@MJG: Almost a week ago you said:
"Projecting any financial SS break-even point, given these uncertainties, is an impossible task."
"I suggest we just move-on."
Too bad you didn't follow your own advice. "haughty and verbose", hmm? That certainly sounds familiar.

Hi Junkster,
In a very short space, your comments managed to be vituperous, tasteless, and inaccurate. That’s quite a trifecta for a single entry.
Good health is an essential ingredient to the likelihood of an extensive longevity. I hope you enjoy your hiking and continue to do so for a long time. That exercise program is a major contributor to a positive lifespan outcome. I too hike, but for much shorter distances these days.
I’m surprised that MFO’s own Mini-Me hasn’t joined your diatribe just yet. But I’m patient (that’s a characteristic of old age); that too is likely to happen. On the happenstance that you don’t recall, Mini-Me is a comic nemesis to Austin Powers in the movies of the same name. Here is a short clip:
http://www.google.com/search?q=mini-me+austen+powers+movies+videos&hl=en&gbv=2&oq=mini-me+austen+powers+movies+videos&gs_l=heirloom-serp.3..30i10.25394.28156.0.31414.7.7.0.0.0.0.379.1102.0j6j0j1.7.0.msedr...0...1ac.1.34.heirloom-serp..0.7.1098.CVtdvDNOrfo
It surely is a “hard knock life” if you choose to make it so. I don’t.
I fully understand that Monte Carlo simulations are not everyone’s cup of tea. I merely offer it as one candidate financial planning tool. If it is not attractive from your perspective, the functional solution is simple: just ignore it. I really don’t care if you do or you don’t. You’re always free to choose.
Twenty years ago I developed my own retirement Monte Carlo code because none existed at that time. In that same timeframe, Bill Sharpe was developing his version. It’s now accessible on his Financial Engines website. I called Professor Sharpe to help in a few tricky programming places. He graciously provided guidance. I recognize that you have little interest, but other MFOers might, so I’ll link to his Financial Engines website now:
http://corp.financialengines.com/
Sharpe also offers a Social Security planner on his site. I have not used it.
You do yourself a disservice with your insipid submittal. I’m baffled by the animosity displayed by a few MFO members. Question the message, but don’t disparage the messenger based on pure personality conjecture.
Regardless, I do extend you Best Wishes for a long, a happy, and a prosperous life.
Quick Edit: It happened as anticipated!

Hi Guys,
Wow! The Social Security (SS) drawdown decision is a MFO subject that just keeps on giving.
I suppose that’s because it’s a complex decision for most upcoming retirees. It includes both factual and feelings elements that interact in a non-predictable manner for each person or couple. That observation has been bolstered by the variety of opinions and approaches that have been recorded on this continuing exchange.
There is a mountain of opinions and studies that are accessible on the Internet. Here is a Link to a 2013 Merrill Edge paper that addresses many pertinent issues in that decision process:
https://www.merrilledge.com/publish/content/application/pdf/gwmol/me_timeismoney_topic_paper.pdf
I selected this paper because it summarizes the conventional wisdom: “If you or your spouse are in reasonably good health and you can afford to, wait to collect your payments for as long as you can. Yet three quarters of Americans do the very opposite….”.
It certainly is a “no-brainer” that if a candidate retiree can’t afford to wait, he simply will not wait. The operational controversy about initiating SS drawdown only applies to those fortunate folks who don’t need SS benefits for a comfortable retirement, but are eligible. Now a timing issue enters the equation. When?
The Merrill paper advices delay because of the benefits increase it shows as a function of age. Merrill quotes an annual $18000. benefit at age 62 that increases to a $ 31680. annual award at age 70. Merrill concludes that: “Being an early bird usually doesn’t pay”. That’s a standard viewpoint.
I’m not convinced that that advice universally applies to those wealthy enough to wisely invest the smaller, but longer duration SS income. As in many investment scenarios, time is an ally.
Investment outcomes are notoriously uncertain which further confuses any decision. Given these uncertain outcomes, I default to Monte Carlo analyses. In this instance, I used the Monte Carlo simulator available on the Portfolio Vizualizer website. Here is a Link to that excellent resource:
https://www.portfoliovisualizer.com/
That website offers many fine investment tools. I ran its Monte Carlo code for a reasonable approximation of what might happen if a retiree had the resources to invest his entire SS benefits in a respectable portfolio.
My postulated portfolio included US stocks, International stocks, Core Bonds, and Short Term Corporate Bonds (STCB) in a 40/20/30/10 mix, respectively. I used the STCB as a cash equivalent. For money inflow, I used the age dependent Table recommended by Merrill. I coupled those cash inflows to early, nominal, and late SS drawdown timeframes.
Time was the central influence in this analysis. The early (age 62) withdrawal initiation ended with the highest median portfolio end wealth. The results ordered nicely according to time in market. Even the lowest 25th percentile and the highest 75th percentile ordered the same way; early withdrawal was best while late withdrawal yielded the smallest end portfolio.
The simplest conclusion from this very incomplete analysis is to “take the money and run” with it to assemble a diversified portfolio. My analysis produced results that are counter to the Merrill paper.
Yes, there are risks since the government payday is guaranteed and investing is not. But for those who are strong of heart, and have the financial resources to do so, taking the early SS payout seems like a positive in the risk/reward tradeoff.
I hope this is helpful.
Best Regards.

"And all a result of a couple years I spent as a futures broker way back in the early 70s."
If you were a futures broker, what do you think of futures exchanges (ICE, CME) as investments?

Scott, stocks are not my bailiwick. Plus, based on the wide disparity in our ages, we would have different time horizons. I do note CME is still far below its 2007 highs, a rarity in this market. Albeit it had a spectacular run prior to its 2007 highs. You would know this more than me, but aren't there bears saying that exchanges like CME and ICE will become obsolete at some point in the future because of technological advances? Speaking of the CME, one of the biggest personalities I ever met and had a long conservation with was Leo Malamed. Probably one of the few times I was ever intimated with anyone in the financial industry.

What's all the hellavalo over?
The snippet is a short, simple, multi-pronged piece presenting one financial advisor's view on the subject we've all been discussing. If you're interpreting it as "heavy" reading, you're probably over-reacting. Yahoo is good at tossing out short and incomplete attention-grabbers like this one. I guess that's how they sell ads. If you read Yahoo's business pages you already know this.
There's a few interesting facts: The number of recipients taking SS early has been growing (although we hardly needed to be informed of that). A Gallup Poll survey showed "... more non-retirees ... than at any point in the last 15 years are planning on Social Security to be a major source of their retirement income ..."
The advisor's main point is, I think, offered a bit tongue-in-cheek in the form of a "paradox". A good paradox often expresses an underlying truth contained within an apparent absurdity. Perhaps that's why the reactions are so divergent.
The underlying truth here is that those at 62 are, health wise, better able to enjoy the extra income from early SS payments by engaging in travel, hobbies, and other life-enriching experiences (and the adviser thinks they should avail themselves of the opportunity.)
The obvious absurdity is that only those who don't need the money can afford to take it early.
Best wishes

Hi Guys,
Probably like most of you, there are financial writers I like and trust, and others I do not. Jaffe falls in the positive category, but not without reservations.
Some skepticism is a practical defensive device whenever accessing any financial opinions. I mostly find Jaffe’s columns informative, but buyer beware since there is a tendency to distort presentations to buttress a position.
Jaffe shows promise as a financial commentator. Proof of that is in this referenced column. He wisely chooses to close his assessment by liberally quoting MFO’s own David Snowball. Jaffe’s choice in this regard is spot on-target.
Congratulations to Professor Snowball. The reference to his perspective on this subject gives him a wider, more diversified audience exposure.
But care must be exercised when reading Jaffe’s documentation. It seems as if he is playing loose with statistics. Instead of measuring a manager’s performance over an integrated timeframe, Jaffe resorts to a far less meaningful measure of 8 consecutive years of outperformance to generate his position. He says: “just four actively managed funds …. have current streaks of eight consecutive calendar years of beating the S&P 500, according to Morningstar.”
So what? The meaningful measure should be the time integrated end portfolio value of active management over the entire selected timeframe; a given bad quarter or a substandard annual return is acceptable if recovery is in evidence. Also, why an 8 year period? That specific a timeframe has the unhealthy likelihood of data mining.
Understanding the reasons for making any investment decision is necessary for success.
Remember the infamous 1720 South Sea bubble when one absurd trading company attempted to sell its shares with the following goal: “For carrying on an undertaking of great advantage; but nobody to know what it is.”
History may not repeat itself, but many times it rhymes. For example, recall Speaker Nancy Pelosi’s quote: “We have to pass the Health Care Bill so you can find out what's in it”.
Even Isaac Newton fell victim to the lure of South Sea profits. He lost a ton of money. A brilliant mind is no guarantee of investment foresight.
So the cautionary lesson here is that financial articles, even those from writers who are mostly respected, must be carefully read and aggressively challenged to recognize nuances in the presentation, and biases in the perspective.
Best Regards.

FYI: Bond giant Pimco rolled out on Thursday the Pimco Capital Securities and Financials Fund, which will invest in capital securities, including subordinated bonds, preferred shares and contingent capital instruments issued by financial institutions globally.
Regards,
Ted
http://www.reuters.com/article/2015/05/07/investing-pimco-fund-idUSL1N0XY2H920150507
M* Snapshot PFINX: http://www.morningstar.com/funds/XNAS/PFINX/quote.html

Sorry wrong fund initially posted.
http://www.sec.gov/Archives/edgar/data/1032423/000119312515178419/d922872d497.htm
497 1 d922872d497.htm SUPPLEMENT DATED MAY 8, 2015 TO THE PROSPECTUS DATED FEBRUARY 28, 2015
DIAMOND HILL FUNDS
Diamond Hill Small Cap Fund
Diamond Hill Small-Mid Cap Fund
Diamond Hill Mid Cap Fund
Diamond Hill Large Cap Fund
Diamond Hill Select Fund
Diamond Hill Long-Short Fund
Diamond Hill Research Opportunities Fund
Diamond Hill Financial Long-Short Fund
Diamond Hill Strategic Income Fund
Supplement Dated May 8, 2015 to Prospectus Dated February 28, 2015
Effective June 12, 2015 at 4:00pm Eastern Time, the Diamond Hill Long-Short Fund (the “Fund”) will close to most new investors.
The Fund will remain open to additional investments under the following circumstances:
• Existing shareholders of the Fund may add to their accounts, including through reinvestment of distributions.
• Qualified defined contribution retirement plans, such as a 401(k), 403(b) or 457 plans, utilizing the Fund as an investment option on June 12, 2015 may continue to establish new participant accounts in the Fund for those Plans.
• Financial Advisors who have clients invested in the Fund as of June 12, 2015 may establish new positions in the Fund for new clients where operationally feasible.
• Investors may purchase the Fund through certain intermediary sponsored fee-based model programs, provided that the sponsor has received permission from Diamond Hill Funds that shares of the Fund may continue to be offered through the program. Approved or recommended lists are not considered model portfolios.
• Trustees, Directors, and employees of Diamond Hill Funds or Diamond Hill Investment Group, Inc. and their immediate family members may open new accounts and purchase shares of the Fund.
In general, the Fund will look to the financial intermediary to prevent a new account from being opened within an omnibus account at that intermediary. The Fund’s ability to monitor new accounts that are opened through omnibus accounts or other nominee accounts is limited and the ability to limit a new account to those that meet the above criteria with respect to financial intermediaries may vary depending upon the capabilities and cooperation of those intermediaries.
The Fund reserves the right to make additional exceptions or otherwise modify the foregoing closure policy at any time. The Fund also reserves the right to reject any purchase or refuse any exception, including those detailed above for any reason.
This Supplement and the Statutory Prospectus dated February 28, 2015, provide the information a prospective investor ought to know before investing and should be retained for future reference.

I can't believe I agree with davidrmoran on something! If your health and financial situation warrant, I think it's always better to wait and grow your benefit steadily and tax-free. In addition, if you have a lower-earning spouse who will potentially be your survivor , you are giving them a much larger lifetime benefit if they claim on your record. My late mother had many lady friends who were left in precarious financial straits when their husbands died.
I

----- "Delaying Social Security As The Best Long-Term Return Money Can Buy" -----
The above phrase which Michael Kitces highlights in bold-face near the end of his article would appear better suited for selling cars than providing serious financial advice. ... However, based on that proposition (and assuming I just fell off the turnip-truck), is there any way by which I might mail some additional money to the government for them to invest for me in this wonderful opportunity?
-
Kitices writes: "... ultimately, delaying Social Security benefits provides superior risk-adjusted returns to equities and portfolio investing in the long run. ... Obviously, this is not true in the short run – as noted earlier, it takes more than 15 years to breakeven at all. Yet if the retiree’s time horizon was that short, the proper investment would not likely be equities anyway."
1. I dispute the assertion that a retire with a 15-year time horizon would not want to own some equities. I don't think the smart folks at T. Rowe Price view it that way. Their Balanced Retirement Fund, designed for people already in retirement, carries about 40% equities. Even their conservative Spectrum Income Fund includes a 10-15% allocation to income-producing equities. If we include even a modest allocation to equities and corporate bonds in the investments of older people, I suspect many of his assumptions fail to hold water.
2. Kitices' reference to "superior risk-adjusted returns" have not been documented. He has not analyzed for us the risks of owning different types of equities, or different types of bonds, or tried to quantify for us the risks of potential drastic changes in either tax policy or SS structure - any of which could upset his delicate apple cart.
3. Kitices "proves" that deferring Social Security is a better investment than buying an annuity.
OK - I'll give him that one. What investment isn't?
4, It's somewhat incidental to the referenced article ... but part of the consideration is whom you would rather have in control of that sum of money, yourself or the government?
-
I detest the pop-ups that have begun appearing asking me to send Mr. Kitices some $$ to subscribe to his newsletter. :)

From the article: "While you shouldn't pick funds solely based on fees, expenses matter because high fees will substantially reduce your returns. Remember, though, that some things in life are worth paying more for, and a good fund manager is one of those things. One rule of thumb: If the fund's expense ratio is more than 1.5%, you should be really sure about the fund manager before you buy"
Huh? Whoever wrote this article sounds like a financial adviser considering he talked about what they like to do when selecting funds for their clients' portfolios, and he spouts this crap. How exactly does one get "really sure" about the fund manager before you buy? It sounds a little like knowing your manager isn't as important if he doesn't have to overcome a big expense ratio. We know statistically that a big portion of fund managers can't beat a low cost index fund after expenses, so it seems to me you'd want to know your manager as well as you can no matter what the expense ratio is.

I wonder what will the adviser do if I seek their services: with accounts directly at vanguard, TRP, janus and prudential.

They will only manage the assets you house at Vanguard. So if you "seek their services with accounts.....at TRP, janus and prudential".......for them to manage those accounts, they will want you to transfer them to Vanguard.
This service is a lot more than just advice. They actually perform the transactions.........
They are using CFPs (Certified Financial Planners) employed by Vanguard

As a long-time Vanguard owner/customer, I would like to see them offer this kind of service with the option of paying a flat dollar amount instead of a percentage fee. I've never understood the fairness of advisers' charging ten times as much to suggest how a $1,000,000 portfolio should be invested vs. a $100,000 portfolio. In other words, I'd love to see Vanguard offer a "fee-only" service at a set flat $fee rather than % of portfolio fee. I wouldn't expect any financial services firm other than Vanguard to even consider it.

Hi Guys,
My general feeling is that as a group, we are overthinking and overreacting to the SS question.
There are far too many uncertainties and personal preferences to reach any definitive resolution. It all depends because there are to many variables and far too many uncertainties.
One of the major uncertainties are the ever changing laws, rules, and regulations. If they don't change today, they are sure to change in the future.
When asked to count Federal and State laws, experts conclude that it is an impossible assignment. The estimated numbers are all over the map, and are likely in the multiple tens of thousands. Additionally, a hundred more are proposed each day. Lucky for us that only 10% of these become law.
Good luck on forecasting which of these will be on the books a decade from now. Projecting any financial SS break-even point, given these uncertainties, is an impossible task.
I suggest we just move-on.
Best Wishes.

Nothing wrong with 529 plans, but in the priority of savings they fall far lower on the savings ladder. I would first fully fund an employer's retirement match through a workplace / self directed retirement account. Second on the savings wrung would be to fully fund a Roth IRA. Third would be funding an emergency fund in a (taxable account) equal to 3-6-9-12 months of one's salary. As important, would be to have a plan to pay off high interest loans (revolving credit).
As a "good" parent we think saving for college is a requirement. My opinion is that the fewer dollars specifically ear marked for funding college the more dollars will be offered to your college student in financial aid (grants, loans, internships, work study, etc) as they are mostly all needs based.
Your college student should strive to be a good candidate to get into college (good academics, athletic, and civic minded), but they should also be a good candidate for financial help.
Nothing wrong with 529 plans other than you are short changing your kid the opportunity to receive financial aid and sticking them with the burden and guilt of your financial insecurity.
Let your kid be needy...they'll thank you for it.

Related RE article:

"In a rising market, REITs also have some of the same challenges as directly owned property. “The REIT market is very volatile, down 75% between 2007 and 2009 — which was terrific if you were in a rebalancing situation — and then up 400% from that bottom,” Haraway says. “I handle REITs as maybe 10% of a portfolio. REITs tend to lead the other indexes and provide some diversification.”
Along with volatility, REITs also carry interest rate risk, Altfest points out, and aren’t always available at favorable prices. “We’re value investors, and a lot of money is chasing REITs. Valuations are high and yields are low,” he says.
Instead of (or in addition to) REITs and direct real estate ownership, Altfest suggests private partnerships, in which a group of people pool money to make a real estate buy and pay for its professional management."
real-estates-new-rules

I traded VGK for the hedged HEDJ in November and have been rewarded for doing so as the Euro became more devalued as compared to the dollar. Although the European market closed down today the EURO continued to rise.
It would seem that somewhere along the way HEDJ will reflect the rising EURO and I may want to return all or a portion to VGK.
Because the Euro-Dollar is unpredictable and depends on the US interest rates, Greece financial improvement, ECB quantitative easing etc., I am thinking of diversifying my European funds in 50% VGK and 50% HEDJ.
Would appreciate other opinions on their approach to European funds with regard to current situations.
prinx

Hi Guys,
I’m somewhat amazed at how many MFOers retired at so early an age. Contrary to earlier periods, nowadays older folks are and are planning to work longer.
You guys who opted for early retirement are swimming against the prevailing, but ever changing, tide. It’s great that you had the wherewithal to assemble the requisite financial resources to implement your preferences. Congratulations to all retirees of all ages!
The early retirement goal is an illustration of an eroding characteristic that contributed to our Nation’s original success story. I’m speaking of our famed hard work ethic. Mostly we came to America, not to extract riches from the soil and leave, but to toil the soil and build. We worked harder and longer than most others around the globe.
What was true in the past still remains true today, although to a lesser degree. Here’s a Link to a worldwide survey that lists annual hours worked by nation:
https://stats.oecd.org/Index.aspx?DataSetCode=ANHRS
Among developed nations, the US still works longer hours; compared to underdeveloped nations, that is not so. Note that our annual work hours have decreased slightly since 2000. But that’s not the trendline with our older population segment.
Today, approximately 80% of baby boomers anticipate that they will work beyond the normative retirement age. That’s likely to change because of our pernicious system of laws and rules. Remember that most laws are commands; they are prohibitive or compulsive by design with limiting options and opportunities. All this makes a retirement decision still more complex.
There are many personal reasons why the current trend is against early retirement. Work
tasks have become less physically and more mentally demanding that allows for a longer
work life. A worker may need the job to protect family financial security, or to keep healthy, or because he finds the job enjoyable and stimulating. This last reason seems especially attractive given today’s job market.
From a national perspective, a delayed retirement should also benefit the Nation’s prosperity and strength. Presumably, the retiree is incrementally adding more value in doing his assigned tasks than he is being paid. That’s a net increase in our GDP. Also, since he is presumably experienced at his job, his efficiency and effectiveness should be at a high profitable level. If it were not, an employee would choose a younger less talented individual who would command a lower salary.
It’s not altogether a bad thing that our aging population is migrating back to the workforce. Like most complex happenings, there are both pluses and minuses. But the current trend is clear: Our older folks are freely electing to rejoin that workforce for a variety of excellent reasons. Those of you who have chosen the “other path” have similarly made free choices to satisfy your own personal situations and preferences. More power to all our aging population.
By the way, the when to initiate SS benefits issue has no simple answer from my perspective. It depends on too many uncertain variables like how long you will actually live. The statistics can give you a rough number, but the actuality is something else entirely. As you might anticipate, I did Monte Carlo analyses on this matter without much final help. The uncertainties dominated any worthwhile insights. Make your best speculative guess and just do it.
I’ve enjoyed each and everyone’s story on this exchange. Each has its own logic and its own quirks. We’re all the same, yet we’re all so different. Thank you all for sharing.
Best Regards.

There are some funds that M* gets enthralled with, data aside. WPVLX is one of them. Like David, I took a flier on this fund in the late 90s and got burned. I looked through the M* analyst report archive to find the following headlines:
3/2000: WPVLX's bet on financial may be worth the short-term pain it is causing.
6&7/2001: We think that this is the kind of fund to buy and put away for years.
11/2001: This could be a buying opportunity.
2/2002: This fund's strict attention to value has paid off over the long haul.
4,6,&10/2002: Despite its struggles, WPVLX is worth keeping.
1&2/2003: Better than it looks right now.
7/2003: Investors in this offering have long been rewarded for patience.
12/2003: This fund is worth waiting for.
3/2005: Is this glass half full, or half empty? -and- Not for everyone.
9/2005: We still think there's good reason to like this mutual fund.
5/2006: Despite a very tough year and a half, we thing this mutual fund still has the goods.
12/2007 & 1/2008: This fund fund is down but definitely not out.
6/2008: Be patient with this fund.
11/2008: Recent performance woes don't dim our support for this mutual fund.
4/2009: Investors should stick with this fine mutual fund.
9/2013: Take a bow, Wally Weitz et al. -
the analysis says: "this fund has never been better than duringthe past 4.5 years." After which it wound up in the 63rd percentile for all of 2013 (meaning it had a dreadful latter part of the year) and 82nd percentile for 2014.
Briefly on costs. The M* article concedes that ARTKX's cost is not above average, but they wish it were lower given the large size of the fund. But the article wasn't about sizes of funds, it was about costs, and ARTKX isn't challenged by a high cost.

"Target-date funds have selected dates at which time the assets will be liquidated"
Once again we find a financial writer who doesn't seem to know what he is talking about.
Target date funds' dates refer to the general date of one's retirement. They tend to come in two varieties: one with a glide path that reaches its terminal allocation at the retirement date (e.g. 70/30 or 80/20), and one where the fund holds a gradually declining amount of equities for 10-15 years into retirement (in anticipation of a 25-35 year need). Either way, these funds are not liquidated.
There are two types of funds I'm aware of that are liquidated on a specified date (excluding UITs that pretty much by definition terminate). One type is target maturity bond funds, like the American Century Zero Coupon Bond Funds, or Fidelity's newer Defined Maturity Funds, or Guggenheim BulletShare ETFs. Here's a good Vanguard paper on defined-maturity bond funds.
Another type includes some managed payout funds. Managed payout funds are funds that are designed to work like annuities (if all goes well - they're not guaranteed). Some, like Vanguard's, are designed to pay out in perpetuity. Others, like Fidelity's Income Replacement Funds, are designed to terminate on a specific date. These funds hold a mix of equity and debt, and are liquidated on the specified date.
That subtype of managed payout fund is the only one I know that match the description of a "target date fund" given in the article here.