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Old 01-14-2015, 03:21 AM
 
71,798 posts, read 71,896,917 times
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Quote:
Originally Posted by lurtsman View Post
You need a better adviser.

If he actually told you an average amount to expect annually, he wouldn't pass ANY of the ethics tests for working in personal finance. That's a big red flag in the industry. Secondly, he should have conducted a risk tolerance assessment with you before investing a single cent to ensure that you signed off on knowing the range of deviations that could occur in your money.

I'm a financial analyst, I know this industry extremely well. The variations you saw in your portfolio were probably very normal short term bumps. However, you should have someone that is doing a better job of explaining those things and listening to your needs.

The most efficient way for educated investors is usually through index funds, but casual investors will panic and sell low and then buy high because they don't have the knowledge base necessary to remain calm. The proper investing portfolio for you would involve a few indexes, but I won't prepare it. I don't do individual financial advice. I am paid to do portfolio analysis and individual company analysis. Since I don't desire your business, I have no vested interest in your choice. However, the things you told me about your adviser are things that would cause me great concern if I were to hear them from a family member.
I agree. any advisor worth anything in the 2nd half of the game knows average returns do not mean a thing at all when spending down. the fact he told the op she should see a 5% average return is meaningless.

when spending down average returns do not exist. the measure that determines outcomes when spending down is sequence of returns .

the exact same average returns can span more than a decade of time difference in how long that money will last just based on the order those gains and losses come in.
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Old 01-14-2015, 03:45 AM
 
Location: Grove City, Ohio
10,138 posts, read 12,402,575 times
Reputation: 13987
Quote:
Originally Posted by volosong View Post
Just want to mention that even though you live in a state that does not tax SS income, the federal government still does. Something to keep in mind for planning purposes.
For a small few there will be some but for most of us I believe it will be tax free.

Federal income tax on social security (Can anyone show me where I am wrong?)

I hope I am right because if I am we're 100% set to start collecting in three more years!

If I can make it.

I have my moments. Getting grumpy in my old age having to deal with the younger set really lights up my fire sometimes. As I have to remind the little smart asses sometimes "Your quickness of mind and youthful agility is no match for my experience in the ways of treachery."
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Old 01-14-2015, 03:51 AM
 
71,798 posts, read 71,896,917 times
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the taxing off social security is a horrible cycle because you have two moving targets.

the higher the modified adjusted income (magi) the more ss gets taxed and the more ss that gets taxed the higher the magi and the more ss gets taxed ,and we go round and round.

as Michael showed in his examples :

the net result of these formulas is that while 50% of Social Security benefits are being phased in, the marginal tax rate is essentially boosted by 50%, from 15% to 22.5%. For those whose income exceeds the upper threshold, the marginal tax rate is boosted by extra 85%, from 15% to 27.75%! This essentially results in a tax bracket "bubble" that occurs as Social Security benefits are being phased in, until the maximum phase-in is reached and the client's tax rate returns his/her normal tax bracket again.
For individual clients, the effect can be even more severe, because the taxation of Social Security benefits potentially overlaps not just the 15% tax bracket, but the 25% tax bracket (which starts at "only" $36,250 for individuals). As a result, individual clients face a potential tax rate boost from 25% to 46.25%!


Michael kitces looked at this . excellent explanation .

https://www.kitces.com/blog/the-taxa...rate-increase/
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Old 01-14-2015, 03:59 AM
 
Location: Grove City, Ohio
10,138 posts, read 12,402,575 times
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Quote:
Originally Posted by mathjak107 View Post
the taxing off social security is a horrible cycle because you have two moving targets.

the higher the modified adjusted income (magi) the more ss gets taxed and the more ss that gets taxed the higher the magi and the more ss gets taxed ,and we go round and round.

Michael kitces looked at this . excellent explanation .

https://www.kitces.com/blog/the-taxa...rate-increase/
Excellent!

For a while I was toying with the idea of maybe start collecting at age 66 while continuing to work full time as I am.

If I had done that our combined social security would have been around $3,400/month but that amount added to a full time income really socks it to you in the pocket book. I was going to take the $3,400 and bank it every month... in four years we'd have money but over that four years taxes would take a good chunk of the social security as well.

Another reason not to collect until I am done working or age 70 when I got to take it anyway.
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Old 01-14-2015, 05:53 AM
 
Location: Ocean Ridge
154 posts, read 314,461 times
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Its a hard thing as a young person as said the market is a long term thing, you put in and hold the returns if placed right can give you a better return than under the mattress or same thing the bank, let me list several ideas IMO safest savings bond set return, next you could get into a dividend paying stock with a modest return on investment, I have had good luck thru investments with Edward Jones, for informative ideas but trades are expensive but they have to make their money! Lastly a fund that has stayed consistent Vanguard has treated some well,
I must say retirement is a scary thing these days for some folks as we have the biggest generation coming into the pipe line with NO retirement savings so its going to get real interesting! I am no way a financial planer please use any advice on line with common sense, Good Luck
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Old 01-14-2015, 06:44 AM
 
753 posts, read 707,256 times
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Quote:
Originally Posted by RVD90277 View Post
A few things:

1) Re-evaluate the financial advisor. You are obviously very risk averse and he should have taken that into consideration when investing your funds. You are ok with gaining 5% when the market is gaining 15% but you are not ok with losing 10% when the market loses 10% so he should have you mostly in fixed income and only some equities. I'll bet if he had stuck you into 80% vanguard total bond market and 20% vanguard total stock market, you would have come out ahead and something like this is probably more aligned with your goals. Heck, if you have enough capital where minimal growth is all you need, an inflation protected security (vanguard tips) is probably good enough as well. I'll also bet that he's taking a lot of fees and buying a lot of dubious and high cost funds.

However, if it does make you feel better you don't have to do everything DIY. It isn't hard but if you're not comfortable with it, don't do it. Find a good fee-only advisor who is part of NAPFA and interview a few of them.

2) An annuity (as others have mentioned) is also a good idea here since it's guaranteed income that you will be getting.

3) Don't trust anyone that comes referred to by friends or family who work at a big firm (especially firms such as Edward Jones, LPL, etc.)

I might add for tip #3, that also goes for Insurance Co's that sell the annuities. Licensed insurance agents sell annuities- MetLife, New York Life etc. Let the fee only planner find them for you, don't get it directly from an insurance agent- that is their gravy train and they get nice tidy commission off it.

Last edited by mamasplace; 01-14-2015 at 06:46 AM.. Reason: explanation
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Old 01-14-2015, 06:50 AM
 
71,798 posts, read 71,896,917 times
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I will add one further. stay away from any annuity other than immediate annuities which are generally bought direct like buying a cd and not sold by planners.

immediateannuity.com is a good place to shop.
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Old 01-14-2015, 07:40 AM
 
2,181 posts, read 2,142,427 times
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If you lost money in the stock market over the last 6 months, you need to find a new money manager to work with.
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Old 01-14-2015, 09:10 AM
 
2,429 posts, read 3,228,824 times
Reputation: 3330
Quote:
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.
Somehow I think Warren Buffet's wife would have been OK....regardless.
(She's passed away though)
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Old 01-14-2015, 09:28 AM
 
29,814 posts, read 34,900,894 times
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Food for thought on Social Security taxation. The federal standard for taxing SS applies the same across the states. However the level of SS benefits varies from state to state. Consequently a high income state like Maryland is going to have a higher percentage of SS recipients paying SS taxes especially when combined with a higher percentage of employers offering pensions and 401/403 plans. Our perceptions of what is normal are probably skewed by where we lived and worked.
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