Retirement-planning roadblocks

[Nords]

This is excerpted from Forbes' "Roadblocks to Avoid in Retirement Planning".

I expected an article about how to cash in stock options, enjoy your executive perks, and otherwise retire on $200K/year.* I was pleasantly surprised that Forbes doesn't expect everyone to retire to their standard of living, although they leave a few holes in their discussion.

BTW Forbes expects you to read the article and then to scroll through 10 screens of ads to review the individual roadblocks.* So here they are without the extra effort but with my () comments:

1.* Limited Horizon.* Don't plan for X years of retirement, because you may outlive your money. It's also a mistake to assume that you or your spouse will live longer. Run various scenarios and consider the contingencies of each.

2.* The Law Of Averages.* It's a mistake to assume that the law of averages will work in your favor. Over time, the stock market is the place to be, but if you were close to retirement and took a big hit in the market downdraft after Sept. 11, 2001, you're hurting now. Remember: Averages trace the general trend and don't tell you much about the specific instance. So, don't bet the farm based on an average.

(OK, Forbes, what other benchmark should we use?* The Depression?)

3.* Following Someone Else's Plan.* Don't follow the herd, and don't be bound by the book when drafting a retirement plan. Define your needs carefully and precisely. Make trade-offs as needed that fit your needs--not the outlines of an off-the-shelf plan.

4.* Forgetting That The Tax Man Cometh.* Remember that you're not immortal, but the IRS is eternal--or so it seems. Therefore, a sound strategy is required if you expect to pass a good chunk of your estate on to your children upon your death. Working with a tax adviser now means the taxman won't morph into "Infernal Revenue Service," and your grandchildren can go to college on the money you bequeath.

5.* Panicking.* There are always some bumps in the road. If you hit one, don't panic and dump your retirement plan. Consistency is the key to long-term success. Just don't let consistency degenerate into dogma, because it will be necessary to make minor adjustments along the way.

(Don't panic but don't stick to a bad plan.* OK, how do we tell the difference?)
* *
6.* Future Health Care Costs.* Don't base future health care needs on current costs. Age changes everything. There's also the matter of inflation. Work with your financial adviser to plan your future health coverage.

(Ruh-roh-- I can see where the financial advisor would push commissioned sales products.* How 'bout another source for assessing & handling health care expenses?)

7.* Not Getting Professional Help.* OK, hotshot, listen up: You can't run your own money, even if you're top of the heap at work. You need a pro to balance risk and reward and to match asset allocation to your needs. Trying to do this yourself is an invitation to a beheading--yours.

(Glad I'm not subscribing to Forbes.)

8.* Hiring The Wrong Pro.* When looking for an adviser, competence is a given. Look for fit and trust. If it's not a match, you owe your current adviser nothing. Find another who better meets your needs. Remember: Your adviser's fees come out of your pocket, so make sure you get value. Shop around, because fees and performance vary widely.

9.* Dreams vs. Reality.* Here's betting that you don't retire to Tahiti where dancers peel grapes for breakfast. But if you're diligent, you might be able to afford that old farmhouse. If your hair is gray, financial reality has almost certainly intruded, and it's time to put aside youthful dreams of the South Pacific and start planning for retirement.

(Now I want to visit Tahiti.)

10.* Oversimplifying.* How and when do you want to retire? What will it take to achieve your goals? Drafting a sound retirement plan isn't easy and requires mastering the details. Remember: It's your retirement. Get it right.

(JohnGalt, I'll let you handle this one...)

[unclemick]

Duh!!!!

After thirty years or so - I canceled my Forbes subscription a few years back.

I don't let a Vanguard planner near my portfolio - even though I have enough for a 'free checkup'!

I read most retired stuff(and calc) - 4-5 yrs AFTER I ER'd.

Still reading - after twelve years in ER - it's always interesting to read how I screwed up.

Quote:

. The Law Of Averages. It's a mistake to assume that the law of averages will work in your favor. Over time, the stock market is the place to be, but if you were close to retirement and took a big hit in the market downdraft after Sept. 11, 2001, you're hurting now. Remember: Averages trace the general trend and don't tell you much about the specific instance. So, don't bet the farm based on an average. (OK, Forbes, what other benchmark should we use? The Depression?)

Forbes should look at FireCalc. - If your portfolio survives this, then it is probably OK for the long haul. As you know FireCalc uses the Depression and the Go Go 90's. - That is a good enough average for me.

Remember though just 1 Atomic Bomb will ruin your whole retirement plan.

[steinj]

I like the line about 'when looking for an advisor, competence is a given' ..... yeah right, that's sure been my experience ....

JoJo

[Spanky]

Apparently this aritcle is sponsored by the investment advisors or finanical consultants.

[BUM]

Nords,

Thanks for the witty editorializing on an otherwise terrible article for young dreamers. Tripe like that IS the retirement roadblock.

[MRGALT2U]

Quote:

Originally Posted by Cut-Throat Remember though just 1 Atomic Bomb will ruin your whole retirement plan.

Hi C-T. So will just one bad marriage

Forbes is only good for toilet paper. Hey, unclemick, I am going in for my
"annual review" next week (Edward Jones). Don't know why they bother with me. It's peanuts and I seldom do what they tell me.

JG

[Eagle43]

Tahiti. Now that's real close to Bora Bora. James Michener told me years ago to go there. Forbes is telling me not to go. I like Michener better!

[LEX]

IMHO: 99% of all the so called "financial press" is really driven as some form of advertising to support the brokers, bankers and insurance parasites that buy space in the respective magazines, media, web page, or newspaper.* Trust your own common sense and sense of self preservation by avoiding the fog of media maniplulation such as Forbes, Money, and the paid for air time "informercials" passed as objective radio and TV spots that never fully disclose who is behind the opinions that are being passed as facts. The Merril Lynches, Morgans, Chases, and myriad other blood suckers that make up the "Financial services" system do not like or profit from self reliance, no load fund based portfolios,* and independent investors who refuse to pay for some sales idiot to steal their money while pretenting to provide advice.*

You can not remain ER without being fairly cynical about those that "are here to help you!"*

That also includes nosey relatives.

[igreen]

<quote>Thanks for the witty editorializing on an otherwise terrible article for young dreamers. Tripe like that IS the retirement roadblock. </quote>

I'm a writer working on a retirement planning guide for a national personal finance magazine. I'm hoping to produce something considerably more useful than the example cited at the top of this thread.

To do that, I'd like to interview (and quote by name) several "young dreamers" who've done the FIRE math in recent months, as well as a veteran or two succeeding in their planning strategy. If you'd like to share your experience and have the time for a brief phone intervew this week, please email me: igreen01<at>yahoo.com. I promise to keep it real.

If the admins would allow me to repost this message in the young dreamers forum, I'd certainly appreciate it. Thanks in advance for your help.

[LEX]

If the word got out that self discipline and comon sense budgetary restraint was more effective than any single fee driven system being offered by the established financial industry, everyone would be in on the deal.* Then the feds would issue arrest warrents for all ER's and make them go back to work, join a forced labor camp in Kansas, or face some draconian tax rate for failure to belong to the earn and spend treadmill.* Anyway, you are stealing intellectual property from this forum and converting the origianal works that have been posted so that you can copyright them and sell them without paying royalties to these noble and sometimes brilliant ER's.* I suggest that no ER talk IGREEn unless thay are paid for it and get a cut of the residuals.

Now, IGREEN, go away and make an appointment with your local Merrill, Schwab, Prudential, (and so on...)* financial consultant to obtain true and unbiased information for your version of the scam set that passes as financial information. Copyright, LEX Inc. 2005 8)

[cute fuzzy bunny]

Quote:

Originally Posted by LEX IMHO: 99% of all the so called "financial press" is really driven as some form of advertising

99% of everything you see in print, television, or on the radio is some form of advertising.

Buy our product. Watch our show. Use our service. The cost of getting something to your eyes and ears costs money. Whoever paid that money wants a return on their investment.

[tryan]

Quote:

Apparently this aritcle is sponsored by the investment advisors or finanical consultants.

Between the pop-ups and the financial advisor advice ... this is hard to deny.

Enjoy!

[dory36]

Quote:

Originally Posted by igreen <quote>Thanks for the witty editorializing on an otherwise terrible article for young dreamers. Tripe like that IS the retirement roadblock. </quote> I'm a writer working on a retirement planning guide for a national personal finance magazine. I'm hoping to produce something considerably more useful than the example cited at the top of this thread. To do that, I'd like to interview (and quote by name) several "young dreamers" who've done the FIRE math in recent months, as well as a veteran or two succeeding in their planning strategy. If you'd like to share your experience and have the time for a brief phone intervew this week, please email me: igreen01<at>yahoo.com. I promise to keep it real. If the admins would allow me to repost this message in the young dreamers forum, I'd certainly appreciate it. Thanks in advance for your help.

Go ahead and repost there. If folks are skeptical, they might contact you via private message where you can establish bona fides and so forth.

[Craig]

With respect, seems igreen is asking a reasonable question.

I enjoyed this line in the article: "When looking for an adviser, competence is a given. ... Shop around, because fees and performance vary widely."

So competence is a given, but performance varies widely? Got it.

[Ed_The_Gypsy]

Remember Ted Sturgeon's Nine-Tenths Law: "Nine-tenths of everything is garbage."

I used to buy Forbe's September mutual fund Honor Roll issue, which was my introduction to rational selection of funds. After a while, I began to notice that VFINX showed up in the list a lot, and so my enlightenment began.

El Gitano

[Ed_The_Gypsy]

Reply to REX (reply #8),

A chap named Don McDonald used to have a radio show on money. He was a former stock broker who discovered enlightenment (or maybe a conscience, but we should be generous). He debunked flakey products and mostly tried to educate about the virtues of indexes.

As a money show, of course, it was sponsored by high-flyer-type investment "advisors" and flakey products, who didn't like getting slammed on the show. Eventually, the only outfit that was clean enough to be interested in sponsoring the show was Vanguard--which he wouldn't allow because he talked them up on the show. No good deed goes unpunished and now he has no show (again), but a web site and a newsletter.

I called in once to ask him about Berkshire Hathaway. He said it was kind of expensive for a mutual fund (PE too high, I think) and discouraged me. It was at $8,500 then. It is now $85,000. He was right then and is still right, but oh, my.

Ed

[MRGALT2U]

Quote:

Originally Posted by Ed_The_Gypsy Remember Ted Sturgeon's Nine-Tenths Law:* "Nine-tenths of everything is garbage." El Gitano

The 9/10s Law sounds fishy to me.

JG

[LEX]

Very little of the fish is fillet.