Retirement - Looking for advice

[Rex B]

Last Thursday I said goodbye to my workplace after 36 years. Friday I set up Social Security payments to start when I turn 62 in January. Next to do is to deal with my 401K savings.

I know many of you have gone through this process in recent years, and some are doing so now. I am looking for some shared wisdom, or at least opinions.

I have looked into, and met with, the investingmakesmesick program, and I like what I see there. Seems to be straightforward and decent people. Are any of you using them?
What over programs should I look at before making a decision?

Any suggestions or advice appreciated.

Rex

[JALLEN]

I have no idea what your background or experience is, but I would invest less than $20 in "The Little Book of Value Investing" by Christopher Browne. Amazon has them, Kindle and dead tree, and bookstores can order you one. LBVI is a simplified version of the investing philosophy of Ben Graham, less cumbersome and more modern than "The Intelligent Investor" which is the next book you can tackle if you are of a mind to do so. I encourage this because people seldom get cheated when they know what they are doing.

I'm an owner of a Registered Investment Adviser and have been managing investments for family and friends for some time. I was lucky enough to learn the Graham and Dodd approach at UT, before the Efficient Market Hypothesis and related nonsense swept financial academia. Browne was a partner in a firm started by his dad and others that was Graham's, and Buffett's, brokerage.

It's not rocket surgery but you do have to master a handful of principles, and get control of yourself, the hardest part, actually.

I've never heard of the program you mention, but I am wary of "new things" when it comes to investing especially since the tried and true works very well.

What else can I tell you?

[texanjoker]

Congrats on the big R. Gonna go buy that book myself.

[cb1000rider]

Rex,
First congratulations...
Second, what you're asking is a massively important question because it can impact your lifestyle and the lifestyle of your family for a long time.
Here are my suggestions, but I encourage you to get more:

I have no feedback on investingmakesmesick. All I can see is that it's tied to a financial planner: Walt Parker. Most financial planners offer their advice "free" to you. They get paid in terms of commission on the back end when you invest in one of their products or services. To me, human nature is what it is, and I think it disadvantages you to be steered toward investments based on how much commission is paid. Also, most commissioned financial planners have a limited set of investment options - other options may be available. I'm inherently suspicious of any investment "program" or "plan".

A safe financial planner? Someone you pay for his/her time who doesn't get commissions from your investments. This is called a fee-based financial planner. Someone who has access to a wide range of investment options on the open market.

How you are treated in the investment world depends on how much money you have. The more money you have, the more free services and often more investment options you are offered. Generally clients with over $1M get special treatment from major brokerages.

Be suspicious of someone who wants to sell you an annuity or whole life policy. Be VERY suspicious. Seek out independent and experienced advice before you do it.

Generally, you'll look for more stable investments as you need your money. If you don't need your money, you can go a little more risky. When I say risky, I generally mean spread out risk, such as a broad market fund. A broad market fund over a long period carries very little risk. It carries a lot of risk if you need money in the next few years.

Watch for fees on any investment vehicle. Want broad market indexes - you can get them anywhere - but only a few places are really good at keeping the fees low (like Vanguard).

I'd find a good investment forum to double check whatever investment advice you're getting. Fatwallet is one (finance forum). Clark Howard has another good forum. There are others. Find a forum where people aren't in a position to sell you something, they're just in a position to analyze what your investment advice and strategy is.

A solid strategy (in my opinion) invests in low-fee broad market stocks and lets that money sit for a while. Over time, the market has a great return rate. As you approach retirement, you roll that money into lower risk and lower yield investments such as bonds. Right now, with interest rates low, bonds don't do much other than try to keep up with inflation.

[chasfm11]

I went through it in March of 2012. My retirement was March 1st and my wife's knee replacement surgery was March 2nd.

I'd admit that I'm anal but I attended a financial seminar that pretty much set things up the way that I did them.

1. A fund to handle emergencies. If you had a really severe problem, how would you fund it? The idea is to have cash on had, readily accessible. I'm a Dave Ramsey fan, though I came to most of his ideas before I ever heard of him. He has different parameters for different situations regarding the emergency fund. Since the "six month's salary" no longer applies to you, you might want to use another method to come up with your number.

2. A means of replenishing the emergency fund. The idea was that this was a solid, extremely low risk part of your investment strategy that would help you recover if you did have a large unplanned financial event.

3. The rest of what you have available is set up for growth. While we don't have a huge inflation problem now (it is way bigger than the government is admitting) we could have one if the Fed starts tapering. The rumor is that it could start 1Q14. I gnash my teeth daily over QE and what it is doing to retirees.

Honestly speaking, I had detailed spreadsheet that went year by year, considering life events (like my longevity being less than my wife's) and giving me the chance to project income and expenses. If I'm gone, it is unlikely my wife can handle even our current small house by herself. The spreadsheet exercise was good because it gave both of us A WAY to move forward. It isn't the only way that I've had to make a bunch of adjustments to a rather dynamic Federal tax picture for us. It is rotten shame when the chief consideration for your retirement ends up being your Federal tax burden but that is what it has come to, at least for me.

That is my $.02 worth. YMMV.

[Rex B]

JALLEN, I'll buy that book, thanks for the tip

CB1000rider, the fee-based CFP jogged my memory, thanks for that and the other information.

chasmfm11, I am also a fan of Ramsey and Clark Howard. I would do the "debt-free" routine if I thought my wife would cooperate. I definitely need to revisite clarkhoward.com, thanks for the reminder.
I have also done the spreadsheet extrapolation. It told me I didn't have to work if I did not want to. That was a nice moment :)
I do have a separate IRA which serves as my emergency fund. I keep it pretty liquid. And I can always sell off some firearms

I'm pretty fortunate. My wife is a long way from retirement age, and she has a great job. If I dropped dead tomorrow she would be fine financially. When she does retire she will be in better shape than I by a long shot. (We keep most of our finances separate)
I really just want to invest somewhere that I can get around 7% minimum, though I only need about 2.5% to maintain my lifestyle.

[sawdust]

Congratulations on reaching this milestone. Or is it a millstone? I've that -stone on my neck for too many years.

As far as retirement investing is concerned, and if you are not very knowledgeable about investing, consider Scott Burn's "Couch Potato Investing" scottburns.com.His original approach was to simply put 50% of your investment monies into an S&P 500 index mutual fund and the other 50% into a Bond index fund. Once a year or so, as your holdings increase and/or decrease in their respective values and drift away from the 50/50 ratio, you "re-balance" by moving monies from one fund to the other. In the ensuing yeas since his original concept, he has evolved a wider array of mutual fund choices to achieve a degree of "diversification" - a key word in the investing world. This approach removes the agony of market-timing (the "should I buy now or should I sell now" syndrome) and applies the buy-and-hold approach.

Burns is a strong proponent of low,low, low management fees. All fund houses charge management fees, ranging from .15% to 4% of your holdings per year. Add in any advisor commissions at 2-4 % and even in a year in which your portfolio increases - say 6% - you could still lose a greater amount once the fees are applied. Burns' statistics show that low, low, low fees may be more important than solely the performance of the funds in a portfolio.

In terms of retirement, investing is only one issue. Others are expense control, expectations vs. reality.....

20 more pages upon request.

[Rex B]

Sawdust
I'll take a look at that site, thanks.
If low fees and conservative, balanced portfolio is the goal, why wouldn't one of the Vanguard target Funds do the same thing at .21% fees?

I think all those other factors I'm good with. My expenses are very low, my expectations are reasonable. I'm not looking to get rich, just stable income and growth.

[sjfcontrol]

I assume you know that if your 62nd birthday is in January, you won't actually receive a check until March.

[Rex B]

I assume you know that if your 62nd birthday is in January, you won't actually receive a check until March.

SS confirmed first pmt in February.

[sjfcontrol]

I assume you know that if your 62nd birthday is in January, you won't actually receive a check until March.

SS confirmed first pmt in February.

Didn't work out that way for me. Is your birthday on 1/1?

[Rex B]

I assume you know that if your 62nd birthday is in January, you won't actually receive a check until March.

SS confirmed first pmt in February.

Didn't work out that way for me. Is your birthday on 1/1?

NOPE 1/17

[sjfcontrol]

I assume you know that if your 62nd birthday is in January, you won't actually receive a check until March.

SS confirmed first pmt in February.

Didn't work out that way for me. Is your birthday on 1/1?

NOPE 1/17

Well, I turn 62 on 11/10. And I was told that my first payment would be made in Jan. When I inquired, I was told that you have to be 62 for a full month (which would be Dec.), then they pay for that month in the following month (Jan.).

If it doesn't work out that way for you, I'd like to know why it's that way for me!

[Rex B]

I assume you know that if your 62nd birthday is in January, you won't actually receive a check until March.

SS confirmed first pmt in February.

Didn't work out that way for me. Is your birthday on 1/1?

NOPE 1/17

Well, I turn 62 on 11/10. And I was told that my first payment would be made in Jan. When I inquired, I was told that you have to be 62 for a full month (which would be Dec.), then they pay for that month in the following month (Jan.).

If it doesn't work out that way for you, I'd like to know why it's that way for me!

I dunno. who did you vote for last election?

[sjfcontrol]

I assume you know that if your 62nd birthday is in January, you won't actually receive a check until March.

SS confirmed first pmt in February.

Didn't work out that way for me. Is your birthday on 1/1?

NOPE 1/17

Well, I turn 62 on 11/10. And I was told that my first payment would be made in Jan. When I inquired, I was told that you have to be 62 for a full month (which would be Dec.), then they pay for that month in the following month (Jan.).

If it doesn't work out that way for you, I'd like to know why it's that way for me!

I dunno. who did you vote for last election?

Actually, that was my first thought... I take it you voted for the "right" guy?