PBS Frontline : The Retirement Gamble, sorta Must See (1 Viewer)

[Sand]

I rebalance a few times a year, don't check my accounts otherwise.

Too often.

 

[Binky The Doormat]

I have my call with the Personal Capital advisor tomorrow, will report back.

I was disappointed to no longer see the automated version of their advice on the website though. It may still be there, but I couldn't find it.

 

[lod01]

People that are under 50 really need to stop checking their 401k (or equivilant) balances so much. Makes them completely over-reactive imo.

I might check once a month if markets are up, once a quarter for rebalancing considerations otherwise. During that last tough beat market, twice a year.

I check the balance a lot, but I don't do anything with it. Just like to track things...

I'll check on my accounts a few times a week, update my spreadsheet monthly (roughly) but don't do anything about it except every few months I'll have extra cash to add to either my wife's Roth or an educational IRA, and I'll put it in whatever puts my balance closest to where I want it.

Same here. I update my spreadsheet (of about 75 funds) at least weekly and sometimes daily depending on volatility in my 457B account. I move my money around a lot. Probably moved it 20 times so far this year. I pick off 1% here or there. Up 15% YTD. The best fund I have to choose from is up 12%. Most funds are at best up 3-5%.

 

[Sand]

I have my call with the Personal Capital advisor tomorrow, will report back.

I was disappointed to no longer see the automated version of their advice on the website though. It may still be there, but I couldn't find it.

I had mine a couple weeks ago. Today was the sales pitch to try and rope me in.

I like what they do, but don't want to take the capital gains taxes at present. And they guy didn't get it when I disagreed about having to pay those taxes at some point. Once my taxable income goes away you get 92k or so of headroom to avoid that... So kinda split - I like their system, hate their fee, and don't want to pony up taxes.

 

[xulf]

The window for putting in a claim for stolen funds is much shorter for a 401k than for a bank account. People should be checking every couple of weeks or so because of this alone.

Can you unpack this?

I will need to verify current limits, but when I took the CPA exam (2009), one of the four tests is on regulation. There is, I believe, a 90 day window for false credit card transactions, 60 days to notify the bank of illegal bank account withdrawals, and the 401k was 30 days. Since many people have much of their wealth in their retirement, it is a good idea to at least keep an eye on it.

All companies will have fidelity bonded 401k plans to cover fraud, abuse, loss. Every company will have different periods to report possible fraud and theft, I don't think there is a set period by law since this is an issue between the financial provider, the company, and the employee. Additionally 401k fraud is extremely difficult to pull off because it should require employees to submit the proper documentation for withdrawal schedules. If someone is wanting to loot your 401k account and you aren't 59.5, it would be pretty damn hard to do IMO. Not saying it is impossible and I've read a few cases, but it's rare.

I can't even change my email address until I submit a request through my employer, the email address is verified, and at least one of the two email accounts is a company account. To change an address you have to change that data in person at HR. Secondly, if I try to re-balance my portfolio it initiates a bunch of notifications. Two separate email notifications from the provider, a hard copy mailer, and then an HR generated message a few days after. I would hope that others have mechanisms in place to avoid 401k fraud, but this isn't like getting a credit card or bike stolen. There should be layers and layers of security in place to prevent such a thing, and for now...401k fraud is somewhat rare.

So I'm not sure your statement is necessarily true or justified, but you can check your balance all you want. Dentist

I am not saying everything follows the same set of rules. However, it being part of study material and part of the CPA exam left an impression on me. I was shocked it had a shorter timespan than other institutions. Sure there is security setup to protect you, and if you think that is good enough to only check it twice a year that is on you if it gets stolen. I am not willing to risk it on that amount of money.

 

[Doctor Detroit]

The window for putting in a claim for stolen funds is much shorter for a 401k than for a bank account. People should be checking every couple of weeks or so because of this alone.

Can you unpack this?

I will need to verify current limits, but when I took the CPA exam (2009), one of the four tests is on regulation. There is, I believe, a 90 day window for false credit card transactions, 60 days to notify the bank of illegal bank account withdrawals, and the 401k was 30 days. Since many people have much of their wealth in their retirement, it is a good idea to at least keep an eye on it.

All companies will have fidelity bonded 401k plans to cover fraud, abuse, loss. Every company will have different periods to report possible fraud and theft, I don't think there is a set period by law since this is an issue between the financial provider, the company, and the employee. Additionally 401k fraud is extremely difficult to pull off because it should require employees to submit the proper documentation for withdrawal schedules. If someone is wanting to loot your 401k account and you aren't 59.5, it would be pretty damn hard to do IMO. Not saying it is impossible and I've read a few cases, but it's rare.

I can't even change my email address until I submit a request through my employer, the email address is verified, and at least one of the two email accounts is a company account. To change an address you have to change that data in person at HR. Secondly, if I try to re-balance my portfolio it initiates a bunch of notifications. Two separate email notifications from the provider, a hard copy mailer, and then an HR generated message a few days after. I would hope that others have mechanisms in place to avoid 401k fraud, but this isn't like getting a credit card or bike stolen. There should be layers and layers of security in place to prevent such a thing, and for now...401k fraud is somewhat rare.

So I'm not sure your statement is necessarily true or justified, but you can check your balance all you want. Dentist

I am not saying everything follows the same set of rules. However, it being part of study material and part of the CPA exam left an impression on me. I was shocked it had a shorter timespan than other institutions. Sure there is security setup to protect you, and if you think that is good enough to only check it twice a year that is on you if it gets stolen. I am not willing to risk it on that amount of money.

Makes sense.

 

[FUBAR]

People that are under 50 really need to stop checking their 401k (or equivilant) balances so much. Makes them completely over-reactive imo.

I might check once a month if markets are up, once a quarter for rebalancing considerations otherwise. During that last tough beat market, twice a year.

I check the balance a lot, but I don't do anything with it. Just like to track things...

I'll check on my accounts a few times a week

why?

Mostly just curiosity.

 

[KCitons]

I check ours quarterly and realize I can't retire yet.

 

[wilked]

People that are under 50 really need to stop checking their 401k (or equivilant) balances so much. Makes them completely over-reactive imo.

I might check once a month if markets are up, once a quarter for rebalancing considerations otherwise. During that last tough beat market, twice a year.

I check the balance a lot, but I don't do anything with it. Just like to track things...

I'll check on my accounts a few times a week, update my spreadsheet monthly (roughly) but don't do anything about it except every few months I'll have extra cash to add to either my wife's Roth or an educational IRA, and I'll put it in whatever puts my balance closest to where I want it.

Same here. I update my spreadsheet (of about 75 funds) at least weekly and sometimes daily depending on volatility in my 457B account. I move my money around a lot. Probably moved it 20 times so far this year. I pick off 1% here or there. Up 15% YTD. The best fund I have to choose from is up 12%. Most funds are at best up 3-5%.

Ever consider opening a hedge fund?

 

[lod01]

People that are under 50 really need to stop checking their 401k (or equivilant) balances so much. Makes them completely over-reactive imo.

I might check once a month if markets are up, once a quarter for rebalancing considerations otherwise. During that last tough beat market, twice a year.

I check the balance a lot, but I don't do anything with it. Just like to track things...

I'll check on my accounts a few times a week, update my spreadsheet monthly (roughly) but don't do anything about it except every few months I'll have extra cash to add to either my wife's Roth or an educational IRA, and I'll put it in whatever puts my balance closest to where I want it.

Same here. I update my spreadsheet (of about 75 funds) at least weekly and sometimes daily depending on volatility in my 457B account. I move my money around a lot. Probably moved it 20 times so far this year. I pick off 1% here or there. Up 15% YTD. The best fund I have to choose from is up 12%. Most funds are at best up 3-5%.

Ever consider opening a hedge fund?

I'm smoking those losers.

 

[Steve Tasker]

The window for putting in a claim for stolen funds is much shorter for a 401k than for a bank account. People should be checking every couple of weeks or so because of this alone.

Can you unpack this?

I will need to verify current limits, but when I took the CPA exam (2009), one of the four tests is on regulation. There is, I believe, a 90 day window for false credit card transactions, 60 days to notify the bank of illegal bank account withdrawals, and the 401k was 30 days. Since many people have much of their wealth in their retirement, it is a good idea to at least keep an eye on it.

How the hell do you remember this? Pretty sure I forgot everything I learned for REG (also in 2009) the day after I took the test.....

 

[xulf]

The window for putting in a claim for stolen funds is much shorter for a 401k than for a bank account. People should be checking every couple of weeks or so because of this alone.

Can you unpack this?

I will need to verify current limits, but when I took the CPA exam (2009), one of the four tests is on regulation. There is, I believe, a 90 day window for false credit card transactions, 60 days to notify the bank of illegal bank account withdrawals, and the 401k was 30 days. Since many people have much of their wealth in their retirement, it is a good idea to at least keep an eye on it.

How the hell do you remember this? Pretty sure I forgot everything I learned for REG (also in 2009) the day after I took the test.....

Haha. It stuck out to me that there was such a disparity between those different places. The fact that the retirement was the shortest time period was shocking considering his much value they can hold.

It was also my last test and I wanted to make sure that I nailed it so I didn't have to wait months to take it again. I definitely over-prepared (got a 98).

 

[mquinnjr]

The window for putting in a claim for stolen funds is much shorter for a 401k than for a bank account. People should be checking every couple of weeks or so because of this alone.

Can you unpack this?

I will need to verify current limits, but when I took the CPA exam (2009), one of the four tests is on regulation. There is, I believe, a 90 day window for false credit card transactions, 60 days to notify the bank of illegal bank account withdrawals, and the 401k was 30 days. Since many people have much of their wealth in their retirement, it is a good idea to at least keep an eye on it.

How the hell do you remember this? Pretty sure I forgot everything I learned for REG (also in 2009) the day after I took the test.....

I'm almost embarrassed to carry the title with how much I've forgotten from that test. I just know what I work on every day.

 

[xulf]

Same with me. I don't even do accounting work.

 

[Doctor Detroit]

Bonds, the seemingly boring and inscrutable partner to equities, don't usually generate much excitement. But they play important roles in portfolio planning, offering diversification and fixed-income opportunities.

The wide variety of bond instruments provides the opportunity for age-appropriate strategies throughout the client's life span. CNBC consulted with several advisors on how they employ bonds when working with pre-retirees.

Zero Creatives | Getty Images

'Bridge' strategy"I like individual bonds, but I don't like bond funds, because of the fluctuation of the principal," said Helen Simon, certified financial planner, retirement management analyst and CEO of Personal Business Management Services.

She uses individual bonds to bridge the time between when clients retire and when they start taking money out of their qualified accounts, such as 401(k) plans, individual retirement accounts and pensions.

"I like to use zero coupon tax-free municipal bonds because when the money comes through, it is all tax-free," she said.

Zero coupon bonds, long-term fixed-income securities, are purchased at a deep discount and pay out interest only once, at maturity.
Simon purchases these securities for her clients monthly, creating a "bond ladder."

"The ideal situation being bonds coming due monthly or close thereto once the client begins tapping their retirement income stream," she said.

For example, a 45-year-old client who wished to make $10,000 a month available at age 60 could assign a bucket of cash to start purchasing zero coupon bonds through the next 15 years that mature monthly.

The client could purchase a bond today with a 5 percent coupon (interest) rate for $4,800, which will yield $10,000 tax-free when it matures in 2030. Similarly, a 20-year bond at 5 percent, purchased for $3,750, will yield $10,000 in 2045 tax-free.
Market response"A 40- to 50-year-old should consider more than age and time to retirement but also market conditions," said R. M. Zalatimo, managing director, National Securities Corp.

"We are in a potential rising-interest-rate environment, and initially this will have a negative impact on bond and equity markets," he said. "If interest rates go up, your bond portfolios will drop in value and you will take a loss."

For example, a 4 percent corporate bond can only sell at a discount if next year's bonds are offered at 5 percent, Zalatimo said.

Therefore, to increase liquidity, he advises pre-retirees to reduce their bond portfolio duration to short-term positions of five to seven years.
"I wouldn't recommend too large of a percentage of investment in bonds prior to 10 years before retirement." -Russell D. Francis, owner of Portland Fixed Income Specialists

Other advisors suggest even shorter terms.

Herb White, CFP and president of Life Certain Wealth Strategies, advises his pre-retiree clients to hold short-term (one- to three-year) or intermediate (three- to five-year) positions in bonds.

"As an overall strategy, you still need equities for growth, but you don't want to overlook bonds," he said.

Zalatimo at National Securities also suggests looking into convertible bonds—corporate bonds that can be converted into its issuer's common stock.
"This is an overlooked asset class," he said. "It reduces exposure to the market by converting to stock later when the market may be better.

"It gives the income and stability of a bond with the potential for appreciation from the stock market," Zalatimo said. "It allows you to increase your exposure to bonds, but not necessarily lose out" in times of low yield.

CNBC

 

[NewlyRetired]

Bonds, the seemingly boring and inscrutable partner to equities, don't usually generate much excitement. But they play important roles in portfolio planning, offering diversification and fixed-income opportunities.

The wide variety of bond instruments provides the opportunity for age-appropriate strategies throughout the client's life span. CNBC consulted with several advisors on how they employ bonds when working with pre-retirees.

Zero Creatives | Getty Images

'Bridge' strategy

"I like individual bonds, but I don't like bond funds, because of the fluctuation of the principal," said Helen Simon, certified financial planner, retirement management analyst and CEO of Personal Business Management Services.

She uses individual bonds to bridge the time between when clients retire and when they start taking money out of their qualified accounts, such as 401(k) plans, individual retirement accounts and pensions.

"I like to use zero coupon tax-free municipal bonds because when the money comes through, it is all tax-free," she said.

Zero coupon bonds, long-term fixed-income securities, are purchased at a deep discount and pay out interest only once, at maturity.

Simon purchases these securities for her clients monthly, creating a "bond ladder."

"The ideal situation being bonds coming due monthly or close thereto once the client begins tapping their retirement income stream," she said.

For example, a 45-year-old client who wished to make $10,000 a month available at age 60 could assign a bucket of cash to start purchasing zero coupon bonds through the next 15 years that mature monthly.

The client could purchase a bond today with a 5 percent coupon (interest) rate for $4,800, which will yield $10,000 tax-free when it matures in 2030. Similarly, a 20-year bond at 5 percent, purchased for $3,750, will yield $10,000 in 2045 tax-free.

Market response

"A 40- to 50-year-old should consider more than age and time to retirement but also market conditions," said R. M. Zalatimo, managing director, National Securities Corp.

"We are in a potential rising-interest-rate environment, and initially this will have a negative impact on bond and equity markets," he said. "If interest rates go up, your bond portfolios will drop in value and you will take a loss."

For example, a 4 percent corporate bond can only sell at a discount if next year's bonds are offered at 5 percent, Zalatimo said.

Therefore, to increase liquidity, he advises pre-retirees to reduce their bond portfolio duration to short-term positions of five to seven years.

"I wouldn't recommend too large of a percentage of investment in bonds prior to 10 years before retirement." -Russell D. Francis, owner of Portland Fixed Income Specialists

Other advisors suggest even shorter terms.

Herb White, CFP and president of Life Certain Wealth Strategies, advises his pre-retiree clients to hold short-term (one- to three-year) or intermediate (three- to five-year) positions in bonds.

"As an overall strategy, you still need equities for growth, but you don't want to overlook bonds," he said.

Zalatimo at National Securities also suggests looking into convertible bondscorporate bonds that can be converted into its issuer's common stock.

"This is an overlooked asset class," he said. "It reduces exposure to the market by converting to stock later when the market may be better.

"It gives the income and stability of a bond with the potential for appreciation from the stock market," Zalatimo said. "It allows you to increase your exposure to bonds, but not necessarily lose out" in times of low yield.

CNBC

She sounds identical to my financial adviser. Same wording/reasoning/stratgey etc regarding bonds.

 

[Binky The Doormat]

I have my call with the Personal Capital advisor tomorrow, will report back.

I was disappointed to no longer see the automated version of their advice on the website though. It may still be there, but I couldn't find it.

I had mine a couple weeks ago. Today was the sales pitch to try and rope me in.

I like what they do, but don't want to take the capital gains taxes at present. And they guy didn't get it when I disagreed about having to pay those taxes at some point. Once my taxable income goes away you get 92k or so of headroom to avoid that... So kinda split - I like their system, hate their fee, and don't want to pony up taxes.

Here are the key pts from the conversation and presentation with the Personal Capital advisor today:

- recommend a split of

43.8% US Stocks

18.8% International Stocks

21.0% US Bonds

4.0% International Bonds

11.5% Alternatives*

1.0% Cash

*mostly real estate and gold ETFs - also energy, food and metals

Though their recommendations will vary by age and situation, I got the feeling that this fairly representative.

- angle of equal split across the 10 sectors - show that market funds are weighted by market caps and heavier into tech, financial, health care and industrials and therefore increasing risk with general approach to overall market funds. By taking this approach they show an increase in return of 1.3% and a lower risk (std deviation difference of 1.0%)

- pitch that they are more active in managing tax impacts

- fees - 0.79% up to $3M - 0.69% on the next $2M - 0.59% on the next $5M and 0.49% on amts over $10M

 

[KCitons]

Does anyone work for a company where the 401k match is contingent on the companies profit? Now that we have my wife's TSP maxed out, both of our Roth's maxed out, and a chunk of money working in my Wells Trade account, I was looking to set up a 401k for myself.

When I looked at it about a year ago, there was something about the 4% match being contingent. Since we didn't have my wife maxed, I said no thanks and moved on. I'm thinking the fees are going to have to be pretty low to offset any instance where they don't match. I'm going to talk someone next week and find out the exact specs.

 

[commoncents]

Does anyone work for a company where the 401k match is contingent on the companies profit? Now that we have my wife's TSP maxed out, both of our Roth's maxed out, and a chunk of money working in my Wells Trade account, I was looking to set up a 401k for myself.

When I looked at it about a year ago, there was something about the 4% match being contingent. Since we didn't have my wife maxed, I said no thanks and moved on. I'm thinking the fees are going to have to be pretty low to offset any instance where they don't match. I'm going to talk someone next week and find out the exact specs.

In all likelihood it is at the employer's discretion on whether they will make the matching contribution. They will typically make the 4% contribution to avoid disgruntled employees or to remain competitive with other employers. However, it does leave them with the out that they do not need to match if the economic situation takes a turn for the worse.

 

[eoMMan]

I have my call with the Personal Capital advisor tomorrow, will report back.

I was disappointed to no longer see the automated version of their advice on the website though. It may still be there, but I couldn't find it.

I had mine a couple weeks ago. Today was the sales pitch to try and rope me in.

I like what they do, but don't want to take the capital gains taxes at present. And they guy didn't get it when I disagreed about having to pay those taxes at some point. Once my taxable income goes away you get 92k or so of headroom to avoid that... So kinda split - I like their system, hate their fee, and don't want to pony up taxes.

Here are the key pts from the conversation and presentation with the Personal Capital advisor today:

- recommend a split of

43.8% US Stocks

18.8% International Stocks

21.0% US Bonds

4.0% International Bonds

11.5% Alternatives*

1.0% Cash

*mostly real estate and gold ETFs - also energy, food and metals

Though their recommendations will vary by age and situation, I got the feeling that this fairly representative.

- angle of equal split across the 10 sectors - show that market funds are weighted by market caps and heavier into tech, financial, health care and industrials and therefore increasing risk with general approach to overall market funds. By taking this approach they show an increase in return of 1.3% and a lower risk (std deviation difference of 1.0%)

- pitch that they are more active in managing tax impacts

- fees - 0.79% up to $3M - 0.69% on the next $2M - 0.59% on the next $5M and 0.49% on amts over $10M

Way too much in bonds.

I'd suggest doing it yourself.

 

[Doctor Detroit]

I have my call with the Personal Capital advisor tomorrow, will report back.

I was disappointed to no longer see the automated version of their advice on the website though. It may still be there, but I couldn't find it.

I had mine a couple weeks ago. Today was the sales pitch to try and rope me in.

I like what they do, but don't want to take the capital gains taxes at present. And they guy didn't get it when I disagreed about having to pay those taxes at some point. Once my taxable income goes away you get 92k or so of headroom to avoid that... So kinda split - I like their system, hate their fee, and don't want to pony up taxes.

Here are the key pts from the conversation and presentation with the Personal Capital advisor today:

- recommend a split of

43.8% US Stocks

18.8% International Stocks

21.0% US Bonds

4.0% International Bonds

11.5% Alternatives*

1.0% Cash

*mostly real estate and gold ETFs - also energy, food and metals

Though their recommendations will vary by age and situation, I got the feeling that this fairly representative.

- angle of equal split across the 10 sectors - show that market funds are weighted by market caps and heavier into tech, financial, health care and industrials and therefore increasing risk with general approach to overall market funds. By taking this approach they show an increase in return of 1.3% and a lower risk (std deviation difference of 1.0%)

- pitch that they are more active in managing tax impacts

- fees - 0.79% up to $3M - 0.69% on the next $2M - 0.59% on the next $5M and 0.49% on amts over $10M

Way too much in bonds.

I'd suggest doing it yourself.

You don't even know how old he is, what his financial situation is, or how close he is to retirement. How the #### can you tell him he has too much in bonds?

That's thoroughly obnoxious.

 

[wilked]

^

^

^

This

I would never pay someone 0.8% to manage my money though. Let's say you expect returns of 6% going forward on that portfolio, you just lost 13% of your potential money, and that's before you consider the expenses on the funds they would place you in.

No thanks

Lastly, assuming you are in late 20s or better I recommend at least 20% in bonds

 

[wilked]

If you really want an advisor (and I can understand people wanting that), for the love of Allah use a fee-based one. Pay him/her by the hour, and this also ensures they have no motivation to put you in high-fee investments that will further benefit them

https://www.napfa.org/

 

[NewlyRetired]

I would never pay someone 0.8% to manage my money though. Let's say you expect returns of 6% going forward on that portfolio, you just lost 13% of your potential money, and that's before you consider the expenses on the funds they would place you in.

I was like this before I retired but once I started in retirement I changed my thought process.

I talked myself into the adviser by speculating if they could get a .8% return better than I could by myself. And once I saw the bonds that my adviser could get me into that I could not purchase myself, it became a very easy decision.

 

[kutta]

I would never pay someone 0.8% to manage my money though. Let's say you expect returns of 6% going forward on that portfolio, you just lost 13% of your potential money, and that's before you consider the expenses on the funds they would place you in.

I was like this before I retired but once I started in retirement I changed my thought process.

I talked myself into the adviser by speculating if they could get a .8% return better than I could by myself. And once I saw the bonds that my adviser could get me into that I could not purchase myself, it became a very easy decision.

Not only that, but my guy has access to IPO's that I can't touch. He has some "play money" in my account and has done very well flipping IPO's.

 

[eoMMan]

I have my call with the Personal Capital advisor tomorrow, will report back.

I was disappointed to no longer see the automated version of their advice on the website though. It may still be there, but I couldn't find it.

I had mine a couple weeks ago. Today was the sales pitch to try and rope me in.

I like what they do, but don't want to take the capital gains taxes at present. And they guy didn't get it when I disagreed about having to pay those taxes at some point. Once my taxable income goes away you get 92k or so of headroom to avoid that... So kinda split - I like their system, hate their fee, and don't want to pony up taxes.

Here are the key pts from the conversation and presentation with the Personal Capital advisor today:

- recommend a split of

43.8% US Stocks

18.8% International Stocks

21.0% US Bonds

4.0% International Bonds

11.5% Alternatives*

1.0% Cash

*mostly real estate and gold ETFs - also energy, food and metals

Though their recommendations will vary by age and situation, I got the feeling that this fairly representative.

- angle of equal split across the 10 sectors - show that market funds are weighted by market caps and heavier into tech, financial, health care and industrials and therefore increasing risk with general approach to overall market funds. By taking this approach they show an increase in return of 1.3% and a lower risk (std deviation difference of 1.0%)

- pitch that they are more active in managing tax impacts

- fees - 0.79% up to $3M - 0.69% on the next $2M - 0.59% on the next $5M and 0.49% on amts over $10M

Way too much in bonds.

I'd suggest doing it yourself.

You don't even know how old he is, what his financial situation is, or how close he is to retirement. How the #### can you tell him he has too much in bonds? That's thoroughly obnoxious.

Are you not updating your FFA notebook? (57, in 2nd year of forced retirement, 2 kids, Arkansas area, etc.)And edit to add: Your post came off as mega douchey. If anything is thoroughly obnoxious, it's your horrible post. Please show a little respect to your fellow posters.

 

[fourd]

Does anyone work for a company where the 401k match is contingent on the companies profit? Now that we have my wife's TSP maxed out, both of our Roth's maxed out, and a chunk of money working in my Wells Trade account, I was looking to set up a 401k for myself.

When I looked at it about a year ago, there was something about the 4% match being contingent. Since we didn't have my wife maxed, I said no thanks and moved on. I'm thinking the fees are going to have to be pretty low to offset any instance where they don't match. I'm going to talk someone next week and find out the exact specs.

Are you self-employed? It sounds like you are talking about a safe harbor 401k, which does have certain rules in place to avoid the reporting requirements and other rules that the 401k plan normally requires.

 

[wilked]

I would never pay someone 0.8% to manage my money though. Let's say you expect returns of 6% going forward on that portfolio, you just lost 13% of your potential money, and that's before you consider the expenses on the funds they would place you in.

if they could get a .8% return better than I could by myself.

Doubt I will talk you out of it, but let's say he was able to get you a bond that returns an extra 1% that no one else can get (seems doubtful, but let's go with it). Let's further say you have 30% in bonds. You gained 0.3% on overall return, but paid 0.8%, for a net -0.5%.

Study after study shows that mutual fund managers can't beat the market after fees, it would seem at least difficult for your guy to do so, no?

 

[Dentist]

If you really want an advisor (and I can understand people wanting that), for the love of Allah use a fee-based one. Pay him/her by the hour, and this also ensures they have no motivation to put you in high-fee investments that will further benefit them

https://www.napfa.org/

sadly, the people that need to heed that advice most are the people that will never make their way into this thread. I think it would be so easy if I were slightly less than ethical to financially just rape people.... People spend so much of their lives working on making money, or spending hours researching on how to spend their money... but won't dare spend the hours to work on savings or investing their money... they prefer to pay untold amounts of money to "some guy" and live without knowing the difference between preferred stock and livestock.

 

[Tiger Fan]

Bonds, the seemingly boring and inscrutable partner to equities, don't usually generate much excitement. But they play important roles in portfolio planning, offering diversification and fixed-income opportunities.

The wide variety of bond instruments provides the opportunity for age-appropriate strategies throughout the client's life span. CNBC consulted with several advisors on how they employ bonds when working with pre-retirees.

Zero Creatives | Getty Images

'Bridge' strategy

"I like individual bonds, but I don't like bond funds, because of the fluctuation of the principal," said Helen Simon, certified financial planner, retirement management analyst and CEO of Personal Business Management Services.

She uses individual bonds to bridge the time between when clients retire and when they start taking money out of their qualified accounts, such as 401(k) plans, individual retirement accounts and pensions.

"I like to use zero coupon tax-free municipal bonds because when the money comes through, it is all tax-free," she said.

Zero coupon bonds, long-term fixed-income securities, are purchased at a deep discount and pay out interest only once, at maturity.

Simon purchases these securities for her clients monthly, creating a "bond ladder."

"The ideal situation being bonds coming due monthly or close thereto once the client begins tapping their retirement income stream," she said.

For example, a 45-year-old client who wished to make $10,000 a month available at age 60 could assign a bucket of cash to start purchasing zero coupon bonds through the next 15 years that mature monthly.

The client could purchase a bond today with a 5 percent coupon (interest) rate for $4,800, which will yield $10,000 tax-free when it matures in 2030. Similarly, a 20-year bond at 5 percent, purchased for $3,750, will yield $10,000 in 2045 tax-free.

Market response

"A 40- to 50-year-old should consider more than age and time to retirement but also market conditions," said R. M. Zalatimo, managing director, National Securities Corp.

"We are in a potential rising-interest-rate environment, and initially this will have a negative impact on bond and equity markets," he said. "If interest rates go up, your bond portfolios will drop in value and you will take a loss."

For example, a 4 percent corporate bond can only sell at a discount if next year's bonds are offered at 5 percent, Zalatimo said.

Therefore, to increase liquidity, he advises pre-retirees to reduce their bond portfolio duration to short-term positions of five to seven years.

"I wouldn't recommend too large of a percentage of investment in bonds prior to 10 years before retirement." -Russell D. Francis, owner of Portland Fixed Income Specialists

Other advisors suggest even shorter terms.

Herb White, CFP and president of Life Certain Wealth Strategies, advises his pre-retiree clients to hold short-term (one- to three-year) or intermediate (three- to five-year) positions in bonds.

"As an overall strategy, you still need equities for growth, but you don't want to overlook bonds," he said.

Zalatimo at National Securities also suggests looking into convertible bondscorporate bonds that can be converted into its issuer's common stock.

"This is an overlooked asset class," he said. "It reduces exposure to the market by converting to stock later when the market may be better.

"It gives the income and stability of a bond with the potential for appreciation from the stock market," Zalatimo said. "It allows you to increase your exposure to bonds, but not necessarily lose out" in times of low yield.

CNBC

She sounds identical to my financial adviser. Same wording/reasoning/stratgey etc regarding bonds.

Did you create a bond ladder or "something similar" to bridge when you retried to when you can take $ out of retirement accounts?

 

[Tiger Fan]

I would never pay someone 0.8% to manage my money though. Let's say you expect returns of 6% going forward on that portfolio, you just lost 13% of your potential money, and that's before you consider the expenses on the funds they would place you in.

I was like this before I retired but once I started in retirement I changed my thought process.

I talked myself into the adviser by speculating if they could get a .8% return better than I could by myself. And once I saw the bonds that my adviser could get me into that I could not purchase myself, it became a very easy decision.

Not only that, but my guy has access to IPO's that I can't touch. He has some "play money" in my account and has done very well flipping IPO's.

So how does one find these guys? I wouldn't even know where to start. More interested in the bond stuff than anything

 

[Doctor Detroit]

I have my call with the Personal Capital advisor tomorrow, will report back.

I was disappointed to no longer see the automated version of their advice on the website though. It may still be there, but I couldn't find it.

I had mine a couple weeks ago. Today was the sales pitch to try and rope me in.

I like what they do, but don't want to take the capital gains taxes at present. And they guy didn't get it when I disagreed about having to pay those taxes at some point. Once my taxable income goes away you get 92k or so of headroom to avoid that... So kinda split - I like their system, hate their fee, and don't want to pony up taxes.

Here are the key pts from the conversation and presentation with the Personal Capital advisor today:

- recommend a split of

43.8% US Stocks

18.8% International Stocks

21.0% US Bonds

4.0% International Bonds

11.5% Alternatives*

1.0% Cash

*mostly real estate and gold ETFs - also energy, food and metals

Though their recommendations will vary by age and situation, I got the feeling that this fairly representative.

- angle of equal split across the 10 sectors - show that market funds are weighted by market caps and heavier into tech, financial, health care and industrials and therefore increasing risk with general approach to overall market funds. By taking this approach they show an increase in return of 1.3% and a lower risk (std deviation difference of 1.0%)

- pitch that they are more active in managing tax impacts

- fees - 0.79% up to $3M - 0.69% on the next $2M - 0.59% on the next $5M and 0.49% on amts over $10M

Way too much in bonds.

I'd suggest doing it yourself.

You don't even know how old he is, what his financial situation is, or how close he is to retirement. How the #### can you tell him he has too much in bonds? That's thoroughly obnoxious.

Are you not updating your FFA notebook? (57, in 2nd year of forced retirement, 2 kids, Arkansas area, etc.).

Actually that information makes your advice exponentially worse IMO.

 

[eoMMan]

I have my call with the Personal Capital advisor tomorrow, will report back.

I was disappointed to no longer see the automated version of their advice on the website though. It may still be there, but I couldn't find it.

I had mine a couple weeks ago. Today was the sales pitch to try and rope me in.

I like what they do, but don't want to take the capital gains taxes at present. And they guy didn't get it when I disagreed about having to pay those taxes at some point. Once my taxable income goes away you get 92k or so of headroom to avoid that... So kinda split - I like their system, hate their fee, and don't want to pony up taxes.

Here are the key pts from the conversation and presentation with the Personal Capital advisor today:

- recommend a split of

43.8% US Stocks

18.8% International Stocks

21.0% US Bonds

4.0% International Bonds

11.5% Alternatives*

1.0% Cash

*mostly real estate and gold ETFs - also energy, food and metals

Though their recommendations will vary by age and situation, I got the feeling that this fairly representative.

- angle of equal split across the 10 sectors - show that market funds are weighted by market caps and heavier into tech, financial, health care and industrials and therefore increasing risk with general approach to overall market funds. By taking this approach they show an increase in return of 1.3% and a lower risk (std deviation difference of 1.0%)

- pitch that they are more active in managing tax impacts

- fees - 0.79% up to $3M - 0.69% on the next $2M - 0.59% on the next $5M and 0.49% on amts over $10M

Way too much in bonds.

I'd suggest doing it yourself.

You don't even know how old he is, what his financial situation is, or how close he is to retirement. How the #### can you tell him he has too much in bonds? That's thoroughly obnoxious.

Are you not updating your FFA notebook? (57, in 2nd year of forced retirement, 2 kids, Arkansas area, etc.).

Actually that information makes your advice exponentially worse IMO.

I accept your apology.

To get back on topic, I generally don't like bonds and favor stocks....even in retirement. A lot of people fail to realize how long retirement is. You still need most of your money in the stock market.

I understand people holding bonds to diversify and to help add some stability of the market tanks. Imo, you should have a healthy cash reserve to help prevent having to take distributions from your stocks if the market is down.

And bonds won't look too good when interest rates go up soon....

 

[wilked]

re: interest rates... if people keep saying it every year, they will have to be right at some point!

http://money.usnews.com/money/personal-finance/articles/2013/08/28/how-to-prepare-for-rising-interest-rates

You might not like bonds for 'young people' (I am not sure 57 qualifies as young but then again people are living longer) but you are definitely in the minority there.

If your portfolio takes a 40% haircut around 60 years old chances are it will never recover to where you started. I think an investor would have to be very foolish to risk that

 

[kutta]

I would never pay someone 0.8% to manage my money though. Let's say you expect returns of 6% going forward on that portfolio, you just lost 13% of your potential money, and that's before you consider the expenses on the funds they would place you in.

I was like this before I retired but once I started in retirement I changed my thought process.

I talked myself into the adviser by speculating if they could get a .8% return better than I could by myself. And once I saw the bonds that my adviser could get me into that I could not purchase myself, it became a very easy decision.

Not only that, but my guy has access to IPO's that I can't touch. He has some "play money" in my account and has done very well flipping IPO's.

So how does one find these guys? I wouldn't even know where to start. More interested in the bond stuff than anything

I actually met my guy here. We live in the same town and I invited him to join our league years ago. We've been friends since, and he manages my $. I use another that came recommended by a friend.

 

[lod01]

I accept your apology.

To get back on topic, I generally don't like bonds and favor stocks....even in retirement. A lot of people fail to realize how long retirement is. You still need most of your money in the stock market.

I understand people holding bonds to diversify and to help add some stability of the market tanks. Imo, you should have a healthy cash reserve to help prevent having to take distributions from your stocks if the market is down.

And bonds won't look too good when interest rates go up soon....

Listen to this guy because he knows what he's talking about.. I'll never leave stocks, however I pay attention closely to what is going on on a daily basis. If you don't with your hard earned money, you are nuts. I rode the bond wave back in late 2014 thru mid January and got off with a nice gain. I was in this: http://finance.yahoo.com/q?s=VUSTX

I'll jump back into it every once in a while (only for a few days) but he's right that bonds will not like higher interest rates.

 

[RUSF18]

Favoring stocks over bonds is fine. Saying 25% being allocated to bonds is foolish or whatever for a 57 year old is a different story.

 

[Doctor Detroit]

Bond yields going down when interest rates go up is a financial fact. That doesn't mean bonds lose value however in a rising interest rate environment since higher rates mean higher interest payments.

And the bottom line with bonds anyway is that if you hold to maturity, rising rates will have zero impact on the income you receive. Over time in a rising interest rate environment short and intermediate term bonds will still do well enough to balance risk and diversify holdings.

 

[Binky The Doormat]

Wanted to follow up on the discussion about the Personal Capital website pitch and recommendations. Its weird thinking about being old(er), I still feel like the younger guy in the workgroup though I am out of the workforce! I have gotten a lot of good advice here and simply wanted to share what people can expect from the Personal Capital site pitch if they were interested (approach, philosophy, fees, etc.).

We have most of our savings with Vanguard though we have a collection of individual state muni bonds and some individual stocks held over from a 3 year experiment with Wells Fargo Compass program. We have a rental house and thinking about moving a little more dollar in that direction as well but aren't there yet.

I started retirement planning not long after I got married - around 32. I worked for a company that shifted its full pension to a funded 401K and to "help" us they sent in a bunch of financial advisors. This got me started investigating on my own. This was at a time when most people were just hearing about mutual funds. I went to see a planner and got what I found to be the typical package of monte carlo analysis of straight-line savings and interest earned - but it was good to see.

Over that 35 year period since then, we have used a financial manager/planner three times, the first was with a regional house from (1996-2001) that was able to get me in several awesome IPOs for flipping in the wild tech days. The other two ...it just wasn't worth it. Looking back, I would agree that unless the IPO flip deals can make up the 1% or so fees - do it yourself if you can and/or will. I would highly recommend a review on a fee basis every year or two though.

As I saw the forced retirement coming I saw the kind of spending money that I could keep in my pocket and I bailed.

For those saying they would never go with bonds - its all about how to best balance potential return and risk while creating income stream to live on. We keep 1 1/2 - 2 years expected spending in cash with a modest emergency fund. All of our bonds are munis that average 3.5% tax free (we do have some in Vanguard bond funds). I am working to diversify enough to take advantage of what we believe will be rising interest rates while protecting against a market drop/correction. Simply having this cash aside isn't enough. And taking a huge hit to our savings ...when I don't want to start a job search at close to 60 isn't something we want to contemplate.

 

[Binky The Doormat]

One other thing about the Personal Capital pitch.

I did really like the equal weighting approach to the 10 market segments. I may take some more time and start shifting some stuff but as mentioned earlier - need to do it over time to avoid all the taxes at one time.

 

[KCitons]

Does anyone work for a company where the 401k match is contingent on the companies profit? Now that we have my wife's TSP maxed out, both of our Roth's maxed out, and a chunk of money working in my Wells Trade account, I was looking to set up a 401k for myself.

When I looked at it about a year ago, there was something about the 4% match being contingent. Since we didn't have my wife maxed, I said no thanks and moved on. I'm thinking the fees are going to have to be pretty low to offset any instance where they don't match. I'm going to talk someone next week and find out the exact specs.

Are you self-employed? It sounds like you are talking about a safe harbor 401k, which does have certain rules in place to avoid the reporting requirements and other rules that the 401k plan normally requires.

Not self-employed. Working for a publicly traded company. With my recent promotion, I am going to take another look at their benefits package. When started with them a year and a half ago, I passed on most of it. I also remember an insurance policy they offer for cancer and other odd diseases. First time I've seen that.

 

[Sand]

One other thing about the Personal Capital pitch.

I did really like the equal weighting approach to the 10 market segments. I may take some more time and start shifting some stuff but as mentioned earlier - need to do it over time to avoid all the taxes at one time.

That's the part I also liked and they claimed to have numbers to back that up. I wish I wasn't already invested and could go ahead and split this up, but I do and I'm not willing to take the cap gains on switching over. The rest of what they claim as return improvements (tax loss selling, tax efficiencies between taxable and tax deferred) I'm already doing.

 

[NewlyRetired]

And the bottom line with bonds anyway is that if you hold to maturity, rising rates will have zero impact on the income you receive.

This is how I look at it for my portfolio. My FA did not invest in bonds to flip them, she built a ladder with varying maturity dates with the specific intention of keeping them until they mature. This has worked very nicely for us in giving us the expected income we need to live.

 

[NewlyRetired]

This is a good problem to have obviously but still not sure how to best manage it:

* Wife has a well off Uncle with no children

* He intends to split his estate between his 3 nieces, one of which is my wife

* His communication skills are next to zero. He tells no one anything outside of a grumble here or there.

* Out of the blue today my wife received a check for $5k from him with a little note.

* On the check was her Uncle's name, my wives name and the letters ITF

* In looking this up, it looks like that means "In Trust For"

* My wife talked to her sister and she got a similar check with the letter POD (which appear to mean "Paid on Death").

* My wife tried to call him to thank him but has not yet got in touch with him and to see if she can figure out what he set up

* Best I can guess is that he has put aside some money from his estate, protected it from probate and maybe intends to start dolling it out slowly to avoid taxes......?

* I have no idea how much we are looking at here and don't feel comfortable asking obviously.

* My wife needs to find out if she has any special responsibilities with the ITF (she is the executor of his will).

Any thing specific I should be thinking about or should I just see what happens?

 

[eoMMan]

This is a good problem to have obviously but still not sure how to best manage it:

* Wife has a well off Uncle with no children

* He intends to split his estate between his 3 nieces, one of which is my wife

* His communication skills are next to zero. He tells no one anything outside of a grumble here or there.

* Out of the blue today my wife received a check for $5k from him with a little note.

* On the check was her Uncle's name, my wives name and the letters ITF

* In looking this up, it looks like that means "In Trust For"

* My wife talked to her sister and she got a similar check with the letter POD (which appear to mean "Paid on Death").

* My wife tried to call him to thank him but has not yet got in touch with him and to see if she can figure out what he set up

* Best I can guess is that he has put aside some money from his estate, protected it from probate and maybe intends to start dolling it out slowly to avoid taxes......?

* I have no idea how much we are looking at here and don't feel comfortable asking obviously.

* My wife needs to find out if she has any special responsibilities with the ITF (she is the executor of his will).

Any thing specific I should be thinking about or should I just see what happens?

Keep calling him. Don't cash it until you know what's going on.

Assuming he's alive and it's just a gift, taxes are on him....not her....for that 5k.

 

[NewlyRetired]

This is a good problem to have obviously but still not sure how to best manage it:

* Wife has a well off Uncle with no children

* He intends to split his estate between his 3 nieces, one of which is my wife

* His communication skills are next to zero. He tells no one anything outside of a grumble here or there.

* Out of the blue today my wife received a check for $5k from him with a little note.

* On the check was her Uncle's name, my wives name and the letters ITF

* In looking this up, it looks like that means "In Trust For"

* My wife talked to her sister and she got a similar check with the letter POD (which appear to mean "Paid on Death").

* My wife tried to call him to thank him but has not yet got in touch with him and to see if she can figure out what he set up

* Best I can guess is that he has put aside some money from his estate, protected it from probate and maybe intends to start dolling it out slowly to avoid taxes......?

* I have no idea how much we are looking at here and don't feel comfortable asking obviously.

* My wife needs to find out if she has any special responsibilities with the ITF (she is the executor of his will).

Any thing specific I should be thinking about or should I just see what happens?

Keep calling him. Don't cash it until you know what's going on.

Assuming he's alive and it's just a gift, taxes are on him....not her....for that 5k.

I think there will be no tax implications on him either if I understand the Gift Tax rules

https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/The-Gift-Tax-Made-Simple/INF12127.html

 

[xulf]

No taxes for that amount.

 

[FUBAR]

I just reached out to a FA for the first time in over a decade. The ones we saw back then were salesmen in FA clothing, we just didn't know it at the time.

This time we're going through Dave Ramsey's ELPs, hope that works better. Probably won't actually see them for a few weeks with the pending move (we selected the area we're moving to) but with 4 years left before I'm eligible for retirement and a decent nest egg established, figured it was time for an expert to assess what I've been having us do. Doubt he'll find much we're doing "wrong" but maybe he'll have tips on things we can improve.

 

[wilked]

I just reached out to a FA for the first time in over a decade. The ones we saw back then were salesmen in FA clothing, we just didn't know it at the time.

This time we're going through Dave Ramsey's ELPs, hope that works better. Probably won't actually see them for a few weeks with the pending move (we selected the area we're moving to) but with 4 years left before I'm eligible for retirement and a decent nest egg established, figured it was time for an expert to assess what I've been having us do. Doubt he'll find much we're doing "wrong" but maybe he'll have tips on things we can improve.

Bvwih of the elp program. Someone (dentist?) mentioned whitecoatinvestor upthread, you can read their thoughts here

http://whitecoatinvestor.com/how-dave-ramsey-may-be-leading-you-astray/

If you want someone to review your portfolio and make recommendations, why not pay them by the hour? Get an unbiased opinion?

https://www.napfa.org

 

[Binky The Doormat]

I just reached out to a FA for the first time in over a decade. The ones we saw back then were salesmen in FA clothing, we just didn't know it at the time.

This time we're going through Dave Ramsey's ELPs, hope that works better. Probably won't actually see them for a few weeks with the pending move (we selected the area we're moving to) but with 4 years left before I'm eligible for retirement and a decent nest egg established, figured it was time for an expert to assess what I've been having us do. Doubt he'll find much we're doing "wrong" but maybe he'll have tips on things we can improve.

The key right now is how much you have now. Four years isn't likely to make a difference in your decision to retire. Are you there yet?

Two big things to consider:

- 4% or less withdrawal (certainly Roths help lower this percent)

- what happens if the market drops 30% or more?