Ray Lucia's Buckets of Money - Part2

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PreRetiree2
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Ray Lucia's Buckets of Money - Part2

Post by PreRetiree2 »

Dear Guys,
I had read two good books on how to withdraw money from your retirement funds - Ray Lucia's Buckets of Money and The Grangaard strategy by Paul Grangaard. Last weekend I went to Ray Lucia's Symposium in San Diego and bought his new book "Ready, Set, Retire."

Well, I've read it and am surprised and disappointed by the following:

1) He suggests 20% of the stock bucket #3to be in real estate of which 5% is in REITs and 15% in nontradeable REITS ...yes, 15% in stuff that can't be sold for 10 -15 years!

2) He wants the rest of your stock portfolio to have 3 "managers":
- 1) an active "oversight manager" who over sees
-2) a "strategic" manager who oversees the taxable "passive" account
-3) a "strategic" manager who oversees the nontaxable portion who is somewhat aggressive whose mission is to achieve "alpha results" as opposed to "beta results" from the overall stock market.

Now, being a bit of a suspicous Bogglehead, I assume the following:
1) The oversight manager is an employee of Ray Lucia Inc.
2) They pick the strategic and tactical manager who get their "fees'
3) The fees of a nontradeable REIT are enormous and risky

In conclusion, to say that I like the buckets "concept" is true. To say I am stunned and disappointed by the "actual" buckets proposal is true..to my way of thinking, they are "laddering" fees by using so many managers and apalleld at the concept of nontradeable REITs ...again almost a "rip-off"...who gets the fees going into a non "saleable" entity.
What do you guys think?
For more details see Ray Lucia's "Ready, Set, Retire."
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stratton
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Post by stratton »

Considering the loads and 12b-1 fees from the non-traded REITs they ought to do everything for "free." He makes the loaded American Funds look cheap. Going to a financial planning firm that charges 1% assets under management (AUM) would be a vastly better deal if they put you in no-load funds and kept ER fees down.

Paul
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4th&Goal
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Re: Ray Lucia's Buckets of Money - Part2

Post by 4th&Goal »

PreRetiree2 wrote:
In conclusion, to say that I like the buckets "concept" is true. To say I am stunned and disappointed by the "actual" buckets proposal is true..to my way of thinking, they are "laddering" fees by using so many managers and apalleld at the concept of nontradeable REITs ...again almost a "rip-off"...who gets the fees going into a non "saleable" entity.
What do you guys think?
If you like the concept, use it. But use it with Boglehead investments. There are no hard and fast rules. Lucia suggests advisors for folks lacking knowledge, time, or interest in investments. I've read Lucia"s books and he offers his suggestions but also speaks highly of index funds and other concepts that Bogleheads like.
"I advise you to go on living solely to enrage those who are paying your annuities. It is the only pleasure I have left." | (Voltaire)
TheEthicalAdvisor
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Re: Ray Lucia's Buckets of Money - Part2

Post by TheEthicalAdvisor »

4th&Goal wrote:
PreRetiree2 wrote:
In conclusion, to say that I like the buckets "concept" is true. To say I am stunned and disappointed by the "actual" buckets proposal is true..to my way of thinking, they are "laddering" fees by using so many managers and apalleld at the concept of nontradeable REITs ...again almost a "rip-off"...who gets the fees going into a non "saleable" entity.
What do you guys think?
If you like the concept, use it. But use it with Boglehead investments. There are no hard and fast rules. Lucia suggests advisors for folks lacking knowledge, time, or interest in investments. I've read Lucia"s books and he offers his suggestions but also speaks highly of index funds and other concepts that Bogleheads like.
Agreed. I have read both books and really like the concepts of the bucketing method. That said, I would not use the annuities, non-traded REITS, and as many other loaded investments that he suggests for the strategies.

I have actually structured two portfolios for clients using this theory of short term, mid term, long term "bucketizing" but using Vanguard ETFs and other no-load, low cost mutual funds where that was the only choice for 401ks, 403bs, etc.
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4th&Goal
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Re: Ray Lucia's Buckets of Money - Part2

Post by 4th&Goal »

TheEthicalAdvisor wrote:
Agreed. I have read both books and really like the concepts of the bucketing method. That said, I would not use the annuities, non-traded REITS, and as many other loaded investments that he suggests for the strategies.
Many believe that Single Payment Immediate Annuities have a place in a retiree's asset allocation. Vanguard and TIAA-CREF offer some very good SPIAs. To rule them out completely, and in all cases, eliminates a choice that may well prevent a retiree from running out of money in old age.
"I advise you to go on living solely to enrage those who are paying your annuities. It is the only pleasure I have left." | (Voltaire)
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mlebuf
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Re: Ray Lucia's Buckets of Money - Part2

Post by mlebuf »

PreRetiree2 wrote: What do you guys think?
I like Ray Lucia's radio show and I follow a buckets strategy, although not his particular one. I think costs matter and I don't believe all those money managers are going to work for free.

Best wishes,
Michael
Best wishes, | Michael | | Invest your time actively and your money passively.
TheEthicalAdvisor
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Re: Ray Lucia's Buckets of Money - Part2

Post by TheEthicalAdvisor »

4th&Goal wrote:
TheEthicalAdvisor wrote:
Agreed. I have read both books and really like the concepts of the bucketing method. That said, I would not use the annuities, non-traded REITS, and as many other loaded investments that he suggests for the strategies.
Many believe that Single Payment Immediate Annuities have a place in a retiree's asset allocation. Vanguard and TIAA-CREF offer some very good SPIAs. To rule them out completely, and in all cases, eliminates a choice that may well prevent a retiree from running out of money in old age.
This is what I disagree with. There are very few times that make sense to have an annuity, in my opinion. This doesnt mean that I will totally rule them out in certain situations.
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4th&Goal
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Re: Ray Lucia's Buckets of Money - Part2

Post by 4th&Goal »

TheEthicalAdvisor wrote:
This is what I disagree with. There are very few times that make sense to have an annuity, in my opinion. This doesnt mean that I will totally rule them out in certain situations.
What are some of the "few times" that you believe SPIAs would "make sense to have an annuity?" I am talking about SPIAs, not variable annuities or equity indexed annuities.
"I advise you to go on living solely to enrage those who are paying your annuities. It is the only pleasure I have left." | (Voltaire)
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CyberBob
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Re: Ray Lucia's Buckets of Money - Part2

Post by CyberBob »

mlebuf wrote:I like Ray Lucia's radio show and I follow a buckets strategy, although not his particular one.
Would you perhaps expound on your strategy? :)
I too have always found a bucket-type strategy interesting. Although I prefer a 2-bucket allocation ala Armstrong, Sengupta, Grangaard, et al, rather than Lucia's 3 buckets.
Unfortunately, the one thing that always trips me up is that a bucket-type strategy assumes (as does many retirement withdrawal strategies) a fixed dollar withdrawal, which seems problematic to me.
Are you following a type of bucket system with a fixed dollar withdrawal, or something else? How's it working?

Bob
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tjg911
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Post by tjg911 »

i just read buckets of money about 2 weeks ago. i was not impressed.

while i don't remember all the negative stuff i was surprised at "need" for a or many advisors. sounds like a book written by an advisor! :shock:

i did not care for his investments suggestions and i think he made the whole thing way too difficult. a lot of assumptions about the time periods and how the markets will look at 7 and 14 years or whatever time frame you chose.

when i was done i thought, what a pos! i was really disappointed in the book and his philosophy. i will say that you can have 3 buckets like in his book but i prefer to see it as cash for 1 year expenses perhaps 2 years. then fixed income funds and equity funds. this is diversification 101 really. i'm not assigning money to a bucket for 7 or 14 years and just sitting on that. oh he talks about rebalancing and shifting money in the buckets to suit your needs but frankly it's just too much work. assign your % for fi and equities then decide on your funds or etfs. rebalance each year and draw income from your gainers as needed.

read retire at the pie shop at bob's website http://bobsfiles.home.att.net/WhatsNew.html . it's a lot easier and i can live with it better than the buckets of money rigamarole!

tom
"Anyone who bought stocks in mid-1929 and held onto them saw most of his or her adult life pass by before getting back to even." — Richard M. Salsman
bearcub
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Post by bearcub »

Vanguard is coming out with their managed payout funds soon.Fidelity already has their income replacementfunds in service.You may want to check these out also.
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mlebuf
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Post by mlebuf »

Hi Cyberbob,

Sorry I didn't see your question sooner. I use the Armstrong two bucket strategy with 7 years worth of withdrawals in bonds and cash and the balance of the rest in a widely diversified stock portfolio.

Best wishes,
Michael
Best wishes, | Michael | | Invest your time actively and your money passively.
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