“Many asset managers’ websites don’t nudge retirement savers into favoring a Roth 401(k), however. The calculators they offer to compare the advantages of Roth and traditional 401(k)s often make Roths look second-rate.”
Think about it. Why encourage people to pay taxes before investing or do a conversion later in life which may result in their not having as much left over to invest? Your fiduciaries stand to get a higher “cut” from your higher pre-tax balance than after you’ve paid taxes on it. They’re charging their management fees on money which you’ll eventually need to cede back to Uncle Sam. Double-dipping in a sense.
I can’t speak to the wisdom (or lack thereof) of contributing to a Roth in the early years. May or may not make sense. But if you can afford to pay those taxes at some later point and convert, I think it makes a lot of sense - especially if you can do it with some depreciated asset that stands to rebound.
The thing to remember: All the money you earn on that Roth going forward (potentially for many years) is fully tax exempt. The gift that keeps on giving ...

I can only answer why I don't use it: I maximize my 401k PRE-tax contributions to the extent allowed by law, rather than opting for the Roth.
Very simply, I am in my peak earning years and my marginal tax rate during this time will likely be much higher than when I retire --- primarily as my income in retirement will be much lower.

”Nothing magical about 3 years, though I think that is about the average recovery time for a bear market.”

I borrowed @MikeM’s remark for illustration here, but my question applies to many others who have discussed their withdrawal plan (as relates to cash) in event of a bear market during the distribution phase of retirement.
If your equity heavy portfolio falls by 35% during a 3-year bear market while you draw from your cash reserves, do you really want to start selling your equitiy heavy portion as soon as the bear ends? Say your equity portion is still down 20-25% 3 years later after the bear market has “officially” ended. Having to withdraw funds (even though it’s now a bull market ) could still be problematic.
Looks like the average duration (from peak - to bottom - and back up to that level again) is about 5 years. Since that’s just an average, some of these periods during which you would have to either (1) sell depreciated equities & funds or (2) rely on your cash reserves might last considerably longer than 5 years.
https://www.dividendgrowthinvestor.com/2008/07/average-durations-of-previous-bear.html

FYI: Imagine a savings vehicle that allows you, in retirement, to withdraw as much or as little as you wish—tax-free.
This vehicle, the Roth 401(k), is a great tool for many savers, as my colleague Laura Saunders has pointed out. Why don’t more people take advantage of it?
Regards,
Ted
https://www.wsj.com/articles/the-deal-hidden-in-your-401-k-11559917801?mod=searchresults&page=1&pos=1

https://www.google.com/search?q=what+we've+learned+about+target-date+funds+10+years+later&ie=utf-8&oe=utf-8&client=firefox-b-1-m
Enter News, Quotes, Companies or Videos
Target-date funds have emerged strongly from the damage of 10 years ago, but some advisers say their one-size-fits-all approach to investing isn’t suitable for every investor. Nicolas Ortega
Journal Reports: Funds/ETFs
What We’ve Learned About Target-Date Funds, 10 Years Later
A decade after target-date funds were damaged during the financial crisis, they have re-emerged bigger than ever as retirement investments. But they still have vulnerabilities.
By Jeff Brown
May 5, 2019 10:09 p.m. ET
Back in 2008, many investors looking ahead to retirement in two years had a shock when “target-date funds” designed for them plummeted in value. Many had assumed those funds, targeted to a 2010 retirement, were safe from large moves that late in the game.
Despite the jolt to investor confidence, target-date funds have flourished in the decade since, becoming a staple in workplace retirement plans such as 401(k)s, as a net $532 billion in investor money poured in during that time, according to data from the Investment Company Institute trade group.
Journal Report
Insights from The Experts
Read more at WSJ.com/FundsETFs
More in Investing in Funds & ETFs
Fund Fees Still Vary Too Much
How Much Cash in Retirement?
U.S.-Stock Funds Rose 3.6% in April
529s or Coverdells for College?
ETFs Dial In to 5G
Whether that is a good thing remains a matter of debate. Some financial experts question the value of target-date funds, saying their one-size-fits-all approach to investing isn’t suitable for every investor. Others say the funds can be a good way to save for both retirement and college—as long as investors pay attention to the products’ risk profile, fees and performance, especially as market conditions change.
Of course, the idea behind target-date funds, or TDFs, is to make investing as simple as possible by gradually adjusting to a more conservative investment mix as a target date approaches. As the default option in many workplace retirement plans, TDFs attract investors who don't want to choose and rebalance their own investments and may not be aware that the funds can still own lots of risky stocks close to and even after the target date arrives.
“There is a common misconception among many target-date holders that the portfolio is completely de-risked at retirement, and that simply isn’t true,” says Robert R. Johnson, professor of finance at Creighton University’s Heider College of Business in Omaha, Neb.
A big factor in that growth was Obama-era legislation that encouraged employers to automatically enroll new employees in retirement plans and use target-date funds as the default for those who don’t choose their own investments. Previously, investors who were inattentive—a notorious problem with workplace retirement plans—simply accumulated cash, which doesn’t provide enough growth to build a nest egg that will last for decades.
“It’s certainly a good thing” to use TDFs as the default, says Dennis Shirshikov, financial analyst at FitSmallBusiness.com, an advice service for small-business owners and managers. “This has brought a great deal of consistency to a retirement portfolio, especially since most investors with a 401(k) do not manage their investment actively.”
Another factor in TDF growth, Morningstar says, is the growing popularity of index investing as most TDFs invest in index funds, rather than actively managed funds. In 2017, 95% of new employee contributions to TDFs went to one relying on index funds, according to Morningstar.
Investors can buy target-date funds for their individual retirement accounts and taxable accounts, as well, and most big fund companies offer them. The biggest player is Vanguard Group with about $381 billion in TDF assets in 2017, 34% of the market, Morningstar says. Fidelity Investments had a 20.5% share, and the third-biggest player, T. Rowe Price , TROW 1.89% had a 14.9% share.
The downsides
Retirement experts have mixed views about TDFs’ value in a portfolio. Most say TDFs are better than not investing at all, or putting retirement savings in cash, but the funds can’t take into account each investor’s unique situation. Two investors the same age would get the same fund, even if they have different needs due to dependents, availability of other assets, life expectancy and risk tolerance.
“In an attempt to simplify planning and saving for retirement—certainly a noble endeavor—the entire concept of target-date funds likely is a bridge too far,” Prof. Johnson says. “Individuals are unique, and one parameter, the anticipated retirement date, cannot and should not dictate the appropriate asset-allocation mix and the change in that mix over time.”
Another concern: The automatic investing strategy ignores changing conditions. Patrick R. McDowell, investment analyst at Arbor Wealth Management in Miramar Beach, Fla., says low bond yields in recent years have reduced TDF income after the target date, and increased the risk of losses on bondholdings if rates rise. (Higher rates hurt bond values because investors favor newer bonds that pay more.)
What’s more, he says, stocks and bonds have often moved in tandem in recent years, reducing the benefit from diversification, which assumes one asset goes up when the other falls.
Know your rights
Retirement savers who are automatically put into TDFs have the right to switch to other funds in their retirement plan as they learn more or conditions change, and Mr. McDowell recommends that investors get more involved as retirement nears. He says he often recommends investors nearing retirement leave the target-date fund and buy a mix of stock and stable-value funds—which contain bonds insured against loss and are designed to preserve capital while generating returns similar to a fixed-income investment—to reduce danger from a potential market plunge.
Advisers urge investors to examine the TDF’s ‘glide path’—its investing policy for shifting from stocks to bonds over time. Photo: iStock
“In that strategy, a big drop in equity and fixed-income prices won’t hurt a soon-to-be retiree in the same way it would in a TDF strategy,” he says. “It also helps investors defend against a rising interest-rate scenario” harmful to bonds.
Experts say TDF investors should keep abreast of performance and not just assume they are on track to a comfortable retirement. Morningstar provides data on average performance by target date, as well as details on individual funds.

In retirement, my plan is a 3 year "withdrawal" bucket which would be mostly MM and CD's and possibly a short term bond fund. Replenish each year if the markets up. Wait to replenish if the market takes a nosedive. Nothing magical about 3 years, though I think that is about the average recovery time for a bear market.

@MFO Members: I have always recommended an emergency funds of six months worth of living expenses.

From the article:
"Most people are familiar with the idea of having an 'emergency fund' during one's working years—a pot of money (typically, equal to three to six months of living expenses) that can help with unexpected bills or, perhaps most important, tide you over if you lose your job."
If a function of emergency cash is to tide you over until you get your next job, how long until your next job in retirement?
Many people seem to conflate two questions: how much cash should I keep for an unexpected emergency, and how much cash should I keep in retirement to protect against sequence of returns risk?.
For example, I was reading an old WSJ column where a couple with adequate pension income asked about putting all their IRA money into an S&P 500 fund. The response was that given the situation, that would not be unreasonable.
The column didn't address what size emergency fund they might also want to keep. ISTM that they would have the same need as working people - a reserve for some unexpected expense that their cash flow (here, pensions) didn't cover.
For people without steady income streams that cover all expenses (i.e. typical retirees), it's a different question as to how much cash to keep. Buffett's 10% short term treasury/90% S&P 500 implicitly suggests 2.5 years of "near cash" (10% @ 4% drawdown/year). I'd be inclined to go a bit higher and/or use bonds as a second tier resource between cash and equity investments.

So Hank....just close your eyes and hold on. The market will always be ok long term. Steady as she goes. Tune out the noise. We can't predict the short-term, so why bother.

@JoeD, I wasn’t giving investment advice. Just trying to share a few personal observations and reflections re markets and investor sentiment gleaned over the years - since that’s where @Junkster appeared to want to go with this. (Closing your eyes when moving is probably never a good idea. Might run into an immovable object.)
But here’s my take on risk exposure / market timing:
- Depends on what you’re buying or holding. Treat your equity or high yield stake as one part of a wider investment universe. Don’t overlook investing in a home, maintaining a cash reserve, having a pension or annuity for steady income, investing in your own business or education, etc.
- Depends on your time horizon. For a 25 year-old who won’t need the money for 40 years I think putting 100% in a good global growth fund makes a lot of sense. He / she has time to ride out several market cycles. For a retiree I’d suggest a more conservative approach.
- Depends on your skill set and past experience. Some people have a knack for timing various types of markets. If you’re good at that (only you would know) go for it. However, for most of us, market timing is a somewhat flawed endeavor. The reason may be that markets can remain irrational longer than most of us can remain solvent. Another reason might be that it’s pretty hard to sort out the really pertinent facts from all the noise coming at us from many different directions.
- Depends on your own tolerance for risk. That’s not just your emotional make-up, but also how soon you may need the money and what you intend to do with it. For some of retirement age, an all bonds and cash approach might make sense. It should protect against large or unexpected losses. But it might not protect against rising costs of living or afford the life style one might prefer.

FYI: A decade after target-date funds were damaged during the financial crisis, they have re-emerged bigger than ever as retirement investments. But they still have vulnerabilities.
Regards,
Ted

FYI: Should I hold a cash reserve in retirement? If so, how much? And, if you’re willing to share, do you have a cash reserve as part of your retirement savings?
Regards,
Ted
https://www.wsj.com/articles/how-much-cash-should-you-hold-in-retirement-11556805424?mod=article_inline

@Ted & Old_Skeet: Are both of you sure that somewhere in your portfolios a mutual fund does hold some tips # 7 ?
I have some in VG retirement fund.
Derf

https://www.sec.gov/Archives/edgar/data/1486174/000143510919000260/497chou.htm
497 1 497chou.htm
CHOU AMERICA MUTUAL FUNDS
Supplement dated June 5, 2019 to the Prospectus dated May 1, 2019
On June 5, 2019, the Board of Trustees (“Board”) of Chou America Mutual Funds (the “Trust”) approved a Plan of Liquidation and Dissolution (the “Plan”) pursuant to which the assets of the Chou Opportunity Fund and the Chou Income Fund (the “Funds”) will be liquidated and the proceeds remaining after payment of or provision for liabilities and obligations of the Funds will be distributed to shareholders. The Funds’ investment adviser (the “Adviser”) has recommended that the Board approve the Plan and the Board has concluded that it is in the best interest of each Fund’s shareholders to liquidate the Fund pursuant to the Plan.
In anticipation of their liquidation, the Funds stopped accepting purchases on June 5, 2019. Reinvestment of dividends on existing shares in accounts which have selected that option will continue until the liquidation. Shareholders will be permitted to redeem from the Funds prior to the Liquidation Date, according to the ordinary procedures for redemptions from the Funds described in this Prospectus. Francis Chou, the Portfolio Manager to the Funds and Chief Executive Officer of the Adviser, owns and controls a company that owns shares of each Fund. Mr. Chou intends for this company to remain invested in each Fund in an amount that would enable each Fund to have sufficient cash to satisfy any redemptions by the other shareholders.
The Funds will begin the process of winding up and liquidating their portfolio assets as soon as reasonably practicable. As a result, the Funds are no longer pursuing their respective investment objectives and strategies.
Each Fund will seek to complete the liquidation on or around the close of business on July 31, 2019 (the “Liquidation Date”). The Adviser anticipates that there may be certain portfolio holdings that will not be sold for cash prior to the Liquidation Date, such as the 1.75 Term Lien Loans of Exco Resources, Inc. (“Exco”) owned by each of the Funds. As further background, Exco is involved in an insolvency proceeding and, those loans have been deemed to constitute illiquid investments.
On the Liquidation Date, each Shareholder shall be entitled to receive its liquidating distribution(s) in the form of a pro rata interest in (1) the non-cash assets of the Fund or, at the Shareholder’s election, the cash equivalent of such assets (the “Cash-Equivalent Distributions”), and (2) the cash remaining after the Cash-Equivalent Distributions. However, a Shareholder will be required to receive Cash-Equivalent Distributions if there are any restrictions on the transferability or ownership of any non-cash asset that would prohibit an in-kind distribution of such asset or make it impracticable. Any transfers of the Exco loans, for example, are subject to the written consent of certain banks that are parties to the credit agreement.
If you own Fund shares in a tax deferred account, such as an individual retirement account, 401(k) or 403(b) account, you should consult your tax adviser to discuss the Fund’s liquidation and determine its tax consequences.
* * * *
For more information, please contact a Fund customer service representative toll free at
(877) 682-6352.
PLEASE RETAIN FOR FUTURE REFERENCE.

In May, we launched our 13-step financial life planner, which also attracted a slew of readers. But it seems many folks went straight to the end of the story, because the most visited page was step 13, which is devoted to generating retirement income.
I can understand & will read again.
Derf

I am a ZEO shareholder and have never paid a transaction fee. I don't use a broker. My wife invested in RPHYX a few years ago. We think of ZEOIX and RPHYX in a similar way: it's a "better mattress". I've been with ZEO a few years and I have gone directly to the transfer agent. Zeo uses Gemini in Omaha. Simple paperwork. No fee. ZEOIX shares are in a non-retirement account. Next week I'll have an IRA account in ZSRIX. If you want a ZEO fund in a 401k I suppose it might be harder to avoid a broker.

Thx
From. Newmax
DFA Real Estate Securities I (DFREX) has a one-year return of 21.65%. Its biggest holding is American Tower (AMT)/
Neuberger Berman Real Estate (NREAX) has a one-year return of 20.72%. Its biggest holding is also American Tower (AMT).
Principal Real Estate Securities (PRRAX) has a one-year return of 20.25%. Its biggest holding is Prologis (PLD).
Cohen & Steers Real Estate Securities (CSEIX) has a one-year return of 19.98%. Its biggest holding is Equinix (EQIX).
DWS RREEF Real Estate Securities (RRRAX) has a one-year return of 19.54%. Its biggest holding is Simon Property Group (SPG).
Read Newsmax: Barron's: 5 REITs for Income Investors to Consider
Important: Find Out Your True Retirement Date in Minutes Online! Go Here Now

https://www.kiplinger.com/slideshow/retirement/T037-S004-6-steps-to-snare-higher-yields-in-retirement/index.html
Steps to Snare Higher Yields in Retirement
Income investing is supposed to be like watching a predictable movie that you’ve seen a dozen times before. But lately, it has been full of plot twists. Over the past few years, most income investors settled back with their popcorn for a long period of rising interest rates, believing the Federal Reserve would slowly but surely hike rates back to more normal levels. For bond investors, that would mean some temporary pain—when rates rise, bond prices fall—but it would also bring the welcome relief of higher yields.
Couple funds mentioned in article
Vmmxx
Vfstx
Baird Core Plus Bond (BCOSX
Dodge & Cox Income (DODIX, 3%)

17 monthly dividend to buy hold forever
https://www.forbes.com/sites/brettowens/2019/05/26/17-monthly-dividends-to-buy-and-hold-forever/#1d6c416a48c7
Investors in turn often build complicated dividend calendars that get knocked out of whack whenever they ever have to cut back on certain stocks. May’s dividend check might be enough, for instance but June won’t be, forcing the investor to withdraw from his retirement fund, shaving away future income-generating potential.

Bonds are important to mitigate risk as one approach retirement or as the students start to pay for their college tuition with 529 funds. I agree the bond's yields are no where near the historical levels. Most average investors do not have access to other vehicles without incurring additional risk.

FYI: There were two recurring themes at the annual InvestmentNews​ Retirement Income Summit in Chicago earlier this month: the economic impact of increased longevity and the need for guaranteed income in retirement.
Retirement has traditionally been described as a long-term investment goal. That's true for the accumulation phase. But as clients near the retirement-distribution phase, financial planning needs to shift to risk management and capital preservation.
Regards,
Ted
https://www.google.com/search?source=hp&ei=OcrrXLLfOszGsAWW2om4Aw&q=How+to+battle+sequence-of-returns+risk&oq=How+to+battle+sequence-of-returns+risk&gs_l=psy-ab.12..33i22i29i30.3194.3194..8730...0.0..0.347.440.1j3-1......0....2j1..gws-wiz.....0.mCqDITIbkQ8

In doing a recent Instant Xray analysis of my portfolio I am currently holding, within my equity allocation, a little better than five percent in emerging markets. The two emerging market funds that I hold are NEWFX and DWGAX plus some global asset allocation funds along with some other funds that have some emerging market exposure. I'm thinking, for me now being in retirement, a seven percent position in emerging markets would be all that I'd want due to their volatility and performance over the past five year period. In doing a five year look back, NEWFX has gained an average of 3.2% per year while DWGAX has lost an average of -0.8% per year. However, for the past three year period they have both performed with average annual returns of 10.4% and 6.50% respectively. With this, they both have been underperforming funds when compaired to other funds held within the growth area my portfolio. It will be interesting to see what the next five year period brings. For me, they are both considered a contrarian investment play.
From Xray, within equities, I'm currently 1.27% Latin America, 0.42% Europe Emerging, 0.49% Africa/Middle East, and 3.18% Asia Emerging which brings my emerging market exposure to 5.36%. With this, I've got room for some more emerging market exposure before reaching my seven percent threshold. I'm also considering adding to my commodity strategy fund as many emerging market economies are also major commodity producers.