Pre-Retirement Options

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Jun 3, 2002
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MI
Hello all,

I am considering retirement in about 2 years at age 66.5 and have already begun planning for it (optional - my career is an enjoyable passion). I am married (homemaker with only SS income), I have a TIAA 403b and small Roth IRA (under 50K) - already moving to less risky portfolio. No insurance income. No debt. Have a will and burials are pre-paid. Unique situation - won't have home ownership at retirement and considering condo, etc.. Not sure I want to do fixer upper ownership. I have little interest in managing investments nor getting rich, and my risk tolerance is low to medium, maybe 4 on a scale of 10? My retirement activities are modest (frugal/cheap) - travel a tiny bit, hobbies, fish/hunt/bicycle a tiny bit, give back/volunteer, consult, etc.. Attempt to stay healthy.

I'm not soliciting explicit advice, but rather am trying to establish a game plan, cook book style. The available options are too numerous.
- stay with TIAA, or consider other options: Schwab, Vanguard, Fidelity, private advisor, etc.??? Fisher's hard-sell tactics scare me.
- how do I compare plan costs/charges and/or whittle down choices?
- cash out, keep 403b, rollover IRA-which ones?, more Roth, annuity, combination????

Past threads tend to denounce annuities, but recent changes "seem" to indicate that today they are a viable option for some situations? My TIAA advisor (meet biannually) pitched his first volley: With SS, I could annuitize 50% of my 403b and retain my current "just enough" income. They have provisions for leftover $$ after death still to siblings (at a cost), etc..

So, where do I start? Thank you.
 
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Start with the most basic of questions - How much do I need in retirement. Next, ask where that income will come from. And third, are you currently in a position to provide that income for the remainder of your life.

Once you get these questions answered then you can start allocating assets to give you the income stream that you need. Retirement for me was an attitude change from "earning money" to "managing money". I left work at 55 and I was ready.
 
I'm in the same boat, retirement is four months away. I'm trying to stay away from financial advisors. I went to my first free seminar and learned a few things. I'm setting up an appointment with my bank, to see what advice I can get from them. They offerred this in the past. I'm expecting them to be neutral and not have any underlying interest with my finances as Vanguard may have.
 
I "retired" from a real job at 48 years old and though I don't consider myself an expert. Be careful and why retire? It is nice to have a source income that doesn't deplete the investments.
 
Figure out your expenses. Figure how much more than SS you'll need. Estimate how long you plan to be alive. Do some math and figure out how much you'll need over that time period. Don't forget to include health insurance and costs. It's significant.

My plan for retirement is basically in 3 buckets. Income, income/growth, and growth. Each bucket has an increasing risk profile. My growth bucket will be in more stocks with a 10 year horizon with lose of liquidity with safer caps on losses. Income/growth is in multiple rotating investments that come due at 6 month intervals in case I need the money. If not, they go into another multi year cycle and the next one come matures in 6 months. Income is in safer investments such as annuities or similar.
 
I'm not soliciting explicit advice, but rather am trying to establish a game plan, cook book style. The available options are too numerous.
- stay with TIAA, or consider other options: Schwab, Vanguard, Fidelity, private advisor, etc.??? Fisher's hard-sell tactics scare me.
- how do I compare plan costs/charges and/or whittle down choices?
- cash out, keep 403b, rollover IRA-which ones?, more Roth, annuity, combination????

Past threads tend to denounce annuities, but recent changes "seem" to indicate that today they are a viable option for some situations? My TIAA advisor (meet biannually) pitched his first volley: With SS, I could annuitize 50% of my 403b and retain my current "just enough" income. They have provisions for leftover $$ after death still to siblings (at a cost), etc..

So, where do I start? Thank you.
Not really enough information for anyone to offer any kind of solid advice. Normally you want to control your own destiny and not have it tied down to one company that's tied to your previous company so it usually makes sense to take it out. However it depends on what you have in the current plan, if you have access to particular funds that you can't get outside of it, it might make sense to stay. That's why there's really not enough info to offer any advice.

Annuities tend to lock you into a fixed rate of return and you'll miss out on those years when the market goes up 30%. Just look at the last two years, S&P 500 up over 30% in 2019 and this year looks like it's around 17%. That's why they're not popular and the rates offered today are the lowest ever in this low interest rate environment. Annuities are a popular pitch as they have nice commissions. just buying shares of an S&P 500 has no commission and the expense ratios of those funds are ultra low.

Schwab, Vanguard, Fidelity are all good choices, kinda depends who's close to you. I prefer Fidelity as they're close to me but in person visits aren't that important these days. You basically have to do your own research, Morningstar is good for researching funds and as others mentioned there are other financial forums like Bogleheads which will offer better advice.
 
I'm not a financial planner, but have recently had to make some of the same decisions, and here are my thoughts.
I retired 5 years ago at 64.5 years old from a job I loved to take care of family obligations. Had a small defined benefit plan retirement, a moderate 401k and a tiny Roth IRA. Younger spouse already "retired".
Rolled 401k into a Fidelity IRA due to no fees and lots of options. Started rolling a significant portion of the IRA into the Roth annually since my income was low and I could pay the extra income tax out of savings. Delayed collecting my Social Security for two reasons. First, to minimize income while I rolled Roth to IRA, second to increase spousal survivor benefits from SS in case I predeceased her. This was only an option because I had sufficient funds to pay living expenses and additional taxes from the rollover.
In my case, delaying SS made sense, but only marginally.
As to your situation, your thought to rollover your 403b to a Schwab, Fidelity, or Vanguard IRA is a good one. With interest rates the lowest in history, now is not the time to buy an annuity (not sure there ever is one). Talk to a tax professional about annual rollover amounts to your Roth.
As to staying with TIAA, remember banks are in business to make money for themselves. I've heard from a lot of happy customers from Schwab, Fidelity, and Vanguard. On the other hand, I've heard a lot of horror stories from bank managed accounts.
 
I have Fidelity for my 401K, Vanguard for brokerage and TDameritrade for IRA. All are good places to manage your own money. You really don’t want or need some commissioned sales person trying to churn your account or place you in some high risk funds with expensive fees.

Luckily I was wise and made some decent investing decisions and have enough in the ‘gas tank‘ to retire tomorrow.

The Bogleheads website and their members recommend very conservative investment strategies. I’d definitely check out that site.
 
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Thank you so far, everyone. I have already gleaned a few excellent tidbits of information.

The options available make this a daunting task. Everyone's personal situation is too different to seek specific advice here. I.E., I can see that Wolf359, Dave Hess, and Kestas tend to want more personal control where as I have no problem giving up a certain bit of autonomy to professionals, similar to medical and legal decisions IMO.

So, how do I develop this game plan? I will visit Bogelheads (again/more) - https://www.bogleheads.org/wiki/Bogleheads®_retirement_planning_start-up_kit. I think I will arrange presentations by the various companies (Vanguard, Schwab, etc.) and compare options, costs, etc.. Yikes. Like religion, it would be so much easier if one did not have an enquiring mind and just accepted what is preached! I have retired friends that just followed the TIAA mantra and others with independent personal advisors they trust 100% to manage their money. I hope to be somewhere in the middle regarding choices and decisions.

Thanks again. Comments and options are still welcome! I edited this a bit before the comments below.
 
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Thank you so far, everyone. I have already gleaned a few excellent tidbits of information. Determining where to start is a daunting task. Who do you trust? Everyone's personal situation is too different to seek specific advice here. I.E., I can see that Wolf359, Dave Hess, and Kestas tend to want more personal control where as I have no problem giving up a certain bit of autonomy to professionals, similar to medical and legal decisions IMO.

I am going to have to identify my personal needs better first. Then, I will have to sit down with some people and/or study the various options, collect their "pitch", then compare them and choose the best one that fits MY needs.
One reason you need to do your own research is to figure out if you're getting good advice or not. Sorta like give someone access to your checkbook, you don't know if they're going to do a good job or not. I've had Fidelity pitch me on their managed accounts, tried it for a couple years, but they under performed my non managed accounts where I did nothing but own a couple mutual funds and didn't sell any funds for the 2 year period I tried them. Meanwhile they charged a fee and were buying and selling funds every few months. So I got rid of them. Your mileage may vary of course. Basically 75% of fund managers can't beat the S&P 500 on a consistent basis. Maybe with Tesla in the S&P 500 that might no longer be true, but it has a pretty good past track record which is all we can go on for now.
 
Stock markets concern me, they could drop like a stone with the current world situation . This going up in large amounts doesn't make sense to me.
 
Stock markets concern me, they could drop like a stone with the current world situation . This going up in large amounts doesn't make sense to me.
It's not really up that much. It's just the big companies that make up the bulk of the rise. But everyone seems to think it will keep going up higher next year as the vaccine rolls out and things get back to normal. Just look at the pandemic in 1918, that lead to the roaring 20s. You didn't get a depression til the 30s which had nothing to do with the pandemic.

The stock market never makes sense to anyone.
 
Good luck. If I were you, I would talk to Schwab.
I moved my Fidelity stuff to Schwab because Fidelity sold me an annunity.
I feel like my rep was more interested in his commission than my best interest.
Schwab seemed to have far more integrity. Maybe I'm wrong?
Ultimately, you are the decision maker. I have not gone along with all Schwb's recommendations.

Again, good luck. Enjoy your retirement!
 
Stock markets concern me, they could drop like a stone with the current world situation . This going up in large amounts doesn't make sense to me.
Depends on your event horizon. Doesn't make sense to put all your eggs into the stock market. Especially if you need the money short term. Makes a lot of sense to invest in the stock market if you need the money in 10 years and have enough in conservative positions currently to get you there. All depends on the individual's situation. There are also ways to invest in the stock market with limits on losses and gains. For example, cap your gains at 25% in exchange for capping your losses at 5%. There are complicated investments that can do that.
 
Jeff, you make a good point. I have enough in Fidelity to have an Account Executive. He suggested both a managed account and an annuity. I knew enough to say no to the annuity, but, like Wolf, tried the managed account. After a couple of years, decided I didn't like some of their picks, so I let them go. Now it's a mutual fund, low fee S&P index fund, and some individual stocks I pick for fun. I'd be better off if I threw it all into Fidelity Contrafund, but I do get some pleasure out of limited self investing.
I do have other investments, so I don't really need to diversify much in the stock market.

Kinda like everything in life. Be able to recognize who is a salesman out there, regardless of what he or she is called (advisor, broker, account executive, etc.). What a salesman is trying to sell you is for their benefit, not yours.
 
If OP will be 66 years old when he retires then a very conservative plan is what he really needs. Zero need to take on unnecessary risks at his age. The simpler you keep it.... the better you’ll be in the long run.

100% of these decisions can be made without the help of a commissioned advisor eyeballing and drooling at his retirement nest egg $$$. 🤤
🤔
 
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If OP will be 66 years old when he retires then a very conservative plan is what he really needs. Zero need to take on unnecessary risks at his age. The simpler you keep it.... the better you’ll be in the long run.

100% of these decisions can be made without the help of a commissioned advisor eyeballing and drooling at his retirement nest egg $$$.

🤔
I'd op for staying fully invested in S&P 500 no-load mutual funds.At his age, he's got a long way to go.
 
I'd op for staying fully invested in S&P 500 no-load mutual funds.At his age, he's got a long way to go.
Concur if he adds a liquid (cash or equivalent) bucket to cover 3 years or so of expenses so he doesn't run into sequence of return risks associated with having to withdraw at a down market at the start of retirement.
 
Jeff, you make a good point. I have enough in Fidelity to have an Account Executive. He suggested both a managed account and an annuity. I knew enough to say no to the annuity, but, like Wolf, tried the managed account. After a couple of years, decided I didn't like some of their picks, so I let them go. Now it's a mutual fund, low fee S&P index fund, and some individual stocks I pick for fun. I'd be better off if I threw it all into Fidelity Contrafund, but I do get some pleasure out of limited self investing.
I do have other investments, so I don't really need to diversify much in the stock market.

Kinda like everything in life. Be able to recognize who is a salesman out there, regardless of what he or she is called (advisor, broker, account executive, etc.). What a salesman is trying to sell you is for their benefit, not yours.
Actually that's exactly what happened. I had an account with a mix of Fidelity Contrafund and Fidelity's S&P 500. Their managed account couldn't beat it. Just look at the research for those two funds and see what whoever is proposing compares and if they had a track record. It dawned on me that the reason Fidelity was pushing their managed account because it was new and improved was that their old ones didn't have a good track record so they had to roll out a new one with no info except to label it new and improved. It wasn't.


 
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