Is Working Past Age 65 a Realistic Option? Hi Mark,
Yes, working beyond age 65 is indeed a realistic option. Unfortunately, for some reluctant non-savers and some reckless spendthrifts, it is mandatory. The other side of that coin is that they can work and recover. As our life expectancy has increased, so has our potential for workplace longevity.
Technology and the Information miracle offer positions that are less demanding manually, but more demanding mentally. Age need not be a handicap while experience becomes more highly rewarded. Education and continued learning is a paramount and sometimes decisive factor.
Chasing the Holy Grail, the magic Number (net total wealth that permits a reasonable likelihood that your resources will survive you) can be illusive, given the housing meltdown, a nervous investment marketplace, an uncertain economic environment, and high unemployment levels. These are challenging times, especially when preparing to make a retirement decision.
For many folks, their 401(k) contributions have been reduced to a 201(k) plan, and their home values have been substantially slashed. But alterative options exist. Especially if we subscribe to what Greek philosophers advised: Know Thyself. Identify and capitalize on what you do best while acknowledging and honoring your shortcomings.
The Number is an ever-changing target. If much of that Number is dominated with investment portfolio holdings, diversification is a prerequisite for ultimate success. Conscientious savings, both in good times and bad times, must be considered a compulsory task. To accomplish this, the pre-retiree needs to be flexible in his spending habits. If already in retirement, the retiree needs to adjust downward his planned withdrawal rate when anticipated returns are not realized.
I have completed a mountain of Monte Carlo simulations that demonstrate the survival robustness of a portfolio when minor drawdown adjustments (like don’t cover inflation rate increases) are exercised during spotty investment periods. In the final analysis, it returns to the Know Thyself axiom. Patience and persistence are also useful attributes that permit the making of lemonade from bitter lemons. The conventional wisdom of the baseline 4 % annual drawdown rule requires constant monitoring and some fine-tuning that is situational and event dominated. By adroitly adjusting to a poor period, that withdrawal rate could be stretched by an additional 1 %.
The major mutual fund houses have invested a fortune to develop programs and tools that will help plan and achieve a comfortable retirement. Of course they aim to profit from client accumulation and fees. It can be a win-win game for everyone.
To illustrate, Fidelity saw the future, and developed an organization and a definitive set of private investor-friendly tools in 2002. Today, its 401(k) division is huge and services millions of customers, both individual and institutional.
On an anecdotal level, I retired before this impressive array of financial planning tools became commonly available. Hence, I did much of the heavy lifting myself. I remember arguing with a financial planner with respect to the merits of Monte Carlo simulations before they were popularly recognized. I was a believer, he was not. About a year later he called and apologized for his shortsightedness. I never did do business with him.
For those still struggling with the retirement decision, I would encourage you to stay the course. Keep learning and keep the information exchange network active.
Age alone does not demand any specific retirement date. Again, on an anecdotal basis, incremental retirement is an attractive option, especially if you enjoy work interactions. For the first five years of my retirement, I worked as a paid aerospace consultant. Since that time, I still consult; however, now I do the consulting on a volunteer freebie basis.
The outfits that still seek my service offer to pay for that service, but I reject the monies. I am financially secure and want to give-back to the industry and, yes, even to the Country. I enjoy teaching the younger engineers who benefit from my experience. I feel good about being a “lamp of history” that lights the way and mostly avoids costly pitfalls.
As I age, I do not wish to be judged by how much I made, but more importantly, how much of a difference I made. Everyone sets his own measures of performance. Don’t be shocked that they change over time.
This topic has endless avenues to explore that demand an eternity of time. But for now, enough from this quarter.
Best Wishes.
agriculture and drought 2012 ... plus couple of reads
PIMCO's Gross prophesies death of equities in August outlook
trading worst drought in 50 yrs & a few other reads
Yield Hungry Funds Lend $2 Billion to Ukraine Reply to
@hank: Yep. And I think the thing becomes that this period of "quest for yield" could go on longer than anyone could imagine, making the end result even worse.
I think it's really tough, especially for those in
retirement age. I kind of agree with what Mark Cuban wrote - "3. I always laugh at all the pundits /analysts who try to tell you what any non-dividend paying stock is worth. Its a function of supply and demand. Its never fundamentals. Read what I wrote a long time ago about the stock market. In the case of facebook they put an ENORMOUS number of shares into the market. Too much supply. Valuation has no relevance what so ever. Conventional wisdom says the buyers of stocks will try to determine the value of a stock before they buy or sell and make the appropriate rational decision. Not even in a Richie Rich cartoon does that happen." (
http://blogmaverick.com/)
I think yield is really important, but it's difficult to find real *value + yield* when everyone and their cousin is desperate for any sort of yield whatsoever.
Yield Hungry Funds Lend $2 Billion to Ukraine Reply to
@scott:
It looks like we have an answer:
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Brookfield Global Listed Infrastructure Income Fund (NYSE: INF) Dan, I own BIP in my retirement account, and according to my research, in such accounts, the K-1 amount is treated like any other money earned and taxable only when you start withdrawals.
Kevin
Any insights on Thomas White International (TWWDX)? My favorite in this space continues to be SGOVX which is available NL/NTF at Schwab for minimums of $2500 and $1000 in retirement and taxable accounts, respectively.
Kevin
EM Allocations.How much?? Yes, I'm not adding to my EM bonds or equity funds for the time being. As always, the EM piece is already too big a piece of my pie. I'm letting divs and cap gains ride and grow. I'm semi-retired, which means I'm unemployed, having taken retirement early. But I ENJOY money coming to me for doing....ummmm... NOTHING! Yes!!!
Looking for comments on DWS RREEF Global Infrastructure = TOLSX Reply to
@bee: Well, I think it also falls under "real assets" - hard assets that are strategic, productive and produce a consistent cash flow. I've discussed on the board before that I think infrastructure will get increasing attention as an asset class, both from small investors and things like Sovereign Wealth Funds. You're seeing Asian investment going into European infrastructure -
"China Buys Into Portuguese National Power Company, Politicians Aghast"
http://oilprice.com/Energy/Energy-General/China-Buys-Into-Portuguese-National-Power-Company-Politicians-Aghast.html"Canada Pension ‘Interested’ In European Infrastructure Assets"
http://www.bloomberg.com/news/2012-05-08/canada-pension-interested-in-european-infrastructure-assets.html"Canada Pension has been investing in private companies and infrastructure in the past decade, buying stakes in utilities, pipelines and companies as it diversifies from stocks and fixed income assets. Canada Pension, with C$152.8 billion ($152.9 billion) in assets of Dec. 31, manages
retirement funds for 18 million Canadians in every province except Quebec."
There's a lot more, as well, but I do think strategic infrastructure (ports, rail, lots more falls under that) will continue to draw a lot of interest in coming years.
mutual fund strategy Reply to
@Investor: Good point on spousal Roth contribution. This is directly from IRS,
http://www.irs.gov/retirement/participant/article/0,,id=211358,00.html"Spousal IRAs
If you file a joint return, you and your spouse can each make IRA contributions even if only one of you has taxable compensation. The amount of your combined contributions can’t be more than the taxable compensation reported on your joint return. It doesn’t matter which spouse earned the compensation.
If neither spouse participated in a
retirement plan at work, all of your contributions will be deductible."
mutual fund strategy Reply to
@MaxBialystock: If you are in a low tax bracket now, it is a great opportunity to invest in Roth as during
retirement people may actually be in a higher tax bracket because during
retirement exemptions etc. do not exist and you cannot shelter money in 401k etc. I would take this an opportunity to invest in Roth.
I personally invest max. in 401k and max out also Roth IRA. There is an advantage of deciding where to draw money from in
retirement. Also, you do not have required minimum distributions from Roth IRA vs Traditional IRA. I wished I started contributing to Roth earlier than I first started doing so. (Note: You can also have spousal Roth even if she is not working. You only need to cover enough *earned* income to contribute)
Anxious Investors Day Trading With Retirement Accounts
Looks like Affiliated Managers Group (AMG) have completed Yacktman Funds acquisition Reply to
@Sven: While the ticker stayed the same CUSIP has probably changed and Fidelity has not installed the page under new CUSIP. Even if the page was there, the minimum purchase is often overstated than really allowed.
If you try to put an order of $1, you can get an idea on the minimum. $500 was for
retirement account. Taxable could be different.
Favorite buy and hold fund? Reply to
@kevindow:
Hi K-dow,
Thanks for your comments and list. I noticed that Invesco offers a
retirement fund that has an expense ratio of .25 and invests solely in ABRIX. The fund ticker is TNEAX...looks like an even lower ER than ABRIX.
From Fundmojo:
"Invesco Balanced-Risk Retire 2050 A Fund seeks to provide total return with a low to moderate correlation to traditional financial market indices. Invesco Balanced-Risk Retire 2050 A Fund is a "fund of funds" and invests assets in other mutual funds. It has an approximate target asset allocation of 100% in the AIM Balanced-Risk Allocation Fund, as of April 30, 2010, until approximately 10 years prior to the fund's target
retirement date at which time the fund will begin transitioning from an accumulation strategy to a real return strategy. Invesco Balanced-Risk Retire 2050 A Fund is designed for investors whose target
retirement date is in or about the year 2050. It is non-diversified"
http://www.fundmojo.com/mutualfund/fund_report/mutualfund/TNEAXTNEAX is available through USAA brokerage for a minimum of $250. Funny thing...this note appeared just as I placed my order...
"We are unable to process the order referenced above. This fund is not available for purchase by residents of your state."
Other comments:
Looks like Marisco manages Harbor's fund but Harbor has a higher minimum hurdle ($50K with an ER of 1%) vs MFCFX ($2500 with an ER of 1.27%).
I pay a TF fee to buys TGBAX (ER=.63). TTRZX is NTF at my brokerage with an ER=.79%. As a strategy, I buy small amounts of TTRZX often and then once a year I have a scheduled transfer to TGBAX. Because it is scheduled there is no TF fee. I assume this would work in the other direction if someone where to be in
retirement and selling out of shares.
Thanks for you ER points.
Favorite buy and hold fund? I sold FAIRX earlier this year and planned to move to FAAFX, but backed out because I was not agreeing with Berkowitz's strategy. Basically I watched FAIRX climb as high as 30+% YTD this year but with no significant change in portfolio. I know he trimmed back on a few positions, but the fund is still almost wholly financials. I don't know what kind of returns Berkowitz is aiming for, but in my opinion if you've made 30% in a couple of months in a hated sector, you should give yourself a pat on the back, cash in your winnings and move on to another game. Surely RIMM or some other lousy company is at least as good a value as SHLD was in 2011.
I think others will have more thoughts on stock funds and bond funds but I just wanted to comment on REITs, which have been a part of my portfolio for a long time. I have tried a few funds but the only one that I have stuck with is the good ol' index, VGSIX. However earlier this year, I found an alternative in PRRSX, which is Pimco's derivative-pumped version of a REIT index fund.
Lastly I now have a significant holding in PAUIX, which I think of as a "true" buy-and-hold in the sense that I am trusting the manager to handle all of the underlying allocation for me (much like one of those all-in-one target date retirement funds).
RPHYX RiverPark Short Term High Yield: What role in your portfolio? Reply to
@MarkM: This fund compare to Ultra Short Term Bond funds and floating rate bond/credit funds.
Most of those funds in 2008 was investing in sub-prime mortgage bonds to generate higher yields than money market funds, this fund is investing in high yield bonds that are about to be called or mature. As such, the fund is pretty easy to understand.
Ultra short term bond funds and floating rate funds had extremely stable NAV until tail risk in 2008 suddenly eroded the NAV and redemptions much above normal levels forced fund to sell assets before maturity and suddenly jumping defaults did not help either.
Can this fund endure such a tail risk scenario? I don't know. We will probably not going to know until it actually happens.
Disclosure: I do own this fund for a small portion of my total
retirement portfolio (~5%)
RPHYX RiverPark Short Term High Yield: What role in your portfolio? Of interest: Back in August 2011, I parked ~$10,000 in each of RPHYX and VCSH [Vanguard Corporate Short Term ETF] with dividends/interest reinvested in both. Since then, the balance in each has nominally been within ~$100 of the other with VCSH being the more volatile of the two.
I plan on using RPHYX in my (soon) retirement as a repository for my annual cash, with a fixed monthly transfer to my checking account for budgeted living expenses. [The monthly transfer out is a feature if you have an account directly with RiverPark.]
The pseudo 'steady income stream' will keep the better half happy :-)
