Advice on where to put our IRA money once we retire
We will be retiring in late January. Also in January, our Civil Service Voluntary Contribution fund will quit paying interest and all interest stops the minute we retire. We have to move that money, via a direct electronic transfer, to an IRA. The CSVC is essentially the kind of IRA that comes out of POST-tax money but the interest my other half has earned on it isn't taxed until he draws it out. We want to move it into an IRA that will have the same provisions but that will be covered by FDIC and don't want any risk at all, since we are too old for risk. We're getting over 4% interest on the CSVC now, would like to find an IRA that pays at least that and that gives the least amount of hassle possible for taking money out. One other thing is that it can't be an online bank since we are scared to use online banks. I've discussed with my husband the possibility of moving the money we have in our credit union checking and saving into something like an ING account but he's totally opposed. He doesn’t want anything to do with online money transfers. And I can sort of understand it, given that our computers were stolen once. So if you have any ideas (or if any of you have any ideas), please advise. Note that we have to be careful when doing the money transfer because there have been cases where people get a check from the CSVC to deposit in their IRA and then end up having to pay taxes on it because they "withdrew" the money that's why it has to be a direct transfer.
If you are moving it to an IRA to not get taxed on it then an ING Direct would not work. Also, I do not advise ING Direct - You should go for EmigrantDirect.com or HSBCDirect.com which pay at 5.05% APY.
You could get an account with Bank of America - they allow free trades but I am not sure about IRA's. Ameritrade offers no fee IRA accounts but that is an online brokerage -- although they do have offices in Texas you could go in person if you need to. I have some IRA money in a Calamos fund (CVGBX, CVTYX, CIGBX) that seems to do well and is not really any risk that I can see.
Ameritrade can set you up in an IRA fee-free and you can just have the cash sit there and earn interest until you can figure out what you want to do with it.
Having done everything wrong at retirement and destroyed my future finances: I am probably your best source to answer post and pre-retirement money questions. Surely you guys have attended many hours of seminars, talked to referenced financial advisors, laid out everything on the table so you can good advice and make good decisions. I suspect the government offers a lot of seminars, financial assistance in the form of advice.
You need to stay on the best medical plan the government offers forever. Rule #2 - You need to be open minded about your plans -looking at your total wealth, future income, insurance, etc must be on the table for a respected advisor to look at so you can have the best strategy for your situation. Rule #3 - You have to have your bills added up to the last penny so you are not making wild guesses at the income needed to support your existence.
Your portfolio includes the stock market and electronic banking whether you like it or not -this is our world today. I don't believe in stock history -the US is operating with only 5% of the world's key resources to survive. But the markets determine our lives: If a tomato costs 10 next year instead of the $1 that you pay today - the tomato would eat you alive if all you have is fixed income. Risk is in line with income, but you may be at greater risk by not listening to good sound financial advice.
I just moved my cash to E*TRADE Money Market instead of Commercial Federal Credit Union because for 3 months E*TRADE will pay 5.15%, FDIC insured, and also insured against fraud if a thief get your id. Some stocks pay good dividends and the stock goes up every year. Dividends are nice and provide some tax break - but then you would have to vote for the Republicans! After 3 months, ET pays 4.62% in this money market and you can write 3 checks per month if you are fortunate enough to have 50k in cash. IRA's in E*TRADE have no fees. And you could make an instant money transfer and make stock trades to your heart's content in a trading account.
-John, St. Louis
Reply from Katey-
Which government do you think we work for? We work for the U.S. government, champion cutter of costs for anything that benefits the little guy. Seminars? Financial Advisors? Great benefits? You've been reading too much republican propaganda. We got one six-hour gangbang seminar a year ago which I attended where one speaker from our regional office's personnel department and about 150 people, and those included people who weren't under Civil Service retirement but rather under Federal Employees Retirement System which is totally different. Needless to say, there was no individual attention involved. Since then, they've even quit doing that. They have an "online seminar" that we can access from our home computers. Needless to say, there's no question and answer session.
Your E*TRADE money market sounds great IF you're sure it's FDIC and that it's an IRA (in other words, that we don't get taxed on the interest until we withdraw the money). In fact, if you're sure of that, send me any links you might have to make sure I have the right place, though I'll check on Google and see what I find. We're not talking big money here, either. Most of our retirement money is in the Thrift Savings Plan, which fortunately we can just keep there. What's in the Civil Service Voluntary Contribution fund is basically the money from a recent death in the family plus a little extra we threw in for a while. The Thrift Savings Plan is a better deal because it comes from pre-tax money, thus lowering our taxable income, so we've mainly put money in that.
I'm also going to call a friend who retired a few years ago who also had one of those Civil Service Voluntary Contribution funds. He may actually be my best resource on this except that he's been retired long enough that he may have forgotten exactly what he did and where he did it.
Extra Comment 1:
I agree online banking is very secure - actually a little too secure - yes, too secure. My HSBCDirect.com account makes me log in with a different personal question every time(chooses from three randomly), plus password and username, plus some other new security feature where you have to use your mouse and cannot type the password. This is three steps that take forever to sign into my account but everyone can rest assure its protected - and way safer than driving to an ATM or bank.
I don't do online banking but if you use a bank that has no actual buildings (like ING), you HAVE to use online transactions because there's nothing else.
High Interest Savings Accounts