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