With Labor Day weekend behind us, we are in the home stretch for 2017. Hard to imagine, I realize, but September and October are prime deliverables time. What that means for our readers is that you should ensure their retirement plan is sound. You should also verify that your portfolio matches your plan – rebalancing. Finally, you should stay alert for opportunities.
The Home Stretch: Keep disciplined, have a plan and stick with it.
If there is one drum we beat consistently here it is that you need to have a retirement plan and you need to stick with it. You cannot chase the deal of the day. You cannot panic when things go sour. Be consistent and it will pay dividends over time. Now, sequencing risk remains a valid concern. Right around your retirement date (before and after) you cannot afford a major setback. So, your plan should account for this by dialing back aggressiveness or dialing up diversification here. One element of retirement planning we have not touched upon before is timing. This is an interesting piece for the many approaching that decision point. When should you retire? Consult this checklist of questions.
The Home Stretch: Will markets ever correct?
One important variable these days, especially for those around their retirement date, is the potential for a correction. The tremendous bull run since the 2009 bottom has generated a lot of market growth … and paper profits. This situation begs more for the diversification approach than anything else. With proper offsets in your portfolio you should cushion any adverse impact of a stock market correction, for instance. One thing we often discuss is the need to be more aggressive than you think in retirement. Since we live longer and costs, especially healthcare, are rising, old adages don’t hold up any longer. How to Balance Investment Risk and Reward in Retirement Advisor sentiment is trending downward now Risk Tolerance Falls as Correction Fears Rise
The Home Stretch: Some ideas to consider as you constantly evaluate your portfolio.
So, what ways are there out in the market to help enhance your long-term performance? We often talk about top dividend stocks as providing good total returns. You tend to see the occasional article about dividend stocks. It is important to note that any given article, on its own, may not be genius, but the authors we pick tend to have good reasoning. 5% Plus Dividend Yield Portfolio: Catching Fallen Angels and Falling Knives is a good example. While current year performance has not been stellar, cash flows have. Similarly, here are a series of articles that outline a coherent dividend strategy. Buying Stocks for a Dividend Growth Portfolio While you may not like everything in here, you will like the education you get. Maybe this is the right answer for a portion of your portfolio 5% or 10% say. In the end, food for thought.
The Home Stretch: Something to lighten things up for those in Hurricane zones.
What better escape than a NASA probe? Cassini’s Last Photos Will Be Spectacular
What a week it has been, clearly it is time to focus, focus, focus. Donald Trump won the election by promising a whole lot of things. Not much of this has been done, one might argue none of it. Boy has there been controversy, though. Whether you agree that media reports and hearsay trump first person accounts from General McMaster or not, Congressional Democrats and the media will not let the latest story go. All this smoke seems to mean that any progress you were hoping for on taxes, healthcare, jobs, or any other important area of focus for the government is not likely to happen any time soon. That’s why you and I need to focus, focus, focus on what we can control. Sadly, this seems to be a theme of late because there is a never-ending stream of scandals or wanna be scandals. Don’t fall for it, wait for the process to work. Did you notice the reporting on Seth Rich and Wikileaks? http://www.foxnews.com/politics/2017/05/16/family-slain-dnc-staffer-seth-rich-blasts-detective-over-report-wikileaks-link.html Here, too, sensitivity to the nature of the underlying evidence produced – in both these cases none – is paramount, and the lack of actual evidence reinforces our topic today: focus, focus, focus.
Focus, Focus, Focus: Have a plan and stick to it.
There are only so many drums we beat here to help you navigate your way to a comfortable retirement. One of those is to have a plan and stick to it. This article reinforces this notion, pointing out that investor behavior is a big driver in returns. Don’t get sidetracked by Washington, please. Up on Trump or in the dumps, don’t invest emotionally
In that vein, here is a nice tutorial on why it is important to have a plan and stick to it. The Most Important Rule in Investing
Another important thing, have the right expectations. With retirement savings so anemic in the US, ever increasing longevity and related healthcare costs … what do you expect? This is somewhat cutesy way of slapping you on the same old retirement notion. A personal finance writer explains what too many people get wrong about retirement
Focus, Focus, Focus: Another dose of dividend investing ideas to keep you thinking.
Yes, dividend stocks and ETFs may not be the sole component of your strategy, but the right ones can provide income and principal protection. Here are some interesting takes on the space right now: Not all Dividend Growth ETFs are Created Equal Great Dividend ETF to Simulate Dividend Yield of 21.5% and Recent Price Declines Make MORL Attractive Dividend Champions Everywhere Patience Leads to Great Dividend Growth
Markets remain a perplexing, challenging read and a dividend defense may not be the worst approach. The first thing you need to do is understand the environment. Whether you are in the accumulation phase or the distribution phase, dividend defense may be a good approach.
Dividend Defense: What are the risks you face today and how can you protect against them?
As you plan your retirement you have to be wary of myriad risks, and reliable dividend stocks can be a good way to insulate your portfolio through the cycles.
Let’s start by assessing the risks that can derail your retirement plan. 7 Dangers that Could Derail Your Retirement (and What to Do About Them) and 5 Silent Killers of a Financial Plan
Then, of course, there’s the truly defensive way of thinking. Seems like we have been waiting forever for the ‘other shoe to drop.’ It really has been a long run up since the debacle that was 2008/2009. Will it go on forever? Unlikely. Retirement Strategy: Do You Have What it Takes for the Next Major Correction? or Positioning a Portfolio Properly for Any Outcome
A quick word of caution: all signs point to passive investing as the way to go. Indeed this week Warren Buffett essentially endorsed the model saying: “ “ Two ways of looking at this, if markets are going to correct, indices go with them and how much of the market rise comes from the move to indexed products? Indexing Investment Strategy Becoming Increasingly More Risky? Not to mention, Monday Morning Memo: Is Capacity a New Restriction for the ETF Industry?
Dividend Defense: Using dividend stars to deliver returns or income and preserve capital
All too often we focus solely on the income aspects of dividend stocks. They are a great way to deliver income and preserve capital in the distribution phase. They are also a decent way to deliver returns and build basis in the accumulation phase. Regardless how you plan to utilize your dividend investments, fundamentally sound selection is the key. 15 Straight Dividend Hikes, Raised Guidance Again, Major Earnings Growth, 12% Upside or 10 Champion Dividend Dogs Said to Gain 7% – 22% by May 2018 or Dividend ETF to Retire On
Dividend Defense: Evolving political landscape aims to make self-determination easier.
No matter your opinion on where markets are heading or dividends as a tool, this is a good idea. TIAA, IRI Back Bill Requiring Retirement Plan Income Projections
Retirement planning is a vital tool in your retirement security arsenal. No one is doing this for you – if you are not paying them. Social Security alone will not deliver a secure retirement. If you are like most Americans, you are not saving enough for a secure retirement. So, you need to arm yourself with a plan and start following it.
Retirement Planning: Where are you now?
Inasmuch as you probably do not believe you need to spend this time, why not assess your situation. If you are like most Americans you simply have not saved enough and do not save enough. Here’s how much the average family in their 40s has saved for retirement The most alarming statistic: to be financially ready to retire at 67, Fidelity says, you need to have six times your salary saved by 50. Do you? Will you? Did you?
Part of a retirement plan is a retirement budget. Since you will likely be on a ‘fixed income’ in retirement, managing expenses is vital. Knowing your expenses is an important part of developing your retirement plan. How to set a retirement budget
The flip side of your retirement budget is your retirement income. Just how will you be generating retirement income? Social Security? 401(k)? Pension? Working? Somehow you have to zero in on a balanced budget – income and expenses matching up over a likely very long time. What’s your retirement strategy?
This piece takes a more comprehensive look at the problem – expenses and income. Some good food for thought and guidance here. The 7 elements of a successful retirement
Retirement Planning: Plugging the gaps.
What should you be doing as you approach retirement age? Are there specific steps you should be taking? This article has some interesting perspective on moves to make before you stop working. An Investing Roadmap for Pre-Retirees (you may need to create a login, but access to Morningstar data is not a bad thing to have)
Since you just signed up for access to Morningstar, why not look at dividend stocks? One inexpensive way to generate quality income from dividend stocks is through a dividend ETF. This focuses on Schwab, but talks about the competitors, too. High-Quality Dividends for a Slim Fee
I loved the concept of this piece: focus on sequence, longevity and unplanned expenses. Fact is we talk a fair bit about the first two, and the last one is a good addition when thinking retirement planning. It is a super simple article, but helps reinforce the point. Take the time to read it. Prepare now for these 3 retirement risks
I usually focus on a particular area in these posts, but today we consider two core investing skills. These may apply to your accumulation or distribution phase. Either way they are valuable skills to have in your arsenal.
Core Investing Skills: Protecting your principal balance.
No matter whether you are in the accumulation phase or the distribution phase, you want to protect your principal. Now, you do not want to do that at all costs, i.e. zero risk investing. You still need to grow your principal, you just do not want to lose it all – even on a paper basis. This article introduces a great term ‘margin of safety.’ Notionally you devote some portion of your principal to risk coverage. It seems like a good way to think of the concept. What to Do About Fading Stock Market Momentum
The article on stock market momentum does not tell you how to create your margin of safety. There are myriad ways to do so, and they depend – to a degree – on where you are in the retirement life cycle. A Qualified Lifetime Annuity Contract (QLAC), for instance, is a great element of a margin of safety for someone in the distribution phase. This article delivers a very specific, rather unusual approach. It focuses the majority of assets on a steady return and a very small portion on ‘home run’ investments. It is not for the faint of heart, or is it? The Holy Grail of Investing – The Barbell Approach
If that is too crazy for you, you may consider options as a means of delivering your margin of safety. This provides a nice primer for you to start. Options Strategy and Tactics: Diagonal Spreads
Core Investing Skills: Delivering consistent income in retirement.
As noted above, the QLAC is a great vehicle, if you can get it, for creating margin of safety in the distribution phase. It is also a great way to deliver consistent income in the distribution phase. Indeed, this article does a nice job of summarizing the prudent role an annuity can play in retirement security. It points out some of the key decision points – health in particular – and notes that annuities work beyond the QLAC. A Simple Way to Get Guaranteed Income in Retirement Whatever your preconceived notion of annuities, you need to do this research. This is Not Your Father’s 401(k): The Retirement Product You Should Know About Finally, another one that touches on the salient points around immediate annuities (outside your plans). The right way to get the retirement income you need
The other basic way we talk about delivering consistent retirement income is through dividend stocks, good ones. This is a very good article about the why of dividend stocks. Response to ‘Should You Build a Portfolio of Dividend Stocks?’
This piece takes a somewhat different tack, arguing that dividend growth investing works in both accumulation and distribution phases. It is a very valid perspective, and one worth considering. The Dividend Growth Investing Mindset
Finally, we all know the very best dividend stocks tend to be fluid and opportunities present themselves. High-Dividend Stock Yields 10%, 11 Straight Dividend Hikes, Pullback Buying Opportunity and 10 High-Yield Dividend Aristocrats Worth Considering
We have turned our focus back to your retirement and plenty of disgruntled people out there will be well served by Optimizing Trump. What that means is identifying the potential implications of a Trump presidency for your retirement and addressing them now.
Optimizing Trump: Locking in things as best you can before it gets any crazier.
One of our common themes is income generation in retirement. Whether using tools like longevity annuities or investing in the finest dividend stocks, securing income streams matters.
Plenty of dividend stocks and funds, and plenty of tips on them, too. This one is intriguing, though. One of the Best Dividend Growth Stocks Around Regardless of the State of the Economy
This is way, way in the weeds for most, but it portends something worth understanding. The bottom line is that the Fed bought up lots of stuff in propping up the economy. Now, they are thinking about exiting some, specifically mortgage backed securities. It is good to be aware, at least. Everyone is suddenly worried about this U.S. mortgage-bond whale
Optimizing Trump: Finding weaknesses before they overwhelm.
Safe to say whether you like Trump or not, you probably expect there will be turmoil at some point. Turmoil equals uncertainty, and uncertainty drives volatility. If Trump Flares Up Uncertainty, Profit from These ETFs
Optimizing Trump: always focus on the fundamentals … fees, longevity, etc.
It has been some time since we have harped on the fact that you will live longer and that means you will need more savings. Perhaps the oracle of The USA Today will lend some credence to the argument. How much do you need to fund retirement? More than you think.
Now a somewhat different angle on the same topic…your spouse is likely not the same age. That matters. Retirement Planning? Couples, Mind the Age Gap
It always seems to be the best advice to focus on what you can control; right now that means Refocus on Retirement. As satisfying as a snarky Facebook post or march to Trump Tower may be, it will not improve your life. Getting your retirement strategy straight and working on your retirement account and assets, that will matter. Indeed, with only so many hours in the day, you are far better served by getting your retirement in order. You might find value in spending time with your loved ones after that. To this end, we return to our core value proposition here, delivering insightful reading on retirement topics.
Refocus on Retirement: Navigate a challenging environment
With equity markets on an extended tear, one must wonder when it ends. Market timers never prosper, but vigilance is very much in order.
As ETFs have prospered many have shifted from active strategies to passive. Is that still a good idea? When markets correct what happens to indices? What drove the performance in the first place? What if Everybody Became an Indexer? Financial Advisor Daily Digest US ETF Industry Growth Shows Signs of Maturity
Be prepared for a downturn by repositioning assets as needed. No magic, just an open mind: How to survive a ‘worst-case’
The uncertainty driven by the Trump Administration has generally worked favorably for US markets. Will that continue, or should you seek shelter now? Emerging-Market ETF Strength is More than Meets the Eye
In the same vein, volatility may be a decent play as the Administration finds its footing. Market Volatility Bulletin: VIX Back in Bed?
Refocus on Retirement: As always, find ways to optimize your retirement income
One obvious way to optimize your retirement income is though income generating investments. This REIT Yields 7.4% and Could Return Over 50%
Stay current in your awareness of dividend stocks. Dividend Champions for February 2017
Another great way to improve your retirement is leveraging the tax code. Retirement: Use extra cash to cover retiree health costs
Refocus on Retirement: As promised, your getaway section for this post
A getaway may simply be in your mind. Try these on for size, it won’t take long. 25 Shortest Jokes Ever
Here is a classic case of careful what you wish for … look at the budget numbers! Still, worth a side trip, at least. The world’s first “acoustically perfect” concert hall opens in Germany
Since we advocate saving money and traveling (well). These sites might help. The Checking Accounts That Let You Avoid Foreign ATM Fees The 12 Best Travel Sites and Apps You Need Right Now
With Thanksgiving behind us we are into the Holiday Push. Hopefully you are closing deals at work. Holiday shopping is in full swing. You simply do not have time for this retirement stuff. Our regular readers know there is no time like the present to enhance your retirement. With the incoming Trump administration caution is likely the best watchword.
Holiday Push: Always keep doing the right things.
Doing the right things always start with watch your fees. How an extra 1pc investment fee will cost you 16 years of retirement income (don’t be fooled by the UK spin here, the math is the same!)
If you are a small business owner, a large business decision maker, or an employee interested in helping yourself and your fellow employees, consider this. Get Your 401(k) Fees Down Because Your Employees Deserve Better
In the spirit of the season, I’ll give you a contrarian position on fees, too … that is, sometimes active managers actually do earn their fees. Royce Special Equity Fund Earning It’s Fees
If you are in the income phase – retired already – then be sure you are generating income. You will find some interesting thoughts on that in these pieces: Despite Mistakes, a Dividend Growth Investor Retires Early, Part 1 Despite Mistakes, a Dividend Growth Investor Retires Early, Part 2 Good Grief, Don’t Jump Off This Dividend Machine High-Dividend Stock Yields 9%, Pays Monthly, 4 Dividend Hikes in 2016, More in 2017
This one is really interesting, if for no other reason than to understand how convoluted the oil and gas industry has become. Sunoco LP: a 15.2% Yield with Significant Upside
Holiday Push: In December we will ease off retirement focus and give you other valuable leads.
Stay alert, particularly during the holidays, to nefarious doings on your phone. What is spyware? How secret programs can see into your iPhone and record your calls
About that Taiwan phone call … what’s up? Donald Trump is aggressively provoking China. What is he thinking?
Do you realize that yesterday a milestone anniversary passed quietly by your door? Is it time to revisit the thinking behind the words? 20 Years Later, Greenspan’s “Irrational Exuberance” Has Become Even More Irrational
I am always looking for the finest analysis to share, this week I turn to Folksy Investing. This article Getting Asset Allocation Right for Retirement struck me with how simple and folksy it was. No doubt Henry is a retired aeronautical engineer … or line worker … from Boeing, still his advice is simple. Sometimes I think it pays to go with what feels right.
Folksy Investing: Henry uses 105 as a baseline, how long will your retirement go?
It is a common refrain here, longevity is a giant variable in your retirement planning. Annuities can often help moderate that longevity risk. Are You Missing Out on Guaranteed Income Because of These 5 Misconceptions?
We often talk about healthcare costs in retirement and inflation is a concern, too. In this low return world even low inflation can make a difference. Inflation is Coming Back – What Does That Mean for You?
Speaking of healthcare cost in retirement, here’s another good primer on that. Retirement health care estimates vs. reality
Finally, here is a nice summation of the risks you face, including the three we are focusing in on today. Navigating 5 critical retirement risks
Folksy Investing: Some more good tools and tips for your retirement.
We often highlight dividend stocks as a means of generating income. How will they fare in any downturn, though? You certainly don’t want to lose a whole lot of principal. 3 Reliable Dividend Stocks Yielding 7% or More
So how do you handle the ups and downs of markets? Your nest egg will vary in value over time, is there a way to account for that? Here is one idea. Ratcheting Up Retirement Spending
So what are the odds markets will correct? Who knows? Some say the election will do it, if Trump wins. Others say it is all ‘baked in’ already. Perhaps ask yourself are things as good as markets would indicate? Unemployment rate is 4.9%, but a more realistic rate is higher than that and The Story of Durable Goods is the Story of the (Global) Economy
This may be too little, too late, given the proximity of the election, but … The philosophy of Marcus Aurelius is supposed to make you be more resilient and at peace – here’s how to master it in 7 days
Speaking of the election, you may want these tips, too. A new travel app is offering the lowest flight prices we’ve ever seen and Surprise! This Cruise is Actually on a Luxury Yacht, and It’s Everything Anti-Cruisers Could Hope For
We often highlight the impacts of longevity on retirement. This week we look at Retirement: How Long, How Much? What are the practical implications of a longer life? What is a safe withdrawal rate? Save as much as you can when working, that is the first step. Knowing how much you can take and how long you need to take it is vital.
Retirement: How Long, How Much?
So, just how long will you live in retirement? No one knows for certain, but it is wise to know the odds and the outside shot. Retirement Planning for a 115-Year Life Expectancy
Once you have a sense for how long you will be in retirement you can start on how much you need in retirement. Use the FI Formula to Find Out How Much You Need to Be Financially Independent
That FI Formula still leaves the open question about the 4% rule. Just how much is a safe withdrawal rate? Look at the actual study to fill in some of the gaps in that story. Safe withdrawal rates
Not surprisingly Vanguard has an opinion on withdrawal rates. It makes sense, but is it right for you? Vanguard’s New Model for Retirement Spending in Low-Yield Market
Retirement: How Long, How Much? – Perhaps there are other ways to think about it.
Some of you may be thinking about running away from the US after November 8. We have covered the topic before, but here are some reminders on what to consider. How to Manage Your Finances When You Retire Overseas
If you don’t want to bite the bullet and move overseas, this option still gets you offshore? 6 Reasons a Cruise Ship is the Best Retirement Option
Keeping with the overseas perspective, are we doing everything right here? Australia and New Zealand certainly are better positioned and here’s why. Our legislators should take note. What U.S. Retirees Can Learn from New Zealand and Australia
Regardless your view of longevity and even safe withdrawal rate, generate as much income as you can. Dividends are one approach worth considering. There are always new options to consider. This Dividend ETF Does Your Investing For You
Is dividend investing right for you or as part of your investment strategy? This article might help you consider just that. Why do Some People Like Dividends So Much?
Retirement: How Long, How Much? – What comes after November 8.
So, will there be an implication on the economy? Here’s an interesting viewpoint. Could Hillary Clinton be the Next Herbert Hoover?
Maybe it will happen, maybe it is already priced in already. Is there a smart answer to hedge your bets? How to Hedge the S&P 500 with a Minimum Return of 7%
Maybe you are better off reading a book. Top 10 Books that Will Change Your Life in 2016