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"Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Tue Aug 13, 2019 1:08 pm
by Taylor Larimore
Bogleheads:

I retired 38 years age at the age of 57. During this time I learned a few things about investing. One of these is the value of "simplicity" which I selected for my "signature" at the bottom of this post.

Morningstar's Christine Benz (Christine is on our "Panel of Experts" at Boglehead confrences) has written an important article about "simplicity" in retirement. These are excerpts:
"Creating a financial plan for retirement is too dang complicated."

"More and more people coming into retirement are grappling with knotty issues like figuring out a sustainable withdrawal rate, managing taxes while pulling assets from various account types, and determining how to cover healthcare and long-term care expenses from their coffers."

"When it comes to your investment portfolio, simplicity should be your watchword."

"By maintain a fairly minimalist portfolio, you won’t risk getting caught in the minutiae of your investments and can instead devote your energies to more important issues like monitoring your withdrawal rate, right-sizing your insurance coverage, and reducing the drag of taxes and fees on your plan. You’ll also have more time for the activities that constitute your quality of life in retirement: running, volunteering, overseeing your fantasy football league, you name it."

"Having a pared-down portfolio can also be considered an estate-planning tool, in that it reduces your loved ones’ oversight obligations in case something should happen to you."

"Multiple tax-deferred accounts, whether IRAs or company retirement plan assets, offer a major consolidation opportunity, in that it’s possible to collapse them into a single large Traditional IRA."

"You could reasonably get away with a single total U.S. market tracker, an international index fund, a bond fund, and cash holdings." (Like The Bogleheads Three-Fund Portfolio.)

"You can also keep your portfolio streamlined by cutting holdings that you thought would supply diversification and/or returns but at the end of the day haven’t added a lot to your portfolio’s risk/reward profile."

"asset classes, including real estate, commodities, and various types of alternatives funds, have been less impressive diversifiers, and most investors don’t hold large enough positions in them to move the needle on performance anyway."

"many investors operate small "side" portfolios that consist of individual stocks. Such portfolios are usually ripe for the cutting when I do my Portfolio Makeovers each year. They often duplicate exposures found elsewhere in the portfolio, adding more complexity and risk than they improve the portfolio."

"As part of your annual review, you'll take a look at your withdrawal rate given your portfolio balance, assess your portfolio's asset allocation and liquid reserves, meet required minimum distributions, identify opportunities to save on taxes, and assess whether you can tie in charitable giving with your portfolio plan."
Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be.

Best wishes.
Taylor

Jack Bogle's Words of Wisdom: "Simplicity is the master key to financial success. -- We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Tue Aug 13, 2019 2:39 pm
by Sheepdog
"As part of your annual review, you'll take a look at your withdrawal rate given your portfolio balance, assess your portfolio's asset allocation and liquid reserves, meet required minimum distributions, identify opportunities to save on taxes, and assess whether you can tie in charitable giving with your portfolio plan."
Thank you for posting this, Taylor. I am following these recommendations completely. Fortunately, you taught me in my early retirement the art of simplicity. This quote is what I learned to do in about my 5th year in retirement (now 21 years). Simplicity and careful withdrawal planning makes for a comfortable and pain free retirement. (although 2008-09 got to me pretty good,)
And, thank you for what you have done to make retirement easier for all of us. You are a special person.
God Bless You,
Jim (Sheepdog and WOODJ)

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Tue Aug 13, 2019 4:20 pm
by rossington
I retired 38 years age at the age of 57. During this time I learned a few things about investing. One of these is the value of "simplicity" which I selected for my "signature" at the bottom of this post.
Taylor,
I haven't been here long enough so I would like to know when you decided to move to the three fund portfolio from a presumably more complex one. Was it in 2012 at the same time you started the original thread or sooner?
Was Jack Bogle the only influence on the decision or were there others?
Thanks.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Tue Aug 13, 2019 4:28 pm
by megabad
rossington wrote:
Tue Aug 13, 2019 4:20 pm
I retired 38 years age at the age of 57. During this time I learned a few things about investing. One of these is the value of "simplicity" which I selected for my "signature" at the bottom of this post.
Taylor,
I haven't been here long enough so I would like to know when you decided to move to the three fund portfolio from a presumably more complex one. Was it in 2012 at the same time you started the original thread or sooner?
Was Jack Bogel the only influence on the decision or were there others?
Thanks.
http://socialize.morningstar.com/NewSoc ... stID=17632

I can't speak for Taylor, but here is a post from...a little before 2012...from him that talks about a similar portfolio (essentially a 3 fund portfolio and money market fund). I think he has had this approach for quite a while. Wisely in my opinion.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Tue Aug 13, 2019 6:31 pm
by Taylor Larimore
Rossington:

Magabad kindly answered your question.

Reading Jack Bogle's Bogle on Mutual Funds and Professor Burton Malikel's A Random Walk Down Wall Street are the two books that convinced me that three total-market index funds are ideal for most investors.

It may be of interest to learn that I have read over 250 books about personal investing:

https://www.physicianonfire.com/read-25 ... ree-funds/

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The Three-Fund Portfolio (book) will help you to develop a sound asset allocation strategy, make smart investment selections, and guide the implementation of your plan."

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Tue Aug 13, 2019 8:24 pm
by abuss368
Taylor Larimore wrote:
Tue Aug 13, 2019 1:08 pm
Bogleheads:

I retired 38 years age at the age of 57. During this time I learned a few things about investing. One of these is the value of "simplicity" which I selected for my "signature" at the bottom of this post.

Morningstar's Christine Benz (Christine is on our "Panel of Experts" at Boglehead confrences) has written an important article about "simplicity" in retirement. These are excerpts:
"Creating a financial plan for retirement is too dang complicated."

"More and more people coming into retirement are grappling with knotty issues like figuring out a sustainable withdrawal rate, managing taxes while pulling assets from various account types, and determining how to cover healthcare and long-term care expenses from their coffers."

"When it comes to your investment portfolio, simplicity should be your watchword."

"By maintain a fairly minimalist portfolio, you won’t risk getting caught in the minutiae of your investments and can instead devote your energies to more important issues like monitoring your withdrawal rate, right-sizing your insurance coverage, and reducing the drag of taxes and fees on your plan. You’ll also have more time for the activities that constitute your quality of life in retirement: running, volunteering, overseeing your fantasy football league, you name it."

"Having a pared-down portfolio can also be considered an estate-planning tool, in that it reduces your loved ones’ oversight obligations in case something should happen to you."

"Multiple tax-deferred accounts, whether IRAs or company retirement plan assets, offer a major consolidation opportunity, in that it’s possible to collapse them into a single large Traditional IRA."

"You could reasonably get away with a single total U.S. market tracker, an international index fund, a bond fund, and cash holdings." (Like The Bogleheads Three-Fund Portfolio.)

"You can also keep your portfolio streamlined by cutting holdings that you thought would supply diversification and/or returns but at the end of the day haven’t added a lot to your portfolio’s risk/reward profile."

"asset classes, including real estate, commodities, and various types of alternatives funds, have been less impressive diversifiers, and most investors don’t hold large enough positions in them to move the needle on performance anyway."

"many investors operate small "side" portfolios that consist of individual stocks. Such portfolios are usually ripe for the cutting when I do my Portfolio Makeovers each year. They often duplicate exposures found elsewhere in the portfolio, adding more complexity and risk than they improve the portfolio."

"As part of your annual review, you'll take a look at your withdrawal rate given your portfolio balance, assess your portfolio's asset allocation and liquid reserves, meet required minimum distributions, identify opportunities to save on taxes, and assess whether you can tie in charitable giving with your portfolio plan."
Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be.

Best wishes.
Taylor

Jack Bogle's Words of Wisdom: "Simplicity is the master key to financial success. -- We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
Excellent post Taylor on the value of simplicity. It is important that we follow the path of simplicity in both our financial and non-financial lives. It is a journey and not a destination.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Tue Aug 13, 2019 10:39 pm
by SevenBridgesRoad
I agree simple is best for portfolios and life. 95% of the threads and posts here would disappear. I’ve learned a lot here, so I’m certainly grateful. But man, focus on posts from Taylor and Longinvest and you’re pretty much good to go.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Tue Aug 13, 2019 10:54 pm
by Jazzysoon
I know it's inevitable but I hope Christine Never retires. Her Messaging is so succinct and always resonates with me.

Taylor - Thanks for posting this.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Tue Aug 13, 2019 11:23 pm
by nedsaid
Hi Taylor, I am so glad that you mentioned that retirement planning is complicated. There is so much bias here for a do-it-yourself approach to both investing and retirement planning. I don't think investing needs to be complicated but there are a number of irreversible decisions that are involved with retirement. I think folks out to consider getting advice as they approach retirement.

Just a few things folks should think about.
1) When should I retire? Once you turn off the income spigot from a career, it isn't always easy to turn it on again. Lots of 50 somethings having to take lesser jobs after a lay-off.
2) When to start drawing Social Security?
3) How do I deal with the sequence of returns problem near and in retirement? Buckets? Flexible withdrawal strategy? Partial annuitization of the portfolio?
4) Asset allocation of the portfolio in retirement. This would depend upon the size of the portfolio, health, and how much guaranteed income from such things as pensions and Social Security.

For lots of folks, a couple of appointments with a financial planner could shed light on things that otherwise would be missed.

I recently did something that I have been thinking about for years, turning over the keys to part of my portfolio to a portfolio management service which will manage a conservative portfolio for me. Part of the service is comprehensive financial and retirement planning. They are doing this for 90 basis points. I have posted extensively about this elsewhere on the forum in my own thread on my investment portfolio. At some point, I may use Fidelity Go (robots) to run my Fidelity portfolio. The third major piece of my portfolio is with an independent broker.

So I think financial advice to be vital. Know my recent decision will not be agreed with by many here but something I have wanted for a very long time. Thought long and hard about Merriman 11-12 years ago but their all-in costs were 1.34%. To get a comprehensive service for 0.90% seemed like a relative bargain. I have wanted a partner to work with for a long time.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 2:27 am
by xxd091
From over the Pond-UK Boglehead
Like you Taylor retired at 57- now 16 years retired
3 Funds only-Vanguard Global Index Tracker ex UK,Vanguard UK Index Tracker and a Vanguard Global Bond Index Fund hedged to the Pound
A Cash Account for 2 years expenses
That’s it
I have learned such a lot from this forum and Taylor in particular
The good news goes far and wide!
xxd091

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 5:48 am
by A440
"Life should be exciting. Your investments should be boring"
Thank you Taylor!

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 8:51 am
by bertilak
nedsaid wrote:
Tue Aug 13, 2019 11:23 pm
I recently did something that I have been thinking about for years, turning over the keys to part of my portfolio to a portfolio management service which will manage a conservative portfolio for me. Part of the service is comprehensive financial and retirement planning. They are doing this for 90 basis points. I have posted extensively about this elsewhere on the forum in my own thread on my investment portfolio. At some point, I may use Fidelity Go (robots) to run my Fidelity portfolio. The third major piece of my portfolio is with an independent broker.

So I think financial advice to be vital. Know my recent decision will not be agreed with by many here but something I have wanted for a very long time. Thought long and hard about Merriman 11-12 years ago but their all-in costs were 1.34%. To get a comprehensive service for 0.90% seemed like a relative bargain. I have wanted a partner to work with for a long time.
I assume you know about Vanguard's PAS so I will ask why you chose to spend 3x as much for advice/management from a different source.

I am seriously considering future use of PAS so will appreciate any input.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 10:22 am
by abuss368
nedsaid wrote:
Tue Aug 13, 2019 11:23 pm
Hi Taylor, I am so glad that you mentioned that retirement planning is complicated. There is so much bias here for a do-it-yourself approach to both investing and retirement planning. I don't think investing needs to be complicated but there are a number of irreversible decisions that are involved with retirement. I think folks out to consider getting advice as they approach retirement.

Just a few things folks should think about.
1) When should I retire? Once you turn off the income spigot from a career, it isn't always easy to turn it on again. Lots of 50 somethings having to take lesser jobs after a lay-off.
2) When to start drawing Social Security?
3) How do I deal with the sequence of returns problem near and in retirement? Buckets? Flexible withdrawal strategy? Partial annuitization of the portfolio?
4) Asset allocation of the portfolio in retirement. This would depend upon the size of the portfolio, health, and how much guaranteed income from such things as pensions and Social Security.

For lots of folks, a couple of appointments with a financial planner could shed light on things that otherwise would be missed.

I recently did something that I have been thinking about for years, turning over the keys to part of my portfolio to a portfolio management service which will manage a conservative portfolio for me. Part of the service is comprehensive financial and retirement planning. They are doing this for 90 basis points. I have posted extensively about this elsewhere on the forum in my own thread on my investment portfolio. At some point, I may use Fidelity Go (robots) to run my Fidelity portfolio. The third major piece of my portfolio is with an independent broker.

So I think financial advice to be vital. Know my recent decision will not be agreed with by many here but something I have wanted for a very long time. Thought long and hard about Merriman 11-12 years ago but their all-in costs were 1.34%. To get a comprehensive service for 0.90% seemed like a relative bargain. I have wanted a partner to work with for a long time.
Turning over the keys to a service is a big decision. One that I don not think is discussed enough when thinking of spouses ability and willingness. In addition our thinking may decline or slow.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 11:40 am
by BL
I can see where financial planning, not necessarily investment planning alone, could be useful at certain points in life. However, how to find a good one is something that I just don't feel confident in finding or recommending. I live out in the boondocks where the main ones I see would not be fiduciary enough for me.

So, finding a good one, and knowing how to know when you have found one, is a daunting job for most folks. As is often said here, by the time you know enough to judge them, you don't need them. Just because you like them and they act like they know what they are doing, may not mean they are actually good for you instead of good at projecting a great image!

Guess I will bumble along just fine as we have enough as frugal spenders to not need to withdraw from accounts now, and I can see setting distributions in taxable to go to my bank account if I am the survivor some day. (Yes, we have a small tIRA that we keep trying to get rid of with QCDs that way more than cover RMDs.) Have Jane Bryant Quinn's book and Bogleheads' books as handy references if I need more advice, and of course there is Boglehead's in reserve as well.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 1:10 pm
by nedsaid
abuss368 wrote:
Wed Aug 14, 2019 10:22 am
nedsaid wrote:
Tue Aug 13, 2019 11:23 pm
Hi Taylor, I am so glad that you mentioned that retirement planning is complicated. There is so much bias here for a do-it-yourself approach to both investing and retirement planning. I don't think investing needs to be complicated but there are a number of irreversible decisions that are involved with retirement. I think folks out to consider getting advice as they approach retirement.

Just a few things folks should think about.
1) When should I retire? Once you turn off the income spigot from a career, it isn't always easy to turn it on again. Lots of 50 somethings having to take lesser jobs after a lay-off.
2) When to start drawing Social Security?
3) How do I deal with the sequence of returns problem near and in retirement? Buckets? Flexible withdrawal strategy? Partial annuitization of the portfolio?
4) Asset allocation of the portfolio in retirement. This would depend upon the size of the portfolio, health, and how much guaranteed income from such things as pensions and Social Security.

For lots of folks, a couple of appointments with a financial planner could shed light on things that otherwise would be missed.

I recently did something that I have been thinking about for years, turning over the keys to part of my portfolio to a portfolio management service which will manage a conservative portfolio for me. Part of the service is comprehensive financial and retirement planning. They are doing this for 90 basis points. I have posted extensively about this elsewhere on the forum in my own thread on my investment portfolio. At some point, I may use Fidelity Go (robots) to run my Fidelity portfolio. The third major piece of my portfolio is with an independent broker.

So I think financial advice to be vital. Know my recent decision will not be agreed with by many here but something I have wanted for a very long time. Thought long and hard about Merriman 11-12 years ago but their all-in costs were 1.34%. To get a comprehensive service for 0.90% seemed like a relative bargain. I have wanted a partner to work with for a long time.
Turning over the keys to a service is a big decision. One that I don not think is discussed enough when thinking of spouses ability and willingness. In addition our thinking may decline or slow.
What I really wanted was the comprehensive financial and retirement planning. I have run my own portfolios for many years but may want to turn the keys over completely someday, the portfolio management is a test drive.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 1:12 pm
by nedsaid
bertilak wrote:
Wed Aug 14, 2019 8:51 am
nedsaid wrote:
Tue Aug 13, 2019 11:23 pm
I recently did something that I have been thinking about for years, turning over the keys to part of my portfolio to a portfolio management service which will manage a conservative portfolio for me. Part of the service is comprehensive financial and retirement planning. They are doing this for 90 basis points. I have posted extensively about this elsewhere on the forum in my own thread on my investment portfolio. At some point, I may use Fidelity Go (robots) to run my Fidelity portfolio. The third major piece of my portfolio is with an independent broker.

So I think financial advice to be vital. Know my recent decision will not be agreed with by many here but something I have wanted for a very long time. Thought long and hard about Merriman 11-12 years ago but their all-in costs were 1.34%. To get a comprehensive service for 0.90% seemed like a relative bargain. I have wanted a partner to work with for a long time.
I assume you know about Vanguard's PAS so I will ask why you chose to spend 3x as much for advice/management from a different source.

I am seriously considering future use of PAS so will appreciate any input.
Also test driving the comprehensive financial and retirement planning. Not sure PAS does this, they manage your portfolio, maybe perform tax loss harvesting.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 1:21 pm
by bertilak
duplicate deleted.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 1:26 pm
by RadAudit
nedsaid wrote:
Wed Aug 14, 2019 1:10 pm
What I really wanted was the comprehensive financial and retirement planning. I ... may want to turn the keys over completely someday, the portfolio management is a test drive.
Keep us posted. Ought to be informative to see how this turns out.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 1:28 pm
by bertilak
nedsaid wrote:
Wed Aug 14, 2019 1:12 pm
Also test driving the comprehensive financial and retirement planning. Not sure PAS does this, they manage your portfolio, maybe perform tax loss harvesting.
You are probably right. I think VG only looks at assets they hold. In my case they hold pretty much everything that is liquid. I believe they will manage it to the point of providing a distribution. I have a discussion scheduled with PAS next week so will know more after that.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 2:06 pm
by abuss368
nedsaid wrote:
Wed Aug 14, 2019 1:10 pm
abuss368 wrote:
Wed Aug 14, 2019 10:22 am
nedsaid wrote:
Tue Aug 13, 2019 11:23 pm
Hi Taylor, I am so glad that you mentioned that retirement planning is complicated. There is so much bias here for a do-it-yourself approach to both investing and retirement planning. I don't think investing needs to be complicated but there are a number of irreversible decisions that are involved with retirement. I think folks out to consider getting advice as they approach retirement.

Just a few things folks should think about.
1) When should I retire? Once you turn off the income spigot from a career, it isn't always easy to turn it on again. Lots of 50 somethings having to take lesser jobs after a lay-off.
2) When to start drawing Social Security?
3) How do I deal with the sequence of returns problem near and in retirement? Buckets? Flexible withdrawal strategy? Partial annuitization of the portfolio?
4) Asset allocation of the portfolio in retirement. This would depend upon the size of the portfolio, health, and how much guaranteed income from such things as pensions and Social Security.

For lots of folks, a couple of appointments with a financial planner could shed light on things that otherwise would be missed.

I recently did something that I have been thinking about for years, turning over the keys to part of my portfolio to a portfolio management service which will manage a conservative portfolio for me. Part of the service is comprehensive financial and retirement planning. They are doing this for 90 basis points. I have posted extensively about this elsewhere on the forum in my own thread on my investment portfolio. At some point, I may use Fidelity Go (robots) to run my Fidelity portfolio. The third major piece of my portfolio is with an independent broker.

So I think financial advice to be vital. Know my recent decision will not be agreed with by many here but something I have wanted for a very long time. Thought long and hard about Merriman 11-12 years ago but their all-in costs were 1.34%. To get a comprehensive service for 0.90% seemed like a relative bargain. I have wanted a partner to work with for a long time.
Turning over the keys to a service is a big decision. One that I don not think is discussed enough when thinking of spouses ability and willingness. In addition our thinking may decline or slow.
What I really wanted was the comprehensive financial and retirement planning. I have run my own portfolios for many years but may want to turn the keys over completely someday, the portfolio management is a test drive.
Agreed. I finally realized that if anything happened to me it was best for my spouse to simply call Vanguard and enroll in the PAS service they offer. I do not believe this is recognized or discussed as much as it should be.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 2:17 pm
by bertilak
abuss368 wrote:
Wed Aug 14, 2019 2:06 pm
Agreed. I finally realized that if anything happened to me it was best for my spouse to simply call Vanguard and enroll in the PAS service they offer. I do not believe this is recognized or discussed as much as it should be.
That's part of my IPS which I gave to my wife and made sure she read it. That part is highlighted in different color text.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 2:40 pm
by abuss368
bertilak wrote:
Wed Aug 14, 2019 2:17 pm
abuss368 wrote:
Wed Aug 14, 2019 2:06 pm
Agreed. I finally realized that if anything happened to me it was best for my spouse to simply call Vanguard and enroll in the PAS service they offer. I do not believe this is recognized or discussed as much as it should be.
That's part of my IPS which I gave to my wife and made sure she read it. That part is highlighted in different color text.
I went one step further! Highlighted and also printed out a picture of Vanguard website with phone number and information.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 2:41 pm
by cashboy
Taylor,

thanks for posting this.

After reading many of your posts on the subject, and many hours of my own research and validation, my retirement portfolio is now simple - I am BH 3 fund all the way.

I find that another benefit of a simple BH 3 fund portfolio, in addition to how well it performs, is that it is easy for my wife to understand.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 3:25 pm
by Taylor Larimore
cashboy wrote:
Wed Aug 14, 2019 2:41 pm
Taylor,

thanks for posting this.

After reading many of your posts on the subject, and many hours of my own research and validation, my retirement portfolio is now simple - I am BH 3 fund all the way.

I find that another benefit of a simple BH 3 fund portfolio, in addition to how well it performs, is that it is easy for my wife to understand.
cashboy:

It makes me happy every time an investor discovers the many benefits of The Three-Fund Portfolio.

Best wishes.
Taylor

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 4:40 pm
by nedsaid
bertilak wrote:
Wed Aug 14, 2019 2:17 pm
abuss368 wrote:
Wed Aug 14, 2019 2:06 pm
Agreed. I finally realized that if anything happened to me it was best for my spouse to simply call Vanguard and enroll in the PAS service they offer. I do not believe this is recognized or discussed as much as it should be.
That's part of my IPS which I gave to my wife and made sure she read it. That part is highlighted in different color text.
Hopefully she won't just run to the nearest Edward Jones office, because like Mt. Everest, it is there. Probably the best thing would be to enroll while you are still alive and have your spouse get used to the service. When somebody passes, there is an amazing amount of things to do, best to have as much as possible lined up. Not sure she will even look at the IPS after you are gone. Everyone is different and what you have lined up will probably work, but Edward Jones is like catnip for senior citizens. Local office, friendly and folksy people.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 4:53 pm
by nedsaid
RadAudit wrote:
Wed Aug 14, 2019 1:26 pm
nedsaid wrote:
Wed Aug 14, 2019 1:10 pm
What I really wanted was the comprehensive financial and retirement planning. I ... may want to turn the keys over completely someday, the portfolio management is a test drive.
Keep us posted. Ought to be informative to see how this turns out.
That is what my "New 'Doo" thread is for, a running commentary on my own retirement portfolio. Have posted about this already in some detail.

I just started with their Private Client Group last week. Spent time linking personal accounts to their aggregator service, they can see everything in my retirement accounts. Not everything was convenient to link so I sent statements via secure e-mail. They know my entire financial picture.

The thing is, any advisor that uses Dimensional Funds will charge 0.75% to 1.00% for Assets Under Management. There are folks who are cheap and pretty much are just a conduit so that you can buy DFA Funds. Merriman was going to charge 1.34% all in, advisory fees plus embedded expense ratios in the funds. They used to have CPAs hired but let most of them go after the 2008-2009 crisis. I am getting portfolio management for 0.90% and this includes the comprehensive financial planning and retirement planning.

The portfolio was complex by Boglehead standards but peel it all away it was essentially 45% stocks and 55% bonds and cash. They compensated for a low stock allocation a bit by taking risk on the bond site with Global Bonds, including Emerging Market bonds. They also were light on International Stocks as they believe there is less risk here in the USA.

Again, what I was really interested in was the planning piece. I should find out in a week what they recommend.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 4:56 pm
by Dinosaur Dad
nedsaid wrote:
Tue Aug 13, 2019 11:23 pm
Hi Taylor, I am so glad that you mentioned that retirement planning is complicated. There is so much bias here for a do-it-yourself approach to both investing and retirement planning. I don't think investing needs to be complicated but there are a number of irreversible decisions that are involved with retirement. I think folks out to consider getting advice as they approach retirement.

Just a few things folks should think about.
1) When should I retire? Once you turn off the income spigot from a career, it isn't always easy to turn it on again. Lots of 50 somethings having to take lesser jobs after a lay-off.
2) When to start drawing Social Security?
3) How do I deal with the sequence of returns problem near and in retirement? Buckets? Flexible withdrawal strategy? Partial annuitization of the portfolio?
4) Asset allocation of the portfolio in retirement. This would depend upon the size of the portfolio, health, and how much guaranteed income from such things as pensions and Social Security.

For lots of folks, a couple of appointments with a financial planner could shed light on things that otherwise would be missed.

I recently did something that I have been thinking about for years, turning over the keys to part of my portfolio to a portfolio management service which will manage a conservative portfolio for me. Part of the service is comprehensive financial and retirement planning. They are doing this for 90 basis points. I have posted extensively about this elsewhere on the forum in my own thread on my investment portfolio. At some point, I may use Fidelity Go (robots) to run my Fidelity portfolio. The third major piece of my portfolio is with an independent broker.

So I think financial advice to be vital. Know my recent decision will not be agreed with by many here but something I have wanted for a very long time. Thought long and hard about Merriman 11-12 years ago but their all-in costs were 1.34%. To get a comprehensive service for 0.90% seemed like a relative bargain. I have wanted a partner to work with for a long time.
I have read with interest your many thoughtful posts, and I find it interesting that you have made this decision. I do think it's relatively easier to create a broad, diversified portfolio than it is to identify the ways to "optimize' income while protecting assets at the same time. For me the complexity comes in when you talk about Roth conversions, tax rates, how to plan for surviving spouse, etc.: I'm 63 and will probably retire some time next year, so I'm right in the middle of all this Some on this forum seem to have found a way through a combination of their own knowledge and various tools and calculators to do it themselves; I keep thinking I know a little but I need someone looking over my shoulder from time to time. to see if I'm missing something. I'm leaning towards periodic check-ins with a fee-based planner.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 4:57 pm
by nedsaid
abuss368 wrote:
Wed Aug 14, 2019 2:06 pm
nedsaid wrote:
Wed Aug 14, 2019 1:10 pm

What I really wanted was the comprehensive financial and retirement planning. I have run my own portfolios for many years but may want to turn the keys over completely someday, the portfolio management is a test drive.
Agreed. I finally realized that if anything happened to me it was best for my spouse to simply call Vanguard and enroll in the PAS service they offer. I do not believe this is recognized or discussed as much as it should be.
I read all the threads on the Vanguard Personal Advisory Service. Would be interested to know how comprehensive their service is. From what I understand, they take a look at your financial picture and base portfolio construction on that. Don't know how far they go into retirement planning, such things as when to start taking Social Security.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 5:06 pm
by willthrill81
"Everything should be made as simple as possible but not simpler."
- (commonly attributed to Einstein although possibly a paraphrasing of his words, also builds on Occam's razor)

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 5:09 pm
by nedsaid
Dinosaur Dad wrote:
Wed Aug 14, 2019 4:56 pm
nedsaid wrote:
Tue Aug 13, 2019 11:23 pm
Hi Taylor, I am so glad that you mentioned that retirement planning is complicated. There is so much bias here for a do-it-yourself approach to both investing and retirement planning. I don't think investing needs to be complicated but there are a number of irreversible decisions that are involved with retirement. I think folks out to consider getting advice as they approach retirement.

Just a few things folks should think about.
1) When should I retire? Once you turn off the income spigot from a career, it isn't always easy to turn it on again. Lots of 50 somethings having to take lesser jobs after a lay-off.
2) When to start drawing Social Security?
3) How do I deal with the sequence of returns problem near and in retirement? Buckets? Flexible withdrawal strategy? Partial annuitization of the portfolio?
4) Asset allocation of the portfolio in retirement. This would depend upon the size of the portfolio, health, and how much guaranteed income from such things as pensions and Social Security.

For lots of folks, a couple of appointments with a financial planner could shed light on things that otherwise would be missed.

I recently did something that I have been thinking about for years, turning over the keys to part of my portfolio to a portfolio management service which will manage a conservative portfolio for me. Part of the service is comprehensive financial and retirement planning. They are doing this for 90 basis points. I have posted extensively about this elsewhere on the forum in my own thread on my investment portfolio. At some point, I may use Fidelity Go (robots) to run my Fidelity portfolio. The third major piece of my portfolio is with an independent broker.

So I think financial advice to be vital. Know my recent decision will not be agreed with by many here but something I have wanted for a very long time. Thought long and hard about Merriman 11-12 years ago but their all-in costs were 1.34%. To get a comprehensive service for 0.90% seemed like a relative bargain. I have wanted a partner to work with for a long time.
I have read with interest your many thoughtful posts, and I find it interesting that you have made this decision. I do think it's relatively easier to create a broad, diversified portfolio than it is to identify the ways to "optimize' income while protecting assets at the same time. For me the complexity comes in when you talk about Roth conversions, tax rates, how to plan for surviving spouse, etc.: I'm 63 and will probably retire some time next year, so I'm right in the middle of all this Some on this forum seem to have found a way through a combination of their own knowledge and various tools and calculators to do it themselves; I keep thinking I know a little but I need someone looking over my shoulder from time to time. to see if I'm missing something. I'm leaning towards periodic check-ins with a fee-based planner.
Probably the best thing is periodic check-ins with a fee-based planner. Advice is best purchased by the hour.

I have been at this mutual fund company since 1984, my portfolio there grew as the firm grew. I have not quite 1/3 of my retirement portfolio there, my all-in costs between their active funds in the mutual fund IRA and index funds at their Brokerage IRA was about 0.75%. Moving my active funds over to their Private Client program didn't cost me that much more, I had my funds invested in similar manner to their One Choice Moderate fund which has an expense ratio of 0.90. Their One Choice Conservative Fund has an expense ratio of 0.81%. My guess is that I might be paying seven or eight more basis points for the Private Client Group. As I said, their all-in fee is 0.90%.

So it was like I was already there and chose an option that was a bit more expensive. It wasn't like I moved funds from Mutual Fund Company A to Mutual Fund Company B. So let's see what they deliver. I have dealt with these folks for 35 years now, I know this company and their funds very well. What is applicable to me is not necessarily applicable to others.

My advice to you, if you feel you need financial advice, is to pay for it by the hour. Finding the right firm for you isn't easy. Have heard good things about the Garrett Financial Planning Network, a fellow I worked for a few months was part of the network. The fellow used index funds and had some on line tools to work with as well as the network's resources. He charged 0.75% Assets Under Management for those clients who wanted a portfolio management service. Don't know what his hourly rate was for financial planning.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 5:32 pm
by abuss368
nedsaid wrote:
Wed Aug 14, 2019 4:57 pm
abuss368 wrote:
Wed Aug 14, 2019 2:06 pm
nedsaid wrote:
Wed Aug 14, 2019 1:10 pm

What I really wanted was the comprehensive financial and retirement planning. I have run my own portfolios for many years but may want to turn the keys over completely someday, the portfolio management is a test drive.
Agreed. I finally realized that if anything happened to me it was best for my spouse to simply call Vanguard and enroll in the PAS service they offer. I do not believe this is recognized or discussed as much as it should be.
I read all the threads on the Vanguard Personal Advisory Service. Would be interested to know how comprehensive their service is. From what I understand, they take a look at your financial picture and base portfolio construction on that. Don't know how far they go into retirement planning, such things as when to start taking Social Security.
I believe they recommend domestic and international stocks and also bonds for a four fund portfolio.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 5:42 pm
by baconavocado
"many investors operate small "side" portfolios that consist of individual stocks. Such portfolios are usually ripe for the cutting when I do my Portfolio Makeovers each year. They often duplicate exposures found elsewhere in the portfolio, adding more complexity and risk than they improve the portfolio."

Getting rid of my side portfolio is on my to-do list.

Thanks for this reminder Taylor.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 5:46 pm
by Silence Dogood
Thanks for sharing, Taylor! Another important reminder about the benefits of simplicity.

My portfolio is very simple: 100% Vanguard Target Retirement 2055 (VFFVX).

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 7:00 pm
by abuss368
cashboy wrote:
Wed Aug 14, 2019 2:41 pm
Taylor,

thanks for posting this.

After reading many of your posts on the subject, and many hours of my own research and validation, my retirement portfolio is now simple - I am BH 3 fund all the way.

I find that another benefit of a simple BH 3 fund portfolio, in addition to how well it performs, is that it is easy for my wife to understand.
The Three Fund Portfolio is an excellent choice! Many benefits and I would encourage anyone to read The Bogleheads Guide to the Three Fund Portfolio.

Keep investing simple!

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 7:49 pm
by abuss368
baconavocado wrote:
Wed Aug 14, 2019 5:42 pm
"many investors operate small "side" portfolios that consist of individual stocks. Such portfolios are usually ripe for the cutting when I do my Portfolio Makeovers each year. They often duplicate exposures found elsewhere in the portfolio, adding more complexity and risk than they improve the portfolio."

Getting rid of my side portfolio is on my to-do list.

Thanks for this reminder Taylor.
We removed our stock portfolio a long time ago and now simply invest in a few index funds. It was the best financial decision we ever made.

Thanks Mr. Bogle!

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 7:51 pm
by nedsaid
abuss368 wrote:
Wed Aug 14, 2019 5:32 pm
nedsaid wrote:
Wed Aug 14, 2019 4:57 pm
abuss368 wrote:
Wed Aug 14, 2019 2:06 pm
nedsaid wrote:
Wed Aug 14, 2019 1:10 pm

What I really wanted was the comprehensive financial and retirement planning. I have run my own portfolios for many years but may want to turn the keys over completely someday, the portfolio management is a test drive.
Agreed. I finally realized that if anything happened to me it was best for my spouse to simply call Vanguard and enroll in the PAS service they offer. I do not believe this is recognized or discussed as much as it should be.
I read all the threads on the Vanguard Personal Advisory Service. Would be interested to know how comprehensive their service is. From what I understand, they take a look at your financial picture and base portfolio construction on that. Don't know how far they go into retirement planning, such things as when to start taking Social Security.
I believe they recommend domestic and international stocks and also bonds for a four fund portfolio.
I have seen six fund portfolios, maybe as many as eight funds, memory gets a little foggy, recommended by VPAS. Usually, they are 4-6 funds. The additional funds are usually on the bond side.

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 8:27 pm
by abuss368
nedsaid wrote:
Wed Aug 14, 2019 7:51 pm
abuss368 wrote:
Wed Aug 14, 2019 5:32 pm
nedsaid wrote:
Wed Aug 14, 2019 4:57 pm
abuss368 wrote:
Wed Aug 14, 2019 2:06 pm
nedsaid wrote:
Wed Aug 14, 2019 1:10 pm

What I really wanted was the comprehensive financial and retirement planning. I have run my own portfolios for many years but may want to turn the keys over completely someday, the portfolio management is a test drive.
Agreed. I finally realized that if anything happened to me it was best for my spouse to simply call Vanguard and enroll in the PAS service they offer. I do not believe this is recognized or discussed as much as it should be.
I read all the threads on the Vanguard Personal Advisory Service. Would be interested to know how comprehensive their service is. From what I understand, they take a look at your financial picture and base portfolio construction on that. Don't know how far they go into retirement planning, such things as when to start taking Social Security.
I believe they recommend domestic and international stocks and also bonds for a four fund portfolio.
I have seen six fund portfolios, maybe as many as eight funds, memory gets a little foggy, recommended by VPAS. Usually, they are 4-6 funds. The additional funds are usually on the bond side.
Agreed. Typically US and International stocks and US and International bonds. Maybe a couple more bond funds (which I not sure why).

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 10:08 pm
by edgeagg
Well, Taylor. This has nothing to do with simplicity or the 3 fund portfolio, but congratulations for being just 5 years away from a centurion and having all of your faculties intact!!

All the very best, and thanks for your service to this community!
ea

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 10:58 pm
by Taylor Larimore
edgeagg wrote:
Wed Aug 14, 2019 10:08 pm
Congratulations for being just 5 years away from a centurion and having all of your faculties intact!!
edgeagg:

Thank you for your kind words.

Some might disagree with you about having my "faculties intact." :happy

Best wishes
Taylor

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Wed Aug 14, 2019 11:00 pm
by abuss368
Taylor Larimore wrote:
Wed Aug 14, 2019 10:58 pm
edgeagg wrote:
Wed Aug 14, 2019 10:08 pm
Congratulations for being just 5 years away from a centurion and having all of your faculties intact!!
edgeagg:

Thank you for your kind words.

Some might disagree with you about having my "faculties intact." :happy

Best wishes
Taylor
:beer

Re: "Retirement Planning Is Complicated. Your Retirement Portfolio Shouldn't Be"

Posted: Thu Aug 15, 2019 8:26 am
by SGM
I am self educated regarding retirement planning and read at least 30 books about financial and retirement planning over the last 15 years. Major decisions have been made including delaying my SS until 70, setting up non-portfolio income streams and doing Roth conversions after retiring and before taking SS. I have also planned for additional social, physical and creative activities to fill my retirement days.

I have recently tossed a lot of old books. I have kept a few around including Jane Bryant Quinn's book on making your funds last through retirement. My decisions are in line with a lot of her recommendations and explanations. Kotlikoff's book on SS confirmed what I was already planning. James Lange's book The Roth Revolution confirmed what I was doing with serial Roth conversions over several years. I am planning on a series of SPIAs over the next ten years. I don't think I could have received better advice from a paid consultant.

In the event of my demise or inability to manage finances in old age, I have discussed plans with DW and grown children including the possibility of using Vanguard's PAS for advice. One grown child has attended the national BH meeting in Phillie and may be prepared to take over a lot of financial activities.