Hi Dex,
Often the retirement decision is a high anxiety event because of portfolio performance uncertainty. If the retirement depends on a portfolio drawdown, a few bad years can do lasting damage.
There are plenty of millionaires in the USA. In very rough numbers (it changes so precision gives a false signal), the Millionaires Club is about 5% of US households. Since there are about 123 million households in the US, there are about 6.2 millionaire households. These households are not evenly distributed across the Country. Here is a recent estimate map published in the WSJ:
http://blogs.wsj.com/economics/2014/01/16/where-are-the-u-s-s-millionaires/

I couldn't tell from the WSJ info if that is net worth (including non investment income e.g. house) or invested assets. Can you?
Thanks

Hi Dex,
Often the retirement decision is a high anxiety event because of portfolio performance uncertainty. If the retirement depends on a portfolio drawdown, a few bad years can do lasting damage.
There are plenty of millionaires in the USA. In very rough numbers (it changes so precision gives a false signal), the Millionaires Club is about 5% of US households. Since there are about 123 million households in the US, there are about 6.2 millionaire households. These households are not evenly distributed across the Country. Here is a recent estimate map published in the WSJ:
http://blogs.wsj.com/economics/2014/01/16/where-are-the-u-s-s-millionaires/
The Southern states are at the bottom of the heap. The likelihood of a millionaires household increases with age, with education, with being married, and with multiple wage earners in a household. No great surprises. About one-third to one-half of millionaires are in households below typical retirement ages. Here is a Link that makes that claim (see chart 4):
http://taxfoundation.org/article/who-are-americas-millionaires
However, when retiring, sometimes “A Million is Not Enough”. That’s the title of a book by financial advisor Michael K. Farr. But the real answer depends upon many individual factors that can not be adequately addressed in any book.
Many of these individual factors can be nicely addressed by exercising retirement planning tools that are accessible on the Internet. I have referenced these resources frequently on MFO, and am not reluctant to do so again. I am a fan of these tools since they help to reduce retirement planning anxiety, especially when Monte Carlo analyses capabilities are integrated into their toolkits.
One of my favorites is The Flexible Retirement Planner site. Here is the Link:
http://www.flexibleretirementplanner.com/wp/
The workhorse tool on this site is its Monte Carlo simulator. Please give it multiple test runs for your specific circumstances. Exploring “what-if” scenarios will increase a user’s understanding of what is influential, what actions are positive, and what options are harmful.
A more barebones Monte Carlo simulator, with many fewer options, is available on the MoneyChimp website. Here is the Link to it:
http://www.moneychimp.com/articles/volatility/montecarlo.htm
The MoneyChimp code inputs can’t be made more simple. You get to choose your own tool. I might test both resources because both are efficient time-wise.
The bottom-line output from either simulator is the probability of success (avoiding portfolio bankruptcy). There are many actionable options to move the likelihood into an acceptable green-coded probability zone. This is a terrific planning tool, and should make a final decision just a little more comfortable and definitely more reliable.
Knowing how to become a millionaire is not a mystery; the discipline to achieve that goal is yet another matter. The ball is in your court. I wish you good planning, a good decision, and good luck.
Best Regards.

I just wanted to thank the MFO community....I reached a big milestone in my HSA, thanks to all of you and the T Rowe Price funds you have recommended over the years. It is greatly appreciated!

Hi l5b,
What's the milestone? Hopefully the Health Savings Account finds you healthy, wealthy and wise. Were you able to set an hsa with TRP funds at TRP or through an intermediary?

I just wanted to thank the MFO community....I reached a big milestone in my HSA, thanks to all of you and the T Rowe Price funds you have recommended over the years. It is greatly appreciated!

Many of the bank loan funds are having decent years over 3% YTD ala LSFYX and DBFRX. Same with many of the junk funds ala JAHYX.

A year ago I bailed from Price's floating rate (bank loan) fund, PRFRX, after enduring about 3 years of very poor performance. Guess what? It's up around 3.5% YTD. Meanwhile, RPSIX, where I put the $$, is flat YTD. Another case of being "a day late and a dollar short."
Buying and selling rarely pays. Maybe a lesson in there for others.

FYI: Smart beta has emerged as one of the most exciting and hotly debated investment trends of the past 10 years.
Going by many different names—strategic beta, Fundamental Indexing, factor investing and others—smart beta is a
catchall term for rules-based, quantitative strategies that aim to deliver better risk-adjusted returns than traditional
market indexes.
Regards,
Ted
http://www.etf.com/sites/default/files/smart-beta-guide-043015.pdf

FYI: Value mutual funds did well in the first two of the past 10 years but have lagged their growth and core counterparts since then, leaving the style trailing for the whole period.
Regards,
Ted
http://license.icopyright.net/user/viewFreeUse.act?fuid=MTk5MzkzOTE=
Enlarged Graphic:
http://news.investors.com/photopopup.aspx?path=071515webLV.jpg&docId=761703&xmpSource=&width=986&height=1135&caption=&id=761693

Many of the bank loan funds are having decent years over 3% YTD ala LSFYX and DBFRX. Same with many of the junk funds ala JAHYX.

I've noticed the same with my bond funds - the junkier stuff is doing better than the higher quality holdings.

Many of the bank loan funds are having decent years over 3% YTD ala LSFYX and DBFRX. Same with many of the junk funds ala JAHYX.

OK. Just could you note...
My bad on the Alarm Rating column...basically, latest legacy Fund Alarm Ranking...HR - Honor Roll, TA - Three Alarm, ND - No Designation (ie. In between), Dash - Less Than 5 Years Old, so not ranked in legacy system.
The output is from the MFO premium site, which I'm coming to rely on more and more.

@MFO Members: Its the same old story ,what have you done for me lately. In my opinion, Dr. Mark has been over rated for years besides being a pompus ass in his white suit, living the good life as the world's self-proclaimed authority on emerging markets investing.
In recent years, he has little to do with the day to day of the funds that bear his name, and has functioned mainley as a good will ambassador for Franklin Templeton.
Regards,
Ted
Mark Mobius Track Record:
http://www.trustnet.com/Managers/ManagerFactsheet.aspx?personCode=00000018SR&univ=U&print=true

@Sven. Correct. Mobius has his following from many years ago but investors today can use other cheaper funds and ETFs to accomplish the same thing. He became too expensive for the product he produced.
I did like his commercials but never invested in his funds for the same reasons you mentioned.

Our risk and return performance metrics through quarter ending June 2015 have been posted to the Search Tools, including updates to Three Alarm, Honor Roll, and Great Owl funds, and well as Dashboard of all funds profiled.

I think we need another category: Funds that will out perform in their category over the - next 5, 10, 15, 20+ years

I agree that this is not a good time to purchase a fixed immediate annuity. The calculation may be a bit different for someone (over 59.5) in the accumulation phase.
In most market environments, fixed annuities generally provide better returns than comparable CDs (albeit wth higher risk - the insurer might go bust, and much more severe "early withdrawal penalties"). Here's a Marketwatch column that says the same thing with a lot more words.
Even in this low interest rate environment, Fidelity shows a NYLife 3 year fixed annuity (with a whopping 7%+ surrender rate) yielding 1.75%. That's a few basis points higher than I can find at a credit union. Not enough of a difference to make it worthwhile - just enough to show that sound, shorter term fixed annuities can still beat CDs. (Going out five years, the current CDs seem to do better than fixed annuities from top rated insurers, and with lower surrender costs.)
That's the only reason why I could see purchasing a deferred fixed annuity now - as a CD alternative. (The reason for age 59.5 is so that there is no IRS penalty for cashing out.)

Morn'in @hank
You noted:
"Perhaps above caption/question is offered tongue-in-cheek. However, it's highly unlikely anyone sits down on the weekend and decides how to invest during the coming week. (And anyone so inclined would soon run amuck of mutual fund trading restrictions or be eaten alive by trading costs.)
So I must assume the initial post and question are intended only as a conversation starters, rather than as a serious question."
>>>The "problems" being "repaired" was tongue-in-cheek for the most part. But, moving the cash to something productive this week was serious. And, no; this would not be an over the weekend decision, but is part of the our normal watching (trends) that is a cumulative process for the investments. We already have quite a bit of money towards the various sectors of healthcare related; but may place more into this area, too.
We wouldn't run into restrictions with Fidelity for too many mutual fund trades with any money moves this week. And we have moved more towards the etf area which would not cause a trading problem, as well as the numerous etf offerings at Fidelity (Fidelity and I-shares) for broadbased sectors that are available without a commission. Worst-case is that etf trades would be $7.95 cost via online purchase.
Fidelity etf offerings
I expected some thougths, which is why I posted the equity holdings breakdown we currently are invested into. So, serious to that aspect.
Lastly, and not related to the above is that we may have a short period of time in mid-August to stimulate the Michigan economy and the initial plan is to visit Leelanau county for a few days. Have not been to this area since the early 80's. Hell, should have purchased real estate there and then. :) Anyway, you know this is a beautiful area, eh?
I snooped around online for this and that for the area, as was surprised to find so many "for sale" real estates listings for that county. About 1,000 listings for all property types, and about 140 listings for waterfront. 'Course, some of this is condo listings and also tied to a portion of Traverse City. Zillow Leelanau waterfront Appears that "some" of the listings are not in Leelanau county....a Zillow problem I guess.
Today, we are more of the "we'll rent a property for a week, versus buy a second property". We have "dirt", 1.5 acres, in Eagle Harbor; but that is "not" the west coast of Michigan; and will likely become inherited property, as we don't plan to sell; unless approached with a "offer that is too good to refuse". Tis a long way from downstate Michigan and this area has about as much traffic from Chicago and/or Minnesota, as Michigan. A much different part of Michigan from the downstate, populated areas. And as you know, too; a lot of the west coast (Lake Michigan) has property owners from the Chicago area, aside from Michigan owners over the past 100 years.
Eagle Harbor Michigan
Hey, take care; and thank you for your thoughts and time.
Catch

This is pretty simple, really. Assuming you are referring to immediate, fixed annuities, the process is sort of like Social Security or a corporate/public pension. In return for giving an insurer a sum of money, you receive an income for life. The income could be for your life only, for you and a spouse, a period certain (for at least 10, 15, etc. years even if you (and your spouse) should pass before that period is up. Depending on the interest rate used and your life expectancy, the income received will vary. Now is not a good time to give money to an insurance company for an immediate fixed annuity, since rates are really bad. We are advising clients to wait until immediate annuity rates are in the 3-4% range. That is still not great, but a lot better than they are now.
This is for immediate fixed annuities only. The income starts now. We would certainly not use deferred fixed annuities in the current interest rate environment. This guaranteed contract depends on the ability of the insurance company to remain solvent, so do your homework on the company. And I would never recommend something like VPGDX as an annuity substitute. It is a mutual fund, where you really have no guarantee of any kind. With almost 60% in stocks, you need to be able to handle a 14-15% loss in that 60% (assuming a correction will occur). So the fixed annuity is an ok option, if you are willing to give that lump sum of money to an insurance company in exchange for a guaranteed payout for your lifetime. Again, sorta like SS or a pension.

Thanks msf.
Yeah - I realize you're buying insurance with an annuity. For some reason, this "insurance" appears to carry an expensive price tag. Sometimes insurance doesn't make sense. I rarely carry any, except for legally mandated PLPD, on vehicles over 4-5 years old. (Probably not a good analogy.)
VTINX, which you linked, is an interesting fund. It's about 30/70 equity/bond, compared to TRRIX at around 40/60. I've owned the latter a number of years and am quite fond of it as a substantial long term retirement holding.
Haven't studied all your leads yet - but intend to do so. Lots of food for thought here.
A final thought: While The two funds I mention look like they would provide a steady stream of decent retirement income and offer a high degree of principal protection over many decades, there's of course no assurance of that.

@hank - I'll try to address your questions as best I can. But I would first like to point out that there are subtle (and not so subtle) differences among the various products out there.
At the 50,000 foot level, annuities and other insurance products are just that - insurance. They aim to insure (guarantee) something that you want insured (e.g. that your checks won't run out, no matter how long you live). In contrast, noninsured products provide a different but related service - managing your cash flows so that it's likely (but not guaranteed) to last as long as you do, and likely (but not guaranteed) to remain relatively constant (with or without annual increases/inflation adjustments, depending on the product).
Mutual fund companies have come up with two different types of "managed payout" products to manage your cash flow. One is designed like an annuity - to spend down after a number of years (like a "term certain only" policy). Another is designed to last in perpetuity - drawing income only and preserving principal.
As the linked-to article points out, Vanguard and Schwab provide funds of the latter type. Vanguard had problems with its three funds (designed for different levels of growth/risk and different payout levels), and combined them into a single fund VTINX. Schwab still has its three funds:SWJRX, SWKRX, SWLRX.
Fidelity's Income Replacement Funds can be found here. Regarding PIMCO, it had two funds, PIMCO Real Income 2019 and 2029. Apparently they never got much traction and were liquidated Nov 14, 2014, shortly before their manager was dismissed for improper trading.
PIMCO still seems to offer a "Real Income Strategy" if you can figure out how to participate. (The page links only to generic mutual fund and separate account pages.)
If you'd like to compare these funds with how insurance companies invest, here's a two page paper on that from the Chicago Fed, April 2013.

Lewis' link succenctly lays out three prime areas of concern with these. Agree with all.
Junkster's done a great job over recent weeks researching these and sharing his impressions.
He, msf, Bob C and some others on the board understand them far better than I do.
However, I can never get past the simple math that seems to show that they give you back over a roughly 15-year time-span (+ -) essentially all your money along with a very low rate of return (in the order of 1 or 2% compounded). Of course, it depends on how long you live. Exceeding that period produces a somewhat better rate of return.
I'm big on inflation protection. Maybe that's because my formative years budgeting & investing were during the highly inflationary 70s and 80s. That left a lasting impression. Of course, there's no assurance we'll witness anything like that again anytime soon. Still - I'd list the article's point #1 (inflation protection) as my biggest concern with these products.
Junkster's point-on about the current low interest rates pretty much torpedoing any chance for an annuity purchased today to provide an attractive return on investment. That's because the annuity company has to invest that money during your drawdown period, and there aren't a lot of attractive options right now.
I think Vanguard or some other fund provider once marketed a mutual fund which was meant to generate a modest rate of return and also provide a relatively safe monthly pay-out to retirees over time. Not an annuity in name - but having similar appeal. (Unlike an annuity, the years of payout would be finite.) Anyone know what fund that might be and whether it still exists? If it does exist, it's probably struggling against the same low-rate headwinds as any similar investment today.

Probably shouldn't be using a word like "fixed" when discussing investing markets. :)
A formal title for this, perhaps should be something like: "Wish I didn't know now what I didn't know then." Thank you, Mr. Bob Seger for this insight thought.
As to next week July 13; well, and I don't know why :), but I still feel a little twitchy about Greece getting a real short term fix.
And I suppose I should be keeping in mind that only some of China equity is trading. 'Course, this country likely has enough real capital monies to shape whatever it needs for its internal equity markets and citizens.
Ms. Yellen's note on Friday about a small bump in rates didn't seem to bother the equity markets; and Europe had a very nice day, on Friday.
Other than the above items, is this as normal as it gets for the near future.......?
Well, anyway; from recent further reductions in investment grade bond holdings, our house has about 4.35% of a portfolio cash position that will be deployed next week, or at least, more than likely next week barring major baby black swans being born. Well, that's the thought at this time, anyway.
'Course, been looking at the oversold or down trodden areas. Latin America, as an example, is still a mess, IMO; and will likely remain in the dumper for the future. Not interested in commodities at this time, with the possible exception of energy; which we have been watching for so many months. This area is still having a rough time gaining upward momentum.
For the curious (yes, we all are, eh?) our current mix (evolving over the past two years) is:
---equity, 67.4%
---investment grade bonds, 28.2%
---cash, money market, 4.4%
EQUITY breakdown
---health/bio/pharma, (mostly U.S.) 41%
---blend U.S., VTI / ITOT type, 25%
---int'l, (mostly Euro), 20%
---real estate U.S., 14%
Well, the health related stuff is still happy; and the blend equity is around +2.4% YTD and the Euro area is doing well, too. U.S. real estate has been in a funk, but has had positive moves during the past few weeks, but this area remains in the negative for the year in the -3% range, depending upon the fund. Many IG bond holdings are pretty much flat and/or slightly negative YTD.
Just a little thinking outloud, Sunday morning, not enough coffee yet..........words.
Hoping that you find your investments, and you, to be happy during this "interesting" markets period.
Take care,
Catch