Retirement Dollars --> Energy-Efficient Techno Purchases

I believe the question is: Would you take money out of a tax deferred retirement investment such as a 401K or IRA and buy something to reduce your energy consumption such as a PV solar cells, wind turbine, Prius, etc. I take it as selling paper assets to buy real goods that will hopefully reduce your energy costs in the future. If you do this you are betting that the cost of energy will increase at a faster rate than your retirement investment's rate of return.

To go one record, NO I would not do this.

 

Nope. In lieu of withdrawing from a retirement account I'd belt tighten to pay cash. That forces a wait, contemplation and allows for one to enjoy possible technology evolution.

In my opinion a debt free frugal approach which minimizes consummerism and may be more helpful in our overall environmental effort than chasing the latest technology.

 

This is exactly what we did upon my retirement as a teacher. After waiting an appropriate length of time to avoid penalties, we withdrew 25K to install solar panels on our roof. These generate electricity which we "sell" back to the utility at .22&1/2 for each kw produced. This was a huge decision but one I feel comfortable with doing. A number of people on this topic talk about investment return. Money is important but not, for us the only reason for acting. It was the right thing to do. Just like the milage screen on the Prius, we now play the "how little electricity can we use" game to increase our return from the utility. BTW, they send us a check if we produce more than we use or we sell at a higher price than we buy (.07 vs. the .22+). For those bottom line driven, this money, the money we get from the utility (50 to 150 dollars per month, less in the winter) is like an investment and better these days because the money to install came out of tanking investments in the market. The panels and other environment improvements have also made our home more desirable for sale should that point arrive, and I suspect it will some day. Not a bad thing in today's housing market.
Of course, we all have our different situations to contend with and being foolish with our money is never a good idea. But if you can do something to save money (in the long term), increase your return, and do something decent for the environment, why not? I only wish that the government, the way they throw money around, could make this more affordable for everyone.

 

Good job, But to be honest, that money you put into PV cells is probably thought of as discretionary, by yourself, correct? Very few people nowdays have a secure guaranteed retirement system AND have a 401K, etc so although an admirable concept, curing the ills of the world should not be anybodys personal goal. If done enmass, by federal or state edict, that's different. In your case you were able to be both idealistic and practical and in the end proftable. The initial question posed by the OP is a bit too La,La land. I bought a Prius for as mileage, a nice selfish motive. Luckily we are also contributing to cleaner air. I actally did have a worker in a gas station Thank me, for that!:target:

 

For the 2 lala's Please contact me immediately, I have a sure investment which will totally clean up the whole world by this date next year. Money back guaranteed!

 

Uh. I do.

I'll have a pension through the State Teachers Retirement System.

I've also been contributing to a TSA since I was 30.

The goal was to be able to retire at age 57-58.

With all that's been going on, who knows? I might have to work until I die.

 

I'm not gloating and in these trying times, this is a bit embarrassing but Godiva, it can be done. That's exactly the path I took. This is getting off topic so I'm going to keep quiet now.

 

Godiva: I am in the same postion, retired at age 54, however nowdays most people in the US no longer have this safety net and that is what the OP was addressing. Anybody that risks future retirement funds which they MUST depend upon in later years IS NUTS ( for any reason ) I sort of think that this was the consensus that the OP was aiming at.

 

AND, That money you invested was really discretionary, right? 401K, IRA plans etc, are non-dicretionary funds reserved for RETIREMENT. Period. You don't really have to keep quiet, I have a bridge I want to sell to you, but you are obviously too sharp.

 

The TSA I have is supposed to be especially for educators. I can't take money out early without a stiff tax penalty. And I *have* to start to withdraw it by, I think, age 72. But the pension will only be something like 60% of my salary, so I had to do some saving to supplement. As is, the two combined won't be my current salary. Hope that my current expenses will be smaller after I stop working will probably be wiped out by the higher cost of food, utilities, gas etc.

Taking any of my retirement out early would be stupid. So as to the OP post I agree with above. It is not cost effected to withdraw retirement funds early to make green purchases. Not only do you lose the principal from your retirement and subsequent interest, you also take a big hit on taxes for early withdrawal.

My worry is that even with what I've managed to save, it won't last me until I die. My family is long lived. 3 out of 4 grandparents lived into their 90s. If I retired at 57, I'd have to make sure my retirement would last 40 years. With the volatility of what is going on now, there is absolutely no guarantee of that. Even if I worked until 65 or 67, continueing to contribute to my TSA, I still wouldn't be confident of 30 years of retirement. There's some sort of diminishing returns thing with the pension that makes working beyond 58 not have any significant increase in the pension. So after that, it's just the TSA contributions. And I'd be hard pressed to keep them a the level they are now if the cost of everything keeps going up.

Bottom line: don't withdraw early for retirement.

 

Godiva,

You do have one HUGE advantage. You live in San Diego. You may not want to do it but in a pinch you could sell your house in San Diego and buy one in say Kansas. Believe it or not there are still lots of places in the US were an average single family house can be purchased for $100K or less. I would say you would be able to live on the proceeds from selling your house for many years.

 

I'm aware of that. San Diego is in the top most expensive places to live Cost of Living-wise. San Francisco and Los Angeles also consistently make the list. I think California has the majority of the top 10 most expensive COL.

But....I have family here. And if I sell my house then in order to stay in San Diego I have to really move down to buy something else.

At some point I may have to choose between my house and my parents' house. But I was hoping to either live in my house or keep it and rent it out.

I don't believe in selling real estate unless you absolutely have to.

 

If your TSA is anything like a 401k or an IRA, I believe the rule is" You must start MRD s Minimum Required Distributions at 71.5 and you may start at 59.5. Don't wait to start at 72 as you are then required to take 2 years distributions and you pay taxes on that amount.

 

No way I can wait until I'm 71 to start drawing. If I can't draw until I'm 60, then I may have to work until I'm 60. I can't survive on my pension alone. That was the whole point of the TSA.