How much do you need for retirement

I concur. But people are penny-wise and pound-foolish. By building in the advisory as part of the asset management, you have an open line of communication to a skilled financial professional. You don't wonder, "what's this going to cost me?" before picking up that phone like you do with your attorney.

CPA's operate teh same way. They probably overcharge for what they do on an annual basis. But you've got a resource that knows your situation.

Most folks will NOT pay a subscription fee nor a by-the-hour fee. The truly rich will. Well, they already have the $. But I can't see your average 2-income, 1.9 child family shelling out $5,000 per year for financial advice. They'll rarely feel like they are getting their $'s worth.

And it isn't about time, it's about skill and knowledge. People don't pay you for your time, they pay you to know how to fix a problem.

Bob has a sore tooth. His best friend Bill is a dentist. So he goes in to talk to Bill.

"Bob, that tooth's gotta come out."

"What's that gonna cost me?"

"About $350."

"THREE-FIFTY! How long does it take???"

"Oh, I'll have you out of that chair in about 8 minutes flat and on your way home."

"EIGHT MINUTES!?!?!? I'm gonna pay you $350 for 8 minutes of your time? That's like $2500 per hour. Are you insane."

"Bob, Bob, calm down. If it's the hourly rate you're worried about, I can make it last as long as you want."
This....I call them skimmers. Which is what most low cost money managers are. If you want good management, you have to pay for it, and if you are paying for it, you should not be getting losses.

I have a guy now managing one of my wifes old 401k's about 100K in there. It gets managed like someone with no skills is managing it. Meaning........the market goes up, the fund goes up, the market tanks, the fund tanks. Yet he is collecting 1%. Which is a waste of our money. I can do that, actually, i can do better than that, and have in my 401K. I sold when I needed to sell at dow 36K, and rebought at dow 30K.....he did zilch for us to take profit when he should have, and buy back when he should have. In fact, a month ago, after 18 months using him, the fund was nearly back to what I gave it to him with. I should have called him and fired him.

He is biding his time keeping us on the hook, and hoping he will get all of my 401k and pension assets to manage, plus all of hers, which will be 7 figures when we retire. He will then collect a bigger 1%.

That's not going to happen, but by showing my wife this was the only way to prove how most of these guys operate.

Even my gun club, who has 7 figures in their account, is passively managed and the manager doesn't take profit when he should. The majority of these guys just want you to keep as much in the account as possible and skim their 1%. The more clients and money under "management" the more they make.
 
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No self respecting quality financial advisor will work with you at 22 unless you are a child or grandchild of a very good client. You're on your own, whether you are doing it yourself or using lesser-quality "advisors" until at least 40 or so. There is no money in advising someone at 22 or 25 or 32.
I respectfully disagree. At 22 don’t expect to get flown to Epstein Island but it’s good to build a relationship early on. Service will be limited, as are the fees, but it’s good to start early. The Epstein Island trips will come once you corner the FTT market and have lots of dough that make it worthwhile for them to spend time with you and your money.
 
Getting good financial advice means having a good relationship with someone you trust. Typical models include the brokerage house, which charges you by the transaction and as such has the incentive to churn your account. Paying a fee based on assets under management runs the risk of the advisor not doing much and collecting the fee whether your portfolio goes up or down. So you can always get scammed regardless of the fee structure. And of course you can invest yourself through eTrade or other platforms. Really comes down to your level of comfort.
 
Last financial planner I talked to wanted you to have at least $500K before they'd even talk to you. Even then you'd get a person just out of school to manage your account. No thanks.

My biggest problem in Retirement will be my prescriptions. I take a lot of stuff to keep my alive and I really need to pay attention to what those costs will be post retirement. Some form of Plan D is in my future for sure.
 
Most folks will NOT pay a subscription fee nor a by-the-hour fee. The truly rich will. Well, they already have the $. But I can't see your average 2-income, 1.9 child family shelling out $5,000 per year for financial advice. They'll rarely feel like they are getting their $'s worth.
The way you get middle class people to cough up big $$ is with charges like "one half percent of assets" or selling loaded funds.

You get the middle class family that has a $1M total retirement total between the couple paying a $5000 skim off the top that would never dream of writing out a $5000 check. In many cases, those with $1M+ assets would be better off paying $200 an hour for advice than the skim - but the service isn't offered that way.
 
Last financial planner I talked to wanted you to have at least $500K before they'd even talk to you. Even then you'd get a person just out of school to manage your account. No thanks.

My biggest problem in Retirement will be my prescriptions. I take a lot of stuff to keep my alive and I really need to pay attention to what those costs will be post retirement. Some form of Plan D is in my future for sure.
You are correct, I had one as a benefit from MIT/Fidelity until Obama and Liawatha screwed us with their anti-bank, fiduciary bill in 2014 I believe.
I called a few after that and they wouldn't even talk to you without at least 500K and their fees were high.
You will need a good Plan D for your scripts but who knows what happens 20/30 yrs from now.
 
Do not let car dealers talk to you about payment amounts.

Do not let financial planners talk to you about percentage fees without also expressing it as "total dollars given my account size", then you can ask "How many hours do you anticipate spending with my wife and I, plus working on our plan, for the $20,000 fee you just quoted us, and will we be getting highly personalized advice; your personal conclusions as a professional; or the financial guidance recommended by you firm?".
 
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I’ve been less than impressed with the last few I’ve spoken to at Fidelity. A couple of them pushed hard for me to move my money into their managed service, which has a percentage fee per balance. One of the other ones wanted me to sell my index 500 fund in a taxable account in order to buy index 500 ETF. Now ETFs do have some advantages, but taking a big tax hit to convert from a mutual fund to an ETF doesn’t seem to make any sense to me.
 
No self respecting quality financial advisor will work with you at 22 unless you are a child or grandchild of a very good client. You're on your own, whether you are doing it yourself or using lesser-quality "advisors" until at least 40 or so. There is no money in advising someone at 22 or 25 or 32.
I've had an investment advisor since I was 28.
 
Surprised bogleheads hasn't been mentioned.

Wiki start page:

Forum(heavily moderated).

Ask portfolio questions and add this info:

Me, I retired at 47 with ~1M in investments, minimal health care expenses due to insurance, a COLAed pension , and then got a bonus COLAed chunk from the VA because I'm broken as f***.

Half of those investments has gone into buying property/slooooooooowly building a house.
 
Having like 100K or more stashed aside in something like a Roth is good to have for vehicle and house projects. I think that is a minimum need when retiring. Leave it there don't touch it. When you need bigger amounts of cash.....then you can take it out tax free.

Its one of the goals Im working on now. We've not funded our Roth as much because of kids college and a wedding. Now its time to catch up. In fact, I almost think I should be putting in less for 401k and funding my Roth to my tax detriment. Because at least if I pay the taxes now...they are paid.
My acct. tells me that if your income in retirement will be lower than your working income now, you're better off with the pre-tax investments as you'll be in a lower tax bracket later than you are now.

I don't quite comprehend that. I need (like need) ~50K a year to keep breathing right now (homeowner) with 0 excess spending and self-sponsored health plan. With prices going like they are, the increased need for medical attention as we get older $$$, I can't see how I could do with less income in retirement. In 10 years, that 50k requirement will be 70K.

I'm evenly split between pre and post contributions - mainly cuz I don't understand enough to hop off the fence.
lol
 
A good friend of mine has more degrees than I can count, all from MIT. Including a Phd from MIT Sloan. Brilliant guy.

His advice to anyone that will listen about being successful at a job.

1. Show up.
2. Shut up.
3. Do 10% more than everyone else.

He said one can be wildly successful using that simple formula. And I think he's right.
That’s pretty much what my father told me when I got out of college Many decades ago!
 
One thing none of the articles seem to cover br bracket plugging. If you are > 59.5 but below the RMD age (70.5, I think) look at your tax bracket. If it is lower than it will be come RMD time, withdraw enough of the taxable savings to "plug the bracket" so you can pay the lower rate now. This is particularly applicable if you expect your RMD+SS*.85 to put you into a higher bracket than you are now. Many people will find they have to withdraw well in excess of 4% a year as they get older.
 
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My acct. tells me that if your income in retirement will be lower than your working income now, you're better off with the pre-tax investments as you'll be in a lower tax bracket later than you are now.
Your income post 70 1/2 once RMD kicks in , added to SS*.85 may very well be higher than your current working income. And it's not simply "higher" but "pushes you into a higher gap" - know those numbers to make an informed decision.
 
My acct. tells me that if your income in retirement will be lower than your working income now, you're better off with the pre-tax investments as you'll be in a lower tax bracket later than you are now.

Fidelity told me the same thing when I inquired about when was a good time to convert to a Roth. Said to wait until I retired when I’m in a much lower tax bracket. Didn’t realize that until they told me.
 
I’ve been less than impressed with the last few I’ve spoken to at Fidelity. A couple of them pushed hard for me to move my money into their managed service, which has a percentage fee per balance. One of the other ones wanted me to sell my index 500 fund in a taxable account in order to buy index 500 ETF. Now ETFs do have some advantages, but taking a big tax hit to convert from a mutual fund to an ETF doesn’t seem to make any sense to me.

Why not ask them? We know they won't tell you that it is because they make more money that way.

The Financial advisors at Fidelity don't do any investing. They are salespeople who then do what their investment people tell them to do.
 
The way you get middle class people to cough up big $$ is with charges like "one half percent of assets" or selling loaded funds.

You get the middle class family that has a $1M total retirement total between the couple paying a $5000 skim off the top that would never dream of writing out a $5000 check. In many cases, those with $1M+ assets would be better off paying $200 an hour for advice than the skim - but the service isn't offered that way.
In most cases they’d be better off putting their money in a low cost index fund. And paying a fee based advisor for specific questions not investment related.
 
One thing none of the articles seem to cover br bracket plugging. If you are > 59.5 but below the RMD age (70.5, I think) look at your tax bracket. If it is lower than it will be come RMD time, withdraw enough of the taxable savings to "plug the bracket" so you can pay the lower rate now. This is particularly applicable if you expect your RMD+SS*.85 to put you into a higher bracket than you are now. Many people will find they have to withdraw well in excess of 4% a year as they get older.

RMD age was bumped up to 72 in 2019 as part of Trump’s SECURES act legislation.

Another big change re IRAs is that upon death your non-spousal beneficiaries can no longer spread IRA distributions over their lives (stretch provision), but instead have 10 years within which to fully deplete the inherited IRA.

So, if you leave a decent size IRA to the kids, Uncle Sam is coming for that ass when they are forced to take sizable distributions over a few years. Higher marginal tax rates, Obamacare taxes, etc. and now here in MA you may even get impacted by that lovely new “millionaires” tax.
 
This....I call them skimmers. Which is what most low cost money managers are. If you want good management, you have to pay for it, and if you are paying for it, you should not be getting losses.

I have a guy now managing one of my wifes old 401k's about 100K in there. It gets managed like someone with no skills is managing it. Meaning........the market goes up, the fund goes up, the market tanks, the fund tanks. Yet he is collecting 1%. Which is a waste of our money. I can do that, actually, i can do better than that, and have in my 401K. I sold when I needed to sell at dow 36K, and rebought at dow 30K.....he did zilch for us to take profit when he should have, and buy back when he should have. In fact, a month ago, after 18 months using him, the fund was nearly back to what I gave it to him with. I should have called him and fired him.

He is biding his time keeping us on the hook, and hoping he will get all of my 401k and pension assets to manage, plus all of hers, which will be 7 figures when we retire. He will then collect a bigger 1%.

That's not going to happen, but by showing my wife this was the only way to prove how most of these guys operate.

Even my gun club, who has 7 figures in their account, is passively managed and the manager doesn't take profit when he should. The majority of these guys just want you to keep as much in the account as possible and skim their 1%. The more clients and money under "management" the more they make.
I can lose money on my own, lol. Hard pass on paying someone to do it for me. I'll just say we are way behind on saving for retirement. I wasn't thinking about it in my 20s and 30s, also had a divorce cost me some $$ (obviously), and a child later in life hasn't helped.
 
My acct. tells me that if your income in retirement will be lower than your working income now, you're better off with the pre-tax investments as you'll be in a lower tax bracket later than you are now.

I don't quite comprehend that. I need (like need) ~50K a year to keep breathing right now (homeowner) with 0 excess spending and self-sponsored health plan. With prices going like they are, the increased need for medical attention as we get older $$$, I can't see how I could do with less income in retirement. In 10 years, that 50k requirement will be 70K.

I'm evenly split between pre and post contributions - mainly cuz I don't understand enough to hop off the fence.
lol
While this is mostly true......I think when I need to buy a new car I'd rather take out 30K rather than take out 45K to get 30K.

This is just a personal thing......and I feel there are some advantages to just paying the taxes now.

Also........still being under 591/2.....everything being locked in my 401K......I don't like that, I like the Roth of still being able to invest, yet, should there be an emergency, or need for a large withdrawl, I"m not taking penalties or 401K loans. You can always withdraw principle from the Roth at any time as you paid the taxes on it already.

If there is one thing that hack financial advisor gave me it was that your money should be in separate "buckets" per say. There should always be a tax free bucket that you can grab from, it
just makes planning easier if your still working or your spouse is, to save you from a big tax event.
 
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Why not ask them? We know they won't tell you that it is because they make more money that way.

The Financial advisors at Fidelity don't do any investing. They are salespeople who then do what their investment people tell them to do.
I was warned about Fidelity and didn’t entertain the idea of even picking up the phone to talk to them.
 
Is there such a thing? 🤔 I'm still looking. :confused:
Yes.

If you do not get a Plan D when your are first eligible, or when a plan that qualifies as creditable coverage (like an employer plan, but not COBRA) ends, you will have a surcharge of 1% per month delay added to any Part D plan you sign up, and that penalty is permanent.
 
RMD age was bumped up to 72 in 2019 as part of Trump’s SECURES act legislation.

Another big change re IRAs is that upon death your non-spousal beneficiaries can no longer spread IRA distributions over their lives (stretch provision), but instead have 10 years within which to fully deplete the inherited IRA.

So, if you leave a decent size IRA to the kids, Uncle Sam is coming for that ass when they are forced to take sizable distributions over a few years. Higher marginal tax rates, Obamacare taxes, etc. and now here in MA you may even get impacted by that lovely new “millionaires” tax.
This.....one of the people at my work had to take distributions and though its good to have the money to take, it pushed them into another tax bracket.

But they were left the IRA from their parents and had to take them. Its a first world problem, but I'm sure a lot of that IRA went to taxes.

I told my MIL that has an IRA to deplete it when she retires and has less income, or gift it to my kids. Just don't leave us with a sizeable IRA because if we are still working, we will lose it in taxes.

Also one of the reasons never to stay in MA with the millionaire tax. As if there could be another reason not to live here.
 
But they were left the IRA from their parents and had to take them. Its a first world problem, but I'm sure a lot of that IRA went to taxes.
Under the old rules, an inherited IRA had to be liquidated over the life expectancy of the recipient, using the same RMD distribution table as for your own IRA, but the drawdown started the year after (or of, forget which) death, not when you reached 70.5.

Under the current rules, the drawdown starts immediately but it's over 10 years, not the inheritee's life expectancy.
 
Yes.

If you do not get a Plan D when your are first eligible, or when a plan that qualifies as creditable coverage (like an employer plan, but not COBRA) ends, you will have a surcharge of 1% per month delay added to any Part D plan you sign up, and that penalty is permanent.
Well, that's fine... but my problem is that none of the Part D plans I am eligible for in my location are any damn good. My current plan from Aetna Silverscript costs a lot and saves me nothing. I am far better off financially just using GoodRx or nothing at all at places such as Walmart... which is what I end up doing. I'd go broke otherwise.

I seem to be missing something about these Part D plans. It may be that my assortment of prescriptions just happen to fall into weird pricing categories that my plan happens not to like. But I don't think so. Something is fishy and I need to figure that out before next year. 🤔
 
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