fdic ?--protecting bank accounts ?

People generally do not have that much money in FDIC protected accounts. Consider moving money to brokerages where you are protected by vastly higher limits, and at the very least look at money market accounts and brokered CD's rather than the stuff that banks offer.

The problem that you may face at your age is that you have gone so conservative (putting everything in low return bank instruments) that you risk out-living your money. Lets say you are 60. You could very well live to be 85, and 95 is not out of the question. That is 35 more years. In comparison, that is like sitting down at the dinner table while Jimmy Carter was President to plan how you would live today in retirement. During the Carter era, we had massive inflation and 20% interest rates. Who could have guessed back then that we would have two monumental bull markets just over the horizon? With the dow at 875, who could have even thought of the dow above 10,000?

My point is that you need exposure to the market with this money, unless you have critical mass where you can safely live off of the interest for at least 30 more years, and longer if needed.

-john-

This is one time "immediate annuity" may make financial sense. (there. I said annuity. Mark Twain said "the difference between the right word, and almost-right word, is the difference between lightening and a lightening bug." This, to me, is the difference between the immediate annuity which is right for a good slice of retirees, and a VA, which I abhor, mostly. JOE

First, find out how much of it is actually already insured - it's not as simple as some people make it out to be. Use the calculator at

Second, it's not all that difficult to have a *lot* of accounts at multiple institutions. A friend of mine had a 7 digit net worth, and had insured CDs at something like 18 banks. If they are 2 year CDs, very little time is required to monitor them, on an annual basis. If you use a software program like Quicken, it is even easier.

John Cowart

Buy US treasuries.

First you have to believe that there's a HUGE pot of money in Washington backing up everyone's insured savings.

Seriously, how about a brokerage account stuffed with US Treasuries of varying maturities?

-HW "Skip" Weldon Columbia, SC

There is a huge pot of money backing up the insured savings. If it runs short, they'll print more. The FDIC is backed by the full faith and credit of the Federal Government.

Which are also backed by the full faith and credit of the Federal Government. One is not safer than the other.

Doug

If the US government defaults, then your FDIC insured accts is not going to be too safe either.

Or better still, Treasury Direct.

One big safety measure that should not be overlooked is to be sure you own your home free and clear at the time of retirement. Then, whatever happens, you will not have to worry about making mortgage or rent payments. And nobody will drive you out of your home, not even in an economic downturn where lots of banks fail and/or stocks are worthless. Furthermore, if I had enough cash to need 20 banks to get it all insured, I would put a big chunk of it into more real estate, which again would not be affected by bank failures or stock market crashes.

Skip

There is. It's called the United States Dollar. The Treasury can print more money to meet its obligations. The problem would be the risk of uncontrolled inflation that would result.

I don't know what the US rules are if your broker goes broke, but I would suggest *two* brokerage accounts, at different firms, holding US Treasuries.

You've got that permanent rent payment to make the rest of your life (barring some oddball "homesteading" exemptions) that we call Property Tax or Real Estate tax.

Not so fast on that one. Our local auctions are filled with homes where the owners simply couldn't keep up with the tax obligations, and therefore they're watching their homes go on the auction block.

Happens every day 'round here.

It's good advice -- pay off your home prior to retirement, but that still doesn't make it a "sure thing". Them taxes take plenty of elderly folks on a fixed-income right out of the equation.

Think about this: We're now paying more (on average) in property/real-estate taxes than our parents paid on actual mortgage payments (we being my wife and I -- and I'm sure that the rest of John Q. Public and family are in the same boat). Assuming current trends hold, that means that after 30 years of paying on your house, you'll likely still have the equivalent of your original house payment due on taxes. The good news is that, inflation adjusted, in

30 or 40 years that will amount to about diddley-squat, but the bad news is if you're not growing above and beyond inflation then that tax bite's gonna hurt. A lot.

.

I'm not so sure -- someone please help explain:

If Uncle Sugar had to print $100K to give to me under the FDIC, isn't that precisely because the $100K is gone from my account? Because it's disappeared?

Wouldn't that be a zero sum -- my disappeared 100K replaced by a newly printed 100K. No net increase in money supply and no net increase in inflation.

.

I know of 2 states where that isn't so. In California, I believe, after age

65, you can defer property taxes until time of sale. Here in Alaska, the first $150k of valuation is tax-free to those over 65. That may not sound like a lot, but in most communities there aren't the high real estate valuations of many other states. Though that won't entirely eliminate taxes on many properties, it sure will reduce the heck out of them. Maybe there are other states with similar provisions for older property owners.

Elizabeth Richardson

Ok, let's take that to the next logical step. If my house burns down, its value is destroyed, no? Instead of needing insurance, why can't the government print the money needed to replace the house? Same with my stolen or totaled car.

I think the only way this works is if there is a proven situation where actual money is destroyed, not where it's squandered. That's why the FDIC collects premia and has a limited amount it can protect. JOE

True, it is not a sure thing, but no investment is a sure thing. It seems to me the problems in having to come up with a big mortgage or rent payment month after month for the rest of your life are much greater than the ones that come from having to pay property tax once a year. But I would never suggest investing everything in real estate, no more than I would recommend investing exclusively in stocks or mutual funds.

Sgt.Sausage wrote on [Mon, 12 Mar 2007 16:19:07 -0500]:

Really? Property tax in this area is under 1000 a year

If, say, the management of the bank stole the $100k, it has gone

*somewhere*, albeit into the hands of local drug smugglers or real estate speculators, say.

It is not 'destroyed'.

More generally, if the US treasury prints dollars, without issuing bonds to back them up, then that money increases the money supply (there is no reduction on someone else's balance sheet from buying the bonds).

This would, in effect, increase the reserves of the banking system. Through something called the 'reserve multiplier' a $1 increase in banking reserves leads to a $12.50 (or more) increase in how much money the banking system can lend.

He is correct - my parent's 1968 mortgage was $102/month, including property tax. My property tax alone runs $1200/year, on a small, low- end house, in the same city.

John Cowart

Ah, my parents bought housing much more recently than 1968.

What was the property tax in 1968 and what is it now?

Couldn't tell ya. Likely next to nothin'.

Another data point. My folks bought their first place in 1972 for a $117 a month mortgage payment. My property taxes are currently $1,480, or about $123 a month.

I am paying more per month in tax than they paid in toto.

Of course, that's in absolute terms -- not inflation adjusted. I'm quite sure when I'm paying a grand a month in property taxes in the year 2037 that the new kids on the block will be buying their new houses with $10,000 a month payments!

.