How Much Do You think You Need to Retire/What Age Will You/Spouse Retire: General Retirement Issues (Part 2)

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6412

Interesting that people comment on others’ spending choices at all. ShawWife’s friends wish she bought more clothes. We have friends who have done well (net worth no doubt north of $50 MM) and she just doesn’t care about clothes – she wears ripped dresses and 20 year old dresses to fundraisers they host for Senators. Her friends urge her to buy new dresses and even to wear makeup to her kids’ weddings (she didn’t). The lack of spending is just about her – she is happy to spend on house renovation, presents, etc.

@Youdon_tsay, I’m relatively sophisticated about investments (worked on Wall St. and helped start a hedge fund) and taxes (I find tax optimization a fun puzzle-solving exercise and ShawWife says it is my hobby) and I find using a good financial advisor to be very helpful. They suggest things I had not thought of and also will evaluate things for me (Do I have the right level of insurance? Can I apply to reduce IRMAA? Will making a particular illiquid investment be a problem for me?)

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6413

It’s possible that you need someone. (In retirement we do have a fee-only planner - it costs us, but it’s helpful since much of our retirement income is from saving rather than pension - lots of variables).

But it’s also possible that the rep is trained to make you feel overwhelmed, in need of their assistance.

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6414

Good call. I think sometimes people (myself included) forget that this is retirement thread, and not their personal blog.

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6415

I believe in getting a second opinion when getting financial advice, akin to second opinion with a doctor. But then again I believe the worst about people until they prove otherwise.

I think are many people who would like to go back to that point when they made a big personal financial decision while on the golf course on the back nine after a good number of beers. You start believing the guy will get you a 20% return every year. Just Bernie Madoff.

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6416

It does take time to build up information yourself so you can understand all the things a personal advisor may be presenting.

Also understanding about your own particular situation - if you have retirement/pension, 401k, IRAs, Roth IRAs. If there is a need to consolidate some things. If you can benefit from instruments like Annuities (if you don’t have pensions). However, take some time to understand what you have, what your financial goals are, and how you can get there.

Hopefully the Vanguard personal advisor is going through a risk assessment evaluation for you - so in addition to your age, it tells how risk averse you are, and where your current investments lie on risk assessment. Also how you can have your funds last till age XX (with plugging in the age). Ask him/her a lot of questions and ask him/her to guide you on resources you can study to be an informed client.

Also understanding how taxes come into play. If you have IRAs and want to roll them into Roth IRAs, and if and when that can be done. If you are pre-social security and Medicare, understand how that works in your situation and for your decisions.

Read up what you can. Go to a local bookstore and sit down with some of the books available there - and decide what one to start with on your personal education path.

You may have access to various web sites through your own 401k or other assets. For example, my 401k was through Fidelity. When our FA group moved their client stock investments (which were in several risk groupings) from TD Ameritrade (which was acquired by Schwab) into Fidelity (to obtain the same ‘deal’ on cost of various transactions), I had prior experience with Fidelity’s web site and web resources.

DH’s 401k is with Prudential (DH and I manage these investments), but it had been previously with Principal and with Dreyfus. That is our largest stock account, and no need for us to have under our Financial Advisor’s ‘umbrella’ because it is fine with our risk assessment to have those assets managed by us. When that fund grows enough, we spin off purchasing an Annuity, if that is a good call at the time (Annuities that are offered at a particular time can be better at some times then at others). Our FA applauded our purchase of an Annuity (that met the ‘looking good’ test on returns) out of a chunk of funds July 2021 – many would have wanted to ‘continue to ride’ on these funds in their stock portfolio; well Jan 2022 was the big stock market drop (which continued with calendar year negative returns). Our 401k is still not at the level it was Dec 2021, but it is recovering, and is not affecting our life or SWAN status (sleep well at night).

No question is a dumb question.

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6417

One builds up trust over time - but every so often there is a CPA that goes off the rails. I remember one many years ago in our city, and one recently in a city an hour drive from us.

In our city, there are about 5 other financial advisor groups like the one we have, and I got ‘other client’ feedback from someone older and wealthier than us that was please with our Financial group’s management of the downturn in 2022, handled better than his former financial group handling of his funds in years earlier downturn.

Despite all the licensing one needs to have to be a Financial Advisor, and all the regulations, obviously there are going to be some that do a better job than others with handling your account, and what services are presented. There are greedy people out there who will do what earns them money over your financial interests.

A financial advisor/group has a Disclosure Brochure (it actually is a document), which details a lot of things, including “Client Assets under Management” with Asset Management fee structure, typically with price breaks (tiered or breakpoint fee schedule) for larger amounts of assets - giving an annual fee and a monthly fee rate.

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6418

Property Tax

Well I received erroneous information on the reduction on our property tax for 2023 (due by end of calendar year), but I do save some money on the property tax category for 65 and over. The state tax portion drops off (which for us is under $400) and also save an extra $48. I also saved with having the assessed value be lower due to appraised value. I’ll take whatever savings are properly ours to have.

However if someone is 100% disabled, in our county, one pays no property tax. Of course they spell out how to file for that.

So it is worthwhile to see about disability status, and what qualifies for various exemptions within your state/county.

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6419

It’s good you had some success lowering tax bill.

Sometimes I complain about my husband not doing enough paperwork. But he retired before me and handles a lot more now… including jumping through the hoops for senior property tax reduction (about $500/year) - much appreciated!

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6420

Something fun

Near the end they talk about residential cruising
“ For example, Storylines MV Narrative has several different configurations to choose from. The entry-level home is an inside studio with a virtual window, which starts at around US $1M. Then the range goes to four-bedroom penthouses priced at around US $8M and everything in between.”. I suppose that folks who can afford that won’t be overwhelmed by te $85/person daily fee for food etc.

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6421

Only a virtual window seems like those proposed Munger Hall dorm rooms.

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6422

Many people are thinking about costs with living in a place different from where they have lived with job/career.

Having been involved with local city government (city council meetings, work sessions) has gotten to have me familiar with some of the changing dynamics - which gives me additional things to look at with further home/townhouse at other locations - once we are ready to move closer to DD/family with perhaps a 2nd home. Drilling down on locational choices and concerns checked out.

Control of crime, and how it affects one’s day to day life on choices for shopping. We lived in a home where crime moved into our area and affected our property value, and caused us to also have a more difficult time to sell.

6423

@SOSConcern Not retired yet so my 401K is still with Vanguard through my company. I plan to keep it in Vanguard when I retire just to have some that is not under the FA’s umbrella. Although they control the investments, it is administered by others. Not that I don’t trust the FA, but think having something separate may make sense. Seems like you made the same decision for your DH’s 401K.

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6424

I kept my 401s separate from our financial planner investments. In part because if I move some of that money it messes with taxes (clergy housing in retirement) and in part because spreading things out a bit seemed like a good idea to me. I also kept our “enough to pay off the mortgage” money and put that in a high-interest savings account. That’s my “sleep well at night” money. I would have just paid of the mortgage, but it’s at just under 3% and I can get 5% on savings plus the tax implications, so. . . And it hasn’t lost anything over the past three years, which I can’t say for the stocks and bonds.

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6425

This post was recommended in a Facebook discussion. Probably nothing we’ve not already discussed…

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6426

Question …

So, when we were working, we all know to have 3-6 months in an emergency fund to replace potential lost income. But what about retirement, when income from a pension and/or SS are guaranteed? You aren’t going to lose those sources of income so do we still need such a large emergency fund? Just thinking out loud …

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6427

We still have an emergency fund which we used some of this last year to replace our…furnace. Things like this happen, and you want the funds available to get the work done…in my opinion.

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We think of it as having ready cash instead of an emergency fund, and we keep funds in a money market account, or in a savings account that can be immediately transferred to a checking account. The amount you might want would depend on how quickly you could access other funds. At times it has taken over three days to transfer from investment accounts to checking, and that can be too long. We don’t relate it to monthly income, but rather to past experiences and anticipated outflow.

We also keep some actual cash in the house in case there’s an extended area wide power disruption as happened after some bad storms. We try to remember to exchange those bills every so often since young clerks may not have seen paper money without certain security marks (or whatever changes have been made.)

The readily accessible accounts have funded everything from immediate legal assistance for a relative to a substantial earnest money payment on a house that was likely to be sold in <24 hrs. if I didn’t act quickly. A lot of other needs can be handled with credit cards that we pay off monthly.

Sorry, that’s a long winded way of saying, “It depends.” :grin:

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6429

It can depend on the liquidity of your other assets. You still want to be able to deal with surprises in car repairs, house (roof, furnace etc). Or that wonderful Viking cruise deal that comes along :wink: - ref other threads.

In some cases, parents want to be able to loan funds to their kids with surprise situations… since parents often have “deeper pockets”.

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6430

We have a six-month reserve to cover all household expenses AND extra money set aside for a new AC and new flooring, for instance. Began wondering whether that was overkill.

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6431

We’ve always considered having reasonably quick access to money, as opposed to having an actual pile of money, to be adequate for a reserve.

We’ve always gotten HELOCs on our house that I can write a check for however much, I have a credit card with a $30k limit, and others with around $20k. Why do I need a pile of cash in the bank earning (up until recently) zero percent interest?

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