6:35 pm
Why not 1099 into a SPIA (single premium immediate annuity) – I just did a quick quote online and 40K for a 60 year old female can turn into 200 a month guaranteed for you till you die. Since it is a WL to an annuity product you wouldn’t have capital gains (1035 exchange).
If you don’t need the 200 that month you shove into brokerage or if you need it to feed charly you use it
DISCLAIMER: I HAVE NO IDEA HOW OLD YOU ARE
February 13, 2012 at 6:38 pm
Should mention that there is an inclusion ratio for income taxes on a SPIA but that changes with age and you’ll need a real quote to get that
February 13, 2012 at 6:43 pm
Thanks Evan! I’ll ask the financial guys about that idea. They’ve generally been tepid about annuities; instead have tended to look for safe harbors in bonds and cash when they anticipate hard times y-cumin’ in. The big IRA is invested in a very diverse array of securities; as a rule the strategy has been re-investment.
LOL! I’m older than Methuselah. I figure if I can keep working enough not to have to draw down from retirement instruments (which doesn’t require TOO much income), then I can defer draw-downs until I’m 71 1/2 (or pretty close to it), when I’ll be forced take distributions from the traditional IRA. At that point I may want to stop teaching (or doing whatever I’m doing by then) so as to limit taxes.
Maybe not, too. I’m mighty tired of living like an anchorite. 😉
M’hijito buys food and pays for vet bills and all those good things for Charley. LOL! Anchorites can’t afford two dogs, especially when one of them is the size of a pony.
February 13, 2012 at 9:31 pm
Make sure when you talk to your guys you mention SPIA. Most investment guys will shy away from deferred annuities because of the fees (I disagree with that sentiment that is for a different post).
February 14, 2012 at 4:54 am
@ Evan: Checking this out on the Web, the two issues I see are that the monthly payments wouldn’t keep up with inflation — in a few years, $200 sure won’t buy much — and that when you die, the money’s gone. One of my goals is to leave as much as possible of my savings to my son. If I converted my entire money bin to an SPIA, it would generate enough to support me now (maybe not in 10 years), but not enough to pay for a life insurance policy. At this age, life insurance isn’t cheap.
February 14, 2012 at 7:02 am
You can easily get a SPIA with an inflation rider. Also I was just talking about the whole life policy that you mentioned in the post not any other retirement bucket.
February 14, 2012 at 9:06 am
@ Evan: Ahhh! Gotcha. I thot you had in mind the January windfall.
Hm. They’re advising me to use it to live on after the present pile of cash disappears. We though I would go through that in a year; three years later, there’s still enough to last another year, because I keep replenishing it with my earnings and then drawing down only enough to make ends meet. So in theory the amount in the whole life policy (the value of the insurance payout is around 40 grand, but the cash value is only about 23 grand) could last me another four years, especially if I keep getting tax refunds.