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Just put all your money into Schwab and with 90% of your assets buy the SWPPX which is Schwab’s low cost S&P 500 index fund, and this way instead of paying 1.5% a year, you pay 0.02% a year, and pocket the savings for yourself. Absolutely no need to pay fees to any advisor. This is not my advice, but is Warren Buffets advice.
Edited to say that the Fidelity zero cost funds that a poster suggested above are the best funds to be in, even better than the Schwab fund I mentioned. No neeed for any advisor, just buy the Fido S&P 500 zero fee fund and spend the 1.5% you save every year to pamper yourself in retirement.
We got lucky with our 401K and it did well, but it is too aggressive for going into retirement. That much we know.
A 401k can be as aggressive or conservative as you want it to be. You could even have it in a money market with zero risk. That said, I'd agree with advice to move it to Fidelity or Schwab and put in low cost funds. I'd never give full control over to someone else. Seems to me the managers tend to get their most important investors out early when there's a bust while telling the rest to "ride it out".
A 401k can be as aggressive or conservative as you want it to be. You could even have it in a money market with zero risk. That said, I'd agree with advice to move it to Fidelity or Schwab and put in low cost funds. I'd never give full control over to someone else. Seems to me the managers tend to get their most important investors out early when there's a bust while telling the rest to "ride it out".
Yikes, the bolded funds you suggest would way more aggressive than I would want to be in retirement.
Depending on your risk tolerance, time horizon, liquidity needs, tax situation, and other factors (such as charitable goals and thoughts on leaving a legacy for your children, mistress, etc.), you could start equities at 40% at retirement, with a plan to possibly reduce your equity exposure over time.
Some individuals are comfortable starting at 50% or 60% (or more) equity exposure initially at retirement and then decrease over time.
You do want some equity exposure in retirement, otherwise inflation will take its toll over the decades.
An all fixed income portfolio at the beginning of retirement has really just traded one risk for another: trading market risk for inflation risk.
You really need to start with what your goals and objectives are and first have an Investment Policy Statement:
Yikes, the bolded funds you suggest would way more aggressive than I would want to be in retirement.
How are you defining and measuring "aggressive"? Many people are concerned about the volatility of the equity markets, but inflation is like a silent thief who slowly robs you of your purchasing power. Equity generally provides a better hedge and protection against inflation than other mass market investments.
Depending on your age, your retirement years may be longer than your working career. As we are seeing now, inflation is a major threat to retirees, since you have no salary getting adjusted periodically to reflect inflation.
You have to look at your investment allocation in context of all your assets and liabilities. Do not invest the 401(k) proceeds without regard to your total financial situation.
Are you or your spouse receiving a pension from an employer or is Social Security the only guaranteed monthly income you will have?
Do you have other assets and how are they invested?
Do you have any immediate or short term (within 3-5 years) call on your assets for a major expenditure?
Do you own real estate? If so, is it leveraged (meaning is there a mortgage)?
Last edited by Lillie767; 07-20-2022 at 11:14 AM..
At 65, I rolled over my 401K to a Vanguard IRA. I'm in a 50-50 mix of stocks/bonds. The funds were suggested to me by one of their financial advisors. I pay a quarterly fee (not much) to have the advice of a financial advisor. It used to be a specific guy, but I guess now that privilege only goes to their larger investors. So now I make an appointment on-line and get whoever I get, but they've all been great, and one of them prevented me from making a huge mistake. And it wasn't even what I had been calling about. They have a calculator that predicts the likelihood that your money will last until age 95. (I hope I don't live to 95!) And the FA rebalances it from time to time.
I don't have a huge IRA, but it's been seven years and I still have more than I started with, despite regular monthly distributions to supplement my SS and other withdrawals for large-ticket items. It went down quite a bit in the latest downturn, but for now it's still more than I started with (just barely) and of course I'm hoping it will come back.
I was able to keep my 401 when I retired. However I was under the impression that had I been forced to move it to an IRA I could simply roll it over with the same institute (is that the right word) and just keep it as it is. Is that not correct? I should probably know this before I fire off my review of the company on Indeed and burning a bridge.
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1) what institution is 401k with?
2) are there acceptable investment choices and fees in existing 401k?
3) why would you roll to IRA if 401k is adequate?
There are good reasons to remain in 401k, if it has adequate choices and fees. Liability risk shielding is much more robust in 401k than IRA. +/- depending on your risk exposure. Do you have a car? Do you have rental property? Do you have any sole proprietorship, or business partnerships?
Fidelity offers a lot of free services, including training and estate plan reviews (with an attorney who knows the laws of you domicile).
I have retained my 401k for 20 yrs after retirement.
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