Jewish World Review Jan. 24, 2000 /17 Shevat, 5760
I know it is many years before retirement, but I am looking forward to that day already. We would like to retire in our early 50s or sooner.
What I am wondering is, should we continue to put money into the tax-deferred accounts when we will have to pay a penalty to access the money if we take it out before we are 59-and-a-half? -- E.T., Lake Mary, Fla.
DEAR E.T.: I wouldn't sweat it at this point. Your idea of retirement may look different when you reach 50. I can't envision a situation in which it would pay you to start drawing it down before 59-and-a-half, given the 10 percent penalty. It would take a long time to overcome that.
Why not shoot for 60 instead of 50? Maybe you can change jobs and do some part-time work. You would be amazed at how much your attitude about a lot of things will change between now and the time you turn 50.
DEAR BRUCE: We have several mutual funds, and one has done very poorly this year -- it is one of the big funds. A representative told us that the reason it performed so poorly was because of low prices in the bond market. Another said that they are putting more capital into stocks now. A magazine financial columnist said that this company, among others, was putting more of its money into growth-driven, interest-generating investments.
What do you think? -- M.R., Topeka, Kan.
DEAR M.R.: I think that it's possible that all of the above is true. Not every mutual fund has earned money. In fact, there have been a great many that have done poorly.
If you are not happy with the performance of a given fund, go elsewhere. There is no guarantee that everything is going to go up all of the time. A good many will go down or up and down. If you are not tolerant for that kind of risk, unfortunately you are going to have to settle for a great deal less return on your overall investments.
DEAR BRUCE: My wife and I have been looking at a home that has been on the market for some time. It is in a wonderful area -- a large wooded lot -- and it has had some considerable updating and can be purchased well below the asking price.
The catch is that numerous tennis courts have been built adjacent to the back yard and the adjoining property. The neighbors tell me that there is a problem with noise and profanity from the tennis courts. The courts belong to an organization that does not fall under local zoning restrictions. The owners have not been responsive to pleas that a sound-absorbing wall be constructed.
As a long-time reader of your column, my initial thought was to pass on this, but perhaps you can think of some way to turn this sow's ear into a silk purse. -- R.G., Marquette, Mich.
DEAR R.G.: If the solution to your problem is some kind of sound-absorbing wall, it would seem to me that if you're getting such a bargain on the house, the cost of a wall could be factored in there and still make the house a bargain.
In addition to the wall on your side, you could have some fast-growing greenery planted to mask the look of the wall. You might even suggest to the other neighbors that they join you in putting up the wall. They may argue that it's not their responsibility, but the reality is that it's an easier thing for them to do than to fight it out in the courts.
When you put up your own wall, you have a guaranteed win. If you fight it in the courts, you will spend a great deal of money and there are no
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
01/21/00: Strategies for paying off debt