Seeking Alpha


Send Message
View as an RSS Feed
View adaireag's Comments BY TICKER:
Latest  |  Highest rated
  • Dividends Don't Matter In Retirement Either [View article]
    I do. I park 2 years of "rice and beans" type living expenses. Not the lifestyle that I hope to have, but the one that keeps the wolf from the door. Is this conservative? Maybe. But I sleep well and I can look for investments without worrying overly about dividend yield.

    When I retired, I deferred my pension. Once I start receiving it I may trim down to 1 year.

    We always had a cash cushion when we were working. Now we just have a somewhat bigger one.
    Jul 18 10:31 AM | 3 Likes Like |Link to Comment
  • The Best Passive Retirement Strategy In The World [View article]
    What I meant was, the couple retired after 35 years in the work force, with a balance of $100k on Day 1 of their retirement. The 35 year work history is what sets the SS benefit.
    Jul 18 09:29 AM | Likes Like |Link to Comment
  • The Best Passive Retirement Strategy In The World [View article]
    Many commenters have suggested that someone with $100,000 in savings can't afford to retire. Just for fun, I ran some numbers:
    Married couple
    $50,000 annual salary
    35 years of earnings that, indexed to SS wages, would be equivalent to $50k/yr
    3% contribution to 401k plan
    $100,000 in retirement savings
    4% withdrawal rate
    Full retirement age for both - 66 years 0 months

    This couple's present take-home spendable income is $41,353. After retirement it is $38,650 or 93% of what it was before. Not too bad!

    A single person with the same numbers only replaces 69% of his/her income.

    Please do not pick apart my assumptions, this is just an illustration.
    Jun 28 04:45 PM | Likes Like |Link to Comment
  • The Best Passive Retirement Strategy In The World [View article]
    Here are a couple of points worth considering.

    1. You can't set up a 7 year CD ladder, the first of which does not mature for 12 months, and then park the rest of your nest egg in a mutual fund. You still have to eat and pay the light bill starting on Day 1 of retirement. So it would be better to think of it as a 6 year ladder plus living expenses for the first year. Or if you want a 7 year ladder, fine, but you still need to plan for the first year.

    2. The portion of your nest egg invested in equities has to cover ALL of the difference between assumed and actual inflation EVERY year. The longer the CD ladder, the lower the percentage invested in equities, and the more pressure you put on the equity portion.

    The article is very good food for thought.
    Jun 27 03:12 PM | 4 Likes Like |Link to Comment
  • College Or Retirement: What To Save For First? [View article]
    If your student gets a scholarship (or dies, or becomes disabled) then there is no penalty on withdrawals from a 529 plan.

    You do have to pay back the tax break you originally got, but in most cases that leaves you no worse off than if you hadn't done the 529 in the first place.

    Full scholarships are extremely rare these days.
    Jun 21 03:53 PM | 1 Like Like |Link to Comment
  • College Or Retirement: What To Save For First? [View article]
    If you think your kids may qualify for financial aid, you should not use custodial accounts or the like. Instead, you should just save, generally, as cubeless points out.

    Also, some of the state "prepaid tuition" plans are terrible but others are very good, and I encourage everyone to look at them. We used the Texas Tomorrow Fund for both kids and it worked out to be about a 7% guaranteed return on our money. This was an earlier version, not the current plan, but I believe these plans are still worth a look.
    Jun 20 08:52 AM | 1 Like Like |Link to Comment
  • Even Worse Than You Think [View article]
    I think you have to define what you mean by "performance" and "success." There are many income investors who have a preference for dividends, no matter how irrational or mathematically questionable that may seem. Until we acknowledge that, we will just be talking past each other.

    Plus, there are many people (in the USA at least) who do not understand math well enough to evaluate risk quantitatively.
    Jun 20 08:40 AM | Likes Like |Link to Comment
  • Can You Retire On Less Than $1 Million? [View article]
    I recall people almost coming to blows over RPN notation.

    Don't forget the arguments in favor of circular slide rules: less loss of precision, etc. I had several friends who had them.
    Jun 17 10:59 PM | Likes Like |Link to Comment
  • Unplanned Early Retirement, Part 1 - Strategy, Stability, And Moving Forward [View article]
    At the risk of flogging a dead horse, I have a further comment on the issue of keeping 401k versus rolling over to IRA. If you own appreciated company stock in your 401k, there is a tax break available to you that essentially converts ordinary income to qualified income and allows you to spread it out over a time period of your choice. Those who are interested can look up "Net Unrealized Appreciation" or "NUA."

    HOWEVER - this break is only available if you receive the company stock as part of a lump sum rollover of your 401k to an IRA. If you take 401k distributions for income, you may lose the ability to get the NUA tax break. So another reason to plan ahead carefully. I have described the broad idea but there are many nuances and details. My former employer had a good seminar where they explained all of this pretty well.
    May 30 09:36 AM | 3 Likes Like |Link to Comment
  • Passive Investing: Common Misconceptions [View article]
    I guess the issue is what happens if more people want to buy the fund. In order to accommodate the new buyers, don't we need to purchase more shares? And even more shares of those issues whose market cap has increased the most?
    May 28 08:08 PM | Likes Like |Link to Comment
  • Passive Investing: Common Misconceptions [View article]

    Thank you for your article. Perhaps you could clarify your point about
    "(T)he suggestion that as a particular stock rises, index funds must buy more of it is incorrect."

    If stock A doubles in price as in your example, but stock B only increases by 50%, would not the manager of an index fund need to hold relatively more A than B when it comes time to rebalance the fund to match the index?

    If not, the fund isn't really a passive investment, is it?
    May 27 12:03 PM | Likes Like |Link to Comment
  • Diversifying The Perfect Retirement Portfolio - Here's How: Part 3 [View article]

    If you are married, you might want to take a look at this web site:

    Because of this tool, I will defer my own benefit until age 70, but file a restricted application for spousal benefits when I turn Full Retirement Age. I would not have thought of doing this before checking out the tool.
    May 26 11:05 PM | Likes Like |Link to Comment
  • Should I Have Followed My Advisor's Advice? [View article]
    Thank you for the link Dennis, very useful.
    May 26 06:22 PM | Likes Like |Link to Comment
  • Should I Have Followed My Advisor's Advice? [View article]
    Their fee schedule is significantly better than that. Two percent? No thanks!

    I have never really bought in to the laser focus on just the portfolio income. I think of myself as a total return investor with maybe a bit of an income tilt. I don't criticize others for their focus, and I don't think Bob is criticizing anybody either.

    Thanks for the dialogue.
    May 25 07:13 PM | Likes Like |Link to Comment
  • Should I Have Followed My Advisor's Advice? [View article]

    That does not seem to be a practical compensation method, in cases where people are retired and taking regular income from the portfolio. All the DGI people say they don't worry about portfolio value as long as their income is growing. I would guess your objectives are very different.
    May 25 06:23 PM | 1 Like Like |Link to Comment