Re: thoughts on these potential rollover investments?

In article <>,
"> wrote:

> Basically, I'm just wondering if that's a wise thing to do with the
> money, and whether any of you might have better fund suggestions. For
> example, would the Dodge & Cox International Stock fund perhaps be a
> better choice for international investments?

1) I would do a roll-over so I control my own money
2) I would not be doing high-risk sector investing with my
core retirement money. Look at indexes and more conventional
funds. No more than 5% of your portfolio should be in high
risk, and given where you are at, even 5% might be too much.
3) You are way, way behind in saving for retirement. You
should at least be at your age times 2000, or $70K in your
case. You need to kick it up a few notches. The power of
saving for the future is in time, and you only get one shot
at time. Once a day passes, it is gone for good.

-john-

--
============================================================ ==========
John A. Weeks III 952-432-2708
Newave Communications
============================================================ ==========

Re: thoughts on these potential rollover investments?

John A. Weeks III wrote:

> 3) You are way, way behind in saving for retirement. You
> should at least be at your age times 2000, or $70K in your
> case. You need to kick it up a few notches. The power of
> saving for the future is in time, and you only get one shot
> at time. Once a day passes, it is gone for good.

Is this really a general rule of thumb? At age 35 it corresponds
to $70K which may be reasonable, but at age 70 it corresponds
to $140K which sounds very low.

Anoop

Re: thoughts on these potential rollover investments?

"John A. Weeks III" <> wrote in message
news:
> In article <>,
> "> wrote:
>

[snip]

> 3) You are way, way behind in saving for retirement. You
> should at least be at your age times 2000, or $70K in your
> case. You need to kick it up a few notches. The power of
> saving for the future is in time, and you only get one shot
> at time. Once a day passes, it is gone for good.

While I strongly agree w/ you that he's fallen behind -- I'm
not sure I like your formula: "age times 2000". That means
that by age 60 someone should have (60 x 2000 = 120K)
in their retirement account? Talk about being behind (!!), that's
just not even going to cut it for retirement funds.

At (a reasonably safe) 4.5 % withdrawal rate, you'd be
looking at under $500.00 per month to live on. Pretty
scary if you ask me -- especially considering I'm one of
the folks (and so's the OP) that are virtually guaranteed
to have no Social Security checks coming in, since it will
long since be bankrupt by the time we retire.









.

Re: thoughts on these potential rollover investments?

Cool, thanks for the info.

Yeah, I know I'm a little behind, but I've been out of grad school only
a few years, and so I've only recently had the money to start saving
for retirement in any significant way. With my current level of
investing, though, the calculators and financial advisors say I should
be OK, for what that's worth.


John A. Weeks III wrote:
> In article <>,
> "> wrote:
>
> > Basically, I'm just wondering if that's a wise thing to do with the
> > money, and whether any of you might have better fund suggestions. For
> > example, would the Dodge & Cox International Stock fund perhaps be a
> > better choice for international investments?
>
> 1) I would do a roll-over so I control my own money
> 2) I would not be doing high-risk sector investing with my
> core retirement money. Look at indexes and more conventional
> funds. No more than 5% of your portfolio should be in high
> risk, and given where you are at, even 5% might be too much.
> 3) You are way, way behind in saving for retirement. You
> should at least be at your age times 2000, or $70K in your
> case. You need to kick it up a few notches. The power of
> saving for the future is in time, and you only get one shot
> at time. Once a day passes, it is gone for good.
>
> -john-
>
> --
> ============================================================ ==========
> John A. Weeks III 952-432-2708
> Newave Communications
> ============================================================ ==========

Savings rules of thumb (was Re: thoughts on these potential rollover investments?)

"anoop" <> writes:
> John A. Weeks III wrote:
>
> > 3) You are way, way behind in saving for retirement. You
> > should at least be at your age times 2000, or $70K in your
> > case. You need to kick it up a few notches. The power of
> > saving for the future is in time, and you only get one shot
> > at time. Once a day passes, it is gone for good.
>
> Is this really a general rule of thumb? At age 35 it corresponds
> to $70K which may be reasonable, but at age 70 it corresponds
> to $140K which sounds very low.

As a rule of thumb, it's not so good since it doesn't take
into account one's current income (and/or therefore, one's
expected necessary income in retirement), nor one's age.

In the Millionaire Next Door books, the notion of an
"expected net worth" is explained as:

ENW = (annual pretax household income) * age / 10

(ie. someone who's 35 who makes $80k would be expected
to have saved (35 * 80,000) / 10 = $280,000).

If you've saved that ENW, you are an "Average" accumulator of wealth.
If you've saved more than twice it, you are a "prodigious" accumlator
of wealth.
if you've saved half or less, you are an "underaccumulator".

It's not a great rule of thumb, but it sucks a little less.

For a 70-year-old who was making $100k before retirement,
it means an average saver should have $700k. A quick look
up on immediate annuities suggests that a 70-year old male
can buy an annuity paying between $4k and $5k/mo (depending
on minimum guarantees, beneficiaries, etc) for $700k. That's
roughly a $54k (I chose $4.5k/mo) income - quite a bit
less than that $100k he was theoretically making. Looks
like one needs to be a PAW to reasonably expect to keep
one's income the same in retirement as one was making before.

Of course, the above doesn't take into account things
like pensions (wouldn't count on one these days anyway)
or social security (would count on it, but not necessarily
at the levels our parents enjoyed).

The thing about that PAW formula is that it assumes your
full pre-tax income for the calculations. For someone
who is really a PAW, chances are that he's living well
below his full pre-tax income (especially since in order
to be a PAW, he's likely to be saving rather than spending
a fairly substantial portion of his income - at least
the 15% for a 401k, plus probably at least another
double-digit percentage into additional savings).

Nevertheless, the Millionaire formula is a somewhat
better yardstick. Modify (ie. use your pretax income
minus your retirement savings) it as you like.

Other problems with the formula, especially if you
are fairly young and were in grad school for a good
while is that it'll expect your savings to be very
high too soon - ie. a 30-yr-old who was in grad
school until he was 25 and who went right into a
high-paying job - say, $100k/yr - it'd be difficult
to expect him to have saved $300k or $600k in only
those 5 years of earning. ie. the formula's really
bad for young doctors and lawyers and other professionals.

That all said, these kinds of rules of thumb may
help act as motivation to start really saving more
carefully. Don't fret if your numbers don't work
according to the formula. But do think about why
they don't and think about ways to try to get there.


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Re: Savings rules of thumb (was Re: thoughts on these potential rollover investments?)

<> wrote
> Nevertheless, the Millionaire formula is a somewhat
> better yardstick. Modify (ie. use your pretax income
> minus your retirement savings) it as you like.

How can you suggest the Millionaire-Next-Door PAW formula
and John's rule of thumb measure the same thing?

A person may be a Prodigious Accumulator of Wealth and have
hardly anything saved for retirement. Or vice versa.

John qualified his crude guideline as an indicator of "at
least" where one should be. I wouldn't read more into this.
The OP didn't ask specifically on this subject, so I thought
John was offering simply a quick sound bite; a guideline; an
impetus to increase the OP's saving-for-retirement rate.

If and when the OP wants more guidance, I would have him/her
do calculations of his/her annual cost of living, how much
of this s/he expects to need in retirement, factoring in
long term care and health insurance, then onto the person's
guesstimate of how much faith they have in stocks, then
perform a calculation of how much needs to be invested
annually for his/her timeframe.

Of course that's still crude and should be updated annually.
But forecasting the future with precision is a tough
business any way one slices it. Large margins of error
should be anticipated. Etc.

Re: Savings rules of thumb (was Re: thoughts on these potential rollover investments?)

"Elle" <> writes:

> <> wrote
> > Nevertheless, the Millionaire formula is a somewhat
> > better yardstick. Modify (ie. use your pretax income
> > minus your retirement savings) it as you like.
>
> How can you suggest the Millionaire-Next-Door PAW formula
> and John's rule of thumb measure the same thing?

What, exactly, do you think they actually are?

And maybe you missed this:

> > It's not a great rule of thumb, but it sucks a little less.

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Re: Savings rules of thumb (was Re: thoughts on these potential rollover investments?)

<> wrote
> "Elle" <> writes:
>
> > <> wrote
> > > Nevertheless, the Millionaire formula is a somewhat
> > > better yardstick. Modify (ie. use your pretax income
> > > minus your retirement savings) it as you like.
> >
> > How can you suggest the Millionaire-Next-Door PAW
formula
> > and John's rule of thumb measure the same thing?
>
> What, exactly, do you think they actually are?

The PAW yada formula identifies a rate of savings without
consideration for how much is actually needed. John's rule
of thumb gives IMO some consideration to how much is needed.

> And maybe you missed this:
>
> > > It's not a great rule of thumb, but it sucks a little
less.

They're apples and oranges, in my opinion.

Re: thoughts on these potential rollover investments?

I use a 2,000,000 goal at age 68, then use rule of 72:

divide dollars by half and reduce age by 6 as the MINIMUMS needed.

age 62, $1,000,000
age 56, $500,000
age 50, $250,000
age 44, $125,000
age 38, $62,500
age 32, $31,250

this assumes 12% return (rule of 72 is 72/12=6), so it's MINIMUM for
sure. I have a chart which allows these numbers to get lower at
younger ages for lower rates of return.

The reverse of this is also true

age 68 $2,000,000
age 56 $1,000,000
age 44 $500,000
age 32 $250,000 (missed this point, so I cannot invest with a 6% return
and reach my goal). If I can save $400,000 more in 11 years, I might
hit next goal, but probably not.

Re: thoughts on these potential rollover investments?

"jIM" <> wrote in message
news:
> I use a 2,000,000 goal at age 68, then use rule of 72:
>

Why? What do you know about a person's expenses, their desired standard of
living, a pension, etc.?

Elizabeth Richardson

Re: thoughts on these potential rollover investments?

it a rule of thumb with a little more criteria than the original 2000*
age. Think that works for someone in their 20's and 30's and maybe in
their 40's. The table I presented adjusts for age. It's also easy to
adjust the overall goal and keep dividing it in half. Ages stay the
same...

I know little about posters income, standard of living, etc... but this
is less of a SWAG than the $2000*age rule of thumb, IMO.

Re: thoughts on these potential rollover investments?

"jIM" <> wrote in message
news:
> it a rule of thumb with a little more criteria than the original 2000*
> age. Think that works for someone in their 20's and 30's and maybe in
> their 40's.

Well, suggesting that $2,000,000 is a MINIMUM for retirement is just
ridiculous. Sitting in my money market account, that would throw off
something like $80,000 annually. The majority of Americans are living on
less than that now. To suggest a _minimum_ retirement income far greater
than the working income borders on the ludicrous. One should be a little
more realistic when touting rules-of-thumb.

Elizabeth Richardson