Hi, my 120 day countdown has begun and I COVET your feedback!

[TimevsMoney]

Hi, I am relatively new to the forum and have enjoyed reading so much insight. I am however overwhelmed by all your collective knowledge as much of it is over my head. I even had to take a crash course on the myriad of acronyms.

Ok, here are the 5 questions I would really appreciate any insight on. I am excited but very nervous about retirement looming as I begin to see the finish line in the distance. I gave my notice to my boss last week. July '81 start date and a July '18 finish line date. Just transpose those 2 numbers and the curtain comes down.

1. My Portfolio and Chances of Success: I would appreciate feedback on my portfolio, asset allocation etc that I note below.

2. FA vs DIY: This is the biggie for me. I have little knowledge on investing. If I want to go at it alone to save FA fees how best to get up to speed with self learning? Where tools do I utilize? Can I get professional advice with one time charge? i have no idea how to start.

3. Budget/Expenses: I am somewhat embarrassed by my total annualized expenditures compared to what I see on this forum. I thought my life was rather simply, does everyone really live on 60-70K a year?

4. My final 120 Days: Did you stay focused on work? I confess to spending more time on this type of forum then giving it my full energies at work, I want to be respectful and give it a full day but it is a struggle.

5. Structure in M-F 8-5 PM Retirement Life: Before you retired did you have a plan on how your 8-5 PM Monday through Friday former work week looked like? Did you have a firm plan on how you would spend your days? I have a few hobbies but nothing major and I have no handyman skills. I would love your thoughts on how you approached your day to day retirement life.

My Situation:

I am 59, DW is 57.5. Two wonderful grown daughters out of house. No debt. I thought 2 years ago my retirement date would be age 62 but in mid 2017 started giving thought to moving it up. I have worked for the same Dow 30 company for 37 years. I am in Sales and Marketing. Some of the work I still like and I enjoy my staff of 10 direct reports. But I am very tired of the travel (by car and plane), i have a back problem as well as a few other health issues. I am a former long distance runner with 40 marathons under my belt but cannot run anymore due to injuries. Thus, I have gained 25 pounds and that alone causes me some dissatisfaction with work and frustration with myself for allowing me to get to this point. (poor eating habits on the road with lack of sleep). You all say when you retire the best day is Monday morning. For me, it will be Sunday afternoon as every Sunday while most of my working friends are out and about I have to open up that computer to review the prior week sales results, cringed a bit then prepare for sales calls that I lead for Monday morning. Work is always on my mind on Sunday's.

Investments: If I track every dime and quarter I can find under the car seats and such we have 2.1 million with about 65% of that in our 401K. I think our asset allocation is roughly 50% stock mutual funds and 40% in bond funds and about 10% in cash. I am clueless as to what an Index fund is or an ETF which is in there somewhere. I am paying Fidelity 1.2% (gulp) as my FA to manage about 700K of the above. For the first time ever I looked up our mutual fund fees and they run .4% to .9%. We have about 15 different mutual funds. My goal would be to not pay those high FA fees but that means I have to do it and I am not comfortable with the process. Would I have to open an online account with say Vanguard or Fidelity to avoid that 1.2% FA fee? And if I do isn't it expensive to buy and sell trades? Please help me with your suggestions.

Expenses: After what I'm read on this forum, it makes me a tad embarrassed to acknowledge this but I reviewed our prior year and our annualize budget is 105K which includes 10K for health insurance but nothing for taxes. How do you determine your effective tax rate? Even if I assume a 20% rate that would bring my annual withdraw rate up to about 130-135K which seems like a ton!

Income: Once I retire in July, for the next 2 years my sweet bride of 36 years will be bringing home the income as a school teacher. (I will be joining her health insurance plan when I retire). She will work till she is 60. Thus we will have annual income of about 62K until either 2020 or 2021. With a total need of 135K that shortfall requires a withdrawal of 73K in today's dollars or close to 4.0% drain. Once my DW retires we intend to utilize SS and our 3 pensions as soon as possible at age 62. With those taken together that brings us 78K annually in today's dollars and yes each pension has a COLA. Rough math tells me with our 135K budget I am somewhere between 3.75% and 4% withdraw not including inflation. I read a lot of you manage a withdrawal rate of 3% or less. Am I stretching it too thin? The FIRE Cal shows between a 96% and 100% success rate over a 32 year period but I am not sure if I should rely on that.

Our expenses are driven by loving to travel to see our daughters who live far away, LA and D.C. (17K in the budget for now), eating out (8K) and 3 doggies (7K for boarding and such). I know I have control over some of these discretionary areas but I would like to try to retire with a similar lifestyle.

Thank you in advance for any feedback! As a thank you for the awesome advice I will receive I will now provide a free tip to the guys on this forum. Do you get an annual physical? If not you should. Do you get annual blood work? You better. 2 years ago I got my blood work back and it showed my platelets were slightly under the low average for a man (140). Mine was 124. My primary care said it was likely no biggie but over an abundance of caution she sent me out to a few specialist that I was sure would be a waste of time. 3 specialist later and one bone marrow tap later it revealed I have a rare bone disease called Multiply Myeloma. We caught it early but with no cure in sight treatment will follow at some point and my life span will likely not match the national averages. I'm gonna live life to the fullest each and every day with my sweet DW of 35 years. Guys, get your annual physical and blood work and if anything is out of pattern, check it out!

 

[joeea]

Can I get professional advice with one time charge?

Yes. You can hire a fee-only fiduciary adviser.

I thought my life was rather simply, does everyone really live on 60-70K a year?

Of course not.
For example, our retirement buget is $100k/year.

My final 120 Days: Did you stay focused on work?

I did. I had a rather important and intense 2-year project to complete before leaving. That easily kept me focused (although much more relaxed once the end was in sight).

Before you retired did you have a plan on how your 8-5 PM Monday through Friday former work week looked like? Did you have a firm plan on how you would spend your days?

No firm plan.

The nice thing about retirement is that you can take things as they come. If you feel like pursuing a hobby more intensely, you can. If not, you can just kick back.

Some like to add more structure through part-time jobs or volunteer work. I worked 2 days/week consulting for a bit over a year. It was fun.

My goal would be to not pay those high FA fees but that means I have to do it and I am not comfortable with the process.

So find a less expensive adviser.
No everyone wants to (or should) go DIY.

After what I'm read on this forum, it makes me a tad embarrassed to acknowledge this but I reviewed our prior year and our annualize budget is 105K which includes 10K for health insurance but nothing for taxes. How do you determine your effective tax rate? Even if I assume a 20% rate that would bring my annual withdraw rate up to about 130-135K which seems like a ton!

It is a lot compared to many. It's peanuts compared to others.

Once my DW retires we intend to utilize SS and our 3 pensions as soon as possible at age 62.

Have you run the numbers on Social Security?
Many find it beneficial for one or both spouses to delay starting their SS benefits until 70.

With those taken together that brings us 78K annually in today's dollars and yes each pension has a COLA. Rough math tells me with our 135K budget I am somewhere between 3.75% and 4% withdraw not including inflation. I read a lot of you manage a withdrawal rate of 3% or less. Am I stretching it too thin?

Having COLAed pensions is terrific!
I think your portfolio and withdrawal should be fine.

Thank you in advance for any feedback! As a thank you for the awesome advice I will receive I will now provide a free tip to the guys on this forum. Do you get an annual physical? If not you should. Do you get annual blood work? You better. 2 years ago I got my blood work back and it showed my platelets were slightly under the low average for a man (140). Mine was 124. My primary care said it was likely no biggie but over an abundance of caution she sent me out to a few specialist that I was sure would be a waste of time. 3 specialist later and one bone marrow tap later it revealed I have a rare bone disease called Multiply Myeloma. We caught it early but with no cure in sight treatment will follow at some point and my life span will likely not match the national averages. I'm gonna live life to the fullest each and every day with my sweet DW of 35 years. Guys, get your annual physical and blood work and if anything is out of pattern, check it out!

Good advice. At my most recent annual physical we discovered that I have lymphoma. I had no symptoms other than an enlarged spleen (which I hadn't yet noticed on my own).

I'm sure you have revisited your expenditure plans with regard to your wife's survival situation after your demise.

What are the survival benefits in your pensions? 100%? less?
What does her situation look like when just one Social Security benefit is available, rather than two?

 

[Hermit]

If it works for you, you might consider traveling to see the kids by RV. You might be able to save a little on the pet costs and have your pets with you. Overall it might not be a whole lot cheaper, but quite a few here seem to really enjoy their RVs.

I have had Vanguard do a financial plan for me a couple of times. The first time I paid $200 for the service. I had another done last December and it was free because I had rolled my 401k to them. They basically propose an allocation of stock funds (domestic and international) and bond funds appropriate for your age, risk tolerance, and investment goals. You discuss this with a financial planner and modify the plan as works best for you. For a fee, they will also implement and manage the allocations or, as I did, you can manage (re-balance occasionally) yourself. I would think Fidelity has something similar.

 

[Alvin Tostig]

Hi TimevsMoney:

You'll probably need to tighten up a little but you have two great things in your favor. The wife working and with getting on her health benefits buys you three more years of not going into your principle (too much). If your asset allocation even gives you a conservative 3% return over the three years, you may be in better shape even then. Secondly, other work related expenses will go away.

You don't have to rush to make any financial moves. Your new "company" is the one the you are the CEO of with a balance sheet of $2.1 million. You have plenty of time now to get educated on personal finance - even jut reading Money or Kiplinger's which is basically personal finance 101. Also many decent books - just get one or two - Suze Ormann, Jane Bryant Quinn, Carrie Schwab and so many others all have authored books that are easy to read by topic.

Also, you own your house outright. That's another asset. I do not know the value but you could always scale down and free up more money if needed as well as save on maintenance and RE taxes.

Let me know how you make out. We have many similarities. We are just about ready. Our ages are similar (I'm 61, DW is 58). NW is similar (2.3m plus my house). Our two kids, like yours live far away (Portland Oregon and New Orleans) and are self-sufficent. Hey, at least our kids picked cool places to visit!

Also our health. I too was a former health and workout nut. Ran two marathons and lots of 10K's etc. Now I'm 25 pounds overweight and I've had to address kidney stones, blood pressure, cholesterol, blood sugar, and PSA/prostate issues. You'll see that many people on this board are much healthier once they are removed from the corporate world! I'm hoping, like you, given the time off, you'll be much healthier.

 

[Independent]

Investments: If I track every dime and quarter I can find under the car seats and such we have 2.1 million with about 65% of that in our 401K. I think our asset allocation is roughly 50% stock mutual funds and 40% in bond funds and about 10% in cash. I am clueless as to what an Index fund is or an ETF which is in there somewhere. I am paying Fidelity 1.2% (gulp) as my FA to manage about 700K of the above. For the first time ever I looked up our mutual fund fees and they run .4% to .9%. We have about 15 different mutual funds. My goal would be to not pay those high FA fees but that means I have to do it and I am not comfortable with the process. Would I have to open an online account with say Vanguard or Fidelity to avoid that 1.2% FA fee? And if I do isn't it expensive to buy and sell trades? Please help me with your suggestions.

"Index" funds generally track some index. You have low fees because you're not paying anybody to pick stocks for you.

The first (and probably biggest) is Vanguard's "500 Index". It simply buys the S&P 500 stocks in approximately the same proportion they appear in the S&P 500 index.
The expense ratio is 0.04%. https://personal.vanguard.com/us/fu...t=INT&FundId=0540&funds_disable_redirect=true

Your 401k may have index funds available (more and more do). Otherwise, if you want lower fees, you'll have to move your money.

When I retired, I moved my 401k money to a traditional IRA with Vanguard. It was painless. I called the number and the person on the phone walked me through it. They mailed paper, I mailed it back.

My employer sent the check directly to Vanguard. I have an online sign-on so I can see my balance and my statements. I can also have them send withdrawals directly to my checking account. My wife likes to see paper, so I always specify the I want paper confirmations mailed, even though I initiate withdrawals online.

Conventional wisdom around here is:
- If you want a financial adviser you should go with someone who charges a flat fee, not a percent of anything.
- You don't need 15 mutual funds.
- You shouldn't trade individual stocks unless you enjoy doing it so much that it can be called a hobby.

IMO, you've already got a good start on your retirement plan because you've laid out your SS and pensions (awesome good fortune in having COLA'd pensions, they are rare), estimated expenses, and thought about how big a gap you need to cover from investments.

I agree with others that you need a handle on your expenses. That doesn't have to be painful. In fact, you can get a good idea about the last few years from records you've probably retained. Maybe you've already done that.

How do you determine your effective tax rate? Even if I assume a 20% rate that would bring my annual withdraw rate up to about 130-135K which seems like a ton!

Start with the assumption that you will use the new,$24,000 standard deduction, and that all of your income is taxed at the "ordinary" rates, then work your way through the brackets.https://www.forbes.com/sites/robert...deral-income-tax-brackets-rates/#245de802292a

If you have more than $24,000 of itemized deductions, or some of your income qualifies for reduced rates because it is long term cap gains or qualified dividends, your taxes will be lower. So the easy assumptions give you and upper bound (probably).

 

[davebarnes]

Research, read, pay attention

1. You should find a "by the hour, fee only" advisor and get some advice. But, before you do, spend many hours here and at the Bogleheads forum reading.

2. All our money is at Fidelity. At ages 60 and 69, we are comfortable with 90% stocks. I pay Fidelity nothing for asset management advice and get very little from them.

Fund Drag 10-year
Performance
Stocks
FUSVX - S&P 500 Tracker 0.035% 8.47%
FSEVX - Dow Total Tracker 0.070% 9.28%
FNCMX - NASDAQ Tracker 0.300% 11.09%
FSSVX - Small cap 0.050% 15.10%

Bonds
FSITX - US Bond 0.045% 3.82%

Cash
FSBAX - Short-term Treasury 0.060% 1.93%

 

[MRG]

One thing to consider is the 1.2% Fidelity fee. Vanguard will do it for. 3% and cheaper fund expenses. A few phone calls will save you an easy 1% every year.

There's no reason to pay more for the same returns.

Look to the library for a couple books on index investing.

Most of all enjoy!

 

[Hermit]

...
When I retired, I moved my 401k money to a traditional IRA with Vanguard. It was painless. I called the number and the person on the phone walked me through it. They mailed paper, I mailed it back.

My employer sent the check directly to Vanguard. I have an online sign-on so I can see my balance and my statements. I can also have them send withdrawals directly to my checking account. My wife likes to see paper, so I always specify the I want paper confirmations mailed, even though I initiate withdrawals online.
....

Vanguard is a very big company. They don't always get it right the first time. Last December I mailed my 401k rollover check to Vanguard and they put the money in the wrong account. The check stub had the right account number on it and I had even highlighted the account number on the stub which I left attached to the check. Vanguard straightened it all out and when finished it was as if it had been done correctly the first time, but it took a couple of weeks during which I got to worry about it. BTW, I don't plan to move my money elsewhere.

 

[Bamaman]

Congratulations on your impending retirememt. You have done well, and now is time to take a new direction in life.

I am so sorry that you have experienced multiple mylenoma, or cancer of the red blood cells. But thankfully it sounds as if you caught it early.

It is going to be very important that you find out all you can about this disease and take a proactive approach to fighting it--through lifestyle changes or whatever it takes.

MM is something that would be a pre-existing condition that most likely would keep you from changing insurance companies. Hopefully your wife's school teacher insurance will cover you, but you really need to make sure. An ACA program may still be taking pre-existing conditions, but I am not familiar with those plans as they currently stand.

Anyway it goes, having health insurance benefits is of the utmost importance as fighting multiple myeloma sometimes requires bone marrow transplant and radiation treatments costing in the $ hundreds of thousands.

Our son in law started feeling bad at age 43, and he had no healthcare insurance. Instead of paying for a doctor visit, he began taking illegal drugs to mask his discomfort. By the time doctors discovered the problem, a bone marrow transplant was required. But he also developed amliadosis and we lost him at age 45.I

Good luck to you in your retirement.

 

[Dtail]

One thing to consider is the 1.2% Fidelity fee. Vanguard will do it for. 3% and cheaper fund expenses. A few phone calls will save you an easy 1% every year.

There's no reason to pay more for the same returns.

Look to the library for a couple books on index investing.

Most of all enjoy!

Agree on the Fidelity fee. To note though, Fidelity'd index fund fees are generally competitive with Vanguard and sometimes are cheaper such as their S&P Index fund fee.