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I think there’s a misconception that once you hit 60 (and beyond) it’s time to kick back, put your feet up, grab a beer and relax. That’s not always the case.
For most people, their 60’s are a time where they experience a tremendous amount of change which takes some getting used to.
At this point in their lives, most Americans are nearing full retirement age after having worked the majority of their adult lives. Many of the daily routines that they’ve grown accustom to are about to change, big time.
Out with the old, in with the new
Their kids are probably all grown up and out of the house, the mortgage is paid off (or nearly paid off) and pretty soon you won’t have to crawl out of bed, slap the alarm clock and head off to work any longer.
Yes my friend, it’s time to start preparing to cross over and make the leap from pre-retirement to bonified retiree. If you’ve planned for retirement most of your working life, then transitioning into retirement starting in your 60’s should be relatively smooth.
Every time I’m on the internet or watching TV I hear much of the same investment rhetoric over and over and over.
I’ve written about this kind of thing in the past, in a post titled CNBC and Me. Well, in this post I’d like to peek into the retirement arena, where the needle seems to be stuck on repeat; specifically the Roth vs Traditional IRA debate.
When it comes to IRA planning, commentators are always delivering the same soggy, watered down message, often speaking out of both sides of their mouth. Here’s a good example of something you might hear…
‘When it comes to picking an IRA, sometimes investing in a Roth IRA makes the most sense, and sometimes investing in a traditional IRA makes the most sense.’
Want some visual evidence? Please take a minute to watch the above video produced by Vanguard and you’ll see what I’m talking about.
Hold on a moment while I wipe the cobwebs off of from my computer keyboard, it’s been a while since I sat down to write a post. I hope you haven’t forgotten about me;)
Well it feels good to be back…
I would like to start off by wishing everyone a belated Happy New Year and all the best for 2008! I know I have high expectations for the new year and for this blog and hope you’ve set your own personal goals and resolutions, as well.
Best Laid Plans of Mice and Men
If you’ve read my About Me page you may have noticed that I said I was planning a trip to South America sometime late in 2007, well sadly those plans were scrapped (for the time being).
In Tuesday’s post I took a closer look at target retirement funds; many GenXer’s are now offered these kind of investments in company sponsored retirement plans. Of course, you can always choose to buy one for yourself in a traditional or Roth IRA, as well.
Before blindly matching up your projected retirement date with a target fund, I think it’s important to consider your personal tolerance for risk; then you can jump in head first.
Some of you may already know your tolerance for investment risk, based on past experience. If you’ve been invested over the past 7 years, you’ve seen a lot of market swings and probably have a very good idea of what you can and can not handle.
I’ve been writing alot about passive investing (which anyone can do) and detailing pretty much how I run my business. One may think I’m giving away all the secrets, giving away the shop.
Why would I want to do something like that? If you show clients how its done then clients won’t need you, right? If you’re taking a passive investment approach then what am I paying you to do? to choose investments that I can pick myself?
There certainly is surface risk here but there’s risk in everything. It also bears noting that anyone can piece most of this stuff together, from various media sources, but I hope what will differentiate this site is the fact that you can find a lot of it in one place, one stop shopping:)
In my last post, I ended by talking about relative performance. I kinda wanted to clarify a few things since I may not have been as clear as I wanted to be.
The investment portfolios I construct for client’s are (almost always) directly related to what the financial plan tells me we need to return, in order to achieve the client’s stated goals. Each situation is customizable and unique.
In the last post, I mentioned 8.9% as the hypothetical return needed. Typically, based on historical returns and plan assumptions, I will construct a portfolio of stocks, bonds, managed futures, etc. that will put us slightly above that 8.9% number.
This next calculator is pretty cool. Very similar, in fact, to alot of the retirement “What If” scenarios that you can model for clients with more in depth planning software. What you are actually seeing, with these calculators, is a stripped down version of the more formal financial planning software.
These calculators are the engines that make all that fancy software go. Without further ado, lets dive into this ‘Nestegg’ …
Retirement Nestegg Calculator
One thing you must be aware of when using this calculator is its hyper sensitivity. With many of these calculators, there are often only one or two input fields that can dramatically impact the results. With this particular calculator, if you change just about any field, you will see big swings in the future results.
Ok as promised, I’m going to use the fear card to ’scare you straight’ on the issue of social security… are you shaking yet?
‘Scared Straight’ was an Academy Award winning documentary, filmed in 1978 by Arnold Shapiro, that deals with taking troubled teens to Rahway State Prison and introducing them to prison ‘lifers’. The hardened prisoners scare the hell out of the kids, talking about the harsh realities of what happens on the inside. In the end, the kids realize they don’t want anything to do with life in jail… effectively scaring them straight.
In the ‘About’ widget, that appears on the right hand side of every page, it reads, ‘There’s a heavy focus on all things Roth IRA, with special attention given to the upcoming 2010 Roth conversion event.
Now I know some of you have definitely heard of the Roth IRA and maybe even a few of you know what a Roth Conversion is, but I’m pretty sure nobody has heard of ‘Down Home’ financial planning. Well, I plan on changing that fact (pardon the pun).
I know you’re probably jonesing to know more about ‘Down Home’, but first a little background about ‘formal’ planning…
Often there’s not much transparency when it comes to letting clients know how advisors are compensated.
Advisors and brokers often dance around the issue and are hoping clients don’t ask them that question.
I know that was the last question I wanted to hear when I worked in the bank. It was one of the reasons I knew I had to get out of there and needed to switch to a planning and fee based business model.
(To be fair, these days, most banks offer fee based programs although I’d say it makes up a minority percentage of their business)
Cut and dry issue
These days, for me, talking compensation (generated from client asset management) is a very cut and dry issue. The overwhelming majority of my clients fall into one of two ‘fee based’ categories:
Ciaran McKeever is a CERTIFIED FINANCIAL PLANNER™ professional.
Chance Favors hopes to educate, encourage and empower those in their 30's and 40's to achieve financial independence. There's a heavy focus on all things Roth IRA and 401k, with special attention given to the upcoming 2010 Roth conversion event.
Get 'my two cents' on new finance articles from around the web by clicking on the two pennies above my head
I think there’s a misconception that once you hit 60 (and beyond) it’s time to kick back, put your feet up, grab a beer and relax. That’s not always the case.
Hold on a moment while I wipe the cobwebs off of from my computer keyboard, it’s been a while since I sat down to write a post. I hope you haven’t forgotten about me;)
In Tuesday’s post I took a 
I’ve been writing alot about passive investing (which anyone can do) and detailing pretty much how I run my business. One may think I’m giving away all the secrets, giving away the shop.
In my last post, I ended by talking about relative performance. I kinda wanted to clarify a few things since I may not have been as clear as I wanted to be.
This next calculator is pretty cool. Very similar, in fact, to alot of the retirement “What If” scenarios that you can model for clients with more in depth planning software. What you are actually seeing, with these calculators, is a stripped down version of the more formal financial planning software.
Ok as promised, I’m going to use the fear card to ’scare you straight’ on the issue of social security… are you shaking yet?
In the ‘About’ widget, that appears on the right hand side of every page, it reads, ‘There’s a heavy focus on all things Roth IRA, with special attention given to the upcoming 2010 Roth conversion event.
Often there’s not much transparency when it comes to letting clients know how advisors are compensated.
