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Category: Retirement Income Planning

Retirement Income in Bull Markets, Bear Markets & Flat Markets

Retirement Income in Bull Markets, Bear Markets & Flat Markets

I live in a bedroom community of Pittsburgh and there are two primary routes to get to the grocery store. Back roads and the highway. During perfect conditions, the backroads take about twelve minutes and the highway takes about nine or ten minutes. I always take the backroads and my wife would choose the highway most of the time. My logic is that in virtually all conditions, the backroads take 12 minutes. The highway, while faster during optimal times, could…

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When It’s Smart to Pay Capital Gains Taxes

When It’s Smart to Pay Capital Gains Taxes

Imagine for a moment that you are the coach of a Major League Baseball team and you’ve successfully coached your team to the World Series. You’re about to start the 9th inning of Game 7 and your team is up 3-1. You are just three outs away from being crowned World Champions. A life-changing opportunity for players and coaches alike. But before the 9th inning begins, you visit the opposing team’s dugout and ask their coach if they’d like to…

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Retiring at Market Highs

Retiring at Market Highs

As we approach new all-time market highs, one fear I routinely hear is a concern over retiring at market highs. It makes sense given that sequence of returns risk is so prevalent early in retirement. If you experience a market meltdown during your first few years in retirement, that’s obviously not a good thing and most certainly not enjoyable. It’s the primary reason I advocate for pairing dividend growth investing with a bucket allocation strategy in an effort to stem…

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The Only Benchmark That Matters

The Only Benchmark That Matters

Each day, investors everywhere compare their portfolio’s return to a benchmark. Many times, at least for investors in the U.S., the benchmark of choice is the S&P 500. I find it endlessly fascinating because a benchmark is simply the average of all investor returns before costs. This is not opinion, but fact. John Bogle, the late founder of Vanguard, said it this way in his book “Common Sense on Mutual Funds“: All investors own the entire stock market, so both…

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Increasing Your Odds of Retirement Success

Increasing Your Odds of Retirement Success

Recently, I was asked a great question: “What is the #1 thing I can do to increase my odds of retirement success?” Most people are inclined to focus on the portfolio since it gets all the love and attention in retirement planning – how can you optimize your portfolio, pay less in taxes or squeeze out more return?? But when it comes to retirement planning, often the easiest way to increase your chance at retirement success is to concentrate on…

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How to Invest For a 30+ Year Retirement

How to Invest For a 30+ Year Retirement

A couple of weeks back, I had the pleasure of chatting with Taylor Schulte, CFP® on his retirement podcast, “Stay Wealthy.” Taylor is a highly respected retirement expert, so naturally, I was excited to have a public chat about a topic we are both passionate about. On the podcast, we discuss my post, A Portfolio Strategy for 30-Year Retirements, to include the following topics: Why living longer should be a goal to strive for and why you’ll probably live much…

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Why I Prefer Dividend Income Over Total Return in Retirement

Why I Prefer Dividend Income Over Total Return in Retirement

The one constructive response I received on the article, A Portfolio Strategy for 30-Year Retirements, was the preference for total return versus dividend income. If you haven’t read it, I’d encourage you to do so now as what follows will make much more sense. Before we dive in, let’s first define total return investing. Total return investing is the idea that there is no preference for investment gains, whether via dividends or growth of underlying capital. The thought process here…

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A Portfolio Strategy For 30-Year Retirements

A Portfolio Strategy For 30-Year Retirements

PLEASE NOTE: This is a long post, but I passionately believe that if retirees have any chance of getting things right, they must properly understand all the underlying assumptions they are making in their retirement planning decision process. And because I view the subject(s) of this particular article to be so important, I wanted all the thoughts in one place instead of being spread amongst three or four individual posts – especially since these issues are inseparable in nature. If…

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Softening the Edges of the Market

Softening the Edges of the Market

As I was sitting in traffic on my way to the office this morning, I thought of the opening scene of the movie Office Space. If you haven’t seen it, take one minute and watch the video, it’s so relatable!  As I was watching the drivers around me weave from lane to lane, there appeared to be a very clear connection to “chasing performance” from an investment perspective.  Chasing performance is the process of making investment decisions based on what…

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Why Average Market Returns Mean Nothing

Why Average Market Returns Mean Nothing

David Hultstrom of Financial Architects puts out a great quarterly newsletter for financial advisors (and a great one for investors as well). In the most recent version of his advisor newsletter, he posted the following chart below with some great commentary that I wanted to share with you. The average compound return (i.e. geometric) is 9.75% (red line). Only in 1992 did an annual return round to 10%. In only 5 out of the 93 years was it even within…

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