Retiree needs advice

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Topic Author
otzman
Posts: 6
Joined: Wed Jul 31, 2013 5:37 pm

Retiree needs advice

Post by otzman »

New to this site. Retired from Chrysler after 37 yrs. in 2002. Have a pension, and drawing SS. I'm 67, my wife is 62. Never had to hit our savings, and living a very simple, comfortable life, with no debts. However I have no life insurance, and my wife is not entitled to any of my pension. We have a little over $500,000 in savings.
1. J.P. Morgan- balanced fund A $169,000.
2. Credit Union- (savings) $27,000.
3. 1st Fed Bank- (cd) $65,3000.
4. Comerica- (checking) $5,000
5. Merrill Edge- (ira, 10 large cap dividend stocks, about 10% in Pimco bonds) $71,100
6. Vanguard (vdigx $5,200, vtinx $70,900
7. Hanlon Money Management, into Net Exchange/investor. All bonds and money markets $100,000. Went with them about 6 months ago, because all I wanted to do
was keep with or a little ahead of inflation, and their history showed that. Recommended by 1st Fed. Bank. They have a huge 2.2% fee.
I realize I got sort of a mess here, but at a loss as how to correct this. We would appreciate any advice, as you guys are probably the only people I trust.
Thanks, Ken
Grt2bOutdoors
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Location: New York

Re: Retiree needs advice

Post by Grt2bOutdoors »

Hello and welcome to the forum!
Sorry to hear about Hanlon - is that an upfront 2.2% fee or one that is pro-rated daily? Since you've been with them, has the value of your account been stable, tanked or is it up? I'm thinking somewhere between a tanking and stable. If inflation is 1.7% and their fee is 2.2%, they have to be taking quite a bit of risk to generate positive returns. Not being able to see their actual portfolio, I would think they are likely holding junk bonds, preferreds and international bonds to generate those returns - very risky stuff, indeed. Can you exit the relationship without being dinged too badly?

How much retirement income does your wife need to generate if she were to survive you? Has she started claiming Social Security?
How is your health?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Topic Author
otzman
Posts: 6
Joined: Wed Jul 31, 2013 5:37 pm

Re: Retiree needs advice

Post by otzman »

Thanks for responding. I have lost $400 so far in this fund. My wife does not draw SS. We both remarried about 11 years ago. She only worked part time, her husband did work full time.
Yes I can pull out of Hanlon, if appropriate at any time.
thanks, ken
lawman3966
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Re: Retiree needs advice

Post by lawman3966 »

Getting your funds out of Hanlon seems like a no brainer. In addition to not paying such high fees, this should serve as a warning to not take investing advice from banks.

I don't have a recommendation as to exactly which bond funds to invest in at this point. However, as a starting point, you could move the funds to a savings account at Ally Bank, or into a short term bond fund at Vanguard. Either of those options beats paying 2.2% to an advisor for bonds or bond funds in a low yield environment like the one we're in.
mamarachel
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Re: Retiree needs advice

Post by mamarachel »

If your wife is 62, is she now getting the spousal SS benefit? So your current fixed income is your SS, her spousal benefit, and your pension?
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Peter Foley
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Re: Retiree needs advice

Post by Peter Foley »

Again, welcome.

With regard to your investments, I would recomend some consolidation and simplification. The JP Morgan fund (OGIAX) is relatively high cost. If you do not have a lot of capital gains on which you would pay taxes, I would recomend selling it and putting the proceeds with Vanguard. The same for the Hanlon MM account. That would leave you with two brokerage accounts, Merrill Edge and Vanguard. That is plenty. Invest mostly with Vanguard because they have the lowest costs. You have to decide on a asset allocation strategy (stock% to bond% in your portfolio) before more specific advice can be given. Something in the range of 30% to 50% stocks would be mainstream for your age.

I don't know the SS law well enough to provide advice there. It would seem that your wife might be eligible for spousal benefits from your employment that would exceed her own benefits. Regardless, with no access to your pension she should delay SS as long as possible to provide herself with income insurance that way.
Grt2bOutdoors
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Re: Retiree needs advice

Post by Grt2bOutdoors »

otzman wrote:Thanks for responding. I have lost $400 so far in this fund. My wife does not draw SS. We both remarried about 11 years ago. She only worked part time, her husband did work full time.
Yes I can pull out of Hanlon, if appropriate at any time.
thanks, ken
I believe your wife can claim under your record since you have been married at least 10 years. She can wait until age 66 (which is likely her full retirement age) or defer until age 70. She should either go online at ssa.gov or visit the nearest social security office to inquire about what her benefits will be (you don't have to file for them right away, but it does pay to become informed). http://www.socialsecurity.gov/retire2/y ... .htm#a0=-1 It appears her benefits will likely be 1/2 the value you currently receive, but verify that with ssa.gov.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Topic Author
otzman
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Joined: Wed Jul 31, 2013 5:37 pm

Re: Retiree needs advice

Post by otzman »

Hanlon's 2.2% annual fee is prorated, and paid quarterly through Pershing. We are both in good health. I would imagine she would need 25 to $30,000 a yr. if she were to survive me. Per your advise we will delay her SS until she's 70, as we don't need additional income now. Will also take your advise and move these Hanlon funds to Vandguard short term bond funds, or something very conservative. Why not the two funds I now have with Vanguard. VDIGX and VTINX.
The $169,000 in J.P. Morgan Balanced A is an IRA.
Grt2bOutdoors
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Re: Retiree needs advice

Post by Grt2bOutdoors »

otzman wrote:Hanlon's 2.2% annual fee is prorated, and paid quarterly through Pershing. We are both in good health. I would imagine she would need 25 to $30,000 a yr. if she were to survive me. Per your advise we will delay her SS until she's 70, as we don't need additional income now. Will also take your advise and move these Hanlon funds to Vandguard short term bond funds, or something very conservative. Why not the two funds I now have with Vanguard. VDIGX and VTINX.
The $169,000 in J.P. Morgan Balanced A is an IRA.
The Hanlon money was invested conservatively, I'm assuming because that is how you wanted it to be invested. VDIGX and VTINX have equity exposure, though Target Retirement Income has less with a 30/70 mix. If you are comfortable with the potential risk of loss, then Retirement Income (er ratio of 16bps) is fine.


The closest comparison Vanguard offers to the J.P. Morgan Balanced A fund (a fund of funds) is the STAR fund. The STAR fund is actively managed, is a fund of funds, has a 0.34% er, roughly 1/5 the cost of the fund your in now and the performance is better over the last 1,3,5 and 10 year periods.
If you choose to move the J.P. Morgan Balanced A fund you can do a trustee to trustee transfer - call Vanguard they will handle the paperwork and keep it in an IRA.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
donall
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Re: Retiree needs advice

Post by donall »

Since you are not spending your savings: If you die when your wife is 65, your wife can annuitize $500,000 (no survivor benefit) and she can receive about $32K/year. She would also receive your full SS benefit. She should annuitize over a number of years to receive higher monthly payments from the immediate annuities using multiple insurance companies. Please don't buy annuities from a bank, as they tack on lots of fees.

If you don't die, then when wife is 66, she should file for spousal SS benefits, which will be 1/2 of yours. Not sure what her part time income was, so it is best to look into various scenarios concerning Social Security filing.

I'm not a fan of long term care insurance, but in this situation, I would recommend policies (if possible) for both, perhaps a couple's policy where if one partner does not use it and dies, then after a time, no more payments are necessary. One needs to insure if one partner needs long term care to protect the assets for the other partner.

I would encourage you to look very carefully at expense ratios and run away from any fund that charges over 0.5%. Take the time to read the recommended Boglehead reading material. Start with the WIKI. You can save yourself a lot of money and better prepare for your wife's financial security by studying this material.
Topic Author
otzman
Posts: 6
Joined: Wed Jul 31, 2013 5:37 pm

Re: Retiree needs advice

Post by otzman »

Thanks.
donall
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Re: Retiree needs advice

Post by donall »

otzman wrote:Hanlon's 2.2% annual fee is prorated, and paid quarterly through Pershing. We are both in good health. I would imagine she would need 25 to $30,000 a yr. if she were to survive me. Per your advise we will delay her SS until she's 70, as we don't need additional income now. Will also take your advise and move these Hanlon funds to Vandguard short term bond funds, or something very conservative. Why not the two funds I now have with Vanguard. VDIGX and VTINX.
The $169,000 in J.P. Morgan Balanced A is an IRA.
Otzman:
Please check into spousal SS. No expert here, but if she takes her spousal SS or individual SS early, then she gets less money. If she waits until 70 to take spousal SS then it will still be the same as if she took it at 66, so there is no reason to wait until 70 for spousal SS. If she waits until 70 to take individual SS, then the amount will increase. Perhaps you can investigate the various scenarios concerning her individual SS amount vs spousal SS at different ages. Mike Piper at Oblivious Investor has some great explanations of SS.
gerrym51
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Re: Retiree needs advice

Post by gerrym51 »

since she can inherit his entire benefit she should take highest SS she can get now.
JW-Retired
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Re: Retiree needs advice

Post by JW-Retired »

OP,
We need to know the sizes of his & her SS benefits (and her PIA ...i.e, her primary insurance amount if taken at age 66). We can probably assume his is larger from 37 years of work, but it is entirely possible hers with an age 70 delayed credit factor (1.76) would be bigger than his is now. If that is the case she should probably take spousal at age 66 and her own at age 70.

If she takes SS before 66 then her widow benefit would be reduced. Since you don't need the money now it makes sense to try to maximize her age 70 benefits.
http://www.ssa.gov/survivorplan/survivorchartred.htm
JW
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BigFoot48
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Re: Retiree needs advice

Post by BigFoot48 »

otzman wrote: 1. J.P. Morgan- balanced fund A $169,000.
5. Merrill Edge- (ira, 10 large cap dividend stocks, about 10% in Pimco bonds) $71,100
6. Vanguard (vdigx $5,200, vtinx $70,900
7. Hanlon Money Management, into Net Exchange/investor. All bonds and money markets $100,000. Went with them about 6 months ago, because all I wanted to do
I would start by simplifying and moving the funds in Merrill and Morgan to Vanguard, and get out of holding individual stocks in the process. I also agree with the others that getting out of Hanlon is a good idea to avoid the continuing load. I recommend setting a goal of arriving at a simple portfolio based on index funds to make future management very easy, and the Three-Fund Portfolio would be an excellent choice: http://www.bogleheads.org/forum/viewtop ... 10&t=88005
Retired | Two-time in top-10 in Bogleheads S&P500 contest; 18-time loser
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