Nah, I don’t thrive on complicated things, I like to keep everything simple. However, I am the paperwork queen of my entire family, and I don’t shy away from things that are slightly challenging. I don’t really like being the paperwork queen, but it is and always has been one of my family functions.
Definitely not getting rid of another property, we love those and this would just be an addition. Guessing we’d just put 25% on our HELOC and the rest from 401K, though we didn’t want to move into the next tax bracket. It sounds like it’s completely legal to take the money from our 401K and then roll it over into an IRA (not 401K), but the 20% withholding and coming up with the 20% to put it back in doesn’t sound worth it.
My husband really, really wants the property. My sister and BIL are very intrigued by it, it’s exactly what they would love, and it would be perfect to add on to our adjoining property. It’s just the money thing. Though it would get my husband to stop drooling over a Grand Banks, and is financially a much better option that that. When my sister (or someone else) purchases a portion of it, that would knock off much of the cost.
It was my understanding that withholding isn’t required when doing an indirect rollover from employer based IRAs (SEP or SIMPLE), it’s the 401ks that have the mandatory withholding (for indirect rollovers, yet no withholding on the direct). But I defer to anyone with greater expertise here!
A NY Times article (which I talk about in ‘parents caring for parents’ CC thread) May 2 had two children of an aging parent each contribute $1900/month towards their mom’s bills – for assisted living care – their mom’s care at age 83 after cancer and a hip replacement. In-home aids were costing $10,000/month. “Putting a parent in an assisted-living facility is one of those things that you usually see in a movie and the person hates it and it’s terrible,” said Mr. Stanley, 41, of Berkeley, Calif. “But my mom knew that she needed the help, and she had struggled for long enough that she appreciated it.” The assisted living facility was near her home in FL (the two children live in other states - GA and CA).
Some on this thread are also in the sandwich generation situation with aging parents while also having young children or children still in school and/or also needing resources.
I kept thinking my average age of life would be 77/78, but for a 65-year-old, the average life expectancy for a man now is 84 and a woman now is 87.
”Despite recent reports of a decline in average life expectancy, the chance that someone who is 65 reaches 90 can’t be overlooked: It’s 40 percent for women and 30 percent for men, Mr. Kolluri said. “We are racing toward 100-year lives,” he said.” Many of us are planning for our money to last for 100 year timetable.
Anecdotally, I tend to think that people that were in their 70s in the 1980s-1990s were in far poorer health than those in their 70s today. So those that are reaching 65 now do have much higher odds than those who did just a few decades ago.
The number of people who chain-smoked, and the second hand smoke that was everywhere accelerated disease and aging.
I don’t have any facts or figures to back that up! Just the memory of my grandparents who were born in the 1910s, and the state of things during my childhood before indoor smoking was banned.
That is true. Also there are much more medical measures available to keep older people living til much older. (Sometimes with high quality of life, other times not so much.)
For some this is true - however there is a big part of our population that is overweight and obese. That becomes a ‘comorbidity’ situation.
Yes, we have the meds and surgeries that are keeping some people from dying of heart conditions, strokes, other conditions. Big medical breakthrough on drugs, and also now more surgeries/better techniques.
People are not smoking cigarettes so much (and not getting second-hand smoke), but many people are regular Marijuana smokers and young people are vaping - some older people too. All doing lung damage, and some brain cell losses too. Who knows how much some of that will contribute to brain decline/memory in one’s golden years.
There also are some aging individuals who might be very active but do not realize their physical limitations on some declining abilities. For example, my neighbors went hiking in The Smoky Mountains and had to assist a couple who were in their 80’s back from their hike - if my neighbors had not helped them, they would have had to call for help. They were weak and fatigued, and I think one had turned their ankle. Got them back to their car.
DH is planning to be able to jog for 7 miles around the time he turns 70. He has worked his way up to 5 miles. An uncle went skiing with his daughter at age 80 (very carefully).
Portland ME writer: “**Talking with my father didn’t go very far before he died. As his executor I was faced with a string of surprises – a dozen bank accounts, some with my siblings names on them, others without, and the only guidance before he died was “split up everything evenly.” End of life issue was resolved by his dying suddenly at home, but I really regretted not figuring out how to force my stubborn father to give me more guidance. My wife and I set up a trust and detailed instructions on everything possible with the assistance of a law firm. It was well worth the money to make things as easy as possible for our family when we do pass.”
DH and my parents have passed. DH’s parents both lived to 92, and they allowed their mother to live at home with sporadic caregiver coming to bring groceries, help with her personal care, light housekeeping, conversation. It was not a good solution, but DH’s mother was stubborn/tough. This arrangement worked out OK for a while (and DH’s brother who lived an hour away kept up with bills and checking in/taking care of things). The caregiver had a stroke and later died when out of the hospital with another stroke at home; DH’s mother had physical and mental decline; DH had retired and he became her caregiver until they got her into skilled care (she still was protesting - DH was supposed to live there 24/7 was her solution – our home is 850 miles away!). DH’s father died shortly after DH retired (and his mom died 3 months later). Since his mother only was in skilled care a short time before her meds stopped working for her hypertensive heart disease, the house and a few other assets remained for her 4 sons. The house is used sporadically, and a granddaughter plans to live there when she retires from the military (grandma was a second mother to her). Granddaughter, DH, and one brother pay the taxes and upkeep (very small amount) - granddaughter purchased one brother’s share and one brother just turned over his share.
My dad died of cancer 2 days before he turned 64 (1995); my mom died years later at age 77 of dementia (2010). It was drama for my mom to sign the Estate Planning paperwork (an A/B Trust which was appropriate for that time frame and their estate) - my dad was dying (chemo not effective, and between diagnosis and death was 7 months), and my brother was able to tell mom she would not lose control of anything (and she then was willing to sign the papers she refused to sign for my father years earlier). My brother flew in, called the attorneys, they had dad sign all the necessary things first on Thursday (he was so weak the important papers were signed first), and he was dead Friday afternoon. The trust worked beautifully, but almost had a hitch because mom fell asleep behind the wheel on a state highway (a few months before the trust was accepted after being filed) and survived a head on collision with an 18-wheeler (the airbag saved her; mom’s car drifted left and the semi veered right, hitting on the passenger side of the front of mom’s car). Mom’s face was messed up (after surgery it looked good, like nothing happened - she did lose the sense of smell from one side), and her right wrist was rebroken (had broken it as a young girl) but because she was asleep, no other injuries - seeing the vehicle, one would not believe someone came out alive - they airlifted her to the hospital. She had a spot on her liver (showed with CT scan), but it seems it was not internal bleeding. The right hand had less function just because of wrist repair with aging person, but mom did not complain - she knows her guardian angel saved her.
One of my FAs wants to raise our fees from 68 bp to 74 bp and the other has offered to drop its fee (hard to figure out what there actuall fee is as there are different fee levels for different types of accounts) from somewhere close to but less than 100 bp to 50 bp if I transfer all our capital to his firm. If I step back, these are really large expenses. I think they are more in total than we pay for any other category of expense. More than property tax, more than the stub mortgage we have left on the house, and more than health care.
I value one of our FAs for service – moving money between companies, sending wires, etc. I value the other one for their investment advice, tax creativity and also for their ability to explain things to ShawWife and ShawD but the first group has gotten much better on advice since I started with them.
But I’m thinking that maybe I should manage some of this on my own – buy a bunch of ETFs and let them sit and pay no fee for them – and keep one of the two. In the past, I was very good at finding investment ideas but not good at the discipline of monitoring them to decide on an exit.
Good plan to see ways to reduce expenses in this category. Take some time to process which direction you want to go with keeping the one advisor.
I think if you write down some of the processes for ShawWife and ShawD they will be capable of following if something happened to you. Also review with ShawS next time you see him.
You have things structured well. They can learn and follow.
The vast majority of people who buy and sell stocks on their own underperform correspond macro indexes over time, regardless of age.
My father and I talked about his investment plans yesterday, as we do a large portion of times we talk. These talks usually go the same way. He believes the market will go down in future because of something Trump is doing or will do and wants me to confirm that the market will go down in future and confirm what other thing he should invest in that will go up in future. He also tends to have a biased memory, focusing on his successful predictions and ignoring his unsuccessful predictions. For example, he remembered that he was correct in predicting the market would go down after the Iran War started, but memory glossed over that the S&P 500 had recovered since then and was at an all time record high when we talked. Or that S&P 500 is up 44% since we had a similar discussion after his prediction that markets would go down further following “Liberation Day” decline ~1 year ago and he should sell investments.
I think it would be fairly easy for an unscrupulous FA to take advantage of this and get him to pay high % of portfolio fees for services or purchase high ER funds, with claims that he/she could outperforming market. Fortunately this hasn’t happened. I do think FAs can be helpful in many situations, particularly when faces complex financial decisions, including structuring retirement decisions and planning. Or helping setup a basic portfolio to align with risk tolerance, time horizon, upcoming expenses, … .rather than beating market.
@bluebayou, interesting thought. ShawD is definitely interested in learning and really utilizes the FA for advice (how much to save, how long could she live in CA before she got a job, how much she could pay for a two-family house, etc.). ShawWife is really trying to learn as she fears that she would not understand enough if I were to die. I may have complicated things but I have modest investments in a private equity infrastructure fund, a venture capital fund, a private credit fund, and a private oil/gas venture in addition to the stock and bond portfolio. I invest because I think the market is off in some area. I thought that US would need to really up its infrastructure investment and that this would sometimes involve public/private partnerships or outsourcing, which is why I invested in the infrastructure fund. I invested in oil and gas because I thought that even if we were to hit all renewable aspirations, demand for oil and gas was going to grow more than people thought (I wasn’t planning on the Straits of Hormuz, but that has not hurt the value of the investment). I invested in the private credit fund because I was looking for good fixed income investments and this one is extremely thoughtfully run. I was looking for an investment in water because I thought that AI data centers were going to dramatically increase the need for water to cool the data centers. I could not find something specialized so I just bought two water ETFs (international and US only).
I have always been too busy to spend a lot of time on investments. But, I could take a slug and put it in buy and hold ETFs that no one manages and drop to one FA. That would save me a fair bit a year. The two questions are: 1) With the capital invested that way, would I outperform or underperform the current arrangement net of fees? 2) What return would I get on the fees I would no longer be paying? Is the combo better than what I have now? I’m guessing that the fees I would no longer be paying might service a decent mortgage on a house or condo in Florida.
At some point, though, I would likely be in position of @ChoatieMom’s dad – I’ve currently taken over my MIL’s investments (and bill-paying and taxes) – she is not remembering to brush teeth, eat or take meds these days so bills and investments are going to be badly handled. If won’t have that problem likely only if I die before ShawWife, who does not have the investment expertise or comfort that I have, which is largely why I picked one of the two FAs in the first place.
I’ve been managing my own portfolio for over 40 years and I have beaten the S&P every year. I even share my record with my son who’s a portfolio manager in a hedge fund. But I have relinquished some trust accounts to Fidelity because I just want to concentrate on my own portfolio as a retiree.
absolutely! But his (play) money, his rules. (hahaha) And he buys/sells himself, no FA churning. He’s relatively immobile, so playing the market gives him purpose.
Fortunately, he now shares his purchases with his kids, so if anything looks totally whack…
That’s obviously not the norm. I previously linked to SPIVA stats showing close to 95% of mutual fund managers fail to beat macro index corresponding to their fund over a sufficiently large period, after fees. An example graphic is above. And the small minority who do beat the index tend to vary over time. The mutual fund managers who do well in a particular 3 year period don’t tend to do well over the next 3 year period – more similar to random change than you need to find one of the small minority who are historically good at picking winners. I’d expect the number who beat the S&P 500 every year for 40 years to be near 0, without considering fees.
Individual traders aren’t much better, including when trading without fees. The DALBAR reports show that individual equity investors consistently average lower returns than S&P 500 each year. Other studies shows the pattern across general population is the more trades, the worse the average performance.
Mutual fund managers can’t be very nimble—their trades are so large that it can take days to fully execute a position. I have an advantage because I work from home and can make decisions and trades much faster than the typical retail investor with a full-time job. Living in Silicon Valley also helps, and I stay focused on sectors I understand. In that sense, my approach is closer to Peter Lynch’s style, for those who remember him. I started when my father gifted me a subscription to ValueLine, something only ancient investors remember.
I rolled some 401Ks into an IRA in 2006. I didn’t touch it or rebalance it at all. Just set it and forget it. Just like Ron Popeil. It returned on average 10.5% per year. We recently moved it to a managed situation. We are looking towards retirement and wanted to reduce the volatility in the run up to retirement.
I am overly concerned about fees as I don’t mind paying an expert. We just need to stay employed for 9 more years and everything will workout.
@gpo613, I’m hoping to be able to work another 10-15 years but really as long as I am mentally alert and useful to the world.
@Youdon_tsay, I think two of the funds – the private credit fund and a publicly traded PE fund – have monthly liquidity. They are both with the FA who I would likely leave. The others last as long as they last. No real liquidity.
Thinking about the sizeable savings from managing buy and hold assets by myself and the potential savings in state income tax and even bigger in state estate tax that would result from changing tax domicile caused me to spend some (probably useless) time investigating what I would need to do to establish Florida (or other) tax domicile. Real work and planning would be required. One thing is clear, we would need a very serious studio – could not have 800sf in MA and 125 sf in FL. That was my plan anyway, but it is harder to do.
