Picking up off of this thread Financial Advisor

61 1/2, wife is 60. I plan to go out at 63 (1.5 years from now or sooner). We both have pensions and SS, huge E-fund, and 401k, Roth, Rollover IRA.
Met  with Fidelity today after they reviewed all of our documents. We are in good shape and should die at 92/94 with several million.

I am a novice at best with investing. The huge Fidelity package sent today shows they would change 0.88% for managing our assets. I am meeting next week with a local fiduciary used by many retiree's at our F500 company. Expect similar rate. Understanding asset allocation and location within each of the funds we have is overwhelming. Might be a case of "pay the man to get it done right".

Is the 0.88% in line?
Given my novice investment knowledge, should I pay the man?

Thanks,

Take your time!

There should be no rush.

One perspective should be find someone who has the heart of teacher not the heart of a salesman.

It’s a tough pill to swallow 0.88% and not really understand the strategy, what the plan is versus being paid to be educated.

The other concept is to look into “buckets” of your investments versus cash flow.
Meaning, what is your actual monthly income versus budget? Then on a 3 year scale too? Then how does that compare with tapping investments etc.

I’ve got a link around here somewhere.

At 65 we will have $10.5k/month I n guaranteed income.

Right now I’m in stocks and really nervous. Don’t want to let emotion guide my investing by I need to diversify now. And each account is different regarding taxes and risk.

I need to understand my asset location for each account and start there.

FYI, Vanguard charges .33  

Might want to give them a shot.

They will probably do an analysis and a starting plan for free for you.  

At least that is what they did for me, twice actually.

OP,,,,Look into splitting your money 50/50 by having one managed account and another self managed  but a mirror image of the first.  Net result is then 0.44% for mgt. Fees.
BTW,,,We left Fidelity decades ago and are FAR better off for it.

Here’s another point that should help contribute to your comfort level or seeing the picture:

Do you have a written spending plan (budget) on a monthly basis for 2024 then 2025 and 2026?

Part of the issue is if you don’t really need the stocks, have 3-5 years of cash flow or bonds, why sell stocks as those could be your long buckets of income or cash down the road.

First, I appreciate the input from you folks. I am an engineer and know repetition is key to understanding a complex subject...I'll keep at it.

We have a pretty solid budget and started putting that together in November of 2023. The advisor used that for making the plan we went through today.

I went back and read the email he sent post meeting. I'll admit, I was overwhelmed. After reading the below again, I think I'm capable of addressing my asset allocation. And then using them when discussing distribution strategies which we will not need for a few years. We have a very large e-fund as I listed above.

From Fidelity:

I sent out the proposal for two reasons. The first is the asset allocation recommendation (how much risk do we need to be taking) and two you can see how Fidelity could assist as far as risk management/ maintaining a portfolio.

Fidelity is actually recommending a 70/30 stock to bond based on your guaranteed income and need for the funds. That is something that can be adjusted if needed.

I have attached our Wealth Planning Overview (WPO). Like I mentioned I have lots of self-directed investors in my book who pick their own mutual funds, individual stocks, ETFs, Bonds, etc. They use myself for the retirement planning, AKA distribution strategies, tax strategies, efficiencies, risk management, roth conversions. They essentially use me at no cost. My goal and Fidelity’s goal is to help support our high net worth clients with providing and educating on resources to help them make better decisions and increase probability of success.

It sounds like the guy is at least being honest?  
The Fidelity guys will repeat what their computer tells them to say to you, that's not bad but you can do it yourself and avoid the fees like he said.  

The biggest benefit for me has been the "planning" aspect rather than the "investing" aspect.  If you can get that free from Fidelity I'd look into it.  
The guy I use licenses some fancy software that lets you input your personal and financial details and it spits out lots of handy information.  One of the more useful things for me has been a chart that shows what tax bracket you'll be in for the rest of your life.  This lets you plan for minimizing taxes - what retirement accounts to take distributions from when, when is the best time to do roth conversions, when to start your social security, etc.  
It also predicts your net worth for the rest of your life using historical market performance to bound the results, ie. it gives you results based on 5th and 95th percentile market performance over time as well as the average performance.  This lets you plan for your specific situation and what you want/need.  
The guy I use will also manage your money for you and he only charges 0.35%.  

I picked a wealth management/registered investment advisor.  A true fiduciary. The group has trust attorneys and a tax division.  If you don't need all of the income, you will still be paying taxes on it.  They will calculate your overhead and base your income on your plans for retirement.  You can always take more if you want, but you will probably want to limit your tax burden.  

I will be 58 soon and 58.5 at retirement in December.  Diversification may not be what you need.  You will have guaranteed income for life if you don't pick idiots to do your planning. Also, the rule of 55 is a thing, and you can start drawing on a qualified 401K immediately if you stop working. I see you mention a pension, so that may have you locked into a retirement date.   I am not waiting until my 60s, no way.  

My major goal wasn't diversifying, but was consolidating.  I had more IRAs, Etrade, I bonds, and various things than I could keep track of.  It was an absolute pain in the balls to get some of them transferred into the managed funds.  It took 6 months before the last one cleared.  A lot of these made it so hard to get the money moved, that it appeared they were trying to steal it from me.  I am damn glad the group had an entire team moving things.  


ETA: My current 401k is Fidelity.  I wouldn't want them managing my entire portfolio.  I would say it is less than 20% of my total.  

You are an engineer.  Go to the bogleheads forum and start learning- you can handle all this.  0.88% seems like a lot when you can get it cheaper at Vanguard.  Both places offer robo advisors as well,  not sure what they charge.  But the more you learn, the less you will worry about it, and the less you need to pay someone else to do it.  

If you consider the commonly recommended safe withdrawal rate of 4% per year, well if you hand 0.88% to an advisor, now you are down to 3.12% to spend, which is kind of significant.

70/30 may be ideal for you, it very much depends upon your spending needs compared to that 10.5 k/month income, and how much you want to spend of your nest egg.  60/40 to 80/20 is pretty common, so 70/30 is right there for someone probably getting most or all of their needed income from guaranteed sources.  

On bogleheads you can also lay out all the similar info you gave the advisor, and a lot of folks will give pretty good advice.

@tac556

Thanks for that. I'm still thinking about my next moves.
- Retirement date for real (still at about 1.5 years out)
- May want some help getting my accounts situated. 401k out of my company blanket and into Roth or IRA (rollovers)
- Minimizing my tax liability when I make moves

I'm thinking to accomplish this I (1) diversify now and am doing so, (2) find a fee based advisor to help with the above.

Meeting with one more advisor tomorrow. He comes recommended but as you wrote, If I can become informed, It will be more clear moving forward.

Appreciate everyone's input.

I am a few years ahead of you (engineer) but I am retired.  And while I have managed my own funds for several years by myself I am still learning something every week.

Think about this a minute.  Your next 20-30 years is based on your retirement funds you worked to earn over 20-35 years.  You SHOULD learn all you can over the next 6 months about investments and how what you invest in is affected by variables most likely out of your control.  Learn first then decide if you want an advisor or not.  You have plenty of time to take action.

Spend some time learning about risk profiles given your current situation and your future desires.  Personally there is NO way today I would have a 70/30 split with stocks/bonds.   I can't offer you the right profile as it is a personal decision.  But take some time to figure this out.  The biggest problem you will have that I still have is knowing all the tax advantages/disadvantages of numerous investments or movement of monies from/to accounts.  Of course each personal situation is unique.

For example one lightbulb that went off for me after I filled out my taxes this year was that I could earn 5%+ on treasuries and pay NO state income tax (5.75%).  Factoring that in made one investment decision pretty simple for me.  I invest heavily in my non-401k porfolios in short term treasuries instead of CD's.  I calculated the spread between a CD/Treasuries to make the investment equivalent (taxed vs not).  Once I knew that, I can decide which is the right investment.  Again using my non-401k accounts.  For my retirement accounts I take a different strategy.

I use Charles Schwab for all my investments as that is who I consolidated with.  Based on your total value of investments they offer advisors as well.  They also have a wealth of knowledge based tutorials and reports to learn about current markets/strategies and pre-defined portfolios to invest in.  Again as an example they offered a AI portfolio that I used to buy a number of stocks associated with AI.  It saved me hours or reseach.  And I could modify their predefined portfolio to my desires.  

I guess my long winded reply is study up first.  Its your hard earned money.  Then decide if you want an advisor but given better knowledge you can also ask better questions of this advisor.  To me the bottom line comes down to RISK.  How much risk do YOU want in your retirement portfolio.

Nothing wrong with 70/30 heavy on stocks if you will already have a comfortable guaranteed income coming in. Pick a few boring index mutual funds and bonds and forget the advisor. Rebalance once a year or just pick a balanced fund that will do that for you. If you begin to enjoy investing as a hobby you can place some side bets on individual stocks, crypto etc. with some play money you can afford to lose. Otherwise just KISS.

My early retirement will rely heavily on investment income since I will only have a smidgen of a pension but a decent chunk of savings/IRA so no swinging for the fences with risky stocks until I'm sure the bills are paid. I also have no direct heirs so at some point I will just say F it and start eating up the seed corn.  My goal is to tip my grave digger with my last $100.

I wouldn't but thats because ive been doing it my whole life,

all of my stuff is in Vanguard and individual stocks,

I retired and live off the dividends right now

its not hard to set up a vanguard account

Thanks again to all who have added some content. Right now I learning and working on my comfort zone for investing as I head towards retirement. Wife and I think that is 1.5 years out.
I did another online seminar today through Fidelity. Suprisingly, it was not a sales pitch. Rather, chocked full of great info. Info I have been told by advisors/managers but in a very concise straight forward way.

Seminar was called: Fundamentals of Retirement Income Planning. Anyone with Fidelity can attend quite a few offerings.

Onward I travel. Going to start a thread on RV's

70/30 at 61 with retirement a couple years away sounds super aggressive to me, but maybe thats right where you want to be.

It's tempting to go heavy on stocks right now given the S&P performance for the last year and into this year.

However it's time to be transitioning into bonds as you land the plane.

My biggest concern would be that Fidelity is running their models that get you to your 90's based off an allocation (% of stocks vs bonds coupled with various models for projected what-ifs in the market) that is too stock heavy. The danger is that stocks go down with a down market and all of a sudden they can't hit their projections and you run out of money early. However you said you die with millions so maybe thats a non issue for you and you're just a PE baller and your only problem is that you dont like driving over bridges with your $200k RV because you know how they're built.

As to the fraction of 1% that fidelity is charging, thats normal. Fractions of 1% for a portfolio thats more than a few million is about right. At this point I wouldn't fuss about fractions of 1% as much as I would pick the advisory firm that suits me best (Vanguard, Schwab, Fidelity)

Go over to youtube and watch a few hours of Azul Wells get you up to speed and you will feel more confidant.

OH!! And by the way!! CONGRATS!!!!! Sounds like you've done well and the landing strip is in front of you!!! You're most likely in the top 1% of Americans and you and your wife are still young enough to go RV and enjoy your money before everything goes completely to hell in this country. Go enjoy retirement and enjoy your wife in "the youth of your senior years"!!

OP has 10.5k a month in guaranteed income.  I wouldn’t be in bonds at all. I’d be 100% in equities, mostly dividend growth. He shouldn’t be in a position where he is forced to sell at a loss to cover living expenses.

Yeah not sure why anyone would be worried about 70/30 with 10.5k coming in monthly for fixed income for the average retirement.  Maybe a few folks didn’t catch that part…

But until expenses are compared you don’t know how it works out either, and how much they are going to tap their savings (or if they will just add to it each year instead).

Income vs expenses matters more than anything.  Figure that out, compare to your savings, and decide if the burn rate is acceptable or not…that is basically how you decide if you can retire yet.

OP, you seem like a pretty smart guy.  Managed accounts are the latest money manager scheme.  There was a time when you bought a particular investment and paid a commission when purchasing and selling.  If you held it for many years, you paid nothing while doing so.  Managers figured out charging an annual fee is much more profitable.  The sales pitch is they only make more if they grow your account.  A win for the both of you.   Do the math on withdrawing approximately 1% from your account, given the same return, over time.  It costs you dearly!

I retired over 15 years ago and decided to start educating myself on investments and financial planning.  What did I learn?  My very well-regarded financial guy sold me the company determined over allocated portfolio that constantly underperformed the S&P500 and he wasn't really that smart to begin with.

I'm a much savvier investor now than before.  If you're retired, you have the time to learn new skills.  Why not learn one that affects you and your family the most?  At a minimum, don't place all your eggs in one institution.  You can always transition slowly as you gain confidence in managing your finances yourself or just mimic what they are doing and save fees.

spend an evening building a spreadsheet so you can see yearly cashflow projections...that was eye opening for me.

A cell for playing what-if with inflation rate and a cell for playing what-if with average rate of return.

Figure out which income streams are fixed (will not grow over time) and which will.

Understand  your taxes.

Take your expected expenses and apply CPI to that also

The exercise itself was very eye opening to me, and I found that info from the financial planner I talked to was providing half-ass info.

Still appreciate the input.
Will be 62 in a few months. Here is what I have been doing the past few months:

- Did make a spreadsheet with several tabs including expenses (have to's), expenses (fun stuff), major home improvements to date (lots), projected large expenses (car), income from pension, SS by age. Did this for both wife and me.
- Learning about SS as in who takes it first and when. Want to avoid tax mistakes and maximize income.
- Learning about taxes in retirement. What money to take first (taxed vs. non-taxed, cash).
- Researching job options for 62+ years of age. I could consult in engineering at my current job but will most likely move on.
- Listed my hobbies and started to prioritize - big list.
- Learned that moving out of Oregon would be beneficial (no shit). But wife is anchored with family.

The biggest key to all of this is 1) write it down and 2) seek knowledge in what you're concerned about. Repetition is important to learning.

Not to beat a dead horse, but my planner guy pays for some fancy software that does the above (and more) for you.  It's web-based and you can log in anytime to make changes, get information, etc.  I'm late 40s and have found that the planning aspect is far more important than the investing aspect(assuming you're smart enough to know the differences between pre-tax/post tax/tax exempt accounts).

As an example, I'm hoping to quit working when our youngest kid finishes high school(I'll be 53 then).  Here is a couple screenshots of what the fancy software offers when I tell it my paycheck stops when I turn 53.  Significantly, the software has your "current" situation and lets you make a second "proposed" situation with whatever changes you specify and will show you a direct comparison of the two situations to help you make a decision.  ie. you could compare your finances for the rest of your life with the only difference being if you start SS at 70 vs 64.  

Is tells me to use the taxable investments that I have to make up living expenses until that cash is exhausted (at 64 years old), then to use tax deferred money until 70 when it says both of us start SS.  It says that after 70 my military retirement and our SS will cover our living expenses and my remaining retirement accounts shouldn't be needed.  Of course "garbage in, garbage out" applies, so accurately forecasting your expenses is critically important.  
Attached File


I input that me and the wife will live to 95, here is what tax bracket is says we will be in.  The dip in the tax bracket lines are when income taxes will increase due to the TCJA expiring for the 2026 tax year.  The software is updated anytime laws/rules change so that it is always up to date.
Attached File


Medicare is a mandatory expense, and it determines what your medicare premiums will be based on your taxable income and includes it in the planning.
Attached File


You likely are familiar with every individual planning factor, but seeing it all integrated together and presented in an easily understandable format was eye opening for me.  
It makes decisions much easier and is overall well worth the cost.  
I've committed to using this money guy for this year (I started in January), the 1-year cost was well worth it but I'm not yet sold on the benefit of paying him indefinitely.  

I think the part I am having the most trouble coming to terms with what realistic spending in retirement will look like.

All the advisors and models want to base retirement spending at 80% - 110% of pre-retirement income.  I just do not see how that fits for us.

For the last 8 years we have both maxed out 401K contributions (and makeup). We put two kids through college on the pay-as-we-go plan. We've bought two new and two used vehicles with cash. Paid for a too big wedding () last year. Moved into a new home in 2021 that we pumped a lot of cash into landscaping, fences, and other new home shit.  I build a shop in 2022.   All of that without touching retirement saving or borrowing.
Seems like 60% of current income is a better number for us.

I'd like to hear from folks that are several years into retirement and find out how plans for retirement spending have aligned with the real numbers.

It also seems like doing some roth conversions might be in order, but our advisor does not agree.

Certainly sounds like advisor level access to "NewRetirment".

I've got a few friends that swear by it for $120 a year.

Soon I'm going to run through the paid version then use the $120 verision.

Planning software

I'm in the same boat.

I've spent the last 10 years paying for travel volleyball/baseball for 3 kids, with another 2 years of baseball to go.
I spent over $200,000 in the last 12 months travelling to AUS/NZ/Canada/Greece, restoring a Mustang, and putting over $100k into a new office building.
My son and I eat out a lot becuse that's the way it goes sometimes when you are on the road 4 days a week from 7 AM until past dinnertime.
I've got a kid in grad school and a kid doing her undergrad that I'm supporting the little bit they need.
Additionally, my yearly pay could theoretically range between $45k and $500k, but the real range is $110k to $350k.

My spending in 20 years (now 47) will look almost nothing like what it does now. And I don't anticipate retiring until I approach/reach/pass 70 because I like my job, I own the joint, and I set my schedule. So why not continue to make money?
I know my wealth manager has her software and has made these calcs that show my accounts won't start to diminish until I turn 90-something. If I'm trusting her with my money I have to trust her software.

Everybody is in the same boat because nobody can see the future.  I’m not retired, but I’ve seen both extremes.  Even good planning can go to shit due to no fault of your own - witness how Obama care affected many people.  Think about 10 years from now when they cut SS benefits to 70% due to money shortfalls(or print money to make up the difference and then inflation screws you).  

My tentative plan keeps our expenses constant but assumes our house is paid off.  I picked that because it seems to be a pretty conservative guess for our situation.  

Another thing I’ve seen that is helpful is to be realistic and divide your retirement expenses into required and discretionary.  Some of the planning software tools will let you predict for reducing discretionary expenses when the market has down years.  For example, in 2022 you had to skip your annual vacation or delay your new car purchase because the market tanked.  Reducing withdrawals in down years has a large impact on making your retirement savings last and dramatically ups your probability of meeting your goals.  

I also understand now why many old people opt to purchase annuities or do other things for guaranteed income that aren’t the best investments going only off numbers.

It was pretty useful for back checking my pen and paper planning, and numerous other retirement calculators.  They have made some improvements over the last few years as well.  I have not renewed the paid subscription lately though, no real need at this point.  But it was well worth the money when I was looking at pulling the plug or not.

Numbers were pretty dang close to what I had figured out.  Couple problem areas came up though-
Higher than expected inflation starting in 2021…. As we all know.  COLA on the pension is nowhere close to keeping up in normal 3% inflation, much less the mess we have had the last few years…it made a serious dent in buying power.

Kid #1 still living at home due to housing prices being ridiculous at the moment.  And his fiancé moving in as well.  So instead of the planned 3 person expenses like groceries, we are at 5 people.  Stuff like that basically.  

Did a big Roth conversion as well, and it took some time for the paperwork to cycle thru, meanwhile the market rose a bunch and hit a new high, so it converted at the high end, market then dumped down for a year or so after that, pretty much just bad timing.  You want it to convert when the market is down, not up….oops.  Yay to more taxes…

And like I said later in my post...my annual income (which a lot software uses to estimate future spending) has a big range. So between those 2 factors it's hard to guess at what I'll be doing in 2 decades.

Any software that doesn't let you tell it what your expenses are is making so many assumptions as to be useless.  Maybe find different planning software that lets you specify what your expenses will be?  
The Fidelity planning software and whatever my money guy uses base future expenses on what you input.  Neither takes into account historical income or expenses.

What I'm saying is that most estimates are done around a certain of percentage of your current income/spending. If I don't have a steady income/expenditure to input the output is no good.
Even my wealth manager has said as much, and agrees we're shooting in the dark.

At least you have some COLA in your pension. I have a small pension from my factory job that ended in 99. It activates next year and what would have paid a few monthly bills in '99 money is now peanuts (in a smaller bag because of shrinkflation) in purchasing power. Fuck our spend happy gov, the Fed Reserve cabal, and my old company for not choosing a plan with a COLA feature.

I wasn't real happy with vanguard.  Unless you have 5mil plus the service isn't very personal and the plans are fairly generic.  I have been switching over to a real personal financial advisor who is a little more expensive but very hands on.  Vanguard also doesn't provide tax advice which is very important in my opinion.  My new advisor is also a tax advisor.

Granted in am early 40s and have a while yet.  Depending on where you are your strategy may need to include a tax balance.

Yeah, who would have thought that giving away everything for free would have consequences?  Worst economic decisions that I have seen in my lifetime was all what they did the last 4 years or so…

Sure does not take a lot to mess up decades worth of planning- just get politicians trying to buy votes.