6 Tips For Do-It-Yourself Retirement Investors

[MULTIZ321]

6 Tips For Do-It-Yourself Retirement Investors
By Craig Stephens/ Money/ Retirement/ On Retirement/ USNews/ money.usnews.com

"Investing in retirement requires strategy and mindset changes.

INVESTING IN RETIREMENT is different than investing during your working years. Since you are counting on your assets for your retirement income, preserving your savings becomes more important than asset growth.

This strategy adjustment can be a challenge for do-it-yourself retirement investors who have invested the same way for decades. Investing in retirement requires a new way of thinking and some changes to your asset allocations. Here are six tips to help protect the nest egg it took decades to save....."

Managing your own investments becomes more challenging in retirement.(GETTY IMAGES)


Richard

 

[WinniWoman]

We are at this point now. I get overwhelmed thinking about it.

I looked into a financial planner a while ago and it just seemed too crazy expensive to me, though we could do some hourly consults with him instead.

I am currently speaking with one from Rick Edelman Financial Engines- and it is the same with them- high fee. The company is supposedly highly recommended by Consumer Reports- but I still don't like the high fee for ongoing management. I don't mind a one time fee and maybe a smaller fee for each year there after- but not the same high fee year after year. He also had some wrong info. on taking Medicare Part B and D, saying my husband had to register for both when he turned 65. Ummm- no. He is still working. He applied for Medicare Part A only, which is premium free. I have another free zoom meeting with him this week. Have filled in some questionnaires and sending him our excel sheet with our finances on it. He is in South Carolina, so I don't like that either. I don't know...supposedly there is no one else from their company here in NY. Hard to believe.He did a lot of talking and I wasn't that impressed really. But I am trying to remain open minded.

I am also considering a CPA group that also does financial planning and can help with estate planning as well. I kind of like this idea better. I will probably set up an appt. with them after tax season is over.

And I have a few other names of financial planners I can call as well.

But for now- I am a do it your selfer. Just kind of winging it.

 

[Luvtoride]

Thanks for the article, Richard. Nothing too specific or insightful but good general guidelines. This is something most of us will worry about and struggle with as we reach retirement age. I think that finding a good and trusted (and reasonably priced) advisor is key to managing this phase of our investing life.
Start talking to people, friends etc and interviewing potential advisors (if you don’t already have one).
No matter how large your retirement nest egg is we are all dealing with the uncertainty of “how long does our money have to last”. Unfortunately that’s a question none of us can answer.
Good luck.


Sent from my iPad using Tapatalk

 

[VacationForever]

We pay crazy amount to our financial advisor's firm for on-going management. It is enough to support my son who is struggling to find work. The financial advisor said one thing that resonates with me, it is his job to make sure we are not poor and he won't make us rich. It makes sense.

 

[am1]

We pay crazy amount to our financial advisor's firm for on-going management. It is enough to support my son who is struggling to find work. The financial advisor said one thing that resonates with me, it is his job to make sure we are not poor and he won't make us rich. It makes sense.

I can make sure I am not poor but Im trying to get rich as well.

Hi job is to take as much money as you let him from you. Also to get referrals to do the same. The better the return the happier you are with him. Which helps both his goals.

 

[VacationForever]

I can make sure I am not poor but Im trying to get rich as well.

Hi job is to take as much money as you let him from you. Also to get referrals to do the same. The better the return the happier you are with him. Which helps both his goals.

We are happy to make him rich.

 

[Talent312]

I've done well-enuff managing our portfolio for ~ 30 years.
In that time, I've made a few bonehead plays and had tuff years,
but overall, I'm satisfied with where we're at.

Now recently retired, I'm finding it hard to get my mind around
the idea our go-go days are over, and conservation is a priority.
.

 

[VacationForever]

We are now only concerned with when do we take our RMD, do we do dollar averaging by taking out 1/12th every month, 1/4 every 3 months or once a year, with the latter to try to "time" the market. We all know how well (not) timing the market generally works.

 

[Steve Fatula]

In <6 months, when I am 59.5, I will be talking one months living expenses out each month, would never try timing of course. We've simply kept a cash pile for these withdrawals, i.e., uninvested in their money market funds. Don't care if they don't go up, and they certainly won't go down. The rest is invested. Due to this, we can take a lot of market down since we have many years of cash, plus a pension and SS of course. So, pretty conservative now that we are retired. The time to be more aggressive was long ago for us.

 

[pedro47]

I feel tip #1...should be as follows: you should start planning for retirement and actually start a retirement account on your first day of employment. Do not wait to start your retirement account years down the road of your employment....Start ASAP. Start saving with an index mutual fund or any good mutual fund account with no hidden fees, no fees or very low fees and increase your monthly saving contribution over the years. It is called saving monthly dollars averaging. The more you earn the more you contribute to your retirement accounts.

Todays employers do not offer great pension plans liked they did twenty or thirty years ago.
So you much have your own retirement plan in order.

Tip#2, when you received a pay raise half of it; should go directly into your retirement account. Setup of an account for direct deposit into your retirement plan. IMHO.

There is a huge difference in a pay raise and a bonus check.
Give me a 1 or 2% percent pay raise and you can keep that one time $500 or $1000 bonus check.

 

[vacationhopeful]

,,,,
Todays employers do not offer great pension plans liked they did twenty or thirty years ago.
.....

Pension plans DIED OUT on Dec 31, 1982. 37 years ago. That was the day before when the vesting rules changed from 10 years to 5 years. And I feel the main reason for the layoffs in late 1982. And "defined pension" plans died off for most companies.

 

[WinniWoman]

And the next issue is many people are not high earners. So even if they do manage to save some money religiously, it is not going to support them for 20 or 30 years when they retire- even with SS.

This is my worry for our son who is in that category.

We always saved and invested from in our 20's and even bought a handyman house at age 21, but were not high earners. We did ok despite a lot of mistakes and just some bad luck.

BUT-The one thing that really helped us was an inheritance from my parents in 2011 that I split with my brother which was the sale of my parents home and my mom's IRA and leftover savings (and a small life insurance policy- $25,000, which is how I bought my CRV in 2013.).

It's funny, because my parents always wanted to leave that house to us when they died. They refused to sell it when they retired.

I am thinking of starting to play the lottery- one ticket once per month. That's where I am at now. LOL!

 

[Brett]

Pension plans DIED OUT on Dec 31, 1982. 37 years ago. That was the day before when the vesting rules changed from 10 years to 5 years. And I feel the main reason for the layoffs in late 1982. And "defined pension" plans died off for most companies.

good pensions still exist for the military. And pensions for most state employees and municipalities especially police and fire. The federal government and government agencies like the post office still have fairly good retirement plans

 

[bluehende]

good pensions still exist for the military. And pensions for most state employees and municipalities especially police and fire. The federal government and government agencies like the post office still have fairly good retirement plans

I wonder how long it will be before even those are dropped. I am actually surprised my oldest works for a company that still has a pension. Think the largest oil company in the world that is going public soon. My other son works for a large engineering firm and has no pension. The youngest has a little better 401k but not night and day. They both are in high paying jobs that get head hunter calls almost weakly. Pensions are not needed any more for retention.

 

[bluehende]

I feel tip #1...should be as follows: you should start planning for retirement and actually start a retirement account on your first day of employment. Do not wait to start your retirement account years down the road of your employment....Start ASAP. Start saving with an index mutual fund or any good mutual fund account with no hidden fees, no fees or very low fees and increase your monthly saving contribution over the years. It is called saving monthly dollars averaging. The more you earn the more you contribute to your retirement accounts.

Todays employers do not offer great pension plans liked they did twenty or thirty years ago.
So you much have your own retirement plan in order.

Tip#2, when you received a pay raise half of it; should go directly into your retirement account. Setup of an account for direct deposit into your retirement plan. IMHO.

There is a huge difference in a pay raise and a bonus check.
Give me a 1 or 2% percent pay raise and you can keep that one time $500 or $1000 bonus check.

When I was working I always tried to get people that thought they could not participate in the 401K to use your tip 2. I could not understand how a 6% raise could not be put away completely as you lived off it yesterday. Why not today. Half should have been a no brainer unless there was some unique circumstances. It always seemed that new toy was always too alluring.

 

[bogey21]

I screwed up this post. Check the following post...

George

 

[bogey21]

Some 10-12 years before reaching retirement age I and about 10 other long term employees at our Bank proactively went to our Board of Directors which was in the process of planning a phase out of Bank's Defined Benefit Plan and replacing it with a Defined Contribution Plan. We made them a proposal - They keep the DB Plan for existing employees and enhance its annual COLA percentage and we would forego raises for the rest of our careers. They went along with it and the rest is history. I have a great Pension. The moral of this story is think long term, plan ahead and don't be afraid to ask...

George

 

[chalee94]

And pensions for most state employees and municipalities especially police and fire. The federal government and government agencies like the post office still have fairly good retirement plans

https://www.bloomberg.com/graphics/2017-state-pension-funding-ratios/

The news continues to worsen for America’s public pensions and for the people who depend on them. The median funding ratio—the percentage of assets states have available for future payments to retirees—declined to 71.1 percent in 2016, from 74.5 percent in 2015 and 75.6 percent in 2014. Only six states and the District of Columbia have narrowed their funding gaps; New York did best, going from 90.6 percent to 94.5 percent. D.C. is now overfunded.

By contrast, New Jersey, Kentucky and Illinois continue to lose ground and now have only about one third of the money they need to pay retirement benefits. And three states had double-digit declines in their pension funding ratios in the past year: Colorado, Oregon and Minnesota—though some of this can be attributed to actuarial changes in the way pension liabilities are calculated.

some of even these numbers are optimistic as states choose actuarial rates of return that are higher than they have any real hope of achieving...

 

[Passepartout]

Its always something! Either we worry that we haven't saved 'enough' to satisfy the monthly magazine's recommendation. Or that the Brother-in-Law makes/saves more. Or that so and so did something different when applying for SS.

After you've saved and retired and traveled as much as this bunch of TUGgers (do you appreciate how damn lucky we are?) Have and will, the only unknown is how to stay healthy enough to enjoy it as long as it will last. What I retired with is a pittance of what remains in the 'well'. May your experience be as positive. Problem is, I've always been a tightwad, and those purse strings are still tied up tight.

Jim

 

[am1]

And yet a lot of low earners end up being multi millionaires by retirement age. It's possible. But one has to invest wisely and spend less then they make.

 

[WinniWoman]

good pensions still exist for the military. And pensions for most state employees and municipalities especially police and fire. The federal government and government agencies like the post office still have fairly good retirement plans

Right. But not in the private sector. Heck- in the private sector you are lucky they pay you for your work!

 

[cgeidl]

There are hourly fee only CFP's available in most major population areas. I was a CFP for about 15 years way in the past. I was on commissions and tried my best to look at what was best for the client and not my pocketbook.I knew of some CFP's looking at commissions before clients and even boasting about their high pay.The difference in fees of one to two percent ayear i fees makes a huge difference long term. I am not surprised to hear your advisor did not know medicare rules. And probably not a good social security advisor either. You need a specialist for these areas and to read information yourself as most CFP's are not knowledgeable in all areas.I would highly recommend you look at a very sophisticated software free program called Personal Finance. We use it and a lay person can use their services free. They have over 100 billion dollars using the program and are rapidly increasing each year. They compare their recommended plan with what you have and do have paid professional advice. So far I have been aslightly ahead for three years with their plan. If we switched there is a yearly percentage base fee that would make a significant difference. However many have switched and are happy to pay the fee.

 

[WinniWoman]

And yet a lot of low earners end up being multi millionaires by retirement age. It's possible. But one has to invest wisely and spend less then they make.

Sure- they could stumble upon some fantastic, legitimate investment where they put $50 per month in for 30 years-and nothing bad ever happens to them and they are the smartest people on earth and don't make any mistakes- and end up with 5 million dollars at age 70 if they are still alive- but come on! Are you kidding me? The average person will not be able to do that.

The cost of living is so damn high. Rents, health insurance and health care, cars, etc.

 

[Brett]

https://www.bloomberg.com/graphics/2017-state-pension-funding-ratios/



some of even these numbers are optimistic as states choose actuarial rates of return that are higher than they have any real hope of achieving...

right, the underfunding of the "funding ratio".
Municipalities, state governments and the military continue to offer good pensions but they have to keep borrowing more and more to 'fund' current payments

 

[geekette]

It will be a fairly easy transition for me - simply uncheck the 'reinvest dividends' box and let cash accumulate in the money market account, transfer what I need to checking/bill pay each month. No market timing or clever forecasting needed, just extracting the amount of div income I need for expenses and planned frivolity and returning the excess to the market for further reinvestment.

It's really not what you make, it's what you spend. True while working, true while retired. I intentionally set out to make this easy so I didn't have to care what was happening in the market, and no big adjustment needed to simply retire and reverse course to Living Off It from Squirrelling It Away. Sure, it's weird to think about not socking it away, but, that was always For Later, and sure enough, Later is Here! I would call myself semi-retired at this point, we'll see what happens in 2019 to seal that or thrash it.