Retirement savings ....Yikes !

[Larry Caldwell]

I retired as soon as I could. I've seen too many guys make grand plans - or no plans, and die young. I watched my best friend carefully plan on working to 65. At 62, he got cancer. Beat it. At 63, it came back, he was dead before he was 64. His widow now has a house too large, a pain she can never lose, and is alone in her last years. Btw, this guy never smoked, drank, was careful in what he ate, and exercised. I talk occasionally to some ex coworkers that are still working. They are struggling, work is harder than it used to be, and they seem miserable. Life is good for me, I bought my bota a couple years ago, you gotta do things, planning is overrated.

I waited to retire at 65 so I could keep my work medical until Medicare kicked in. The mortgage was paid off for 8 years before I retired, which let me max my 401k and other savings. When gasoline hit $4 a gallon I figured it was going to suck the life out of the economy so I shifted all my investments from stocks to bonds, and sure enough, 6 months later the economy tanked. I figured stocks would lose 50%, which they did, and I bought back in at the bottom, so not only did I save heavily, I doubled my 401k in 3 years. Log prices have recovered, so I'm shopping for a timber contractor to log my place right now, which will put another couple year's income in my pocket after expenses and taxes. My wife and I also have pensions and social security. I can't get my wife to quit working, but she loves what she's doing and is in the middle of a multi-year project. After that's complete they want her to take her boss's job, with a 2 year commitment, so she may end up working to 69 or 70. She loves what she does, which is what counts.

Meanwhile with 93 acres and a tractor, chainsaw, multiple implements and time, I'm just working at home now except for 10 hours a week part-time, just to get me in to town.

I planned and saved for retirement for 30 years, and the plans are working out. I kept myself broke for years, when others were buying quads, boats and jet skis, driving an beater pickup and carrying my lunch in a lunch pail. Now, there's more money than I need in the checking account at the end of each month and other than putting crowns on my teeth I haven't had to touch savings. We're doing a Europe trip by surface transportation there and back next year, and the money is already in the bank to pay for it. Everybody has to die, but if you don't plan to live you will just end up old and broke, which sucks.

 

[Gale Hawkins]

Planning is over rated if everything accidently works in one's favor.

I read there is more regret over not planning than planning the longer one lives.

 

[Ken]

I remember the CEO looking right into the camara and saying we repaid all tax payer money. I almost lost $40,00 in bonds.

mark

Mark could possibly of been one of the Clintons???
Never trust some one that says trust me.
And is there a decimal problem in your numbers of loss
ken

 

[J F]

And...was it almost lost $40k, or lost almost $40k? Big difference, I hope it was the former for mjarrel's sake.

 

[Brokermike]

Sometimes management is worth the price you pay

Travelover, I think you would be surprised how little the average person understands the investment market.
Brokermike is absolutely correct, he said "sometimes". But his reference to bond mutual funds is not helpful in my mind.
For most of us, the management fees by Pimco and others are well worth the cost.

What you have to remember with mutual funds is that you ARE getting professional advice to a certain degree. If Vanguard says its 60/40
split in Wellington is invested properly, I'd believe that before I believed anyone promoting their own "custom blend" of equities and fixed income.
But some people can't even deal with the idea of calling up Vanguard, or even going online, and setting up an account. They need a person to go see, talk
to, reassure them in down times not to bail out if needed, and basically provide the oversight a broker should.

What is so challenging in this low yield environment is paying 1-2% in brokers fees when the overall bond heavy portfolio is only yielding 5%, which might be its target btw.
So spending twenty to forty percent of the account growth on management fees is hard to swallow. But it's done all the time, maybe not by me, as I learned to manage my own investments, and likely by many of those on this forum, but I bet a larger number of you get some professional help at times.

I put all my retirement savings in an annuity many years ago which had some secondary guarantees, meaning the balance would never go down and always would "go up" at least five percent a year.Yes, couple points of costs built in, though my annuity had a total all in fee of 1.3%, which is very low by today's standards. But I was buying insurance of sorts. And since the market went up over this time, after crashing, the extra money I paid in to make sure the final number would be at least X was probably wasted. But not entirely, it was nice knowing that short of the apocalypse the money I was putting away would not be lost. And it worked like it was supposed to. And yes I needed a broker to buy it.

do what you can yourself, if you truly are knowledgeable, and find a pro for the rest. And I see Vanguard as a "pro" here when the client is fairly knowledgeable and understands risk/reward and even better, how to formalize their own investment statement. And then stick to it.

Just for clarification my issue with bond funds is more about index funds than actively managed funds. I think active managers that manage credit risk, duration, premiums, and OID tax problems are worth their weight in gold. Unfortunately most retail investors pick their funds based on what they see for "yield" which is downright dangerous.

Pimco does a good job, they wouldn't be the largest fixed income manager in the world if they didn't!

 

[Brokermike]

Sadly this was my mother-in-law. Her broker just churned and churned and churned. Fortunately she didn't outlive her money, but it make me sick to see her being taken advantage of.

I'm sorry this was your experience however I think you do people a disservice by painting the entire industry with the same brush. There are unethical people in every industry, at least our industry has very serious safeguards to protect investors from these issues. All you would need to do is complain and the dogs of **** would have been unleashed on that broker.

Try seeing how far a complaint gets you when dealing with many other professions and you will quickly see that the industry has changed considerably in the last 15 years.

 

[AlexMarshall]

That's so sad. The world is going to get more expensive over the next 10 years especially and it will interesting to see what happens over the next 30

 

[Brokermike]

Well Broker Mike, if my livelihood depended on keeping that misconception going, I'd say the same thing.

By the way, I was financially independent at age 45 and retired at age 54.

I'm glad for your success, but sad to see your need to cut down others. Life isn't about having a johnson measuring contest. I'm sure that whatever you did to earn your success you added value to the equation, and were paid for that value.

The financial literacy of this country is way below par, but the same can be said for mechanical literacy, etc. Anyone can read a book or look online to learn how to rebuild their car engine, roof their house, file legal papers, etc. However people often make a decision that the opportunity cost of learning to do those things does not justify the cost savings. Financial planning is the same way, some people are comfortable doing it themselves, I applaud them for that. Others are not, for a variety of reasons. To charge that those people are somehow inept is a pretty unfair leap of judgement. I have clients that are world class attorneys, they work 70 hours a week and spend the rest of their time with their family. Would you give up time with your family to spend worrying about the effective duration and credit risk of a portfolio of BQ municipals? We are all generally good/great at one or two things, and mediocre at many others. There are a lot of people that are not, and should not be, content with being mediocre at their financial future.

I subcontract out all sorts of things that I could do but choose not to do because I know there are people better suited, and better educated to do these things for me. I don't do my own taxes, legal documents, site engineering, car repairs, boiler cleaning, and I definately don't cut my own hair!

Just for a reference most ethical brokers offer financial planning advice by the hour, much like an accountant, or lawyer. Others will act as a fiduciary and charge a management fee. The old model of charging commissions is long dead and you will probably find that most strictly commission brokers are more likely salespeople than actual advisors. There are also a plethora of resources to check out your advisors past, their level of education, and any complaints ever filed. It is on FINRA's website and is called an ADV form. Everyone should be utilizing these resources, and most respectable firms, regardless of the type of business you conduct with them, will provide this form for your review at your first meeting.

 

[MacLawn]

I'm sorry this was your experience however I think you do people a disservice by painting the entire industry with the same brush. There are unethical people in every industry, at least our industry has very serious safeguards to protect investors from these issues. All you would need to do is complain and the dogs of **** would have been unleashed on that broker.

Try seeing how far a complaint gets you when dealing with many other professions and you will quickly see that the industry has changed considerably in the last 15 years.

I'm an expert in my field, but definitely NOT in financial planning, etc. So, BrokerMike, (sorry to ask for free advice...) I don't even know how to find a financial counselor, etc., in my area. I wonder if it would be too much to ask of you and some of the other financial experts here, just how to go about finding a local person to help with retirement planning? Man, talk about a dumb question, I guess I asked one! But really, I absolutely think there are many people like me - well educated in our fields with advanced degrees who probably think that since we are so smart in our fields, aw what the heck, surely we can plan our own retirement! But, hey, I'm being honest - I ain't got hardly nary a clue!! Now, I have had sense enough to just live below our means all these years, but that's about it...

 

[zzvyb6]

Is that so much "government policy" as leaving the markets alone, business maximize profit - consumer minimize expense?

Well it doesn't help your cause when just about all of the users on this forum subscribe to the 'consumer minimize expense' theory. It doesn't take 100% of consumers to kill local/domestic manufacturing by abandoning or ignoring domestic production, either. I mention manufacturing because 'making things' tends to produce the highest incomes enabling big paychecks, big savings, nice cars and trucks, and nice homes. 15% to 20% consumer love affairs with overseas competitors pretty much kill a company. The fact that your neighbor might happen to work for a major heavy manufacturer and your purchase might involve their job, their pay, their savings, YOUR local taxes and YOUR next loan doesn't connect with very many purchasers, period.

I have no sympathy for people who have no savings, have lots of high depreciation crap in their homes and garages and barns, have adult 'kids' at home, and now expect to live on 'gubment' checks in their mail. Those of us who DID the right things during our life (including getting decent grades in school instead of 'parddyin', staying healthy, staying out of prison, raising children to respect themselves and get educated) will find a way to protect our savings when the government grabs begin. Believe me, if you think I am cruel to hardluck cases, wait until you see what the next generation of successful people has for ideas. Did I mention Soylent Green ?

Nature finds a way.

 

[Brokermike]

I'm an expert in my field, but definitely NOT in financial planning, etc. So, BrokerMike, (sorry to ask for free advice...) I don't even know how to find a financial counselor, etc., in my area. I wonder if it would be too much to ask of you and some of the other financial experts here, just how to go about finding a local person to help with retirement planning? Man, talk about a dumb question, I guess I asked one! But really, I absolutely think there are many people like me - well educated in our fields with advanced degrees who probably think that since we are so smart in our fields, aw what the heck, surely we can plan our own retirement! But, hey, I'm being honest - I ain't got hardly nary a clue!! Now, I have had sense enough to just live below our means all these years, but that's about it...

A good place to start is this FINRA link.

Selecting Investment Professionals: Search for Possible Candidates - FINRA

they also have a great step by step assesment of what the different types of professionals in the industry do, and who they are regulated by. I would interview at least three and find someone that you are comfortable with and that listens to your goals. I also think there is value in working with a team so that you aren't left holding Herman if someone is on vacation.

On a personal level I would encourage you to look for someone that is licensed to buy stocks, options and bonds (series 7), has passed their series 66 (which allows them to be an investment advisor, and sell mutual funds), is registered with the MSRB, has their insurance license and has made a commitment to continuing education by gaining other designations such as Accredited Wealth Manager, Accredited Asset Management Specialist, etc

I have seen some of the more egregious problems come from "advisors" that are only licensed to sell one product, such as insurance. Better to work with someone that has all of the tools and only needs a few than someone that only has one "solution". There is some truth to the saying that if you're a hammer everythign looks like a nail. The Certified Financial Planner (CFP) designation can be valuable if the person isn't just an insurance salesman, check their licenses and be careful if the first words they utter start with "A" and finish with "nnuity"

You might find that the person that listens the best, or that has come most highly recommended, checks out through FINRA, and just seems to "click" isn't all that local. Many of the best advisors are licensed in many, many states and build their clientele through referrals.

Good Luck and don't be afraid to ask tough questions. You are looking for someone that could very well end up becoming a lifelong friend and advisor.

Also keep in mind that some firms limit the things that advisors can recommend. I would ask that question up front, and I would lean towards someone that gets paid either hourly, by a fee, or both.

 

[MacLawn]

Wow! Thanks a lot Broker!! I think what you just said could help a whole lot of people here, and everywhere! If you don't mind, I'll pass this information on to friends and family as I can. Like I said, I do think most people have been so busy in their respective fields, they haven't learned how to begin! Now, I can at least know where to start and tell others too.

 

[Gale Hawkins]

The big question in my mind is have we as a nation reached a point of no return in our desire to count on the government rather than our direct efforts to feed and care for ourselves as a nation?

 

[Gale Hawkins]

Cancer clinics are turning away thousands of Medicare patients. Blame the sequester.

Good reason to have that $1,000,000.00 savings account in retirement just for health care needs. I hate all the talk about death squads had any validity.

http://cnsnews.com/news/article/rationing-begins-states-limiting-drug-prescriptions-medicaid-patients

 

[Gator6x4]

The big question in my mind is have we as a nation reached a point of no return in our desire to count on the government rather than our direct efforts to feed and care for ourselves as a nation?

Given the large number of individuals in their early fifties in society today who's only retirement plan is Social Security I would say their desire is to have the taxpayer, not the government provide 100% of their retirement is coming to fructification. In my opinion we crossed the line years ago where a very large percentage decided to defer retirement onto the tax payers back. The government only passes out tax payer money it has no authority to make anyone prepare for retirement. Let someone mention enacting some type retirement law and listen to the large very vocal objections.

 

[DABSGT]

Brokermike 2 very good posts, with good advice.

A few years ago my wife and I found a good adviser, his only question to me is "why are you still working?" I told him i dont have all the toys i want yet.
But truthfully with out him I may not be able to retire when I want!

Sent from my iPad using TractorByNet

 

[daugen]

Cancer clinics are turning away thousands of Medicare patients. Blame the sequester.

Good reason to have that $1,000,000.00 savings account in retirement just for health care needs. I hate all the talk about death squads had any validity.

Rationing Begins: States Limiting Drug Prescriptions for Medicaid Patients | CNS News

this is sure no joke. My wife was turned down by Cancer Center of America early this week where she wanted to go for a second opinion.
they saw that she was covered by Medicare and said "so sorry." This is utterly absurd.

And we've been wondering why her primary oncologist at Fox Chase Cancer Center has been less motivated lately, asked
her if she had considered hospice... Nice. My wife is not even close to that yet, and they are trying to get her out the door.
Utterly absurd and utterly scary.

 

[brin]

this is sure no joke. My wife was turned down by Cancer Center of America early this week where she wanted to go for a second opinion.
they saw that she was covered by Medicare and said "so sorry." This is utterly absurd.

And we've been wondering why her primary oncologist at Fox Chase Cancer Center has been less motivated lately, asked
her if she had considered hospice... Nice. My wife is not even close to that yet, and they are trying to get her out the door.
Utterly absurd and utterly scary.

How awful....time to contact the media, your congress members and anyone else you can think of ...We cannot let this stand...WE were all warned about rationing and we stood still....we were all told Obama care would have death panels and we stood still....we stood still and watched 1/2 a trillion dollars shifted from Medicare to Medicaid.....and here we are...How much longer do we just take it ?

 

[Travelover]

Wow! Thanks a lot Broker!! I think what you just said could help a whole lot of people here, and everywhere! If you don't mind, I'll pass this information on to friends and family as I can. Like I said, I do think most people have been so busy in their respective fields, they haven't learned how to begin! Now, I can at least know where to start and tell others too.

I'm sure this will offend Broker Mike, but I think that anyone of average intelligence can manage their own investments. There is an entire industry that works to maintain the perception that you need to pay a "professional" to manage your money or you will not receive an adequate return on your money.

I'd recommend reading a few books off this list and hanging out at the Boglehead's forum for a while and posting a few questions.

Bottom line, look at your total investing expenses. If an adviser is dinging you for 1 to 2%, that is a quarter to a half of your 4% safe withdrawal rate.

 

[MacLawn]

brin, my understanding is that 'bamacare won't fully kick in until 2014, is that right? daug, my prayers for your wife! You too.