We are blessed with sufficient assets (much of which is in pre-tax retirement a/c's) and income, but my goal is to sell our home and invest these funds in the next few years in order to ensure that my wife will have a much larger buffer of after tax assets to draw upon as needed. If I am the one who survives, I would have the same goal.
Sadly, the ineffable truth of most asset managers is, that in order to justify their fees, they have to be doing something. In my experience, however, it is sometimes better to do nothing. That said, what I don't understand is the lack of tax planning in what was apparently a taxable account. Realizing taxable gains is not, per se, bad, but large unanticipated taxable gains can have painful consequences in both the current and following tax years. At a minimum, this manager should have discussed the sale and possible tax consequences with the client before pressing the Sell button. That he didn't justifies his firing. Several comments have suggested self management as a solution. This might be a good idea IF someone has the time and inclination to learn a few of the basic skills of asset management. However, for a great many people, hiring someone to help manage their assets will always be necessary.
I've never understood the appeal of annuities, given their cost and returns. As one commenter noted, however, HD readers are probably not typical investors and likely count on being able to generate better investment returns than a more typical investor might. I find the suggestion of an annuity particular galling when the proposed annuitant may be asked to contribute all or significant portion of their investible funds to purchase the annuity. That said, for investors with sufficient wealth, it may make sense, especially where their other assets may business interests and/or illiquid.
The retirement experience is different for everyone. My goal was to spend more time on things I wanted to do (woodworking, reading, cycling, etc.) and as little time on things that looked and felt like work. My wife, on the other hand, gets twitchy when (in her judgement) I spend too much time watching TV, reading of otherwise engaged in what she considers a non-productive, leisure activity. Perhaps she'll be better prepared when its time to meet her maker, but I am not sure it will much matter.
I spent my career in the investment business and our fees were even higher. The promise was always "better performance," but better than what? As far as I could tell, our performance was average at best. So what exactly is a client paying for? Not, apparently, superior performance. A dedicated a/c exec? That's nice, but so what? Estate planning? Maybe, but they don't draft documents which you will have to pay someone else to do, no matter how much advice they give you. In the end, the answer seemed to be that the primary service we provided was to prevent our clients from making poor decisions, especially in times of market turmoil. Not a bad service, but one that can be easily duplicated for a lot less cost if we're willing to try.
I was lucky to have been able to buy my first home at age 25 and have only owned a total of three homes in the intervening 50 years. The value of my current home is beyond anything that I could have imagined at age 25. That said, the cost of a mortgage, taxes, insurance, repairs and improvements over the years has been considerable. In addition, I have lived through several major real estate resets and have seen the value of my homes swing wildly. So, is owning a home a good thing? Yes, but it depends. Over time owning a home makes sense, but the timing of a move can have a huge impact on the amount of equity you can move to a new home. Buying a fixer can also make sense, but only if you: a) can afford to pay for the repairs and improvements, or b) have the skills, tools, time and willingness to take on significant home repairs and improvements. My wife and I also were very conscious of never having a mortgage payment that we couldn't manage on one income, which has become more difficult to achieve with today's housing costs. All I can say is that owning a home has worked for me, but I am less certain of what my son's experience as a home owner will be over time. He rightly states that the relative cost of my first home was much lower than what he has had to face, which could only be accomplished with the help of the Bank of Mom and Dad. And, if he were to suddenly lose his job, the family bank might have to extend further aid in order to keep a roof over his head.
In my experience, #7 is the hardest for most families to manage. Among the reason given are: 1) I am afraid my children will take advantage of me if they know how much money we have, 2) My kids will do nothing productive if they know they can count on a fat inheritance, or 3) It's none of their business. I always counseled families to discuss their estate plans, especially if the plan included an uneven distribution. Talking about your plans ahead of time can diffuse a lot of hurt feelings and confusion after you are gone. It provides children with a chance to ask questions, but it also needs to be made clear that they don't have a vote in how your estate is divided.
Save early, save often, buy low cost index funds, don't speculate or day trade, and learn the basics of how to manage your own money. Don't spend foolishly on things, but don't skimp on vacations (experiences are forever and life in retirement can be shorter than you imagined).
When I retired 10 years, I kept all of my very expensive work shoes, thinking I would use them. What I found was that I seldom needed "good" shoes (or suits and ties, etc.), and when I did wear them, it became an increasingly painful experience. I haven't quite migrated to wide soled shoes with Velcro straps, but I am definitely committed to the newer "step-in" variety that are now available in many styles.
Comments
We are blessed with sufficient assets (much of which is in pre-tax retirement a/c's) and income, but my goal is to sell our home and invest these funds in the next few years in order to ensure that my wife will have a much larger buffer of after tax assets to draw upon as needed. If I am the one who survives, I would have the same goal.
Post: Have you planned survivor income for your spouse or someone dependent on you? RDQ
Link to comment from May 10, 2025
Yes. I raised two years + of cash to meet our MRD payments and have increased both my international exposure and holdings of US high yield bonds.
Post: Ch-Ch-Changes?
Link to comment from May 10, 2025
Sadly, the ineffable truth of most asset managers is, that in order to justify their fees, they have to be doing something. In my experience, however, it is sometimes better to do nothing. That said, what I don't understand is the lack of tax planning in what was apparently a taxable account. Realizing taxable gains is not, per se, bad, but large unanticipated taxable gains can have painful consequences in both the current and following tax years. At a minimum, this manager should have discussed the sale and possible tax consequences with the client before pressing the Sell button. That he didn't justifies his firing. Several comments have suggested self management as a solution. This might be a good idea IF someone has the time and inclination to learn a few of the basic skills of asset management. However, for a great many people, hiring someone to help manage their assets will always be necessary.
Post: Financial Advisor – NEVER AGAIN
Link to comment from May 10, 2025
I've never understood the appeal of annuities, given their cost and returns. As one commenter noted, however, HD readers are probably not typical investors and likely count on being able to generate better investment returns than a more typical investor might. I find the suggestion of an annuity particular galling when the proposed annuitant may be asked to contribute all or significant portion of their investible funds to purchase the annuity. That said, for investors with sufficient wealth, it may make sense, especially where their other assets may business interests and/or illiquid.
Post: RDQ Sorry folks, I still see annuities, including deferred annuities, as a viable option for creating steady retirement income.
Link to comment from April 26, 2025
The retirement experience is different for everyone. My goal was to spend more time on things I wanted to do (woodworking, reading, cycling, etc.) and as little time on things that looked and felt like work. My wife, on the other hand, gets twitchy when (in her judgement) I spend too much time watching TV, reading of otherwise engaged in what she considers a non-productive, leisure activity. Perhaps she'll be better prepared when its time to meet her maker, but I am not sure it will much matter.
Post: Tasting Retirement
Link to comment from April 26, 2025
I spent my career in the investment business and our fees were even higher. The promise was always "better performance," but better than what? As far as I could tell, our performance was average at best. So what exactly is a client paying for? Not, apparently, superior performance. A dedicated a/c exec? That's nice, but so what? Estate planning? Maybe, but they don't draft documents which you will have to pay someone else to do, no matter how much advice they give you. In the end, the answer seemed to be that the primary service we provided was to prevent our clients from making poor decisions, especially in times of market turmoil. Not a bad service, but one that can be easily duplicated for a lot less cost if we're willing to try.
Post: Fishing for Feedback
Link to comment from April 19, 2025
I was lucky to have been able to buy my first home at age 25 and have only owned a total of three homes in the intervening 50 years. The value of my current home is beyond anything that I could have imagined at age 25. That said, the cost of a mortgage, taxes, insurance, repairs and improvements over the years has been considerable. In addition, I have lived through several major real estate resets and have seen the value of my homes swing wildly. So, is owning a home a good thing? Yes, but it depends. Over time owning a home makes sense, but the timing of a move can have a huge impact on the amount of equity you can move to a new home. Buying a fixer can also make sense, but only if you: a) can afford to pay for the repairs and improvements, or b) have the skills, tools, time and willingness to take on significant home repairs and improvements. My wife and I also were very conscious of never having a mortgage payment that we couldn't manage on one income, which has become more difficult to achieve with today's housing costs. All I can say is that owning a home has worked for me, but I am less certain of what my son's experience as a home owner will be over time. He rightly states that the relative cost of my first home was much lower than what he has had to face, which could only be accomplished with the help of the Bank of Mom and Dad. And, if he were to suddenly lose his job, the family bank might have to extend further aid in order to keep a roof over his head.
Post: Should young people buy or rent?
Link to comment from April 12, 2025
In my experience, #7 is the hardest for most families to manage. Among the reason given are: 1) I am afraid my children will take advantage of me if they know how much money we have, 2) My kids will do nothing productive if they know they can count on a fat inheritance, or 3) It's none of their business. I always counseled families to discuss their estate plans, especially if the plan included an uneven distribution. Talking about your plans ahead of time can diffuse a lot of hurt feelings and confusion after you are gone. It provides children with a chance to ask questions, but it also needs to be made clear that they don't have a vote in how your estate is divided.
Post: Giving Advice
Link to comment from April 8, 2025
Save early, save often, buy low cost index funds, don't speculate or day trade, and learn the basics of how to manage your own money. Don't spend foolishly on things, but don't skimp on vacations (experiences are forever and life in retirement can be shorter than you imagined).
Post: Help Wanted
Link to comment from March 29, 2025
When I retired 10 years, I kept all of my very expensive work shoes, thinking I would use them. What I found was that I seldom needed "good" shoes (or suits and ties, etc.), and when I did wear them, it became an increasingly painful experience. I haven't quite migrated to wide soled shoes with Velcro straps, but I am definitely committed to the newer "step-in" variety that are now available in many styles.
Post: Going Back to Work (Briefly)
Link to comment from March 29, 2025