At what age do you hope to retire/Personal Finance and Investing Thread

[BrewersSuperCollector]

I plan on my home and my life insurance policies as inheritance for my children. Those along with my wife and I pushing for their education should be enough for them if we spend most of our retirement income.

[OldSchoolSnapper]

This is probably old news but I am just seeing it for the first time. Vanguard lowered the minimums for admiral shares from $10k per fund to $3k. That is a really nice little bonus for younger people just starting out.

[MrTPlush]

I intend (with the wife) to save about $3.0mil-$4.0mil or so for retirement. Of course it is a long way off and inflation will make that seem much less impressive etc. etc., but that really isn't the point. I basically save so I will either have a great retirement and able to do many things money requires OR if I get sick of working be able to retire early and still have good funds to do so. I don't want to shoot for what I will need at 62 and be forced to work to that age to have the money I want yearly. I also don't want unexpected events take a hit to my retirement plan and suddenly need to work even longer to get the funds I want.

 

Things could always change, but that is my general retirement plan I like to follow.

[nodakfan17]

My biggest motivation for saving now is that I’m afraid I won’t be able to control when I retire. I hear looking for a new job in your 50s is brutal. I also worry about health issues preventing me from working, even though I’m in reasonably good health now. Even the best laid retirement plans can go awry when you miss out on those high earning years.

[PlayerHader]

Question...Who out there uses a financial advisor? It seems easier than ever to manage your own retirement savings without the cost of an advisor.

 

My wife and Ali met with a guy at Edward Jones today. It was a good conversation, and we got a few things straightened out, but I left feeling like we would’t get value out of the fees we pay until much later on. Our plan is to basically keep pumping into her Roth 401(k) and my Traditional 403(b) and let the market do its work.

 

We don’t have real estate or other investments to consider (outside of a couple small 529 accounts).

 

I could see the value in a few years when it comes to managing tax burden and other factors when we start withdrawing funds. I think my Fidelity account targeted for 2045 probably does me well.

 

Thoughts?

[nodakfan17]

Our plan is to basically keep pumping into her Roth 401(k) and my Traditional 403(b) and let the market do its work.

I think this plan makes sense for most people in the accumulation phase. It sounds like you’ve got the right idea. Just look fo low cost, equity index funds within your retirement plans. I don’t use a financial advisor (most are glorified sales people), but I will consult a JD/CPA as I get closer to retirement or when my assets hit critical mass.

[PlayerHader]

Our plan is to basically keep pumping into her Roth 401(k) and my Traditional 403(b) and let the market do its work.

I think this plan makes sense for most people in the accumulation phase. It sounds like you’ve got the right idea. Just look fo low cost, equity index funds within your retirement plans. I don’t use a financial advisor (most are glorified sales people), but I will consult a JD/CPA as I get closer to retirement or when my assets hit critical mass.

 

Is it worth paying fees at a place like Edward Jones for this, though? I know it's "only .25%" or whatever he says, but that's still money lost for...I'm not sure what.

[OldSchoolSnapper]

I'm sure someone is going to object to this, but there is no reason to have an advisor unless you have no willpower whatsoever and need hand-holding for 30-40 years. I do think it can be valuable to do a one-time fee appointment to get direction, but after that you are simply better off using your 401k and a Roth IRA at Fidelity or Vanguard that's just set to automatic investments.

 

The fee is simply a waste of money and just not needed for a regular person's amount of assets. There is no trick to it. It's putting money in low-cost index funds and letting it sit there for a long time. That's it. Then, you may benefit from meeting with someone again when you are preparing to shut it down to get some clarity on the best ways to do that, but that's only if you don't know what you're doing.

 

If you're investing a million dollars at a time you may benefit from an advisor who can locate value investments but I'm guessing that's not you or most people here.

[MrTPlush]

What Snapper said. Don't overthink simple retirement investing. I agree that once you get closer some type of low fee advising isn't a bad idea, but you seem to have a target date fund which should change as you get closer itself. (which personally I don't like target fund accounts 20+ years from retirement...but that is just me)

[nodakfan17]

there is no reason to have an advisor unless you have no willpower whatsoever and need hand-holding for 30-40 years.

We can hold your hand for free, PlayerHader.

 

For what reasons do you feel you need to meet with an Edward Jones rep? He or she can’t give you any real tax or legal advice. They will just put you in A-share mutual funds and your $1000 Investment will start out at $950 due to the 5% sales load. Then, they’ll set you up with an automatic contribution so they can keep 5% of whatever you invest indefinitely. Next, they’ll try to sell you life insurance you probably don’t need.

[TURBO]

Next, they’ll try to sell you life insurance you probably don’t need.

 

lol

 

That is 100% true!

[nodakfan17]

Next, they’ll try to sell you life insurance you probably don’t need.

 

lol

 

That is 100% true!

I’m actually a big fan of life insurance, including some of the whole and UL products that many bloggers warn against (but I think they’re oversold).

 

I worked for a large life insurance company earlier in my career and the commission paid to the agents for selling a policy was usually equivalent to the the first year’s premium. They might only make $100 on a standard term policy, but could make $1000 for a whole life policy with the same coverage amount. I’m not suggesting whole life insurance is bad. I’m just saying the incentive structure is too out of whack to trust the recommendation of most advisors.

[PlayerHader]

He DID mention life insurance at the end of our meeting! Lol

 

I have a small amount through my employer (3x salary). Not sure what makes sense beyond that.

[PlayerHader]

What Snapper said. Don't overthink simple retirement investing. I agree that once you get closer some type of low fee advising isn't a bad idea, but you seem to have a target date fund which should change as you get closer itself. (which personally I don't like target fund accounts 20+ years from retirement...but that is just me)

 

What is your concern with a target fund? I think I’m currently ~50-52% domestic stocks, 30-32% foreign stocks, and the rest divided up amongst bonds and whatever else (you’d probably know better than I). You thinking 90+% stocks this far out?

[OldSchoolSnapper]

I don't know what his issues are, but they are by nature fairly conservative, which is largely pointless for someone in their 20s. I personally don't think bonds are worth involved with until 35. I would rather take the risk with equities in my youth. My 401k was 100% equities until 35, I had a small amount of bonds in my Roth.

[MrTPlush]

What Snapper said. Don't overthink simple retirement investing. I agree that once you get closer some type of low fee advising isn't a bad idea, but you seem to have a target date fund which should change as you get closer itself. (which personally I don't like target fund accounts 20+ years from retirement...but that is just me)

 

What is your concern with a target fund? I think I’m currently ~50-52% domestic stocks, 30-32% foreign stocks, and the rest divided up amongst bonds and whatever else (you’d probably know better than I). You thinking 90+% stocks this far out?

 

As Old Snapper said I think they are pretty conservative. It wants a fully diversified portfolio with huge chunks in low return areas decades out. Personally I don't like that as historically it costs you about 2% annual return if you instead had it in domestic stocks.

 

I also have a hard time getting behind international stocks in early years too. Historically the index that follows international stock markets has been comparable to government bonds. 2.23% in the last 10 years for the MSCI EAFE.

 

Of course you aren't exactly in the early years and the 20 years to go area is where many think people should start to diversify and consider the risk they are taking. If you are okay with risk 90/10 is a popular pick 20+ years out.

 

If you show interest in your retirement account etc. I think you can do better outside of a target date fund if you do some basic research.

[reillymcshane]

As someone who is a little older than many of you (I'm 54), the one thing I will advise is to start saving as soon as you can. As soon as you enter the workforce, just set up a way to sock away a percentage of your income. Do it so it comes right out of your paycheck so you never see the money.

 

Due to circumstances, my wife and I didn't start saving until later (around 30), and it forced us to do catchup on investing later in life. A little more discipline earlier would have made a big difference. Luckily, we do well now and I am happy with where we are heading in our saving and investing.

 

But start saving early. It really helps.

[RobDeer 45]

He DID mention life insurance at the end of our meeting! Lol

 

I have a small amount through my employer (3x salary). Not sure what makes sense beyond that.

 

Really is personal preference. Some people want enough to continue their income for x amount of years (until retirement, or until kids are done with school, etc). Some want it to pay off all debts, including the house, so the family is left with a clean slate. Some just want the cost of the funeral covered. Start with what you'd like your insurance to accomplish and then an insurance agent can help you figure out what amount would cover that.

[homer]

I think an adviser can be useful in regards to tax and estate planning. But I would never get one for investment advice particularly one that received a commission for any trades you make.

[nodakfan17]

There’s nothing wrong with target date funds.

 

If there’s a knock on them, it’s that they come with an extra layer of fees (since most are a fund of funds) and they’re really ‘one size fits most’ not ‘one size fits all.’ But if you’re contributing to a target date fund at a healthy clip, you’re probably setting yourself up for a successful retirement.

 

I personally don’t use them because they aren’t aggressive enough for my risk tolerance. I already have a fixed income component in the form of a small pension and cash value life insurance, so I prefer my 401(k) to be 100% equities.

[nodakfan17]

I think an adviser can be useful in regards to tax and estate planning. But I would never get one for investment advice particularly one that received a commission for any trades you make.

My thoughts exactly.

 

Save as much as you can using low-cost equity index mutual funds then pay to consult a JD / CPA around age 50 to discuss a distribution strategy. This is appropriate for most people.

 

Wallus - just curious, do you consult an accountant or attorney when managing your rental income?

[RobDeer 45]

Another knock on Target Date Funds, is that you lower your risk more and more as you get close to retirement. But remember, you're hoping you will then be alive for 20-30 years. So you still probably can handle some equity risk to increase your potential for return over those years, and the last 10 years of retirement. Of course not everyone is the same when it comes to risk tolerance, so make sure you do what's best for you.

[PlayerHader]

I'm going to look into this. I'll have to look closer at what Fidelity has to offer. I have a pension, my wife has a Roth that she is funding quite well. I think I can be a bit riskier...

 

Just confirmed...Right now I'm 51% domestic, 35% foreign stocks, 7% bonds, 7% short term (not sure what this means).

 

Anyone have more insight on domestic vs foreign stocks?

[tmwiese55]

Just wanted to say thanks to everyone who's shared in here, good conversation. I don't have much to contribute as I'm in the fairly early stages of it all, but good insight from many to read along on and think about.

[PlayerHader]

Just wanted to say thanks to everyone who's shared in here, good conversation. I don't have much to contribute as I'm in the fairly early stages of it all, but good insight from many to read along on and think about.

 

Same. Thanks to everyone who has contributed, especially those offering insight to the string of questions I have posted recently.