http://www.nytimes.com/2015/06/04/us/last-task-after-layoff-at-disney-train-foreign-replacements.html
We talked about how people don't have money for retirement.
I don't see how they will get it. Illegal aliens taking unskilled jobs and not legal aliens taking skilled jobs.

Just IMO & confirm the following with any Firm you inquire to want to Hire:
First of all as for buying any Ins. Products? Get at least a 2nd and 3rd Opinon, preferably from your own Ins. Agent and be very skeptical .. They are the #2 most Profitable Sales Item for Businesses. many pay 10% Commission to the Agent selling them.. and another 1% yr thereafter.. Thus why they push them so much ! I tell them, If I want an Insurance agent I'll use the one I have for over 20+ yrs thank you..
After Serving the Financial Industry ( and Several Firms , Including RJ ) thru my Limo business in Both Chicao and Boston for over 30 yrs and now Retired..
1- Understand, if they are a Franchise Business that like other Franchises, are Controlled and guided by the Franchisor ( Corp Office) and while may give individual Offices/Franchises some leaway, so that Your Investing your $ into Individual running is, at best 33% True, the other 66% is Controled by what Corp. Says they have to follow..
2- They are no Different in running their franchise type Office any Differently that a Mutual Fund store or EJ, etc.. They all have guidelines to adhear too by " Corporate".. and Depending on your account size, you may get a new Apprentice to one of the Senior Partners running that Office/Franchise.. but, all being Supervised by The Owenrs & Corporate..
3-Your 'Assigned Advisor Will Come and Go , Don't expect them to be with you ForeverMore.. and depending on your Account Size, their Replacement can be one of the Senior to New staff taking your account over, but again, Under the Guidence of the Franchise Owner(s) and 'Corporate'..
4- and you would be wise to be Frank with them, upfront and in informing them, while you have to disclose All your Assets to Determine your Investing plans, your only going to give them either (a) Their Min. Amt. Required to Open an Account or (b) a max of 25%, whichever is less for at least the 1st 3-5 yrs and/or until They Prove themselves Worthy to trust them with More of your hard Earned $.. " Talk is cheap, actions tell you who they really are and only time will prove that, right? "
5- As for these Message Board, always expect that at least 75% or more advisors have good intentions and are very Experienced and Manage their Own $ and don't use WMF's and thus have No Knowledge of what they could have Been & having one do at least 50% of their Decisions..
And , Like you do when evaluating Mutual Funds & Investment Mgmtn. Firms, unless they are willing to Share where their $ has been for the past 7,10 & 15 yrs to back themselves Up?
I'd be very skeptical of following their Suggestions and Advice where to Put your $..
DYOR and then Get In Person Advice from people you Know that have been as or more Successfull doing what you have and want to do , then wait at least 3 mos., before Investing or making any changes with your $ .
6-Personally? I WOULD Recommend RJ if at least 1 of the Min of 3 WMF you want to Ck into and be honest with them all upfront .. of what your doing, ( Comparison Shopping)
and if you have Portfolio's? Bring or send them copies of their history and performance to Let them Know your not Some Rookie at this investing Game.. as well as Informing them your Law Firm that does Family ( & Co.) Business and a CPA firm that does your Taxes and other things will also have to sign off using them as well..
Do you have a Law Firm and CPA firm ? If not? Why not? my CPA firm I've used for over 20+ yrs ( and Now in Retirement ) ave about $500 yr to do my taxes..= Chump change and never been Audited and to me, that is my #1 Priority doing taxes..( I've Been audited in my early yrs in my business and its a Nightmare! )
If the CPA Firm you use has a Good Reputation with IRS? It can make a Big Difference..
Inclosing> I've Owned some of RJ Stock for yrs now and Only because, they were ( and still are) the Financial firm of the Owners of the Limo Co. I was with .. Then again, they Opened up an account with them to get them as a Co. Client to serve them and other Wealthy Clients & Co.'s they have.. And that stock has been Free $ to me for yrs and the only reason I kept it and let it ride on its own.. I think its about 5% of my Tot Assets as of last yr.. And Opptimistically? Will also be Passed Onto my Heirs and up to them wether to Cash it in or keep it ..They, all being Richer than I ever was at their age and their nice Over paid Jobs and Pensions, don't need the $.. Both Living in the "Beverly Hills of the Midwest" ( NorthShore or Chicago).. and R Yuppies as well ! ( and their Neighborhoods/Assoc. Don't allow owners to Mow their own lawns, it all is done by the Assoc. Landscapers ! Its Disgusting ! ;-)
Hope that helps! ;-0)

Thank for the charts MJG. This one says it all:

I like this one for showing what has happened.

http://blogs.reuters.com/david-rohde/2012/01/13/white-house-the-american-middle-class-is-shrinking/
This is another reason why I wrote that thread about the young giving up the hope for a comfortable retirement.

Hi Dex,
Well I suppose your one-liner, gratuitous comment is calculated to secure some attention. But it falls miserably short if it is designed to inspire a consensus.
It is far too easy to denigrate a person’s working contributions on the Internet without offering a shred of evidence to support your ungracious and unwarranted remarks.
I do not take exception that you might not like Lauricella’s writings. Diverse opinions are what makes for a vibrant marketplace. But if you are going to bad-mouth a person, as a minimum, you should make the case for your defaming remarks.
Please present your evidence. Why don’t you think he learned much? Have you been a consistent reader of his WSJ articles? I have. Although some were repetitive, I personally learned from his writings. Overall, his columns were uniformly informative.
I’m awaiting your contrary comments and examples of poor writings as are others on MFO.
Recently, Lauricella has focused attention on an issue that you constantly address on MFO: retirement. Surely, you’ve accessed these articles. If not, here are Links to two representative samples of Lauricella’s work:
http://www.wsj.com/articles/five-myths-about-retirement-1400976997
http://www.wsj.com/articles/for-some-retirement-brings-grief-1414886644?mod=WSJ_hpp_MIDDLENexttoWhatsNewsForth
I would hope these references are helpful to some retirees, but might not apply to your specific situation. Each case is somewhat unique, but all have common elements. Since the columns are prepared for the general public, the glove is never a perfect fit. So adjust and interpret.
Look, Tom Lauricella sure doesn’t need me to defend him. I’m simply annoyed at unsupported scurrilous attacks. Plain and simple, it is character assassination at the lowest levels, and for unspecified purposes.
You are welcome to your unsolicited opinions, but your current comment deserves this repudiation and challenge.
Best Wishes.

" 29 percent of such households don’t have a pension."
What is surprising is that 71% do have a pension.

If I read the article correctly, I think it claims 29% of the 50% that don't have retirement savings also don't have pensions. The percentage of all households that don't have a pension could be even higher.

Yes, that is what I'm surprised about. 71% of those that don't have retirement savings have a pension. I think that number will decrease over the years.
If a person is 55 now and they started working at 20 - that was 1980. 401Ks started to become popular then and pensions were not.

" 29 percent of such households don’t have a pension."
What is surprising is that 71% do have a pension.

If I read the article correctly, I think it claims 29% of the 50% that don't have retirement savings also don't have pensions. The percentage of all households that don't have a pension could be even higher.

Go here:
http://socialsecurityreport.org/half-of-people-near-retirement-have-no-savings/
Then click on the "read more" link

MFO Members: Try This: Google article title "Half Of People Near Retirement Have No Savings" and see what happens.
Regards,
Ted

FYI: Half of U.S. households headed by a person 55 and over haven't stashed away any retirement savings..
And while old-style pensions will help some of them put food on the table, 29 percent of such households don't have a pension.
Regards,
Ted
http://www.chicagotribune.com/business/yourmoney/ct-marksjarvis-0607-biz-20150605-column.html

Hi Sven,
I too have access to Bill Sharpe's Financial Engines website. I elected not to mention it because of its likely limited access for many MFOers.
I have a true anecdotal story involving Sharpe and me. In the early 1990s I was planning retirement and consulted with advisors asking for Monte Carlo analyses to support their opinions. They thought I was nuts.
So I was motivated to do my own programming. I ran into some stumbling blocks and sought help from the academic world. Professor Sharp rescued me with great advice on Monte Carlo issues and Gene Fama sent me tons of data. Both professors were extremely generous, and both were friendly. It never hurts to ask for help.
I don't understand the reluctance of some MFOers to even explore the potential benefits that Monte Carlo offers. Open mindedness when investing is an essential element to enhance the odds of success.
Many thanks for your contribution.
Best Wishes.

Hi rjb112,
Thank you for asking. You are the first person on MFO to specifically ask for a few Monte Carlo code addresses. Here are three that offer different user options.
My favorite because of its flexibility for my needs is from Flexible Retirement Planner. Here is a Link:
http://www.flexibleretirementplanner.com/wp/
The code I used for these submittals is from the Portfolio Visualizer website. It runs on my I-Pad and also offers some nifty other investor tools. Here is the Link:
https://www.portfoliovisualizer.com/monte-carlo-simulation
A third source that is the easiest input, but has the fewest user options is from MoneyChimp. This code requires that you estimate the mean and standard deviation returns from your pre- and post-retirement portfolios. Here is the Link:
http://www.moneychimp.com/articles/volatility/montecarlo.htm
My primary purpose for participating on the MFO Discussion Board is to be helpful to mutual fund investors. I’m way beyond salvation myself. So I’m extremely pleased that you requested this information. No trouble whatsoever.
Best Wishes.

FYI: The good news is that Americans are living longer and spending more years in retirement than ever before. However, funding retirement is a fast approaching crisis. On this week’s WEALTHTRACK we have an exclusive interview with Financial Thought Leader and legendary investment consultant, Charles Ellis, who tackles America’s greatest domestic financial challenge in a new book, Falling Short: The Coming Retirement Crisis and What To Do About It.
Regards,
Ted
http://wealthtrack.com/recent-programs/ellis-fixing-the-retirement-crisis/
M*: 2015 Fee Study: Investors Are Driving Expense Ratios Down: (This is a relink in case you missed it the first time.)
http://wealthtrack.com/wp-content/uploads/2015/06/2015_fee_study.pdf

Hi Bee,
Thank you for reading my post and for the questions that it motivated.
I’ll try to address each and every one of them. If I inadvertently fail to do so, please ask again.
The portfolio that I postulated was a somewhat arbitrary attempt to capture the elusive and non-stationary Efficient Frontier that even its inventor, Harry Markowitz, doesn’t match in his investments.
For the record, it included a 30% commitment to US stocks and 10% equal allocations to Foreign Equities, US Small Cap Value, REIT, Treasury Bonds, Corporate Bonds, TIPs, and Short Term Corporate Bonds. I tried to make the portfolio rather generic in the spirit of Professor Israelsen’s recommendation.
This single attempt at a competitive portfolio does not directly reflect my portfolio which is slightly more nuanced and more numerous in holdings. My current portfolio contains both actively managed and passively managed products, although I am shifting resources in the passive direction and am attempting to simplify.
The portfolio that I tested does reflect some of my preferences and biases. I did not include any Commodities. I used Short Term Corporate Bonds as a Money Market equivalent.
The Portfolio Visualizer code option that I exercised used historical category return data to estimate future returns. A user can override that option with his own set of anticipated statistical returns. Since I deployed the historical data sets, the analysis results should be interpreted as the equivalent (minus the minor costs) of Index products.
The code makes inflation adjustments. An inflation model that incorporates historical data is a default option that I used. The user can override with his own statistical model if he so chooses. Portfolio rebalancing is done annually.
I do not believe that you can force the Portfolio Visualizer (it’s not my product) to specifically do a rising inflation rate. You can input a statistical representation of a higher mean inflation level with whatever standard deviation you deem appropriate. Now that’s hazardous duty and really getting into the weeds from a projection prospective.
Certainly costs are important, especially if future market returns are muted so that costs absorb a higher percentage of gross returns. That’s one of my motivators to increase my Index holdings.
One of the chief benefits of any respectable Monte Carlo code is that it permits rapid turnarounds for postulated what-if scenarios. By running a patch of these scenarios, a user can develop a feel for what is important and what is noise.
Since the codes use Monte Carlo methods, results are always displayed in probabilistic format. There are no guarantees that the likeliest events will happen. But for most folks, that should be the chosen route: take the most favorable odds. In the game of Blackjack, it’s not a good idea to hit when you hold a 17 hand. In roulette, its better to play a wheel with a single green zero and not with a wheel that contains both a single green zero and a double green zero.
Life is a series of challenges. Monte Carlo is an imperfect tool that can help to quantify the odds coupled to some of those challenges. Retirement decisions are one such task.
Thanks again for your interest and your questions.
Best Wishes.

@MJG,
Thanks for chiming in.
You stated:
"As a third case, I invented an 8 category portfolio which was more heavily weighted to US equities including Small Cap Value, TIPS, and a replacement of the money market holding with a Short Term Corporate Bond position. All three portfolios were basically a 60/40 split between equities and fixed income products."
Are you re-balancing and how often? Have you personally implemented this portfolio for your own retirement and have you explored the cost (Fees, ER, trading costs, etc.)? Are you selecting active or passive investments? Are you able to simulate a rising rate environment?
Does your simulator provide a way to examine different inflation trend scenarios?
I believe that part of managing a well diversified portfolio is to be responsive to inflation trends, either rising or falling, as well as prolong periods of stagflation.

Hi Bee,
Thanks for the reference to Dr. Craig Israelsen’s paper on the performance of portfolio asset mix options.
Based on precisely past performance data, he made a case for his equally divided 7 category portfolio.
Since I used the word “precisely”, and from my earlier submittals, you can easily guess where I’m headed with this post.
Israelsen’s work has a major shortcoming when using it for planning purposes. The results are perfectly tied to the exact schedule of returns recorded by past markets. They allow for no wiggle room. To expect identical results in the future requires that the order of returns must be precisely replicated. The chances of that happening are virtually zero.
The sequence of returns in any investment is significant to end wealth and portfolio survival. I’m sorry but once again, this uncertainty of the sequencing of future returns points to the use of Monte Carlo simulations to examine various portfolio options.
Although I favor the Flexible Retirement Planner for many Monte Carlo investment issues, I used the Portfolio Visualizer (PV) code to run a few sample cases because of convenience. I can run the PV version on my I-pad.
I examined 3 portfolios assuming a 1M dollar initial value with a 5.5% annual drawdown that was adjusted for inflation. To replicate Israelsen’s work as closely as possible, I assumed a 25-year retirement period. My analyses used the historical category returns formatted in a manner for random selections.
As a baseline, I inputted a simple 4 category portfolio with the standard 50/10/30/10 mix of US Equities, Foreign Equities, US Bond, and Money Market holdings. As a second portfolio, I duplicated the Israelsen 7 category portfolio that is equally divided. As a third case, I invented an 8 category portfolio which was more heavily weighted to US equities including Small Cap Value, TIPS, and a replacement of the money market holding with a Short Term Corporate Bond position. All three portfolios were basically a 60/40 split between equities and fixed income products.
I let the Portfolio Visualizer loose on all three portfolios.
The baseline portfolio had a median end wealth of 2.66M dollars with a survival probability of 83%. I’m not a happy warrior at that survival probability.
The Israelsen portfolio had a median end wealth of 3.73M dollars with an improve survival rate of 90%. So far, Israelsen wins.
But that winning record didn’t last beyond a single alternative option. The portfolio that I assembled had a median end wealth of 4.45M dollars with a much more attractive likelihood of survival at the 96% level. Note that I make no claims that my portfolio is optimum, but it is an improvement over the Israelsen construction.
This is yet another illustration of the powerful impact that Monte Carlo calculations can make when stress testing a portfolio designed for a long-term retirement period. The inputs are completed in minutes, the results are displayed in seconds, and a limitless set of what-if scenarios can be explored in a half-hour.
I urge all MFOers to become familiar with Monte Carlo tools. Your own analyses are superior to those reported by many financial advisors.
Best Wishes.

Sorry to hear about Mr. Keeley's passing. I believe he was 75. Just another reminder to enjoy life to its fullest in our retirement.

"The challenge of asset allocation now is no longer having too few ingredients to consider but rather selecting among an ever increasing array of sector-specific mutual funds and exotic ETFs"
A Seven Asset Portfolio out performed all other asset allocations, both prior to and during retirement.
This would consist of:
-large-cap U.S. stock
-small-cap U.S. stock
-non-U.S. developed-market stock
-real estate
-commodities
-U.S. bonds
-cash
-in equal proportions, rebalanced annually.

and,
"The second part of this analysis compares three allocation models when used in a retirement portfolio — which is very sensitive to timing of returns, particularly large losses. This analysis assumed an initial nest egg balance of $250,000 — quite comfortable back in 1970, although fairly modest now — with an initial withdrawal rate of 5% (or $12,500 in year one) and an annual cost of living adjustment of 3%. Thus, the second-year withdrawal was 3% larger (or $12,875), and so on each year. The superior approach, however — with a median ending balance of over $2.1 million — is the model using seven different asset classes."


For retirees facing the future headwinds of rising rates this study found that:
-during the inflationary periods of the 1970s, the seven-asset model had considerably better performance as a retirement portfolio — finishing with a balance of $2,086,863 for the 1970 to 1994 period, while the 60/40 model ended up at $1,090,081. The pattern recurs in the first four 25-year periods.
-an asset allocation model that has a large commitment to U.S. bonds (such as the classic 60/40 portfolio) may be at risk because if interest rates rise, bond returns will likely be far lower than over the past three decades.
-that a more broadly diversified portfolio is prudent — both in the accumulation years and in the retirement years.
Source:
which-asset-allocation-mix-outperforms?

This is not a trivial change, but it appears (to me) to be a pretty fundamental re-do:
http://www.fpafunds.com/docs/fund-announcements/2015-06-04-perennial-press-release-final.pdf?sfvrsn=2lease-final.pdf?sfvrsn=2
1. New manager change, plus an alteration from 2 managers to one manager. Eric Ende, as he transitions toward retirement, will move entirely away from this fund and yet remain with Source Capital for awhile, the CEF-equivalent of Perennial which presumably will retain its SC/MC quality mandate. Gregory Herr will pass the baton to Mr. Nathan and focus exclusively on his Paramount charge, which he currently co-manages.
2. Perennial will become US Value and morph, after temporary closure, to an all-cap posture. That this new mandate will result in significant portfolio change is apparent from their press release:
"FPA Perennial Fund will close to new investors on June 15, 2015, as the portfolio manager change will result in significant long-term capital gains. FPA expects to reopen the Fund to new investors in October, following the portfolio transition."
So, congratulations, Perennial holders, the role this MF plays in your portfolio has just been changed for you.

Hi Old Joe,
You're on target when you suggest that all retirement portfolio withdrawal requirements should be based on the amounts needed to supplement the total of all other retiree income sources.
That's exactly the way all such calculations are completed. Not to worry, that's the way they have always been made.
Best Wishes.

Hi Davidrmoran,
You raise important questions with regard to a retirement cash cushion requirement. How much is needed? How was that level determined? What fraction of a retirement portfolio should be protection money in the form of near-term cash equivalents?
I retired twenty years ago, and at that time I was exposed to several professional retirement expert estimates. Yesteryears typical number hovered around two years worth of the planned withdrawal rate. Does four years near-term cash provide additional protection benefits?
This is another example of the benefits of Monte Carlo simulations to scope the issues. There is little need to rely on rules-of-thumb or instincts or opinion.
Since the retirement decision is so far in my rearview mirror, I really don’t want to spend too much time doing real work. Therefore, I only did 4 simulations to illustrate the tradeoffs. These took about 5 minutes to complete using the Portfolio Vizualizer Monte Carlo tool. If the subject is of paramount significance for you, a more comprehensive set of calculations is likely warranted.
I assumed a 30 year retirement time horizon with drawdowns at the 4.5% and 5.5% portfolio levels. I used the programs Historical Returns and Historical Inflation options. I postulated a simple portfolio mix with an asset allocation of 40% US equities, 10% International Equities, 30% or 40% Bond, and either 20% or 10% cash. That’s a 4 calculation matrix with a 50/50 split between equities and fixed income sources.
Obviously, end wealth was always higher (like a factor of 2) for the lower 4.5% withdrawal schedule. End wealth was higher for the 2 year cash reserve portfolio. Portfolio survival was marginally higher for the 2 year cash reserve portfolio. At the 2 year cash asset allocation, portfolio survival was 88% for the 4.5% drawdown rate, and dropped to 70% at the higher 5.5% withdrawal rate.
The 2 year cash cushion wins by both end wealth and survival measures.
These sample simulations suggest that you need not concern yourself with a 4 year cash reserve. Although it certainly would increase the comfort zone for any retiree, it is likely an unnecessary luxury. It seems like an arbitrary number. Portfolio asset allocation is always a top-tier investment decision, especially so during retirement.
I suggest you try a few Monte Carlo cases yourself to confirm and expand my brief findings.
Best Wishes.
EDIT: For completeness, here is the Link to the Monte Carlo code that I used in the reported calculations:
https://www.portfoliovisualizer.com/monte-carlo-simulation