How many times have we all thought back and wondered what would have happened if we had just taken that different course? I had just that question in mind last year when I re-considered the investment advice my wife and I received at the time of our retirement and wrote this article. It's now a year later and time to again ask the question: Would I have done better if I had followed our advisor's advice?
I was a government employee for more than 20 years and a participant in our 401(k) program. I knew nothing about investing back then and simply decided to put 100% of my dollars in an S&P 500 Index Fund. It wasn't until 19 years later when I was about a year away from retirement that I started to really pay attention to my account. Prior to that time the idea of bear markets seemed unimportant. A year away from retirement, things started to look quite a bit different.
We had planned a retirement at age 62 in August of 2008. In the latter part of 2007 I had made the decision to move all of our funds from the S&P 500 Index to a cash fund paying what was then a solid 3.5%. Clearly later this proved to be a great decision.
We retired on schedule. During early retirement I worked regularly as a contract trainer. We made the decision at first to simply withdraw 3.5%, the amount paid at the time by the cash fund to supplement our income. By 2010, we saw a dramatic decrease in the rate being paid by that fund and realized we needed advice.
My advisor suggested a number of approaches: A move to an income fund designed for retirees, a more "aggressive option" and finally the option of an annuity.
