59 & Anxious

[Dtail]

1. Yes, if your company knows you would like to leave, the rest of your time there could be miserable. I made the mistake of letting my company know I planned to leave early, and it made my life as a project manager much more difficult. I'd suggest if you go down this route, be prepared to leave in 2 weeks if things go south. IF the company is considering handing you a golden parachute, and they know you want to leave, they may decide to let you leave voluntarily with nothing.

2. 100% for me.

3. Don't, just don't. A 1% AUM (assets under management fee) will reduce your spending by 25% if you're planning on a 4% withdrawal rate. You seem unhappy with 'just' obtaining market returns in retirement. Going down the managed assets path adds costs, risks, and definitely isn't guaranteed to beat the market. If you THINK you NEED to do this to make ER work, then it tells me that you don't have enough starting assets, and you're NOT READY TO ER. I'd suggest going with Vanguard's simple three-fund portfolio: Vanguard Total Stock ETF (VTI) Vanguard Total International Stock ETF (VXUS) Vanguard Total Bond Market ETF (BND). In the long run, you'll likely do better with this than paying fees to any advisor. A second best option would be to go with a target retirement date fund that auto-rebalances such as Vanguard Target Retirement 2020 Fund (VTWNX). Higher fees, but hands-off simple.

4. Close, but you need to do some more planning, and get your FIRECALC results to at least 95%, either by cutting spending, or increasing investments. Create multiple option budgets (retired supporting kids, retired without kids, retired one spouse only, etc.). Create a spending plan that takes into account taxes. Do the research on the pension options, and determine the best ages for you and your DW to take SS. I'm a little fuzzy on your income once your pension kicks in, and how much you'll need to supplement from the 401(k). In FIRECALC, you should be inputting the pension as an Pension income on the second tab, and not including it in the Portfolio value on the first tab.

Best wishes!

Op has not input any SS yet. My guess is he gets to 95%+ with the input.

 

[cat4ever]

I'm a bit surprised people are saying 120K/year is a lot. When you consider the extra costs of income taxes and insurance premiums you'll have to pay that you're not used to paying now, that probably brings you down to 80-85K of actual spending money. With 5 folks living at home plus a mortgage plus possibly a car payment or at least a large one time cost, that's not a lot IMO.

I was going to say if your used to bring home 200K/year plus a company car, 120K/year seemed pretty light.

 

[nadnerb]

I appreciate the input! It has given me a lot to think about. If the returns are the same, then the lower cost option is definitely better. However, if you have an investment advisor that beats the market by even 2%, then the 1% fee has generated higher income than a market index fund. I guess that was what intrigued be about the Fisher presentation. Having analysts that routinely outperform the market may be worth paying for.

 

[nadnerb]

Finally, are you comfortable with 95% of your 401k in stocks? What happens if a bear market causes stocks to drop 40-50%?

Thanks for the input - I will go to Boggleheads. I was ready to move money into bonds at the beginning of the year, and then Covid hit. I took quite a hit, but it has come back with a vengeance. Presently up 17% YTD which is getting me closer to pulling the plug. So, while I'm not comfortable with that position currently, it is giving me what I think is the final push needed to get across the line. It's a matter of timing to move some of it into bond funds.

 

[nadnerb]

I'm a bit surprised people are saying 120K/year is a lot. When you consider the extra costs of income taxes and insurance premiums you'll have to pay that you're not used to paying now, that probably brings you down to 80-85K of actual spending money. With 5 folks living at home plus a mortgage plus possibly a car payment or at least a large one time cost, that's not a lot IMO.

I was going to say if your used to bring home 200K/year plus a company car, 120K/year seemed pretty light.

The spending is on food, housing, home improvements, 1 week of vacation, phones, internet, utilities. We don't spend on extravagances, don't eat out a lot, and have pared back over the last 4 years. I've retired about $70K in debt using the debt snowball (paid for all 3 kids' colleges so they are debt free, paid off 4 vehicles, and reduced the mortgage). I'm comfortable with that spending.

 

[nadnerb]

1. Yes, if your company knows you would like to leave, the rest of your time there could be miserable. I made the mistake of letting my company know I planned to leave early, and it made my life as a project manager much more difficult. I'd suggest if you go down this route, be prepared to leave in 2 weeks if things go south. IF the company is considering handing you a golden parachute, and they know you want to leave, they may decide to let you leave voluntarily with nothing.

2. 100% for me.

3. Don't, just don't. A 1% AUM (assets under management fee) will reduce your spending by 25% if you're planning on a 4% withdrawal rate. You seem unhappy with 'just' obtaining market returns in retirement. Going down the managed assets path adds costs, risks, and definitely isn't guaranteed to beat the market. If you THINK you NEED to do this to make ER work, then it tells me that you don't have enough starting assets, and you're NOT READY TO ER. I'd suggest going with Vanguard's simple three-fund portfolio: Vanguard Total Stock ETF (VTI) Vanguard Total International Stock ETF (VXUS) Vanguard Total Bond Market ETF (BND). In the long run, you'll likely do better with this than paying fees to any advisor. A second best option would be to go with a target retirement date fund that auto-rebalances such as Vanguard Target Retirement 2020 Fund (VTWNX). Higher fees, but hands-off simple.

4. Close, but you need to do some more planning, and get your FIRECALC results to at least 95%, either by cutting spending, or increasing investments. Create multiple option budgets (retired supporting kids, retired without kids, retired one spouse only, etc.). Create a spending plan that takes into account taxes. Do the research on the pension options, and determine the best ages for you and your DW to take SS. I'm a little fuzzy on your income once your pension kicks in, and how much you'll need to supplement from the 401(k). In FIRECALC, you should be inputting the pension as an Pension income on the second tab, and not including it in the Portfolio value on the first tab.

Best wishes!

Really great input! Thanks!

 

[nadnerb]

Fidelity is another option who may be able to look at your situation. When we retired I moved everything there. We met with the local rep a few times to go over strategies.
Zero cost. I like their website more then Vanguard (four years ago that is).

I liked Fidelity's planning tool also.
https://www.fidelity.com/calculators-tools/planning-guidance-center

Fidelity is where my 401k resides currently. Their local office is about an hour away. I was planning on meeting with them.

 

[nadnerb]

Who is your 401(k) with now?

Fidelity through work.

 

[nadnerb]

This might not be a popular viewpoint, but if you wanted to reduce your monthly bills, refinancing your mortgage might be an option. If you refinanced that $133K for a 15 year fixed @3%, it would drop your payment to about $918/mo, plus taxes/insurance. If you wanted to go with a 30 year fixed @3%, it would drop it to around $560/mo. And you might be able to get a rate lower than that. I'm in the process of refinancing a 30-year fixed, and they're supposed to be getting me 2.875%.

So, if that $1500/mo is just the principal/interest portion of your mortgage payment, refinancing could save you a pretty good chunk per month. And the 15-year wouldn't even push your repayment timeline out all that much.

The $1500 is Principal, interest, taxes and insurance. We have a variable rate mortgage that keeps going down. It never made sense to refi, but it may now. We need to decide if this is our forever home, or if we would rather get closer to the shore. If we are going to stay, refi makes sense, also maybe take some equity to do some needed upgrades.

 

[nadnerb]

Op has not input any SS yet. My guess is he gets to 95%+ with the input.

Actually, adjusting down expenses from $120K to $100K, removing the house expense in 14 years, and adding in my Social Security (not sure of DW's), the score jumped to 99.2% with one failure. I was not aware of the extra tabs that took input.

 

[nadnerb]

On top of that, if your portfolio is all pre-tax, you have to cough that up from your other cash flow-they cannot be paid out of your 401K or IRA.If all they are doing is managing index funds, you should go lower cost. They and Edward Jones are amongst the highest.

Not sure what you mean about this. If you retire and pull pre-tax money out, you can't pay the taxes with what you withdraw?

 

[Dtail]

Actually, adjusting down expenses from $120K to $100K, removing the house expense in 14 years, and adding in my Social Security (not sure of DW's), the score jumped to 99.2% with one failure. I was not aware of the extra tabs that took input.

You can use one of the official SS estimator links below to estimate your DW's SS benefit. You will probably get to 100% success rate.

https://www.ssa.gov/benefits/retirement/estimator.html

 

[pacergal]

You have a variable rate mortgage. Yes it goes down, but I would expect interest rates will go up in the next 14 years of your mortgage.

Now would be a good time to refi to a fixed rate 15 year, rates are really low.

 

[OldShooter]

... if you have an investment advisor that beats the market by even 2%, then the 1% fee has generated higher income than a market index fund. ... Having analysts that routinely outperform the market may be worth paying for.

It certainly would be. I would be among the first to sign up. The fly in the ointment here is that Fisher is lying to you. They cannot deliver 2% over any significant period of time and almost certainly never have. Period. They promise to draw their fee, right? Will they also promise the 2% alpha in writing? If you want a good laugh, just ask.

There is well over a half century of data and studies that show stock pickers' performance is indistinguishable from random. During this elapsed half century, the hucksters have developed finely tuned ways to mislead customers. Hidden survivorship bias, cherry-picking time periods, and apples-and-oranged comparisons are among the tools in the kit. They are smart, practiced, and expert at gulling customers. Don't bother to try to figure out their tricks. Just say no to anyone who makes claims like this.

A good FA will probably deliver performance that is 1-2%.below his benchmark, gross of fees. Include fees and you are down 2-3% or more. DIY, which you can easily do, will put you less than 1% below the benchmark.

Here is a short video from one of the academic gurus in investing, talking about trying to find a good manager -- which Fisher of course claims to be. https://famafrench.dimensional.com/videos/identifying-superior-managers.aspx

In addition to the two books I already mentioned, I'll suggest that you read either one of these two:

• "A Random Walk Down Wall Street" by Burton Malkiel https://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393330338
• "Winning the Loser's Game" by Charles Ellis https://www.amazon.com/Winning-Losers-Game-6th-Strategies/dp/0071813659

 

[pb4uski]

....adding in my Social Security (not sure of DW's) ...

If your DW was a SAHM, her SS at her FRA will be half of your primary insurance amount (your FRA benefit). When you are 70 she will be 65. Check opensocialsecurity.com but I suspect it will recommend that she take early and you take at 70. The other benefit of deferring is that it give you more headroom for Roth conversions before RMDs begin when you turn 72.

 

[rodi]

Not sure what you mean about this. If you retire and pull pre-tax money out, you can't pay the taxes with what you withdraw?

EastWestGal was referring to paying the AUM... if they manage retirement accounts - they count that as part of the assets - but their fees have to come out of non-retirement accounts (or taxed withdrawals from the retirement accounts. Makes their fees more expensive.

 

[iRent2u]

Fisher Investments Response

I am new to Fisher Investments. Was fortunate to buy in one week after stocks hit bottom. I’m very happy with the return. I really like their investment philosophy such as. “We don’t try to time the market. We don’t chase after the latest trend or for a needle in the haystack. We find stocks that have value and long term growth potential. We don’t try to Avoid any and all downsides.” I like the fact that they do not keep the money in a “Fisher Fund”. Your money is invested with a 3rd party (for me Fidelity) thus no chance for funny business (Bernie Madoff). You will be contacted regularly by your investment advisor. They also offer regular webinars. This is my first time to invest cash. (I’m a real estate investor). I could not be happier. Don’t get me wrong I still love my RE investments.

 

[Dtail]

I am new to Fisher Investments. Was fortunate to buy in one week after stocks hit bottom. I’m very happy with the return. I really like their investment philosophy such as. “We don’t try to time the market. We don’t chase after the latest trend or for a needle in the haystack. We find stocks that have value and long term growth potential. We don’t try to Avoid any and all downsides.” I like the fact that they do not keep the money in a “Fisher Fund”. Your money is invested with a 3rd party (for me Fidelity) thus no chance for funny business (Bernie Madoff). You will be contacted regularly by your investment advisor. They also offer regular webinars. This is my first time to invest cash. (I’m a real estate investor). I could not be happier. Don’t get me wrong I still love my RE investments.

Have you compared your returns to a low cost index fund(s) returns, including their fees?
You entered at a good time, so results "might" appear good.

Using a different example, my parents used to use an advisor and my father stated he always makes us money.
Well, he started with the advisor in March 2009. Anyone could have made money starting from March 2009 through 2017.
The returns were lower than a comparable index fund scenario after fees were subtracted.

 

[meleana]

Get a free only FP from the Garrett network that does not manage your money but makes recommendations on what you should do with a more holistic approach to your entire situation. Independent and objective. Pay for the advice and that’s it. Have been happy with ours.

 

[OldShooter]

@iRent2u, listen to @Dtail. You should also be aware that what you say you like about Fisher is really pretty standard stuff that you will get from any FA. The idea of looking for stocks that "have value and long term growth" simply demonstrates a firm grasp of the obvious. Using a custodian like Fido is also standard fare. Fido, Schwab, and TDAmeritrade all have legions of FA customers. It is an important part of their business.

I also suggest that you read "Winning the Loser's Game" by Charles Ellis https://www.amazon.com/Winning-Losers-Game-6th-Strategies/dp/0071813659 Ellis is one of the acknowledged experts in the game (https://en.wikipedia.org/wiki/Charles_D._Ellis). In his book, he explains in great detail why schemes to beat the market consistently fail to actually do it.

 

[AbbA]

@nadnerb, please, please buy and read this book: "The Coffee House Investor" by Bill Schultheis https://www.coffeehouseinvestor.com...e'd be releasing the new version in November.

 

[nadnerb]

I am new to Fisher Investments. Was fortunate to buy in one week after stocks hit bottom. I’m very happy with the return. I really like their investment philosophy such as. “We don’t try to time the market. We don’t chase after the latest trend or for a needle in the haystack. We find stocks that have value and long term growth potential. We don’t try to Avoid any and all downsides.” I like the fact that they do not keep the money in a “Fisher Fund”. Your money is invested with a 3rd party (for me Fidelity) thus no chance for funny business (Bernie Madoff). You will be contacted regularly by your investment advisor. They also offer regular webinars. This is my first time to invest cash. (I’m a real estate investor). I could not be happier. Don’t get me wrong I still love my RE investments.

How do you pay their fees, and when do you pay them?

 

[samcat]

Turned 59 in June. Married with 3 adult offspring. My wife is 54 and stay-at-home mom/grandmother. Youngest child just graduated college and is back living with us while trying to find a job. Middle child & grandchild also live with us and my wife is childcare while daughter works. Currently work for mega-corp (33-yr. employee) $200K/year and a company car which would need to be replaced on retirement. Job changes/reorganization causing me to consider leaving – maybe retire, travel and volunteer or find a lower-paying/lower stress job locally to stay active and get healthcare. With the reorg, thinking of approaching management for an early retirement package.

Only debt is $133K left on a 30-yr. mortgage ($1500/mo. 14 years left). Current expenses $120K year including mortgage. Expenses going down since youngest graduated (no rent, school expenses, etc.) but likely to be offset or go up depending on healthcare costs. Retiree healthcare available $1700/mo to cover DW & dependents. $1100 for just self and DW.

401K is $1.6M and is invested 95% stocks plus pension current lump sum value is $1.07M for a total of $2.67M. $80K in cash/emergency fund. Equity in house estimated at $250K.

FIRE Calc score is 85% if I retired now and used 30-year timeframe. Haven’t chosen a financial planner yet. Considering Fisher Investments or local Edward Jones broker.

Questions:
Any concerns about asking for parachute?

What FIRE Calc score is needed to be comfortable in retirement decision?

Is Health Sharing a good option for healthcare until Medicare-eligible?

What do I need to consider if I took a lower-paying local job that included healthcare? Can I retire, pull from retirement and still work new job doesn't cover expenses?

Since DW is younger and healthy, how do I decide whether to take pension as a lump sum, or annuity with survivor option at 75% or 100%?

Any input on using a fiduciary like Fisher (no mutual funds) vs. broker?

Am I even close to being able to pull the plug?

We use Christian Healthcare Ministries for our health insurance. We are finishing out third year with them and it has worked out great.

If you have an expensive illness, they cover it. Been in business for almost 40 years.