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not even close . they only cover 80% of covered expenses, no prescriptions , you need a prescription plan through an insurer or medigap , no dental ,no glasses , no hearing aids, no long term care beyond some rehab time , no more than 120 days in a hospital in a year, huge donut hole for thousands on prescriptions.
fidelity calculated the typical couple age 65 will shell out around 220k over their retirement for what medicare does not cover.
you need either medigap insurance or advantage plan to cover some of it.
just medicare and a medigap plan can run 10-12k A YEAR for an f-plan for a couple in some areas . we are going with medicare , a drug plan through united American and a high deductible f-plan with a 2k deductible per person per year ..
Last edited by mathjak107; 03-31-2015 at 08:39 AM..
All this inflation hedging beyond the CPI rate is worthwhile if you can do it, but stocks aren't guaranteed to beat either inflation or bonds, especially with a starting S&P 500 level around 2100. The key to long-range planning is spending less than the maximum you could safely spend, so that there's a reserve.
Herbert Stein famously said that an economic trend that cannot continue forever, won't. That applies to health care costs rising at double the inflation rate forever. They won't. Still, $220K for lifetime medical care not covered by Medicare is not a lot of money - for a couple retiring at 65 and living to 90, that's only $4,400 a year per person - and I'd budget more than that, especially if you don't have long-term care insurance.
nothing is guaranteed but like nght follows day there are certain things that are far more plausable of happening than others. sure we all hear about how retirees can be wiped out in equities , but has it ever happened even in the worst of times ? hardley ever and depending who's data set you use maybe never , if they just held a diversified bunch of funds.
tips with negative interest rates , short term bonds with negative rates , cash with negative rates all make portfolio survival for a retiree today very difficult.
trying to draw more than 2% especially if first starting out is not a wise thing to consider at this stage with the above in my opinion..
on the other hand the worst of times has supported a 4% withdrawal rate with at least 50% in equities for every 30 year period over the last 146 years using shiller data.
which sounds likely to have a better outcome ?
you do not even need good average returns as 4% is already based on the worst of the worst times.
just look at the failures at 3% and especially 4% through out history not using equities especially going out more than 30 years.
historically nothing performed worse and failed more often than not using equities.
Last edited by mathjak107; 04-02-2015 at 03:14 AM..
when you think about it the real danger in retirement is not using enough equities , not using to much.
since all of life is about probability we really need to stack the odds of what was , what is and what stands a good chance on our side.
i think while in theory using bonds ,tips and annuities to fund non descretionary expenses souns good in practice today will fall way short of expectations.
I don't think you're diversified enough. It needs to be more complicated.
The more money you have, the more complex it needs to be. For every mil, you should have no fewer than 100 individual holdings.
Try adding some Overseas ETF's, and some REIT's. As the boomers age, hospitals will fill, so buy some REIT's that operate hospitals (gotta be clever here...)
Whatever you do, DO NOT try to operate this thing with a handful of mutual funds. That'd be too simple.
I don't think you're diversified enough. It needs to be more complicated.
The more money you have, the more complex it needs to be. For every mil, you should have no fewer than 100 individual holdings.
Try adding some Overseas ETF's, and some REIT's. As the boomers age, hospitals will fill, so buy some REIT's that operate hospitals (gotta be clever here...)
Whatever you do, DO NOT try to operate this thing with a handful of mutual funds. That'd be too simple.
This is horribly wrong. You don't need 100s of holdings period let alone hundreds per million
Last edited by Lowexpectations; 04-02-2015 at 06:38 AM..
>First of all, your investment strategy does not differ whether you have $200k or $2m or $5m or $10m
I disagree. If you have enough money to be set for the rest of your life at some acceptable standard of living, you should guarantee that standard of living through a mix of bonds, TIPS, annuities, etc. and invest the *rest* in risky assets such as equities. Most people with $10 million (!) would say they only need part of that for an acceptable standard of living if they never work again. The OP is young so he might think he needs more than $10 million but, as a general principle, investors should separate their investments into necessary, target, and aspirational amounts, and put the necessary amount in safe assets.
Fixed income securities, with the exception of TIPS, are not by any means riskless from a purchasing power standpoint, because even a seemingly modest increase in unexpected inflation can reduce the value over time.
and then in investment 102, they go through all of past performance to calculate regression models and then you build a portfolio based on them.
That's because it's easier than investment 103, which is building estimated future growth models on a per company and industry basis. Once you start doing that, it becomes a full time job.
Personally, I'd be very nervous about investing heavily into a new portfolio right now, as we could be in for a big correction. I'd probably be patient and just hold cash/CD's at least until June, in case the fed raises rates. In the meantime, dollar cost average by investing small amounts, maybe $20k per month, into conservative mutual funds, ETFs, short term bonds and stocks that you know well. Use trailing stops liberally. You can accelerate investments once the economic picture looks more stable, which might not be until 2016.
And I've read that 30-50 stocks is more than enough to be adequately diversified, regardless of the value of your holdings. Even that will require a good deal of time and effort to stay on top of.
Last edited by mark85; 04-02-2015 at 05:32 PM..
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