Mother Has Asked Me For Retirement Advice

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Amos601
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Mother Has Asked Me For Retirement Advice

Post by Amos601 »

My mother is 61 and retiring at the end of October, after 30 plus years on the same job. She has under $5,000 in debt and her house and car is paid in full. She is very secretive about her finances but I do know that she has lived off of 50% of her personal income for at least 20 years. She is married and her husband will continue to work for the next few years. They are in Mississippi, live 'in the woods, and their cost of living is very low. She has told me that she has a 'retirement plan' and a 401(K) but has not gone into specifics. She wants to know what to do with the 'retirement plan'. She wants to use it as a form of income until she is able to supplement it with Social Security and her 401(k). I know that she would be very adverse to drastic changes in her account balance and would rather take a smaller monthly payout and preserve capital. She has not discussed the amount of this fund. What Vanguard Fund would you all suggest?
SS Rambo
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Re: Mother Has Asked Me For Retirement Advice

Post by SS Rambo »

So her "retirement plan" is a bridge until she uses SS and her 401k? What is the retirement plan and how do you know it can be invested in a Vanguard fund? Could be a pension or annuity. I understand she won't share much but no one should give/receive advice with that little information.
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Amos601
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Re: Mother Has Asked Me For Retirement Advice

Post by Amos601 »

I am a small detail type person and it is very difficult for me to deal with her. I would not have asked her anything about it and let her figure it out on her own but she asked me. I am going to see if I can get some more information out of her.
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Sandi_k
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Re: Mother Has Asked Me For Retirement Advice

Post by Sandi_k »

I would buy her Jane Bryant Quinn's "Making Your Money Last" and assume that that is sufficient.

I'd also encourage her to delay SocSec until at least her FRA.

Those two things are probably sufficient for someone who's managed to live on 50% of her pay, and has a paid-off house in a LCOL area.
SS Rambo
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Re: Mother Has Asked Me For Retirement Advice

Post by SS Rambo »

Family situations can be tough, and there's always the risk of being blamed when the right investment doesn't pan out. Sometimes the best/safest thing to do is all the legwork to find the right 3rd party for a relative to work with.

But yeah, without knowing how much she'll be needing for this 'bridge' and how much cash is on hand and tax brackets it's tough to tell if even an Vanguard income fund would be right, or if it would just bump their taxes up between now and when both of them are retired. Tough to go completely wrong with those safe funds, but again it's a rather uninformed recommendation for anyone to make.
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JoeRetire
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Re: Mother Has Asked Me For Retirement Advice

Post by JoeRetire »

Amos601 wrote: Tue Sep 29, 2020 11:30 am My mother is 61 and retiring at the end of October, after 30 plus years on the same job. She has under $5,000 in debt and her house and car is paid in full. She is very secretive about her finances but I do know that she has lived off of 50% of her personal income for at least 20 years. She is married and her husband will continue to work for the next few years. They are in Mississippi, live 'in the woods, and their cost of living is very low. She has told me that she has a 'retirement plan' and a 401(K) but has not gone into specifics. She wants to know what to do with the 'retirement plan'. She wants to use it as a form of income until she is able to supplement it with Social Security and her 401(k). I know that she would be very adverse to drastic changes in her account balance and would rather take a smaller monthly payout and preserve capital. She has not discussed the amount of this fund. What Vanguard Fund would you all suggest?
She hasn't disclosed enough details to make any suggestions, so I wouldn't suggest any Vanguard Fund at this point in time.

You might consider offering to go with her to a fee-only fiduciary financial planner for a few hours of professional help. They can help clarify her goals and plans, and suggest the kinds of investments that would help her get there. Hopefully, she will be more open with an advisor that she is paying - that openness is the only way to get practical advice.
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dbr
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Re: Mother Has Asked Me For Retirement Advice

Post by dbr »

What you do with a retirement plan is that you start to withdraw money from it to live on. If you withdraw a lot, the value of the holdings diminishes more and may eventually be exhausted. If you withdraw a little, the value of the holdings will possibly grow faster than the withdrawals. A lot of people try to find a middle ground where they can take as much as the holdings have to offer while remaining secure against running out of money.

For the most part what the investments in the plan are is much less important than how fast you take money out.

A good model to look at this would be www.firecalc.com I would urge a person to try that out to understand how this works. Note this model can accommodate inputs such as when Social Security or other income starts and/or when extra spending starts or stops and also when retirement starts if one is not already retired. The general asset allocation between stocks and bonds can be selected. Exactly what stocks and bonds one has would have almost no effect at all. The model does not concern itself with taxes, so you have to estimate the taxes yourself to be included with spending.

Any financial planner will have similar models they can run to advise a person, perhaps with the exception of those "fake financial planners" that are really just salesmen. At Vanguard I think you have to sign up with Vanguard Personal Advisory Services to do this work, and that may be worthwhile.
123
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Re: Mother Has Asked Me For Retirement Advice

Post by 123 »

Perhaps some open-ended questions might give you some insight like "What do you think you need to do differently?", "How is your current plan not working for you?", "What investment has been the biggest disappointment?", '"Do you sleep well at night with your current investments?", "What do think is missing from your current pkan"...
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InMyDreams
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Re: Mother Has Asked Me For Retirement Advice

Post by InMyDreams »

JoeRetire wrote: Tue Sep 29, 2020 11:55 am You might consider offering to go with her to a fee-only fiduciary financial planner for a few hours of professional help.
+1

But I would add, Fee-only/Advice-only.

A CFP would also look at the big picture, ask about wills, insurance, etc.

Services are available online, so she wouldn't need to worry about who she would see in a small town that she might not want to share her personal business with. I knew of a woman who kept a bank account in a town 60 miles away to keep small-town eyes off of her personal banking needs.
tibbitts
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Re: Mother Has Asked Me For Retirement Advice

Post by tibbitts »

I don't think you should offer any advice due to lack of information. My mom (my dad had passed away when I was younger) was the opposite - she never asked for advice (or took it when I offered!), but always made sure I frequently looked over statements with all her investments.
delamer
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Re: Mother Has Asked Me For Retirement Advice

Post by delamer »

She should determine when she is going to take Social Security and start 401(k) withdrawals.

Then she should calculate how much she’ll need to take in total from her retirement funds until the above income kicks in.

That portion of the retirement funds money should be in cash/short-term TIPS/short-term bonds. The rest can be invested in stocks.
OnTrack2020
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Re: Mother Has Asked Me For Retirement Advice

Post by OnTrack2020 »

Amos601 wrote: Tue Sep 29, 2020 11:30 am My mother is 61 and retiring at the end of October, after 30 plus years on the same job. She has under $5,000 in debt and her house and car is paid in full. She is very secretive about her finances but I do know that she has lived off of 50% of her personal income for at least 20 years. She is married and her husband will continue to work for the next few years. They are in Mississippi, live 'in the woods, and their cost of living is very low. She has told me that she has a 'retirement plan' and a 401(K) but has not gone into specifics. She wants to know what to do with the 'retirement plan'. She wants to use it as a form of income until she is able to supplement it with Social Security and her 401(k). I know that she would be very adverse to drastic changes in her account balance and would rather take a smaller monthly payout and preserve capital. She has not discussed the amount of this fund. What Vanguard Fund would you all suggest?
My suggestion would be to gently let her know that it would be very difficult to give her any information because you really have no specifics in order to guide her.
deikel
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Re: Mother Has Asked Me For Retirement Advice

Post by deikel »

Don't start with any particular fund type or Vanguard or anything in detail really...

You wrote that she had a plan, so let her describe this plan to you in as much detail as she can and only ask questions - no advice whatsoever, just guiding questions

You need to get to the big picture before making any useful suggestions and you don't yet know the half of it (at least your post did not include them).

+1 on Jane Bryant Quinn's "Making Your Money Last"

Who knows, maybe she has a crystal clear plan and it is well thought out and she just needs a little encouragement now that the big date is close and maybe its all rather haphazard. No way to tell right now.
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Stinky
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Re: Mother Has Asked Me For Retirement Advice

Post by Stinky »

delamer wrote: Tue Sep 29, 2020 12:54 pm She should determine when she is going to take Social Security and start 401(k) withdrawals.

Then she should calculate how much she’ll need to take in total from her retirement funds until the above income kicks in.

That portion of the retirement funds money should be in cash/short-term TIPS/short-term bonds. The rest can be invested in stocks.
This is good advice. It gives her a roadmap to work through the numbers herself.

If she asks for more help, you could help her to “fill in the blanks” if she’ll share some numbers with you.

I agree that her funds needed to provide as “bridge” money should be in cash, CDs, etc. She could put the excess in stocks; but if she wanted to be more conservative with the excess, she certainly could be.
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BarbBrooklyn
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Re: Mother Has Asked Me For Retirement Advice

Post by BarbBrooklyn »

+1 on Jane Bryant Quinn!

That book will give mom a vocabulary (safe withdrawal rate, for one) and allow her to see the wisdom in allowing someone else to take a peek at her financials.

Does step-dad have his own "retirement plan"?

Has she executed POAs for health and finances?

There is a slim volume called "Five at 55" that details the five documents that one should have in place at age 55 (shame on me, haven't finished them yet). This might be another useful book for her.

When you say that you are a "small detail person" I take that to mean that you ask questions like "is it a 401K?"

It's like when the tech support guy at work used to ask me what operating system I was running. I used to say sternly "young man, don't make me cry". Understand that your mom may not have the vocabulary to give you details. Get her to read some stuff and she'll get there.
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bikechuck
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Re: Mother Has Asked Me For Retirement Advice

Post by bikechuck »

SS Rambo wrote: Tue Sep 29, 2020 11:49 am Family situations can be tough, and there's always the risk of being blamed when the right investment doesn't pan out. Sometimes the best/safest thing to do is all the legwork to find the right 3rd party for a relative to work with.

But yeah, without knowing how much she'll be needing for this 'bridge' and how much cash is on hand and tax brackets it's tough to tell if even an Vanguard income fund would be right, or if it would just bump their taxes up between now and when both of them are retired. Tough to go completely wrong with those safe funds, but again it's a rather uninformed recommendation for anyone to make.
This is good advice. My son-in-law's mom recently asked me for advice and I gave her two recommendations 1) Read Jane Bryant Quinn's "How To Make Your Money Last and 2) After reading the book to contact Rick Ferri if she wanted professional advice on how to restructure and manage her portfolio.

She did both and she is very thankful that she did so. In this situation I wanted to help but I felt that it would be inappropriate to ask for enough information to provide the help that she needed. I had confidence that Mr. Ferri would give her sound advice for a reasonable fee.
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Re: Mother Has Asked Me For Retirement Advice

Post by Jack FFR1846 »

Her "Retirement Plan" could be 300,000 beanie babies bought in 1993. Not something that can be transferred in kind to Vanguard.

You don't know enough to recommend anything.
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AB609
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Re: Mother Has Asked Me For Retirement Advice

Post by AB609 »

I would find a fee only CFP for her and her husband. You don't have enough details to recommend anything. Why is she $5,000 in debt is she lived off of 50% of her salary for 20 years? It sounds like a touchy situation that maybe better to avoid.
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dogagility
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Re: Mother Has Asked Me For Retirement Advice

Post by dogagility »

Amos601 wrote: Tue Sep 29, 2020 11:30 am My mother is 61 and retiring at the end of October, after 30 plus years on the same job. She has under $5,000 in debt and her house and car is paid in full. She is very secretive about her finances but I do know that she has lived off of 50% of her personal income for at least 20 years. She is married and her husband will continue to work for the next few years. They are in Mississippi, live 'in the woods, and their cost of living is very low. She has told me that she has a 'retirement plan' and a 401(K) but has not gone into specifics. She wants to know what to do with the 'retirement plan'. She wants to use it as a form of income until she is able to supplement it with Social Security and her 401(k). I know that she would be very adverse to drastic changes in her account balance and would rather take a smaller monthly payout and preserve capital. She has not discussed the amount of this fund. What Vanguard Fund would you all suggest?
Put it all in Vanguard Target Retirement Income fund (VTINX).
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Watty
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Re: Mother Has Asked Me For Retirement Advice

Post by Watty »

A couple of suggestions;

1) Have her check this web site to help her figure out good claiming strategy for their Social Security. It is way too common for people to start Social Security when they turn 62 so you might discourage that unless that is what this website suggests.

https://opensocialsecurity.com/

2) You don't have enough information to give good recommendation but you could get her a copy of this book to read.

https://www.amazon.com/Bogleheads-Guide ... ads.org-20

You could even get a second copy so that you could read it to so you would be able to talk over questions that she has. It looks like there are inexpensive used copies available.

One thing you might warn her about is that 99% of financial advisors are really salespeople who will put her in terrible investments just to make a commission off of her. This also includes people at her local brick and mortar bank or credit union. If someone tries to sell her an annuity or life insurance then that should be a red flag that that they are trying to rip her off.
FactualFran
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Re: Mother Has Asked Me For Retirement Advice

Post by FactualFran »

As others have indicated, you cannot provide useful advice unless you know some details about the 'retirement plan' that you mother wants to use as a form of income before starting Social Security or taking money from her 401(k).

What are the income options of the retirement plan? Does the plan offer annuity payments? Does the plan have a "level income" option where the sum of the monthly payment by the retirement plan and Social Security is about the same before and after starting Social Security payments?
rich126
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Re: Mother Has Asked Me For Retirement Advice

Post by rich126 »

My usual method to deal with people who ask me for advice is to ask them a series of questions and hopefully as they answer the questions, they will come to a solution/plan on their own. Everyone is different and I have no interest telling someone how to invest money, what car to buy, whether they should change jobs, who to date, etc.

Instead ask stuff like:
Do you think you have enough to retire ?
Do you have a budget?
Do you have money in an emergency fund?
What about medical insurance?

You get the idea. And a lot of the questions don't really need to provide you specific or personal information. Just kind of make her think.
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Eagle33
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Re: Mother Has Asked Me For Retirement Advice

Post by Eagle33 »

+1 on Jane Bryant Quinn book!

With the limited info I would simly tell her "Choose Wisely"
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tim1999
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Re: Mother Has Asked Me For Retirement Advice

Post by tim1999 »

Amos601 wrote: Tue Sep 29, 2020 11:30 am She is very secretive about her finances.
My mother was similarly "secretive" about her finances but wanted my help. It took several times of telling her over the course of a year, flat out, "I can't help you or give any relevant advice unless you give me the specifics on the types of accounts you have and what they are invested in." Eventually she gave in.
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