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Old 01-12-2015, 06:14 PM
 
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I think the OP should do what Warren Buffett told his wife to do with her money for the rest of her life when he dies: Put 10% in T-bills and 90% into a low cost S&P 500 index fund. That's what I plan to do.
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Old 01-12-2015, 06:16 PM
 
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i hope she enjoys the wild roller coster ride. if warren did that to his wife and those t-bills didn't cover it all i think that would be a terrible thing for him to do to her. . i certainly would never think of leaving my wife in that kind of situation.

that is exactly the thing i spoke of above that men do to their wives and they are oblivious to it.
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Old 01-12-2015, 06:34 PM
 
Location: Mount Airy, Maryland
10,462 posts, read 5,930,681 times
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Every time I hear advice such as "get out of stocks, it's like going to Vegas" I cringe. Math as usually gave a great illustration as to why you need to stay in equities for at least a portion of your portfolio. OP is a 67 year old woman, her life expectancy is easily another 15-20 year. The only way to guarantee failure is to pull out of the market entirely
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Old 01-12-2015, 06:42 PM
 
Location: Durham, NC
2,024 posts, read 5,330,086 times
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OP: You are getting a lot of good advice here, and some of it is good.

The best suggestion is to find a fee-only planner. NOT a planner that wants a percentage of your assets to "manage your money." AND, not a planner that will do it "for free" when in reality they are getting commissions to steer you to high-expense/high-load (commission) funds like American Funds or to variable annuities.

While there is good info here, there is also a lot of it and it is likely overwhelming. In my opinion, the keys for you and your planner are:

1) park you in a mix of investments with some equity (stock), some bonds, some cash -- enough to continue growing your money over time, but while tamping down the volatility, or dips. However, dips are unavoidable in investing of any sort.

2) have a sustainable withdrawal rate. Mathjak posted some data that may be helpful. One approach is to have a sustainable withdrawal rate (SWR) of 3% of your starting year's assets as a withdrawal per year; as you saw, that is unlikely to ever "fail" (run out of money.) Alternatively, there is the method of drawing one-thirtieth per year; unlike the first method, this means you take out more in the successful years and less in the lean years.

3) consider the SPIA, or single premium immediate annuity, as a way of "locking in" some of your retirement income. One way to look at this: make a budget of what you expect to spend each year, compare it to what you earn through Social Security, pensions, etc., then price out what a SPIA would cost to cover the difference. Ideally it would take only a portion of your assets, NOT all of them.

I am assuming you ended up previously with a firm like Edward Jones or Ameriprise. Your instincts about being in low-cost index funds or the like is right on target. A fee-based planner can help you build a conservative plan. Then, you can work with a company like Fidelity, Charles Schwab or Vanguard to transfer what you have at your current company and then liquidate (sell) and reinvest it. One "benefit" of moving now is there shouldn't be any real capital gains to have to pay taxes on. On the other hand, if you paid a 5-6% load (commission) up-front, talk with your planner about whether there is any benefit to trying to earn it back. I'm guessing not.

You're in a place lots of people are and I feel for you trying to figure this out! Besides this community, the web site Bogleheads.org is an excellent place to learn more about this; although, as you state in the opening, you aren't sure that's something you want to do. Good luck whatever you decide.
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Old 01-12-2015, 06:45 PM
 
2,038 posts, read 1,948,524 times
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Quote:
Originally Posted by mathjak107 View Post
i hope she enjoys the wild roller coster ride. if warren did that to his wife and those t-bills didn't cover it all i think that would be a terrible thing for him to do to her. . i certainly would never think of leaving my wife in that kind of situation.

that is exactly the thing i spoke of above that men do to their wives and they are oblivious to it.
Yep that is what Warren advises his wife (actually his wife's trustee) to do:

What I advise here is essentially identical to certain instructions I’ve laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife’s benefit…My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors…

from Warren Buffett: 'Investing Advice For You--And My Wife' (And Other Quotes Of The Week) - Forbes

I think his idea is to just do that, pay no mind to fluctuations and have a happy life.
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Old 01-12-2015, 08:56 PM
 
Location: annandale, va & slidell, la
7,357 posts, read 3,042,841 times
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I think I reviewed the posts, but never saw how much money the OP has to live on for the next 20-years. This is crucial.
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Old 01-12-2015, 10:27 PM
 
6,448 posts, read 3,073,533 times
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WellShoneMoon

First, I'm sorry for your loss. My sister just lost her husband a couple of months ago and at 55 she is not even eligible for social security for at least 5 years, 12 if she wants to maximize her benefits. She is like you smart/but no desire to deal with financial stuff unless it is spending the money lol.

Still, she has made remarkable progress in the last month absorbing what she needs to know to ensure she can maintain her lifestyle the way she wants to off the money she has. She is still stressed by the idea of her income being subject to market changes, but it is becoming her new normal as is the way with all changes people face.

Keep in mind that feelings are not facts. If you have gotten this far in life without becoming a bag lady, you imo are never going to be one. The fact that you are here asking questions tells me that.

My first advice would be just breathe and take some time to sort out your options. If you don't like the options you chose the first time around, you can fix them. Then I would do the following if you have not already.

Ask people you trust for fee only certified financial planner referrals. In the meantime, get all your info together.

Prepare a budget.

Look at the difference between your budget and your social security. The difference is what you need from savings. Do you even know if you need to earn 5% avg per year? If you don't, you may have yourself in a panic for nothing. Of course, to know that for sure you need to also estimate and include state/federal taxes in your budget, estimate inflation increases to your budget each year as well as estimate future COLA to social security. Or have the planner do that.

Google asset allocation and read a few things that come up which are clear and in laymans terms. Its not really rocket science. This will tell you what people recommend you have allocated to stocks vs bonds vs cash at different ages and the risks associated. Google bonds if you don't understand how they work for a lay description.

Identify all your backup options should your investments not produce enough, take a hit or expenses climb too much. Can you downsize either now or some time in the future. Identify expenses you could cut back if you had to. Research reverse mortgages if you have a lot of equity in your home. Could you take in a roommate if you were in a bind. Do you have things you could sell. Sure you may not want to do any or all of these things, but just realizing that you have backup plans will make you less stressed.

Once you have all this info go to the planner and see what they tell you you should do. Make them explain it to you as many times as you need. Make them show you how they calculate things. Don't leave until you understand what you need to know. Think about what they tell you, come back here and ask questions, see if it makes sense to you.

Don't invest in things you don't understand. Make them explain it until you do understand. They are working for you, get your money's worth.

Its tough to learn new things when you have little interest in learning them. Especially, I have seen with my sister its hard for her to take in info sometimes when her brain is fogged with grief or stress so take your time even if you have to break things up in small segments. Don't overwhelm yourself or let other people overwhelm you.

Mastering even the basics will make you feel much more in control of your life and much less stressed even on days when the stock market goes down. Hang in there.
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Old 01-12-2015, 10:30 PM
 
Location: Texas
43,560 posts, read 52,678,186 times
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Don't spend it.
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Old 01-12-2015, 11:00 PM
 
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You can supplement it Do you have a craft or a talent? I know a group of artisans who make candles, soaps, baked goods, glass workers, and painters who supplement their income doing something they love. Social Security allows you to work up to a certain amount.
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Old 01-12-2015, 11:03 PM
eok
 
6,684 posts, read 3,171,794 times
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If you're full retirement age, I don't think there is any limit to how much money you can earn and still get your full SS benefits. But it's sometimes beneficial to put off getting your SS till age 70, to get more per month then, if you're earning plenty in the meantime.
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