Hello forum! Yes, this is my first post.
I'm 61 and at least for the past 10-15 years have been in a position to modulate my workload/income. In other words, there have been times when I worked less in order to do other stuff, mostly involving travel. Even before the covid years I had been tapering off my workload, but for the past 3 years or so my work has decreased (not entirely within my control) to now just a trickle. So I guess I'm now retired and earn what might be called retirement gig income. My savings are in a 401k and a rollover IRA. No pension. I have some cash, and I have been paying expenses with that, though with interest rates so high it has not been the obvious choice of what source to tap for expenses. In other words, I have not dipped into my investments yet, but it is time. I don't want to entirely deplete my cash.
I have been using the same financial planner/advisor to manage that IRA on an AUM basis for decades, and I trust him and his "wealth management" firm completely. In designing and maintaining my portfolio, they have always seemed to follow the conservative, conventional wisdom. They do an annual rebalancing, and every once in a while they have dropped some fund and replaced it with another. I have often thought I could do that myself if I made the time, but I chose to spend my free time on other things. For many years the logic appealed to me that it is reasonably efficient to spend my time doing the paying work I am proficient in--per hour, my work pays well--and leaving the portfolio management to someone proficient in that. However, now that I am ramping down the hours--okay, okay, retired--that logic is less persuasive, and I have more time.
I recently had a long phone call with my advisor to discuss retirement more seriously than in previous conversations we've had, and among the things we discussed was the 4 percent rule-of-thumb withdrawal rate. Sure, they can help with a detailed plan and so forth, but it seems to me that no matter what the details of the plan may be it will still work out to a ballpark withdrawal rate of 4 percent per year. Like most AUM fees, my advisor's is about one percent. After the phone call with my advisor, I started thinking about that 4 percent from another perspective. If my advisor receives one percent, and I therefore receive the remaining 3 percent, my advisor is effectively on my payroll earning 25 percent of my gross retirement income. Just supposing I have a $1M portfolio, it feels as though I'm going to be paying someone $10,000 a year to "run the business" when my "salary" is only $30,000. Is it silly to look at it that way? After all, my advisor is still earning one percent of my assets under management as has always been the case.
I am considering the possibility of taking a more hands-on approach. Could I hire an advisor/planner on an hourly fee basis to plan how to turn my savings into a cash income stream and otherwise make sure my ducks are in a row for, say, the next year, and then repeat the process annually (or at whatever interval I want)? I have contacted a few advisors whose names I got from acquaintances, but so far, none of them work on an hourly fee basis--everyone seems to prefer the AUM fee model.
Thoughts?
I'm 61 and at least for the past 10-15 years have been in a position to modulate my workload/income. In other words, there have been times when I worked less in order to do other stuff, mostly involving travel. Even before the covid years I had been tapering off my workload, but for the past 3 years or so my work has decreased (not entirely within my control) to now just a trickle. So I guess I'm now retired and earn what might be called retirement gig income. My savings are in a 401k and a rollover IRA. No pension. I have some cash, and I have been paying expenses with that, though with interest rates so high it has not been the obvious choice of what source to tap for expenses. In other words, I have not dipped into my investments yet, but it is time. I don't want to entirely deplete my cash.
I have been using the same financial planner/advisor to manage that IRA on an AUM basis for decades, and I trust him and his "wealth management" firm completely. In designing and maintaining my portfolio, they have always seemed to follow the conservative, conventional wisdom. They do an annual rebalancing, and every once in a while they have dropped some fund and replaced it with another. I have often thought I could do that myself if I made the time, but I chose to spend my free time on other things. For many years the logic appealed to me that it is reasonably efficient to spend my time doing the paying work I am proficient in--per hour, my work pays well--and leaving the portfolio management to someone proficient in that. However, now that I am ramping down the hours--okay, okay, retired--that logic is less persuasive, and I have more time.
I recently had a long phone call with my advisor to discuss retirement more seriously than in previous conversations we've had, and among the things we discussed was the 4 percent rule-of-thumb withdrawal rate. Sure, they can help with a detailed plan and so forth, but it seems to me that no matter what the details of the plan may be it will still work out to a ballpark withdrawal rate of 4 percent per year. Like most AUM fees, my advisor's is about one percent. After the phone call with my advisor, I started thinking about that 4 percent from another perspective. If my advisor receives one percent, and I therefore receive the remaining 3 percent, my advisor is effectively on my payroll earning 25 percent of my gross retirement income. Just supposing I have a $1M portfolio, it feels as though I'm going to be paying someone $10,000 a year to "run the business" when my "salary" is only $30,000. Is it silly to look at it that way? After all, my advisor is still earning one percent of my assets under management as has always been the case.
I am considering the possibility of taking a more hands-on approach. Could I hire an advisor/planner on an hourly fee basis to plan how to turn my savings into a cash income stream and otherwise make sure my ducks are in a row for, say, the next year, and then repeat the process annually (or at whatever interval I want)? I have contacted a few advisors whose names I got from acquaintances, but so far, none of them work on an hourly fee basis--everyone seems to prefer the AUM fee model.
Thoughts?