How Much Do You think You Need to Retire? What Age Will You/Spouse Retire? Investment and General Retirement Issues (Part 3)

She sounds like an absolute gem.

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We had a life insurance investment started as a college savings idea
.kept into early retirement. Maybe it was not the best way to use our money, but it did force us to save (beyond 401K) in the early years. We are in process of cashing it out (mine in 2024, husband’s this month). Had to plan carefully, since a portion of the proceeds are taxable.

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Similar situation here as Choatiemom.

My parents could have used the help of a FA. Following my dad’s death when I saw what he had done w/his $$$ I just shook my head. A very intelligent, successful businessman with a lot of time on his hands in retirement he obviously just didn’t want to learn and figure out investments. I think his goal was to simply never run out of money and there was no way that would have happened but he could have done a whole lot better.

As a side note, we manage our own 401ks, our advisor handles our other assets.

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My husband has done a significantly better job managing my widowed mil’s assets than my fil ever did. He was very cautious but also made some dumb choices based on his lack of understanding of the taxation of some investments.

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I remember several years ago, someone got “disgruntled” (that’s putting it mildly) over trading losses and killed his wife, 2 children 9 people, himself, and injured 12 more at 2 brokerage houses
Disgruntled trader kills self after opening fire at two brokerages when he tried his hand with day trading (options, puts, calls, short sales, etc).

Best IMO to recognize when someone is not good at something (despite all the studying, there are simply things we are good at and things we are not) and let others help. Hopefully no one insulted or criticized him beforehand about his losses.

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The guy was a day trader. I don’t think anyone here who manages their own portfolios are into day trading, which basically requires cashing out of all positions by the end of a day.

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Understood. That’s what I said. But there are folks (including my friends who are coming to visit in a few days) who have taken up day trading with their investments.

My point is, there are people who think they are good at managing investments or playing riskier parts of the market, and they just aren’t good at it and shouldn’t do it.

They are likely just trading, not daytrading.

My friends?? Nope he is day trading since he retired. He seems pretty good at it (especially in this market!) but not everyone is.

He is in the tiny minority then.

Even the non day traders, if they aren’t skilled enough to manage it, they should seek help. JMO

What a win-win on being the only attendees with her free presentation - and able to move on to utilizing her S/K/A (skills/knowledge/abilities) on your full financial planning.

I indicated on earlier post about talking about our 401k returns (which we manage with DH’s former employer paying some of the plan fees). His employer had shifted from Dreyfus (before 2006-time frame) to Prudential right at the 2008/2009 time period and we had little access to finding out what was happening with our fund balance – I had noted two points with change in market value - over $100,000 and another time -$17K. I had a Dec end 2008 number, an April 2009 number, and end of Dec 2010 number. Our number went down about $200,000 from Dec 2007 to Dec 2008, and down about $20K more by April 9 2009. Our funds bounced back by Dec 2010 to the end of 2007 value. I had aggressive cancer and treatment starting Nov 2009 and last IV on Jan 31, 2011; some later major surgeries in 2013 - so once we could access Prudential, we were able to re-align investment and fine tune to get improved results under monitoring and adjusting. Mid-year 2023 DH’s former employer moved our 401k to Empower, so have scoped out their tools and our investment data at that time, and also with one year data (July 2024). They had a few different investment choices, and we now are in 3 funds with this 401k, 1 is new for us (Fidelity 500 Index, FXAIX). About 70% of these funds are in Large Cap Growth, and 30% in Small Cap Growth. I have done return analysis year-by-year for 2014 to present one each of these three fund groups (all 3 had double digit losses in 2022).

We manage the risk by only a portion of assets in these stock funds; long term stocks outperform bonds
 It is the skill of these stock fund managers to maximize returns with their investment choices. I review the Morning Star reports – which also compare the returns to the benchmark, be it Russell 2000, S & P 500. The index fund we have with no comparison because it is very close to S & P 500 (but we have a chart showing such on the report). I also look at ‘risk VS category and return VS category’ summary. To see average risk but above average return or high return for example. 3 year/5 year/10 year. Whatever information I can see on Empower (just like I saw with Prudential) system. End of July 2024 I look at the plan summary with line-item data on investment choices with the end calendar year returns for past 3 years. Looked closely at our 3 investment choices – that was the one-year time period we had been with Empower, so could use some 1-year tools with our information at Empower. Prior I completed various analysis on Prudential system.

The ‘housing’ bubble, and the ‘tech bubble’ - it depends how much that affected people, and how they were able to recover. The drop we had in 2022 was almost 100% recovered by 2023. I track our month-to-month performance, quarterly, 6 months, and year performance.

Our highest year returns were 2019 and 2020 (34.41% and 34.85%) - but these are all stock funds. Our risk balancing is primarily with our annuities. Between 2011 and 2021, we had only one small negative return (2018, -4.22%). 2013 we had 25.87% return, 2017 we had 20.47% return. Some years modest 0.94% in 2011, 0.78% return in 2015, 2.77% return in 2014. Pretty decent years 2012 with 12.88% return, and 2021 with 15.20% return. The first half of 2024 we had 12.63% return and I haven’t looked at the last 6 month data – but I see from our month-to-month Balance Sheet statements the line item up and down on this 401k (we log monthly into our account with our financial advisor and also have data links to things like DH’s 401k numbers). To keep our risk level in check, we spin off funds when this 401k gets too large – typically into annuities.

We will learn more about our RMD numbers on future visits with financial advisor (we schedule every 6 months after the firm does a ‘state of the markets’ presentation).

We have shifted some funds into Roth IRA and also transferred some cash for personal use during these lower tax years (lower income years). We are 68 now so have some time before needing to spend down some funds/transfer funds at age 72.

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We have some cash value life insurance policies from our 20’s and 30’s - the dividends are paying for the policies now, and we didn’t have access or information to term life insurance like we do now. This was a financial lesson we had to learn on our own and has been passed on to DDs.

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That is why it is important to have a fiduciary advisor, who is to help with products/services that are for the advantage of the client.

We have purchased annuities with our financial advisor, and it was win-win. Yes he received a commission but the product was a good one that fit our financial needs. We wait if there is not a good product available on the annuities. We have no pensions, and the annuities balance our portfolio risk lever. We met with him often initially to consolidate all our various loose-ends (Sar-sep, IRAs, etc.) and to learn. Had time to absorb the information and review the prospectus. With our portfolio shifts, reduced our portfolio risk to what our risk analysis showed.

We have known people that have worked themselves as ‘day traders’ - not with a firm but one their own. Some have done as a sideline, some in semi-retirement - with only a portion of their portfolio. To me high risk, and questionable returns with potential for higher losses.

Good returns can be achieved by investing in a smarter way and also long -term versus short-term focus.

My nephew did it four years. Times were good so he was good but as I told him not tax efficient. He could have just invested and let stuff go vs trading.

The bigger issue for day traders is that they need scale to earn a living.

So they take on leverage.

And eventually it blows up.

If fund managers can’t reliably beat the market, how can you ?

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I have a suggestion–maybe this thread should be broken up into one about general retirement issues and one called “investing for retirement” or something like that since that’s become the primary focus.

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Our overall 401k portfolio had funds from three stock fund groups. Those are our year returns. At one time we had funds from four stock fund groups. I noticed on some down months, certain stock fund group lost less, so instead of 25% across four funds, we had different %. Then with the change to Empower, we had access to adding in Fidelity 500 Index; we dropped the two lower performing funds (readjusted/balanced our portfolio).

I have been using these three funds with % of investment, and adjusting based on returns. I guess one can say I am using the skills of these three fund managers and directing different percent of portfolio where I see it will be most beneficial to us.

Our Financial Advisor said I beat his numbers (on positive returns) every year but one with managing DH’s employer 401k (meeting with financial advisor since about 2013). However FA better manages the market drops ‘risk managed’ - they do a lot of detail work along with larger fund groups with Redwood. Financial Advisor has several fund groups and all are well managed for the investment goal/risk level - they have (and manage with their group funds) our Roth IRA funds. When TD Ameritrade was acquired by Scwab, Financial Advisor was able to obtain the corporate trading ‘deal’ with Fidelity since Scwab had higher fees – so we also can log onto our Fidelity Account and see all of our managed Roth IRA as well.

Topics on this thread do vary a little, but I do like only going to a few CC threads versus doing a ‘search’ of new threads with not the depth of knowledge there is on this thread - many long-time contributors.

This thread has a combination of those aspiring to retire, and those of us still in transition with having our retirement plan more fully in place.

It is not only how much of a nest egg that gets built up, but learning helpful ways to deal with financial advisors and products, various insurance products, and so many key things to think about, taxes, investment returns. How to budget out time and make key decisions. Then breathe, relax, and enjoy retirement.

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@BunsenBurner, I have no doubt written this before, but we use two FAs. Historically, one was very holistic and very full service and the other was at a brokerage firm and more limited but provided great service for my companies. One charges me about 0.58%. The other a bit more but made a bid for all of my business at 0.5%. I can outline what the FAs do for me beyond just managing the money to see if any of that would be relevant to you. As an entrepreneur, I have a more complicated financial life than many and good advice can save me significant amounts of money (and not having good advice can cost me the equivalent amounts). You have to decide which help might be valuable to you, if any.

The holistic one not only did a financial plan but reviewed our financial risks. So they would look at our insurance to make sure we have the right coverage – not missing things – but also at good prices. They looked at ways we could make some of our kids’ college tuition tax deductible and would have talked with us about merit aid if our kids were applying to schools that gave merit aid. They did the modeling to suggest the optimal time for me to start taking Social Security. They focus on making sure I’m in lower cost funds but also looked with my at alternative investments (PE fund, venture funds, hedge funds, real estate funds). One of their team was happy to work with our kids and ShawD got help on choosing benefits, deciding if she could afford to move to CA, and on whether and how to buy a house and a car.

The other one changed personnel and morphed into a fiduciary as well and has become more holistic. They recently did a financial plan for me. Years ago, they suggested the 412(i) Defined Benefit Program that I used for my retirement plan (and it became a 415(i) plan). It has a slightly different investment strategy. That was worth a lot for me. They also suggested a way for me to have also have a 401k at the same time, which has enabled even more pre-tax savings. They offer estate planning services and have access to PE investments. However, because they are at a big brokerage firm, the fees on the investments they propose are typically higher than the other guys and they find products like hybrid LTC policies that have lots of fees built in. Both ShawD and ShawSon have credit cards through them with an auto payment provision. Several times, they’ve called ShawD and said, there is not enough money in the cash account to cover the credit card payment. Which account should we use to replenish the cash account?

@jym626, I met Dunning at a New Year’s Eve gathering.

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