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Reposting original and Responses
Old 06-07-2004, 12:00 PM   #1
Confused about dryer sheets
 
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Reposting original and Responses

I accidently included my full name and the webmaster deleted everything for me. Hope this works
on Today at 11:15am, embarking wrote:
I will be retired as of June 30 this year and will be 59.5 at the end of July. After giving myself a crash course in finance for the last 2 months and have read many, but not all yet, of the posts on the ER forum. I have decided the best course of action is to leave my savings in my 401k plan and pay myself a monthly or quarterly income from my savings. Below is a summary of my total financial situation. I have $237,000 in my 401k plan and am allowed to leave it there and make regular deductions. My pension and social security together will not be enough to live on. I do not have to begin withdrawing from my 401k until January 2005 or a little later. I do not need to leave an estate. I would like to draw about $18,000 per year however after using the FIRECalc I understand I need to reduce that amount by approximately by 2K. My time horizon is between 20-30 yrs. My 401k is with the Federal Government and has 5 funds, which are not publically traded. Operating costs are 0.1%. The fund is managed by Barclays Global Investors except for the G Fund below. U.S. Treasury Securities (short-term) GSPC - I've been invested 30% for last 17.5 yrs Barclays Equity Index Fund -tracks the S&P 500 - I have been invested 70% for last 17.5 yrs Barclays U.S. Debt Index Fund - tracks the LBA U.S.Aggregate bond index AGG Barclays Small Capitalization Stock Index Fund - tracks the Wilshire 4500 EMW Barclays International Stock Index Fund - tracks the EAFE My question is: How do I learn about asset allocation with changing market conditions/fluctuations as I progress through my retirement? I am not sure at this point, if I can learn how. I would appreciate any critique of my plans and guidance offered. Thank you.

Full time employment: Posting here.
Re: Burning Question« on: Today at 11:39am »
First, I would advise you roll over your 401K to a low fee company like vanguard. My guess is that you are paying big time fees with the current 401K plan. Also you don't have as many low cost Funds to invest in most 401K plans. To start with you can roll over your 401k to a money market fund, and then learn about where to invest it. You do not need to be in a hurry. Also, a good book to read to answer your questions on investing in asset classes. Is William Berstein's "The four Pillars of Investing"
Confused about dryer sheets
Re: Burning Question« Reply #1 on: Today at 11:52am

»embarking:Re: Burning Question« Reply #1 on: Today at 11:52am »
The costs of index funds and IRAs is why I concluded to leave my savings in the 401k. The cost is 0.1%. I understand the costs of reinvesting somewhere else are minimal over $2,500 yr. Am I totally wrong here? i haven't run across investing in "money market' funds assuming this is different from index funds. Thanks PS I didn't intend to post my full name. I emailed the webmaster for help. Hope this post doesn't include my full name again.

NordsRecycles dryer sheets
Re: TSP's almost as cheap as you can get« Reply #3 on: Today at 12:23pm »
Embarking, you can learn what you need to know for your plans without having to become a financial wizard. Actually, Cut-Throat, the TSP probably has some of the nation's lowest ERs. The data is at http://www.tsp.gov/rates/fundsheets.html. OTOH the small-cap "S" fund used to have an ER of 6-7 basis points, so I guess they've raised their fees by over 40% to get to that rapacious 10 BP. But I'd put every penny of my spouse's paycheck in the TSP if I could! You might shave a point or two off those ERs at Vanguard, but there's no reason to move quickly. And I'm not sure it's worth the effort unless you want to roll your TSP over to an IRA and convert it to a Roth. But again if you're not worried about taxes, RMDs, or leaving an estate, then you should be fine where you are. I agree with Cut-Throat on "Four Pillars" from your local library. It's one of the best I've ever read and probably the top recommendation of this board. Then read Ed Slott's "The Retirement Savings Time Bomb" or check his discussion board at http://www.irahelp.com/cgi-bin/forum/index.cgi/. I'm not sure you need to mess with your asset allocation, unless you want to add in the thrill of small-cap value stocks... which may be a very expensive volatility ride. And at your expenses, you may want to ensure that you've accounted for federal/state/local taxes, 3% inflation (not the crap we're being told is in the CPI), and the big lump-sum expenses: replacing a car every 5-10 years, a new roof every 15-20 years, a major appliance every 5 years, a fantasy vacation or a kid's wedding, etc.
Youth may be wasted on the young, but retirement is wasted on the old!
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Re: Reposting original and Responses
Old 06-07-2004, 12:17 PM   #2
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Re: Reposting original and Responses

Relax - you've got 20-30 years. Take your time, read(Four Pillars is a good start and of course my favorite Bogle), play with tracking/tweaking your budget - read posts here and elsewhere - shaving 2k may easier than you think. No major moves until YOU are comfortable.
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Re: Reposting original and Responses
Old 06-07-2004, 03:04 PM   #3
Confused about dryer sheets
 
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Re: Reposting original and Responses

Thank you.
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Re: Reposting original and Responses
Old 06-07-2004, 03:07 PM   #4
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Re: Reposting original and Responses

Quote:
I would like to draw about $18,000 per year...
4% of $237,000 is $9480 per year, inflation adjusted. I am thinking that you only need the $18,000 (or $16,000) until Social Security kicks in, and then you plan to withdraw far less than the $9480. That is the only way that I can figure your calculations would work out. If the market has several bad years in a row while you are withdrawing the $18,000 there is the danger that your 401k balance might get uncomfortably low.

The first few years of retirement tend to be the most important, and no one knows what the market may do. Personally, I would try to tone down withdrawals in the first few years a bit, just in case. $16,000 is 6.75% of your starting 401k balance. Social Security, or your pension, may not grow to keep up with future inflation. Retiree inflation is often different from the CPI because medical costs are going up much faster than the CPI is. If your 401k has no extra cushion, you will not be able to adjust in case Social Security or pension does not keep up with your living costs.
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Re: Reposting original and Responses
Old 06-07-2004, 04:51 PM   #5
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Re: Reposting original and Responses

Quote:
Retiree inflation is often different from the CPI because medical costs are going up much faster than the CPI is.
You will get the same health insurance at the same price as other Federal employees, both working and retired. Health insurance is the biggest financial issue for most of today's retirees.

Be sure to thank God for this benefit as a Federal employee.

Have fun.

John R.
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Re: Reposting original and Responses
Old 06-08-2004, 09:05 AM   #6
Confused about dryer sheets
 
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Re: Reposting original and Responses

Thank you Michael. Your point is well taken. I'm going to try and leave the savings for a year so it'll will grow a little more and then I will reduce the yearly to 16K and reduce it more in 4 years from then.

And thank you JWR1945.
Is that your year of birth? 1945 is mine.
My brother was quite impressed with my health benefits plan. I have difficulty thanking God but I'll take your advice and try. What comes to mind is, "but was it worth all the years of shrinking brain cells and low morale."

And thanks to EVERYONE who offered their opinions and advice. I feel more confident than before. I'll probably will be back soon though... Waiting for the bell to ring.... Eileen
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Re: Reposting original and Responses
Old 06-08-2004, 11:19 AM   #7
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Re: Reposting original and Responses

Yes, 1945 was the first year with atomic bombs and me.

Have fun.

John R.
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