What about OLD FOLKS???

[frujinator]

Ok question to all you financial guru's and Retiree's, I need some experienced advice here.

A few weeks ago I found out that both my parents had some sort of retirement accounts stashed away at some Fidelity Advisor Fund(which sucked) and in some Provident National Life Insurance Company(sucked too).

So I transferred their assets to Vanguard, both into separate accounts. My mom's is a Rollover IRA and my dad's is a SEP-IRA.

My mom is 45, and only has $1600 now in her Rollover IRA. Now she might be putting more in, but slowly and surely. I put her on the TARGET RETIREMENT FUND 2025.

My dads is about $2000, and I too put him into Target Retiremetn 2025. He is 48.

Since they are a bit older, and have decided very late to start thinking about their retirement(I pushed them to transfer assets to Vanguard), but I'm not sure what they should invest them which will help them gain some retirement ground in the next 10-15 years?

Any advice is appreciated.

Thanks!

-Fruji

[MasterBlaster]

Is 45,48 really that old ?

The Target Retirement funds are indeed a good choice. I wouldn't go with a slice and dice approach with your folks like many here recommend.

Your folks need to understand that they should save more, alot more, else they really suffer when they quit working. Perhaps you could do a FIRECALC (or other) simulation for them to project their future likely retirement budget.

[frujinator]

They will start putting more away. I anticipate at least $5k in each account by the end of the year.

At least it's a start.

[OldAgePensioner]

Get your folks to follow this guy's method. He for real and is damned good.

http://www.kirkreport.com/portfolio2005.html

[audreyh1]

Psssst! - your folks are YOUNG!

Audrey

[MikeD]

Originally Posted by frujinator

My mom is 45, He is 48.

Since they are a bit older,

Choke! Gasp!

Mike D.

Originally Posted by OldAgePensioner

Get your folks to follow this guy's method. He for real and is damned good.

http://www.kirkreport.com/portfolio2005.html

I don't think this is very good advice. - Stock Pickers come and go, but rarely are good for the long haul.

[yakers]

Darn, and here I thought this thread was gong to be about the financial issues when someone hits at least 80, and maybe 90 years old. There may be a different approach to asset management at that age even if it is focused on estate planning. But 45, naw.

[Robert the Red]

Do people live to be that old?* Oh, for the Logan's Run days.

[Brat]

While I don't recommend slice % dice, I would add a Vanguard foreign stock fund to the mix - at least 10%, maybe as much as 20%.

Brat, are REALLY old Mom

[MasterBlaster]

Considering what your folks have saved relative to their age I would say that the saving is much more important than some fine-tuned asset allocation.

Have them invest in something that's reasonable. Almost anything is better than not saving.

Here's a link to a guide for someone who wants to retire at 65 with 80 percent of their working income:

The analysis includes social security etc

http://www.realestatejournal.com/buy...jrss=frontpage


The analysis shows that if you have saved 12 times your current income then at a 5 percent withdrawal rate your stash will provide 60 percent of your working income. Social Security is then assumed to get you up to the target 80 percent of income.

This analysis may not be correct for many people. If your house is paid for your expenses may be much less than 80 percent of your current income. I find that my current expenses are only about 30 percent of my income. So for me, I could get by on much less than 80 percent of my income. So, the 60 percent of income that the 12 times current income savings provides would be more than enough for me.

If you find that with your expenses that you can get by on say two thirds of the suggested 60 percent of your income then just scale all of the numbers back by the factor 0.66 (40/60 = 0.66)

Nonetheless, the table is a somewhat useful guide for how much savings you should have.

Note that at your parents age the guide suggest that they have savings of around 3-4.5 times their yearly income. So unless your parents only make a total income of ~$1k/year then you can see how inadequate their savings are and how they will have some problems keeping up with their lifestyle.

* *

[azanon]

Fruji,
I agree, pick one of those retirement dated funds that have a mix of stocks/bonds, or just a vanilla Balanced Fund is hard to beat too.* I personally dont like the rigidity of the fund manager being forced to hold a certain percentage of stocks/bonds.. whereas in balanced funds, they are often lax enough that the fund manager can swing the stock bond ratio from 30-70% and back, if he deemed it necessary.

>My second advise is to just let the rollover IRAs sit, and then buy them a new fund for each of them to invest in.* *Why you ask?* Because i'm just guessing those rollover funds are of the Traditional IRA variety.* *Presuming i'm guessing right, I believe they'd be better off in a Roth IRA since it allows them to effectively contribute more per year, and the withdrawals eventually would be tax free.* *There are other benefits of Roths too (such as penalty free withdrawals at any time of contributions only.

Its never too late to start.* *At their age, i'd have them consider it nonnegotiable that they max all of their legal retirement fund options.* *Meaning if the max is 4K per account for IRAs this year, then they should definitely max them.

[astromeria]

Thanks for the laugh--OLD FOLKS indeed!! At 48 I started my last and most lucrative job--the one with the stock options that were worth something...for a few months, anyway. Ya want old folks? My mom is 80 and last I checked is still invested thusly: 68% individual corporate bonds, 24% dividend-paying stocks (individual, not in a mutual fund), 8% CDs. All in a traditional IRA rolled over from a pension she took as a lump sum. (She never saved anything for retirement either, but she had a pension coming.)

So, dude--will your parents get any pension or employer-paid health insurance? I hope they're convinced to sock away big bucks at last. If they get bonuses at work and have any debt, I hope you can persuade them to use the bonuses for debt reduction--or if not, for investment. I didn't start socking away more than 8% till I hit 40 myself, so I know how easy it is to be a slacker.

I think target retirement plus EFA and/or EEM is fine--it's how I recommended my kids do their Roths to start.

[yakers]

The VG Target fund is good. A couple others you could look at are the Star Fund (VGSTX) and one I like and have my Roth in is the Asset Allocation Fund (VAAPX). Another I like (my wife's IRA) is safe but less growth Wellesley (VWNIX).

[frujinator]

Thanks for the responses guys, here a few answers to questions.

I doubt my mom will have employee sponsored healthcare when she retires, because the company is very cheap from what I hear. My dad is self-employed at the moment for the last 3 years, so no chance of healthcare their.

I think I will have them MAX out their Rollover and SEP for 2005, still a few days left, and make sure to max out for 2006.

Should I switch them to Target Retirement 2045 instead of 2025

Thanks,

-Fruji