Never mind. I see the new thread. That should work out fine.
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I think this thread will continue to be strong and hopefully both will be active. I think with so many focused on financials here itâs difficult to spark discussion on non-financial retirement issues.
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No FA for us. We had one at one point and didnât feel like we did any better than we did on our own. Our only stock market investment accounts are our IRA and a Sep IRA.
Im incredibly lucky as Iâm not concerned about running out of money in retirement. Over the last 35 years we have invested in real estate in a state that has had dramatic growth in value and rental income. No plans to sell but we could if we needed.
I would like to work with an estate attorney to make the best decisions to help our kids.
As far as our children go we have talked with them about saving for the future. We also model responsible spending and not spending money they donât have. A couple of my kids have worked with a FA. One was told they didnât have any issues with saving and they should feel comfortable spending. This is my frugal kid.
We have suggested life insurance for them as they all now are parents. I know several have some through their employer but I donât know if any of them have done anything about it.
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Iâve listened to a business pitch from financial advisers on several times, most recently a few weeks ago. Iâve never been impressed and have never ended up choosing to use a FA. These interviews typically involve listing my financial situation and concerns prior to the meeting, then the FA discussing their thoughts and recommendations. Each person I have interviewed always has had very different thoughts and recommendations. I hope to get something out of the meeting that I had not considered, although that rarely happens.
The most recent person suggested direct indexing for tax benefits, without properly considering long term tax implications in the analysis (assumed my future tax rate will always effectively be 0%); and only bothered to include a minority portion of my investments in the risk analysis without telling me, until I inquired about why the numbers seemed off.
I do think FAs can be beneficial in many situations. Many people have far more complex financial situations than I do, particularly when approaching or in retirement. The more complex the situation, the more likely the benefit from a professionalâs advice will exceed the fee. There are also many persons who make poor financial decisions or lack basic knowledge of personal finance. An advisor can be helpful in such situations, sort of like a personal trainer might be helpful in setting up a fitness plan and helping client stick to it.
Where I donât think a FA is likely to benefit is for persons seeking to beat the market due to the FA having special knowledge about what funds/stocks to invest that has not been priced in to the overall market, which is a common reasons for using FAs among persons I know. If anything, following a good FA is likely to reduce long term returns beyond just the fee due to better compensating for risk. Itâs a similar idea to why mutual fund managers almost always do worse than S&P 500 over the long term, as listed earlier in the thread, a higher loss rate than expected from just the fee. 100% S&P 500 has a high average annual return, but highest possible average annual return is not the goal for a large portion of mutual funds and is rarely the goal when approaching retirement. There is often also concern about things like preserving wealth, not being exposed to risk of portfolio being down 50% when you want to withdraw, not wanting retirement funds to reach $0 prior to death, etc.
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Term life insurance (and I recommend 30 year) is very inexpensive and worthwhile to have for parents (parents that are your offspring). DD1/SIL agreed a few years ago that in addition to the 20-year term life insurance SIL purchased, we purchased 30-year term life insurance on him that DD1 owns (SIL was a bit reluctant about it, but agreed). Now DD1/SIL are expecting their 5th child, and he was exuberant YES when we offered to see about additional 30 year term life insurance on him with DD1 again owning the policy.
An estate attorney in your circumstances (remaining at the same town/city/state with real estate there as well) is a terrific step for you.
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Do you have a tax attorney or any advising on tax implications while in retirement, as well as a plan for income years during RMD timeframe? It sounds like you have a comfortable risk level on your retirement nest egg, and enjoy (and have the skills) to manage your retirement funds âon your ownâ.
I have a financial advisor for some of my money, but I have done better with the money I manage on my own than he has, and I have done better than my husband has. I am no wizard - just S&P, some bonds, and some in a very safe investment. I keep wanting to get rid of my advisor, but he is a nice guy, and I canât explain why else I keep him, but part of issue is sentimental (long story). When I ask some questions, Iâm told an accountant would need to help with that. He has a VERY GOOD accountant on staff, and when I met with both of them, neither would advise me on whether or not I should convert to Roth (which I actually kind of respect, but it was frustrating). When I once asked my FA if I should increase my risk level he advised me that since I was retired and had âwon the gameâ or whatever, that might be considered âgreedy.â Then just this year he did advise me to increase my risk. If I consider the taxes Iâve paid on money invested with him, I havenât earned a whole lot, in one of the highest earning decades in history. OK⊠note to self - you really need to get rid of this guy.
I think for people who are nervous, one of the most important things FAs do is keep you from doing âstupid things.â For example, in the 2008ish financial debacle, both my husband and another person close to me lost a lot, so THEN they changed to very safe investments. I kept my allocation the same as always, and my money was âbackâ within a reasonably short period of time.
They also help you figure out when you have âenough.â
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I believe I am financially good to go with retirement by a large margin. I may choose to retire in the near future, if work becomes unpleasant or if I have a new passion that conflicts with working a day job; or I may choose to continue working for quite some time, if work remains pleasant and nothing changes. So I have no particular timeline of when I plan to retire.
I do have a plan for income years and minimizing taxes during retirement, although given that I am decades before RMDs, a variety of things may change by that point. I believe my tax situation is fairly straightforward and no immediate plans for retirement, so no tax attorney at this time. I am open to using a tax attorney, if this changes.
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We donât use a financial advisor but we do use a CPA and tax attorney. I might accurately be called one of the âfools who has themselves for a clientâ as I was in financial services before being a SAHP. 
I handle our short and long term finances. Having a couple of professionals to bounce ideas off of and get info on choice/consequence has been very helpful and I prefer the hourly billing to an AUM fee. Iâm also someone who doesnât mind research and has a clear idea of our goals and risk profile.
Even if you choose to use an advisor, I would highly recommend taking the time to write an IPS (Investment Policy Statement). It helped DH and me really figure out what our shared goals, individual goals and risk profile actually were which has made sticking to our investment plan much more clear cut.
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Ugh!! Greedy?
Ditch this guy, you donât need him anyways, sounds like youâre just keeping him because heâs pleasant? My sister just refinanced her mortgage with a broker, who is super friendly guy that she adores, at a higher rate and higher closing costs than if sheâd gone with the credit unions I use. Ahh! She didnât ask me, and she knows this is right up my alley. She sighed and acknowledged that this friendship with him is costing them a couple hundred dollars extra a month, and next time she refiâs, it wonât be with him.
As far as being greedy, when I questioned my motherâs broker about investing so much in bonds and guaranteeing a low return, he responded that she has enough money that she really doesnât need a higher return, so why take any risk? But heâs guaranteeing a low return, and she would have been better off if it was all in the money market. The reality is, she doesnât need it and likely never will, so why not put it into something with a higher return? I didnât want to seem greedy, like her investments were for us. But our investments are invested with our children in mind.
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âGreedyâ is poor wording, but the concept of adjusting portfolio to reduce risk after you you have âwon the gameâ is certainly valid. The specific optimal allocation to fixed income or other non-equity investments depends on the particular personâs risk tolerance, time horizon, and long term goals. I donât think itâs applicable to ask a FA âif I should increase my risk levelâ unless you have explained your feelings about these type of factors to him/her, and they are being considered in the FAâs answer.
Regarding bonds vs money market, in theory the money market should not be higher on average, if both accounts are held until maturity. The inverted yield curves with short term money market paying more than long term bonds is based on expectation of fed rate decreasing in the future. At start of bond, treasury yield is higher than bond yield; but towards end of bond, market expects treasury yield will be lower than bond yield.
For fixed income, I personally favor non-traditional short-term investments that require actively looking for opportunities outside of the market. I typically average ~8%/year on such opportunities, with negligible risk and negligible correlation to market.
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âGreedyâ is a terrible label, but there is a retirement tschool of thought that, âonce youâve won the (investment) game, why continue to play?â
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My mom has a financial advisor. Heâs very nice but mom worries, he asks and mom wants it in low risk investments. So thatâs what he does. Right now itâs in CD ladders but because of momâs age and being risk adverse, this is what she wants.
Her other grandchildren have business degrees and IB experience so I send the statements to them and let them figure out if the FA is doing ok. They say he is, the fees arenât terrible and my mom rests easy.
I wonder if thatâs the issue with your mom?
My issue with mom is that she doesnât have much and will run out of money in probably a decade. Things will be helped because of the new social security fairness act. But mom is so frustrating because sheâs convinced she will be long gone before her money. Iâm not convinced but also not entirely sure what can be done either.
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If you have enough, and can in fact fund your lifestyle purely off of social security and pensions, with no debt, then why invest at all? May as well keep it in a fireproof safe or in a zero interest insured checking account, right?
Zero risk.
Say, for example, I have an extra million over what I am certain to need. If I know I have whatever âenoughâ is, why would I not invest is wisely, in a long range plan that reasonably could end up to be ten million? Maybe Iâll decide to do something unexpected if I had a large chunk of money. Certainly my kids and charities would appreciate my forethought. If I wonât need it, why invest it at a rate possibly lower than inflation?
I think the issue with my mom is that she doesnât understand any of it, and though she has a math degree and was an engineer, she is afraid of the numbers. Afraid of money. Afraid to spend money. Afraid to look at it without me. I think she would do whatever the advisor advises, as he is so comforting and she understands nothing. I still cannot convince her that Medicare will pay for most of her medical expenses.
I stayed out of her finances for decades, cause I didnât want to be pushy. She was convinced she had been invested in just bonds for decades. She wasnât, it was the money market. Fine now, but not for decades. Good grief.
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InflationâŠ. You can always grow it risk free and safer than being at home your safe can get stolen. But I get your point.
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Some of the âWhite Coat Investorâ is clearly out of my price-point â25% of ⊠in safeâ - to me that goes into the millionsâŠ
However this risk profile information seems pretty good (Retirement Income Style Chart RISA). I do not like the Annuity products discussed that seem to be cash in and no cash value at death, or really an insurance product that is not something a fiduciary financial advisor would give a nod to. Some of what is discussed does seem to make it more complicated than it would seem to need to be.
A Framework for Thinking About Retirement Income | White Coat Investor
I skimmed the article, has some interesting stuff. I do think the âbucketâ concept is helpful for pre-retiree consideration. Especially important to have cash-like bucket in early retirement if you pensions is low/nonexistent and you are trying to defer SS. That way you can worry less about market returns in early years.
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Thatâs an excellent article. I like how he separates risky part from enough to live on part. It clears up how to allocate my funds. At the end tho, he recommends a financial advisor who will recommend cheap index fund portfolio diversified. If all you do is diversify index funds, do you really need to pay the fees? Would you be worse off if you do it on your own? What qualities should people have to belong to that tiny sliver of people who can invest on their own?