Can anyone recommend a good financial advisor in the Lexington area? Asking for a friend who is 58, has 600,000.00 in his retirement account and has no idea what to do with it.
How much money is needed in your retirement account to actually retire?
- Thread starter Oldblueone
- Start date
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I can answer the subject line question confidently: It depends. Most financial planners will walk through questions to determine what your monthly spend will be in retirement, how long you anticipate you need your savings to last, and come up with a figure.
If you want to retire soon your investment options should be somewhat limited to low return/low risk at this point. If you want to stick it out for 10 more years you (r friend) can probably grow that to 1M with something a little more aggressive/risky. Good luck. Choose a financial adviser that will encourage you to understand what you are buying and doesn't pimp exotic annuities and whole life policies and high-profit crap like that. Get a good book on retirement planning and read it.
Thank you. I’ve heard that annuities is the worst thing to do.
Don't invest in something you don't understand...ever. If a financial advisor doesn't take the time to explain something to you so that you understand what you're buying, don't buy it and get a new advisor.
The $1 million magic number for retirement will likely not be enough for most people. Many experts are suggesting closer to $2 million is what the majority of Americans need to retire comfortably in the next couple of decades. That's what I'll be shooting for, and yes, I am very far away from that goal at the age of 39.
The $1 million magic number for retirement will likely not be enough for most people. Many experts are suggesting closer to $2 million is what the majority of Americans need to retire comfortably in the next couple of decades. That's what I'll be shooting for, and yes, I am very far away from that goal at the age of 39.
Then many experts are completely out of touch, and virtually all Americans will not retire comfortably in the next couple of decades.
My thoughts are if you start with 1M and take 5% (50K) every year and live a long life, you’ll probably run out of money before you die. If you take 4%, good chance you make it to the end and bounce your last check. If you take 3%, you probably have something to leave to your heirs.
Yea, but won't you still be investing the money that you aren't withdrawing each year? Conservatively, your annual ROI should be what, 6-9%? So wouldn't you come out ahead each year it you only take 5% every year, but make 6-9% in returns?
That works. Party hard for one year.and spend it all and then od and problem solved.
Where can I get a conservative ROI of 6-9%? And safe enough to be in it near retirement?
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5 Guidelines for Investing a Retirement Portfolio
1. Keep five years of uncovered expenses in cash. This doesn't mean five years of totalexpenses, just the amount you withdraw from your savings to cover your ongoing costs. For example, if you spend $4,000 a month, and Social Security and a pension together bring in $3,000 a month, that's $1,000 a month that's not covered, or $12,000 a year. So keep $60,000 of your retirement nest egg in cash or cash equivalents such as a savings account or money market fund. That way, no matter what happens to the economy or the stock market, you won't be forced to sell out at the worst time.
2. Become more conservative. An Employee Benefit Research Institute report found that just before the 2008 financial crisis some 40 percent of 401(k) participants between ages 56 and 65 had over 70 percent of their account in stocks. This is too much risk for people approaching retirement, and many of these near retirees or early retirees lost almost half their nest egg. An old rule of thumb suggests a stock weighting equivalent to 100 minus your age. So at age 60 you should have 40 percent in stocks, not 70 percent. At age 80, it's 20 percent. This approach decreases your risk as you get older, yet still gives you room for growth and some protection against inflation. It also matters what stocks you own. As you age, you likely want fewer high flying internet or biotechnology stocks and more utility and large-cap stocks that tend to be less volatile and pay higher dividends. There's even less risk if your choose exchange-traded funds or mutual funds that focus on these securities instead of the individual stocks themselves.
5. Keep it simple. Aim to to gradually shift to a more conservative portfolio over time, so you don't find yourself with so much risk that a market downturn could force you to postpone retirement or dramatically scale back your living standard. Rebalancing your portfolio once each year is typically all you need. The simplest way to diversify your retirement portfolio is to focus on just a few diversified funds, such as a total U.S. stock market, value-oriented ETF or mutual fund, a mid- or short-term U.S. bond market index fund and perhaps a gradually decreasing allocation to an international stock index fund. This mix offers low costs, adequate diversification and, perhaps most importantly, keeps you out of trouble by avoiding the more esoteric and treacherous corners of the investment world.
1. Keep five years of uncovered expenses in cash. This doesn't mean five years of totalexpenses, just the amount you withdraw from your savings to cover your ongoing costs. For example, if you spend $4,000 a month, and Social Security and a pension together bring in $3,000 a month, that's $1,000 a month that's not covered, or $12,000 a year. So keep $60,000 of your retirement nest egg in cash or cash equivalents such as a savings account or money market fund. That way, no matter what happens to the economy or the stock market, you won't be forced to sell out at the worst time.
2. Become more conservative. An Employee Benefit Research Institute report found that just before the 2008 financial crisis some 40 percent of 401(k) participants between ages 56 and 65 had over 70 percent of their account in stocks. This is too much risk for people approaching retirement, and many of these near retirees or early retirees lost almost half their nest egg. An old rule of thumb suggests a stock weighting equivalent to 100 minus your age. So at age 60 you should have 40 percent in stocks, not 70 percent. At age 80, it's 20 percent. This approach decreases your risk as you get older, yet still gives you room for growth and some protection against inflation. It also matters what stocks you own. As you age, you likely want fewer high flying internet or biotechnology stocks and more utility and large-cap stocks that tend to be less volatile and pay higher dividends. There's even less risk if your choose exchange-traded funds or mutual funds that focus on these securities instead of the individual stocks themselves.
5. Keep it simple. Aim to to gradually shift to a more conservative portfolio over time, so you don't find yourself with so much risk that a market downturn could force you to postpone retirement or dramatically scale back your living standard. Rebalancing your portfolio once each year is typically all you need. The simplest way to diversify your retirement portfolio is to focus on just a few diversified funds, such as a total U.S. stock market, value-oriented ETF or mutual fund, a mid- or short-term U.S. bond market index fund and perhaps a gradually decreasing allocation to an international stock index fund. This mix offers low costs, adequate diversification and, perhaps most importantly, keeps you out of trouble by avoiding the more esoteric and treacherous corners of the investment world.
As a financial advisor I would tell you that the only way to make a proper recommendation on what you need is to know your entire situation. I would strongly suggest finding someone who does financial planning, and sit down with them. Anyone who gives you a ball park figure without knowing your complete financial picture is not doing you any favors.
Research and use low cost services like Vanguard and keep the extra points someone was going to take for information you can find for free.
Btw, I want 5% for telling you this.
Btw, I want 5% for telling you this.
I agree Vanguard and other low cost options are great.... If someone has the time to devote to studying the market trends, many people do and it works great for them. All of my clients don’t have that time, or would rather spend it doing other things. But I tell people all the time if they the time needed to do it themselves then they should absolutely look at low cost option.
I *hate* the idea of getting super conservative as you approach or hit retirement, and I think that’s antiquated, ignorant information. If you retire at 60, there’s a good chance you end up needing your $$$ to last as long or longer than you even invested in the first place.
If you put money in the stock market, it should be well diversified and stay there forever. Nobody “lost” money in ‘08, unless they were dumb enough to withdraw. For those that stayed in — their account has tripled.
If you put money in the stock market, it should be well diversified and stay there forever. Nobody “lost” money in ‘08, unless they were dumb enough to withdraw. For those that stayed in — their account has tripled.
Scary how many people.. in their 20's, 30's, 40's and 50's.. are woefully off the mark of $1mil, which yes, won't be enough. Makes you wonder if society is going to be forced to make some changes on how we retire.
The intriguing part for me is "how long will you live?". Life Expectancy may not be rapidly rising, but I think you'll see early/preventable deaths rapidly decline in the next few decades, raising raising the floor of early deaths, which will then raise our LE. Technology, medicine, etc.. will be huge factors in making sure we don't croak early, and also eliminate diseases/conditions.
The intriguing part for me is "how long will you live?". Life Expectancy may not be rapidly rising, but I think you'll see early/preventable deaths rapidly decline in the next few decades, raising raising the floor of early deaths, which will then raise our LE. Technology, medicine, etc.. will be huge factors in making sure we don't croak early, and also eliminate diseases/conditions.
Did you ever buy the duplex?
I made offer on two homes today. One is move in ready and the other needs about $40k in renovations to max out the rent.
One thing I think many retired folks should consider is a reverse mortgage. I've seen retired couples that live near the poverty line in a free and clear house only to die and leave it to some ungrateful kids. Take the friggin equity out of your house and live better - it's your money after all.
That doesn't make any sense.
What about the people who were retired and living off their savings in 2008?
Been looking! Just not a lot of inventory, bidding wars, rising interest rates. Had a sick parent that needed my attention for nearly half the Summer and the girlfriend (of nearly a year) isn't as keen on a duplex/location as I am.. She'd be OK with it for a few years, but still going through the whole "I was thinking we could live together" conversation. Ha.
Decided to take the corporate stock and bolster my Roth IRA to the max, increase my 401k percentage and amass as much of a DP as I can to be ready for "the house".
Uhhh....their savings would have been devastated for about a year, completely recovered in 18 months, then TRIPLED over the next decade.
Well I guess if they have 18 months to not incur any living expenses they're good to go.
Huh??
Dude. WTF are you talking about? If you leave your money in the stock market, it will be way up some years, and way down in others, but over the long haul you should see 8-10% returns. So long as you withdraw a steady amount below that, your investment is safe.
Math really isn’t THAT hard.
You seem to get confused easily.
You said:
People who are retiring don't have the ability to leave their savings in the stock market until it recovers. That's the whole goddam point of diversifying into a more conservative balance. If you were retired in 2008, you couldn't leave your money sitting in the stock market for a decade before you started taking anything out.
Your approach is fine for someone who can weather the storm.
What the hell are you even talking about?
If you put all of your money in the stock market, how the hell do you pay for living expenses if you aren't taking money out of the stock market?
I guess technically you're right. They have the ability to leave their money in the stock market and die of starvation in the meantime because they can't buy food.
Seems like diversifying into a more conservative balance to fund your near to moderate term living expenses would be a better strategy than seeing if you can go 18 months to a decade without spending any money.
If you put all of your money in the stock market, how the hell do you pay for living expenses if you aren't taking money out of the stock market?
I guess technically you're right. They have the ability to leave their money in the stock market and die of starvation in the meantime because they can't buy food.
Seems like diversifying into a more conservative balance to fund your near to moderate term living expenses would be a better strategy than seeing if you can go 18 months to a decade without spending any money.
You don't take it all out at once. You take a weekly or monthly or yearly amount and leave the rest in. So while you may take a loss on the 50K you take out, you still have the rest of what you have invested rebounding from the losses. If you are counting on a small amount doubling every year and taking out half, that's not a retirement account, thats a bad gambling habit.
Or if you know you're going to NEED $50k in a certain time period, you put that in safe investments and let the rest ride.
It's absolutely mind numbingly stupid to argue someone who is at or near retirement should have all their eggs in the stock market basket.
That's fair, too. I wasn't necessarily arguing in favor of high risk investments, I was more or less arguing with what I thought you were saying. If you need $50K but have $1M invested that suddenly drops to 500K, it's still okay to withdraw the 50K (in hindsight anyway) because it was back up to $1M in 18 months. Granted, at the time we don't have the advantage of hindsight, but the market usually trends upward over time even with hills and valleys.
Gonna have to agree with Bill on this one. There is not a financial planner in the country that would encourage a 60 year old to have his entire investment portfolio in the stock market. Some of it? Absolutely.
But as a person nears retirement, it's advisable to move a larger % of their portfolio to conservative investments like income funds and bonds while still leaving a portion in the stock market.
But as a person nears retirement, it's advisable to move a larger % of their portfolio to conservative investments like income funds and bonds while still leaving a portion in the stock market.
Agreed.
-Where do you live? Cost of living?
-Expenses? Mortgage, bills, car loans, family, student loans, insurances, etc?
-What do you plan to do in retirement? Fish, travel, drive expensive cars, sit on your butt?
-How long do you plan to live? What's your health like?
-Social Security? How much have you paid in and when can/should you collect?
-How often do you need the $?
-How good are you at managing your $?
Etc, etc. There are a million questions that need to be answered to find out how much you need in retirement.....and it's different for everyone.
