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… Read More
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… Read More
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… Read More
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… Read More
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… Read More
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… Read More
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… Read More
An Easy to Understand Guide to Required Minimum Distributions
Despite the fact that Required Minimum Distributions (RMDs) impact everyone above age 70.5 with a tax-deferred investment account balance, there is still a surprising amount of confusion around the subject of RMDs and how to calculate the distribution required. Before I get to the actual calculation, I’ll briefly address some frequently asked questions about RMDs many retirees may be curious about. What is an RMD? This is the mandatory minimum… Read More
Why I Choose to Focus on Helping Retirees
Given that I focus exclusively on retirement planning for individuals, I am often asked the simple question, “Why?”. There are three primary reasons: (1) It’s needed. The American College conducted a retirement literacy quiz with over 1,200 Americans age 60-75 with at least $100,000 in household assets (not including their primary residence) and the results were putrid. • Retirement literacy remains low – 74% failed the 38-question retirement literacy quiz!•… Read More
Spending Your Life Savings - Two Ideas For Overcoming the Fear of Spending in Retirement
Retirement should be one of the most fun times of your life. But, generally, that’s only possible if you’re comfortable spending your life savings. I find that there are two psychological barriers that tend to restrict spending in retirement that I think are largely overlooked by the retirement community. If you intend to get comfortable spending in retirement, it helps to be aware of these barriers and find strategies to… Read More
