retirement analysis - Help please

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Topic Author
ch4pal
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retirement analysis - Help please

Post by ch4pal »

For personal reasons, I need to retire soon.
I am currently 60 years old, in April I will be 61.

All I have is about $ 300k that I can put into an IRA.

I talked with a fiduciary financial firm and they did a retirement analysis for me.

In essence, they told me I can get about $ 2,500.- a month ( $ 32,000.- a year) for the rest of my life.
Their assumption was 8% rate of return, 8% tax deferred return and life expectancy 95 years old.
This analysis shows that when I hit 95, I will still have about $ 100k in my IRA account.

Also, the plan is to delay Social Security until I hit 66 years old.

So their plan is that in the first 6 years I draw more from my $ 300k, and when I hit 66 I will start SS and draw less from my IRA and compensate from SS to maintain the same monthly income, let the IRA account grow back, etc. During all this time, my montlhly income will stay at about $2,500.- a month.

If I open and IRA account and hire them to manage this IRA account for me, they want to charge 1,25% per year of the account value.

They were not pushy, and I also have the option to open an IRA and manage it myself.

I have basic knowledge of investments and I would really like to have a professional manage that for me.

Please give me your opinion on this, and any advice is highly appreciated.
I live in the Seattle area, any trustworthy financial firms that I can use to manage my account ?
akron1977
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Re: retirement analysis - Help please

Post by akron1977 »

Your full retirement age is 67, why do they advise taking early?
BitTooAggressive
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Re: retirement analysis - Help please

Post by BitTooAggressive »

ch4pal wrote: Sat Nov 13, 2021 4:04 pm For personal reasons, I need to retire soon.
I am currently 60 years old, in April I will be 61.

All I have is about $ 300k that I can put into an IRA.

I talked with a fiduciary financial firm and they did a retirement analysis for me.

In essence, they told me I can get about $ 2,500.- a month ( $ 32,000.- a year) for the rest of my life.
Their assumption was 8% rate of return, 8% tax deferred return and life expectancy 95 years old.
This analysis shows that when I hit 95, I will still have about $ 100k in my IRA account.

Also, the plan is to delay Social Security until I hit 66 years old.

So their plan is that in the first 6 years I draw more from my $ 300k, and when I hit 66 I will start SS and draw less from my IRA and compensate from SS to maintain the same monthly income, let the IRA account grow back, etc. During all this time, my montlhly income will stay at about $2,500.- a month.

If I open and IRA account and hire them to manage this IRA account for me, they want to charge 1,25% per year of the account value.

They were not pushy, and I also have the option to open an IRA and manage it myself.

I have basic knowledge of investments and I would really like to have a professional manage that for me.

Please give me your opinion on this, and any advice is highly appreciated.
I live in the Seattle area, any trustworthy financial firms that I can use to manage my account ?
You cannot afford to give them 1.25 percent of your assets. 8 % return is very optimistic. On top of that market returns are not even at a constant rate. What if the market has a 20 % correction or worse before you start taking SS?

Their plan looks like nonsense to me.

I would you suggest you give us all your details to see if you have overlooked something or someone on here can suggest something better.

Why can you not work longer? Do you have a lot of equity in your home? Please give more info. Even if you can only work part time from your home it could help tremendously.
Last edited by BitTooAggressive on Sat Nov 13, 2021 4:48 pm, edited 2 times in total.
Katietsu
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Re: retirement analysis - Help please

Post by Katietsu »

I hope you will get some detailed answers. But, in general, this sounds very optimistic. The 8% return would involve investing with a high degree of risk. Did they account for inflation? Did they reduce your returns by their fee or are you supposed to account for their fee in your expenses separately? I will try to check back here to see if you have received a more complete answer. But, this does not sound like a wise choice to me.

Please post more details about your social security and your expenses. What will you be doing about health insurance? Also, is there anything possibility of continuing to earn some income? In your situation, even something like taking care of a couple of kids for a few hours after school would make a huge difference in your financial stability.
Figaro
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Re: retirement analysis - Help please

Post by Figaro »

Well without any knowledge of what your expenses and additional assets or goals are, I would suggest using the 300k to bridge you till age 70. That's about the same amount that your advisors would charge you do. And assuming that your SS payments would hold you your expenses.

I'd personally invest very conservatively - with say a CD ladder or something quite liquid so as not to subject your nest egg to risk.

But...if you have something like $1m house 100% equity that changes the paradigm - you could sell the house at anytime and then start renting. Or pensions as well. Or if you have a spouse.
BitTooAggressive
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Re: retirement analysis - Help please

Post by BitTooAggressive »

Figaro wrote: Sat Nov 13, 2021 4:47 pm Well without any knowledge of what your expenses and additional assets or goals are, I would suggest using the 300k to bridge you till age 70. That's about the same amount that your advisors would charge you do. And assuming that your SS payments would hold you your expenses.

I'd personally invest very conservatively - with say a CD ladder or something quite liquid so as not to subject your nest egg to risk.

But...if you have something like $1m house 100% equity that changes the paradigm - you could sell the house at anytime and then start renting. Or pensions as well. Or if you have a spouse.
But spending the IRA to get a lot more from SS would be less assets for the advisor to charge the generous 1.25 percent fee.
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JoeRetire
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Re: retirement analysis - Help please

Post by JoeRetire »

ch4pal wrote: Sat Nov 13, 2021 4:04 pm For personal reasons, I need to retire soon.
I am currently 60 years old, in April I will be 61.

All I have is about $ 300k that I can put into an IRA.
How much are your monthly expenses?
Their assumption was 8% rate of return, 8% tax deferred return and life expectancy 95 years old.
Seems like a rather high assumption. Must be a fairly risky set of investments to get that.
Also, the plan is to delay Social Security until I hit 66 years old.
What was their reasoning for suggesting 66?
Why not 67? Why not 70?
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twh
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Re: retirement analysis - Help please

Post by twh »

Is anyone considering the cost of health insurance before you hit Medicare? That is going to be expensive.
Figaro
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Re: retirement analysis - Help please

Post by Figaro »

BitTooAggressive wrote: Sat Nov 13, 2021 4:54 pm
Figaro wrote: Sat Nov 13, 2021 4:47 pm Well without any knowledge of what your expenses and additional assets or goals are, I would suggest using the 300k to bridge you till age 70. That's about the same amount that your advisors would charge you do. And assuming that your SS payments would hold you your expenses.

I'd personally invest very conservatively - with say a CD ladder or something quite liquid so as not to subject your nest egg to risk.

But...if you have something like $1m house 100% equity that changes the paradigm - you could sell the house at anytime and then start renting. Or pensions as well. Or if you have a spouse.
But spending the IRA to get a lot more from SS would be less assets for the advisor to charge the generous 1.25 percent fee.
Absolutely! Never give em a dime when you've already got enough to make it till fully vesting the SS and just living below your means on that!
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Re: retirement analysis - Help please

Post by Grt2bOutdoors »

Figaro wrote: Sat Nov 13, 2021 4:47 pm Well without any knowledge of what your expenses and additional assets or goals are, I would suggest using the 300k to bridge you till age 70. That's about the same amount that your advisors would charge you do. And assuming that your SS payments would hold you your expenses.

I'd personally invest very conservatively - with say a CD ladder or something quite liquid so as not to subject your nest egg to risk.

But...if you have something like $1m house 100% equity that changes the paradigm - you could sell the house at anytime and then start renting. Or pensions as well. Or if you have a spouse.
Without knowing how much the OPs monthly social security is, your suggestion will fail. The OP is 60, requires an annual withdrawal of 30k and has $300k in investments. You are assuming that the OP will earn exactly $30k+ in future annual benefits and that doesn’t include the cost of health insurance. That leads me to believe that the OP will be drawing from the portfolio throughout his expected lifespan. Your suggestion will exhaust the OP’s assets prior to age 70.
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Grt2bOutdoors
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Re: retirement analysis - Help please

Post by Grt2bOutdoors »

JoeRetire wrote: Sat Nov 13, 2021 4:59 pm
ch4pal wrote: Sat Nov 13, 2021 4:04 pm For personal reasons, I need to retire soon.
I am currently 60 years old, in April I will be 61.

All I have is about $ 300k that I can put into an IRA.
How much are your monthly expenses?
Their assumption was 8% rate of return, 8% tax deferred return and life expectancy 95 years old.
Seems like a rather high assumption. Must be a fairly risky set of investments to get that.
Also, the plan is to delay Social Security until I hit 66 years old.
What was their reasoning for suggesting 66?
Why not 67? Why not 70?
OP requires 2,500 a month.
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Watty
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Re: retirement analysis - Help please

Post by Watty »

ch4pal wrote: Sat Nov 13, 2021 4:04 pm ...they want to charge 1,25% per year of the account value.
They will also likely put you into investments with high expenses or hidden fees so that you would be paying even more than that. If this is some company like Edward Jones then search the board for prior threads about them. It isn't pretty.

There are all sorts of assumptions and qualifications but academic studies have shown that in the past a "safe withdrawal rate" of about 4% would be pretty safe for someone who is 65 and planning a 30 year retirement.

https://www.bogleheads.org/wiki/Safe_withdrawal_rates

The problem with that is that their 1.25% has to come out of your 4% so you would be paying them over 30% of your spendable income for the year.

One thing to consider is that even if you need to retire out of your current job you might be able to find some part time job that you could handle. Having even a couple of hundred dollars a month come in could really help your numbers work better.

If you post your information using this suggested format as a guideline then you may get a lot better suggestions about what should do with your money.

viewtopic.php?f=1&t=6212
Topic Author
ch4pal
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Re: retirement analysis - Help please

Post by ch4pal »

Thank you for your replies !

I do not own a home, I currently rent.
I have no debt, and about $20k savings.

The idea behind postponing SS until age 67 was to maximize the SS amount (will be around $2,200).

At this point I wanted to have a rough map of what my options are, I could move to Mexico and live on $2,500 a month, or less.
I have a couple of good friends there that could help.

I am single no family so I am very flexible.

I am still looking at health insurance, one option would be that my employer will give me an option, or just risk it a few years and not get insurance.
If I move to Mexico I might get cheaper insurance there.

Working part time online would be an option.
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Re: retirement analysis - Help please

Post by Jack FFR1846 »

I didn't see anything saying you can't go back to work. I would recommend you do so. The numbers don't work in your favor now. There is no magic investment that's going to give you enough money from what you have to live. And 1.25% is highway robbery.
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ebeb
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Re: retirement analysis - Help please

Post by ebeb »

1.25% is too high when Vanguard Personal Advisor charges .3% per year.
You can consider getting advice from reputable financial adviser like Mark Zoril https://planvisionmn.com/get-started/ who charges one time $189 fee to create a financial plan and monthly $8 which you can cancel anytime.
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BitTooAggressive
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Re: retirement analysis - Help please

Post by BitTooAggressive »

ch4pal wrote: Sat Nov 13, 2021 6:31 pm Thank you for your replies !

I do not own a home, I currently rent.
I have no debt, and about $20k savings.

The idea behind postponing SS until age 67 was to maximize the SS amount (will be around $2,200).

At this point I wanted to have a rough map of what my options are, I could move to Mexico and live on $2,500 a month, or less.
I have a couple of good friends there that could help.

I am single no family so I am very flexible.

I am still looking at health insurance, one option would be that my employer will give me an option, or just risk it a few years and not get insurance.
If I move to Mexico I might get cheaper insurance there.

Working part time online would be an option.
Go to SS website www.ssa.gov Your benefits should be maxed at age 70.5. Create an account if you have not done so and see your benefit based on the age you start.
Topic Author
ch4pal
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Re: retirement analysis - Help please

Post by ch4pal »

Latest SS statement i have received gives me estimates.

If I start at age 67 I will have about $2,300.- a month.
Candor
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Re: retirement analysis - Help please

Post by Candor »

ch4pal wrote: Sat Nov 13, 2021 7:06 pm Latest SS statement i have received gives me estimates.

If I start at age 67 I will have about $2,300.- a month.
Bear in mind your SS statement assumes you will make the same going forward (until 67) as you made last year.

It probably won't be that big of a difference but you can plug in your numbers here to get a more accurate estimate.

https://ssa.tools/
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delamer
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Re: retirement analysis - Help please

Post by delamer »

Unless the $300,000 is already in an IRA, you can’t put it into one.

You are limited to $7,000/year if you are working.
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arcticpineapplecorp.
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Re: retirement analysis - Help please

Post by arcticpineapplecorp. »

delamer wrote: Sat Nov 13, 2021 7:43 pm Unless the $300,000 is already in an IRA, you can’t put it into one.

You are limited to $7,000/year if you are working.
it's possible he might be rolling it over from a 401k or other type of workplace retirement plan. He didn't specify, so you may be right, but we don't know exactly why he (and the advisor) think an IRA can be utilized.

also, people who get a cash payout of their pension plan (not relevant here) can roll such funds over to an IRA (I have such an ability upon retirement).
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delamer
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Re: retirement analysis - Help please

Post by delamer »

arcticpineapplecorp. wrote: Sat Nov 13, 2021 7:46 pm
delamer wrote: Sat Nov 13, 2021 7:43 pm Unless the $300,000 is already in an IRA, you can’t put it into one.

You are limited to $7,000/year if you are working.
it's possible he might be rolling it over from a 401k or other type of workplace retirement plan. He didn't specify, so you may be right, but we don't know exactly why he (and the advisor) think an IRA can be utilized.

also, people who get a cash payout of their pension plan (not relevant here) can roll such funds over to an IRA (I have such an ability upon retirement).
All true; hopefully the OP will clarify.
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David Jay
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Re: retirement analysis - Help please

Post by David Jay »

ch4pal wrote: Sat Nov 13, 2021 6:31 pmI am still looking at health insurance
An ACA plan with subsidy will provide very low cost insurance. We are married, showing $48,000 in income and a bronze plan in Michigan is $7 a month.

If you can live on $2500 a month, basic insurance can almost be free...
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ch4pal
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Re: retirement analysis - Help please

Post by ch4pal »

@ delamer - that is exactly my situation.
Sorry for providing incomplete info.

I have a 401K and pension - that I can cash out - and on retirement I can roll both into an IRA.

I am asking all these questions to have more clarity what to do when I retire, and what can I count on.

@ ebeb - thank you for Mark Zoril reference, I will contact him.
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Wiggums
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Re: retirement analysis - Help please

Post by Wiggums »

An 8% return is too high for planning purposes. Because you’ll be depending heavily on investment markets for your income, you will have to ensure your portfolios meet your goals and needs. If the majority of your money is in the stock market, you should have more than 20k in fixed income/cash. I’d hate to see you sell in a down market. That is one reason that we have money in a HYSA.

I would put 300k in a life strategy or balanced index fund before I paid an AUM fee that high.

If you can work online a few more years, you will be in better shape financially.

Getting another financial opinion is an excellent idea.

Good luck to you.
Last edited by Wiggums on Sat Nov 13, 2021 10:39 pm, edited 2 times in total.
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swylie
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Re: retirement analysis - Help please

Post by swylie »

I'd also run the numbers for waiting to the maximum age 70 for claiming SS. You get an automatic increase of 8% for each year you wait beyond your full retirement age. It might make sense for you to spend down your retirement account more heavily up front in exchange for the increased SS, especially if you're in good health.

If you're frugal and are able to make at least some additional income from work I don't see why you couldn't make a go of it--there are many, many 60 year-olds who don't have half of your nest egg saved. The ACA should definitely be able to offer you good, affordable health insurance. (Here in NY if you qualify you can get the essential plan, currently with no monthly premium.)
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Beensabu
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Re: retirement analysis - Help please

Post by Beensabu »

Wiggums wrote: Sat Nov 13, 2021 8:57 pm An 8% return is too high for planning purposes.
Yeah.

Also, is that $2500/mo figure they gave you based on an 8% annualized return or 6.75% (after the fees they charge)?

You need to figure out how much you would get per month from SS for every starting year from 62 to 67 (or up to 70).

Once you know that, then figure out what % return you would need from your portfolio once you started taking SS - and do that for every SS starting year (that also means factoring in the big withdrawals you would make prior to SS kicking in).

Whichever option ends up with you needing the lowest % return to make it work, do that. And don't throw 1+% of it away on management fees.
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delamer
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Re: retirement analysis - Help please

Post by delamer »

ch4pal wrote: Sat Nov 13, 2021 8:11 pm @ delamer - that is exactly my situation.
Sorry for providing incomplete info.

I have a 401K and pension - that I can cash out - and on retirement I can roll both into an IRA.

I am asking all these questions to have more clarity what to do when I retire, and what can I count on.

@ ebeb - thank you for Mark Zoril reference, I will contact him.
Can you provide more information about your options regarding the pension?

Most of the time, it’s better to take a monthly check (for life) than cashing it out for the lump sum. But “most” is not “always.”
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ch4pal
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Re: retirement analysis - Help please

Post by ch4pal »

From my SS statement that I received this year:

age 67 - $2,362
age 70 - $3,160
age 62 - $1,365

Pension:
I am vested in a small pension, $730.- /mo., with the option to cash it out. The earlier I cash out the more I get.
If I cash out now I can get about $150,000.- The more I wait, the less I get, down to around $100k or so at age 65 - ish.
I have a 401k with about $160,000.-

The plan from this advisor was to cash out my pension and roll it into a IRA, and also transfer that 401K into the same IRA, that would give me about $310,000.- to invest. He suggested a heavy(er) draw from this account until I start my SS - age 67, or 70 - IF the 310k will last that long (he seemed to be confident that it will), and after that start my SS and have that for life.

I can be frugal if I need to, basically I am trying to figure out HOW frugal I need to be with what I have...

The plan makes sense to me, but I thought the 8% was high - agreed, he said he can make it work and most managed investments can give that, or around that number. Also the 1,25% seemed high, that's why I asked in this forum. On the other hand, if this firm doesn't do a good job, each year there will be LESS money for them to charge 1,25% from, so I see that as an incentive for them to work smart.

The risk is that they will mess up and dry my account before I want to start my SS.
BUT - being fiduciary, aren't they obligated by law to work in my best interest ?

Now this guy did not push this agenda at all and at no time did he suggest or try to sell me their services.
The talk was kept very generic, and he basically said this is what he thinks is best, and that the IRA account will have to be manages by somebody - myself or a firm.
Maybe this is a smooth tactic to avoid saying what he wants his client to fill in for him ...

I like Vanguard, I will look into whether they offer Personal Advisors, and/or IRA management services.

Awesome community, I appreciate your time and thought.
twh
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Re: retirement analysis - Help please

Post by twh »

Not going to be a comfortable retirement with these numbers.
GetSmarter
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Re: retirement analysis - Help please

Post by GetSmarter »

ch4pal wrote: Sun Nov 14, 2021 12:39 am From my SS statement that I received this year:

age 67 - $2,362
age 70 - $3,160
age 62 - $1,365

Pension:
I am vested in a small pension, $730.- /mo., with the option to cash it out. The earlier I cash out the more I get.
If I cash out now I can get about $150,000.- The more I wait, the less I get, down to around $100k or so at age 65 - ish.
I have a 401k with about $160,000.-

The plan from this advisor was to cash out my pension and roll it into a IRA, and also transfer that 401K into the same IRA, that would give me about $310,000.- to invest. He suggested a heavy(er) draw from this account until I start my SS - age 67, or 70 - IF the 310k will last that long (he seemed to be confident that it will), and after that start my SS and have that for life.

I can be frugal if I need to, basically I am trying to figure out HOW frugal I need to be with what I have...

The plan makes sense to me, but I thought the 8% was high - agreed, he said he can make it work and most managed investments can give that, or around that number. Also the 1,25% seemed high, that's why I asked in this forum. On the other hand, if this firm doesn't do a good job, each year there will be LESS money for them to charge 1,25% from, so I see that as an incentive for them to work smart.

The risk is that they will mess up and dry my account before I want to start my SS.
BUT - being fiduciary, aren't they obligated by law to work in my best interest ?

Now this guy did not push this agenda at all and at no time did he suggest or try to sell me their services.
The talk was kept very generic, and he basically said this is what he thinks is best, and that the IRA account will have to be manages by somebody - myself or a firm.
Maybe this is a smooth tactic to avoid saying what he wants his client to fill in for him ...

I like Vanguard, I will look into whether they offer Personal Advisors, and/or IRA management services.

Awesome community, I appreciate your time and thought.
I think you need to hit the pause button, read investment books to get better understanding, and do not hire an advisor at 1.25%. That is way too much for something you can do on your own. If you truly feel you need help after educating yourself here and in good books, I'd consider Vanguard's advisory service for .30%. I spoke to a Vanguard advisor and they gave me a courtesy sample plan based on my assets if I were to move forward with them. I decided for now I'll continue to invest on my own. If you can, gift yourself time to read this forum, good books, and then make your best educated decision. I agree with others here to get a part-time job if you can and wait until 70 to claim social security. I know these aren't easy decisions when it's all new and you want to preserve and grow your money in an uncertain world. You'll find your right answer.
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Godot
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Re: retirement analysis - Help please

Post by Godot »

twh wrote: Sun Nov 14, 2021 12:43 am Not going to be a comfortable retirement with these numbers.
Why even say that? Can you be any less helpful?
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jdstripling
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Re: retirement analysis - Help please

Post by jdstripling »

How soon can you begin collecting your pension? If the cashout value is only 150k and your monthly benefit is $730 which equates to $8760 per year then I think it could make sense to keep your pension unless you are concerned that the pension fund dries up and your benefits are reduced. Using the 4% rule your safe withdrawals from the 150k lump sum would be $6000 per year or $500 per month.

We still haven't heard what your expected expenses are going to be be in retirement. That is a major factor in what the recommendations would be. If you are in good health I would recommend finding a way to wait until age 70 to collect SS even if that means completely using up your 160k from your 401k and/or working part time. If you made it until age 70 you would have $3100 adjusted for inflation plus $730 in today's dollars per month if you keep your pension. This is likely the best outcome should you live past your early 80s based on your current assets.

With respect to the advisor you spoke to, the management fees alone are enough to make you run away let alone the confidence they have in getting you 8% returns in retirement. To achieve those returns you would likely need to be heavily invested in stocks and have decent returns. If you feel you need to work with an advisor, find a fee based advisor instead of someone utilizing AUM billing.
Derpalator
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Re: retirement analysis - Help please

Post by Derpalator »

Several problems with the advisor. The pension you have is gold; many in this forum would love to have one. The advisor suggests cashing out so that HE can then profit off of it by charging assets under management fees. These fees you cannot afford. Run away.

The most straightforward advice should be: use your pension as is. The difference in living expenses will be funded from your other money until social security kicks in. The amount of money in your IRA is definitely tight. Things will have to go well in the market, not necessarily GOOD returns, but definitely not BAD returns over the next ten years for it to work.

ALL money experts agree that waiting until age 70 to start Social Security is OPTIMAL as there is no other deal as good on this planet. The only reasons to take it before 70: there is no other alternative for money, you are ill and will not likely live that long, or you have a strong family history of dying before then. Once social security kicks in at the rate of $ 3160 you are golden, as this amount will be adjusted for inflation in the long run. You may even have significant money left in your IRA by then.

Finally, with your IRA amount it may be tough sledding as markets have a history of constant surprises and possibly long runs of poor returns. If the worst happens and to give yourself some more runway, seeking part-time employment or simply working longer is recommended. Best wishes and luck!
kilkoyne
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Re: retirement analysis - Help please

Post by kilkoyne »

Are you staying in the Seattle or are you planning to more to a more retirement friendly state? That's something to take into consideration.
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JoeRetire
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Re: retirement analysis - Help please

Post by JoeRetire »

Grt2bOutdoors wrote: Sat Nov 13, 2021 5:27 pm OP requires 2,500 a month.
Where did the OP say that?
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Carl53
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Re: retirement analysis - Help please

Post by Carl53 »

ch4pal wrote: Sun Nov 14, 2021 12:39 am From my SS statement that I received this year:

age 67 - $2,362
age 70 - $3,160
age 62 - $1,365

Pension:
I am vested in a small pension, $730.- /mo., with the option to cash it out. The earlier I cash out the more I get.
If I cash out now I can get about $150,000.- The more I wait, the less I get, down to around $100k or so at age 65 - ish.
I have a 401k with about $160,000.-

The plan from this advisor was to cash out my pension and roll it into a IRA, and also transfer that 401K into the same IRA, that would give me about $310,000.- to invest. He suggested a heavy(er) draw from this account until I start my SS - age 67, or 70 - IF the 310k will last that long (he seemed to be confident that it will), and after that start my SS and have that for life.

I can be frugal if I need to, basically I am trying to figure out HOW frugal I need to be with what I have...

The plan makes sense to me, but I thought the 8% was high - agreed, he said he can make it work and most managed investments can give that, or around that number. Also the 1,25% seemed high, that's why I asked in this forum. On the other hand, if this firm doesn't do a good job, each year there will be LESS money for them to charge 1,25% from, so I see that as an incentive for them to work smart.

The risk is that they will mess up and dry my account before I want to start my SS.
BUT - being fiduciary, aren't they obligated by law to work in my best interest ?

Now this guy did not push this agenda at all and at no time did he suggest or try to sell me their services.
The talk was kept very generic, and he basically said this is what he thinks is best, and that the IRA account will have to be manages by somebody - myself or a firm.
Maybe this is a smooth tactic to avoid saying what he wants his client to fill in for him ...

I like Vanguard, I will look into whether they offer Personal Advisors, and/or IRA management services.

Awesome community, I appreciate your time and thought.
I suspect that your understanding of your SS benefits statement is lacking. SS uses your best 35 years of eligible earnings to determine your benefits. Since you are 60, the reduction in benefits from your age 67 benefits to age 62 is 30%. You can confirm this by using SStools sited by others or one of the other calculators touted on this forum if you search for them. The reduction from 2362 to 1365 is 42.2%. This suggests that either you currently have fewer than 35 years of eligible earnings or that your recent earnings are much higher than those earlier in your career thus SS is assuming that you will continue to earn those bigger $$ and replace zero or low earning years by working until 67. Since you are contemplating retiring soon, the age 62 benefit of 1365 is likely the least overstated. Assuming it is correct and that you quit working at age 62 your age 67 benefit would only be 1950 = 1365/(1-.30) without any inflation adjustment. Your age 70 SS benefit would only be 24% greater than the age 67 benefit or 1950 X 1.24, or 2418. Don't be fooled by thinking your benefit will be the numbers on the SS statement if you quit now. We don't know your need to retire soon but working longer will make the SS that you ultimately receive be higher as long as you are replacing historical zero or low earnings years in their calculation. Working longer also means your nest egg can grow a little more rather than be used to support you.
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CrazyCatLady
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Re: retirement analysis - Help please

Post by CrazyCatLady »

JoeRetire wrote: Sun Nov 14, 2021 7:37 am
Grt2bOutdoors wrote: Sat Nov 13, 2021 5:27 pm OP requires 2,500 a month.
Where did the OP say that?
In his first response. He said he could move to Mexico and live in $2,500 or less.
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JoeRetire
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Re: retirement analysis - Help please

Post by JoeRetire »

CrazyCatLady wrote: Sun Nov 14, 2021 7:58 am
JoeRetire wrote: Sun Nov 14, 2021 7:37 am
Grt2bOutdoors wrote: Sat Nov 13, 2021 5:27 pm OP requires 2,500 a month.
Where did the OP say that?
In his first response. He said he could move to Mexico and live in $2,500 or less.
Thanks! I see it now (the old "move to Mexico" plan).

Seems like the advisor told them exactly what they wanted to hear. Yikes.
I like advisors to tell me what I need to hear instead.
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Grt2bOutdoors
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Re: retirement analysis - Help please

Post by Grt2bOutdoors »

JoeRetire wrote: Sun Nov 14, 2021 7:37 am
Grt2bOutdoors wrote: Sat Nov 13, 2021 5:27 pm OP requires 2,500 a month.
Where did the OP say that?
In his original post, said he needs $30k or will have $30k annually at social security in age 70 which is what was needed.
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22twain
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Re: retirement analysis - Help please

Post by 22twain »

ch4pal wrote: Sun Nov 14, 2021 12:39 am From my SS statement that I received this year:

age 67 - $2,362
age 70 - $3,160
age 62 - $1,365
As has been noted already, these numbers probably assume you're going to continue working (and contributing to SS) until those ages. You can get a more accurate projection assuming you stop working now, based on what you've paid in so far, from the calculator at https://ssa.tools/ . You'll need a list of your SS earnings by year.
It's "Roth", not "ROTH". Senator William Roth was a person, not an acronym.
GuyInFL
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Re: retirement analysis - Help please

Post by GuyInFL »

22twain wrote: Sun Nov 14, 2021 8:40 am You'll need a list of your SS earnings by year.
Which you can get from the SSA.gov website.
Exchme
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Re: retirement analysis - Help please

Post by Exchme »

So asset-wise, OP has:
$20K savingss
$160K 401K
Private pension, $730/mo or $150K cash value

Skip the advisor; they have disclosed the advisory fee (which is way too high), but the funds also have operating costs (often quite high) and they will pass those along to you as well. If you knew all the fees, you would probably find it's more like 2% from you each year.

Cashing out the private pension and living on your funds until age 70 and then claiming SS sounds like the best path as you will be trading your static, non-inflation adjusted private pension for the maximum SS benefit. Since SS benefits increase to age 70 and is inflation adjusted, it's your better deal. I can't figure out why the advisor wasn't pushing you in that direction.

With no return above inflation on your assets, you could live the 9.3 years from now until age 70 on $35K/year and then claim SS at almost $38K/year. As others have pointed out, you need to be quite conservative with investments as bear markets can take a decade or more to return to their original value and you have to live in the meantime. It's hard to see going over 20-30% stocks as the impact of a downturn on your spending ability would be harsh. You definitely don't need an advisor taking thousands of $ from you in this situation! The advisor telling you that you can have $100K left late in life is a fantasy built on taking risk you can't afford to take.

Deferring retirement as long as you can + a part time job (maybe the current employer would let you work part time remotely?) for a few years would make those early years a lot better and give you a bit of a cushion for later in life. Start being very frugal now, it could save you from having to take extreme measures later.
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22twain
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Re: retirement analysis - Help please

Post by 22twain »

GuyInFL wrote: Sun Nov 14, 2021 9:08 am
22twain wrote: Sun Nov 14, 2021 8:40 am You'll need a list of your SS earnings by year.
Which you can get from the SSA.gov website.
Or from his SS statement which he already has.
It's "Roth", not "ROTH". Senator William Roth was a person, not an acronym.
tibbitts
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Re: retirement analysis - Help please

Post by tibbitts »

Derpalator wrote: Sun Nov 14, 2021 3:14 am ALL money experts agree that waiting until age 70 to start Social Security is OPTIMAL as there is no other deal as good on this planet.
That is simply not the case, particularly if the law isn't changed to allow for a continuation of existing benefit levels. For example, the Opensocialsecurity calculator (which I'd consider similar to an "expert") recommends a claiming age of roughly 68 for me, although I may choose to extend that (and admittedly the difference isn't large.) Regardless of that, everyone agrees that you have to consider other factors such as your personal projected lifespan. And that doesn't even get into the issues for married recipients, which I assume isn't a factor for the OP.
Jeepergeo
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Re: retirement analysis - Help please

Post by Jeepergeo »

22twain wrote: Sun Nov 14, 2021 8:40 am
ch4pal wrote: Sun Nov 14, 2021 12:39 am From my SS statement that I received this year:

age 67 - $2,362
age 70 - $3,160
age 62 - $1,365
As has been noted already, these numbers probably assume you're going to continue working (and contributing to SS) until those ages. You can get a more accurate projection assuming you stop working now, based on what you've paid in so far, from the calculator at https://ssa.tools/ . You'll need a list of your SS earnings by year.
That tool is Fed Lazy. Why don't they include the tool in your account so that the history can auto-populate from the SSA's database of one's earnings? Or at least have an export-import feature that allows one's account to easily talk to the tool.
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22twain
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Re: retirement analysis - Help please

Post by 22twain »

Jeepergeo wrote: Sun Nov 14, 2021 11:24 am
22twain wrote: Sun Nov 14, 2021 8:40 am You can get a more accurate projection assuming you stop working now, based on what you've paid in so far, from the calculator at https://ssa.tools/ . You'll need a list of your SS earnings by year.
That tool is Fed Lazy. Why don't they include the tool in your account so that the history can auto-populate from the SSA's database of one's earnings? Or at least have an export-import feature that allows one's account to easily talk to the tool.
Despite the name ssa.tools, it's a third-party offering, not from the SSA itself.

Even though there's no direct feed, it's pretty simple to copy and paste from the earnings record in your account on ssa.gov. I tried it once that way just to see that it works. Normally I copy it from my own spreadsheet.
It's "Roth", not "ROTH". Senator William Roth was a person, not an acronym.
delamer
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Re: retirement analysis - Help please

Post by delamer »

To reiterate the point others have made —

1. Your pension is an excellent deal. The monthly benefit is high relative to the cashout balance. Remember it is guaranteed, while any return the advisor projects is speculative.

2. The advisor makes more money if you do the pension cashout versus taking the monthly benefit. There is no question that his recommendation is colored by that fact.

However, if you take the pension then your liquid assets would only be $150,000. And you’d spend down a lot of to get yourself to Social Security at 66.

If you have the option of doing part-time work until age 66, even bringing in $15,000/year would make a big difference.

Maybe pre-Medicare, you would be eligible for very inexpensive ACA coverage. Please don’t take the risk of going without insurance, especially if your reason for retiring now is health related.

Investigate Vanguard’s PAS as an alternative to the advisor you are talking to now: https://investor.vanguard.com/advice/financial-advisor/

The cost is just 0.3%.

Good luck with your retirement.
Last edited by delamer on Sun Nov 14, 2021 12:05 pm, edited 1 time in total.
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retire2022
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Re: retirement analysis - Help please

Post by retire2022 »

Op

Depending on your location where you reside, have you considered applying for Section 8, it is a rental subsidy.

Generally it is available for persons between 10-60% Area Median Income under HUD.

Good luck
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Ben Mathew
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Re: retirement analysis - Help please

Post by Ben Mathew »

ch4pal wrote: Sun Nov 14, 2021 12:39 am he said he can make it work and most managed investments can give that, or around that number.
This advisor is a charlatan. Run away.

Finding a good advisor can be harder than learning the basics yourself. This forum is a great place to figure out a plan. You have received excellent advice so far.

The first step is to pin down your most important financial resource in retirement, which is Social Security. Figure out exactly what you'll get at different ages. Then your options will become a lot clearer.
tibbitts
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Re: retirement analysis - Help please

Post by tibbitts »

Jeepergeo wrote: Sun Nov 14, 2021 11:24 am
22twain wrote: Sun Nov 14, 2021 8:40 am
ch4pal wrote: Sun Nov 14, 2021 12:39 am From my SS statement that I received this year:

age 67 - $2,362
age 70 - $3,160
age 62 - $1,365
As has been noted already, these numbers probably assume you're going to continue working (and contributing to SS) until those ages. You can get a more accurate projection assuming you stop working now, based on what you've paid in so far, from the calculator at https://ssa.tools/ . You'll need a list of your SS earnings by year.
That tool is Fed Lazy. Why don't they include the tool in your account so that the history can auto-populate from the SSA's database of one's earnings? Or at least have an export-import feature that allows one's account to easily talk to the tool.
It's not very difficult to import data to ssa.tools, but it's not SSA-affiliated so I can't see it being "included" in an SSA account. And I can understand the developers of an independent tool - especially a free-to-use one - not wanting to deal with any potential authentication/privacy/security issues of direct logins to SSA.
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