Financial Advisor for Retirees
Offices in Boston and S. Dartmouth
You just retired. Along with a great career, you have built up a substantial 401(k) balance. It took a while, but you got the hang of investing in equities, never comfortable with the ups and downs, but always focusing on long-term growth.
However, now you need income, not growth. Over the years, you owned some bonds with mixed success. Moreover, unlike your foray into equity investments, this time, you cannot afford on-the-job training. You need the retirement income now. Plus, you have less time to recover from any mistakes.
With Interest Rates Low, Where Do You Go for Income?
The Department of Labor’s fiduciary rule might have resulted in more people keeping 401(k)s with former employers. However, on March 15, 2018, the Fifth Circuit Court of Appeals ruled that the Department of Labor overstepped its bounds in creating the so-called fiduciary rule, parts of which went into effect last year.
The 2019 retirement SECURE Act makes it easier for employers to offer annuities in their 401(k) plans. But with the economic recession brought on by the pandemic, most employers have probably yet to adjust their plans.
So, the Question Remains—Can You Get the Retirement Income You Need From Your Plan?
Many employers still steer their employees’ 401(k) choices toward stock funds to grow their accounts, rather than bond funds or annuities to distribute the accounts.
Even if your plan offers sufficient bond funds, today, with the ten-year U.S. Treasury Bond yielding just 1.5%, bonds hardly seem to be the place to go for income, even though, government bonds have provided investors with an excellent total return so far this year.
For example, the Barclays Aggregate Bond Index is up 5.4% for the year. Total return combines the interest rate with the bond’s change in price: bonds go up in value when interest rates fall.
Diving into the Stock Market
Many retirees who are frustrated by low rates have put money that was earmarked for bonds into stocks, hoping the dividends plus the growth will provide sufficient income.
Even with the coronavirus-induced recession, the stock market, as measured by CAPE or the Q Ratio, is still anywhere from 80–100% overvalued. This does not mean it cannot continue to increase; it can, and it has. (It was more overpriced during the late ’90s Internet boom and the Roaring ’20s than it is today.)
High stock prices can exacerbate the problem with a stock-centric retirement portfolio. If the market drops and you withdraw principal as income, that money is no longer in your portfolio if the market rebounds.
Bonds In Your Portfolio
Bonds play an important part in a portfolio, so unless an investor’s risk tolerance or goals change, it is unwise to scrap or reduce the percentage of their portfolio invested in bonds. If, in the future, inflation does spike, investors with diversified portfolios can implement fallback strategies: adding shorter-term bonds, inflation-protected bonds, and/or emerging market bonds. (Asset allocation and diversification strategies cannot assure a profit.)
Remember, the asset managers and pension plans that sold bonds to the Fed used those proceeds to purchase risk assets. Those purchases propelled those assets higher, and higher prices entice speculators who borrowed money to buy those same risk assets. The public, frustrated by the low interest rates, also purchased those risk assets. So, in addition to excess reserves, the other side effect of QE is that risk assets, such as stocks, get expensive
The Financial Services Industry Has Adapted to This Low-Interest-Rate Environment
It has done so by building products for it, some of which provide you with income guarantees. But, they come with restrictions on withdrawing your principal, as well as somewhat confusing terms and conditions.
Other products offer a higher yield, but no guarantees of how much of your investment will be returned. Many of them also lack daily pricing, making it impossible to know the value of your account on any given day.
In This Turbulent and Unfocused Market, Going It Alone Can Be Unnerving
Those with questions should be wary of talk-show advice, whether it be on television or the radio.
Understanding interest rates, bonds, and dividend stock investing along with other transition products can be challenging, if not confusing.
With an upcoming election, talk of a second wave of the coronavirus, and so much uncertainty worldwide, now may be the best time to take control of your financial future.
As with most things in life, the first step is often difficult, but securing sound financial advice shouldn’t be left until it’s too late.
Reade More: Independent Financial Advisor Massachusetts
Finding a licensed and knowledgeable resource: It’s the best financial advice you’ll ever receive.
Asset Management – I build portfolios for individuals, trusts, and retirement plans. The portfolios may hold stocks, bonds, cash, mutual funds, and exchange-traded funds (ETFs). The client’s goals, time horizon, and risk tolerance impact what the portfolio holds. Risk tolerance is how a client feels about a drop in their account. The time horizon is the length of time before the client needs the money.
Retirement Planning – Employees who leave their employer can keep their 401k or 403b there or move it to an IRA. If they decide to move it, I build their IRA portfolio. I also build portfolios for clients saving for retirement.
Read More: Rollover Advice
Businesses and Nonprofits – I provide investment advice or education to the individuals in your retirement plan. I can also monitor investment options and provide fee information.
Insurance – I can get clients the right type and amount of life insurance or disability insurance. I am licensed with many insurance companies, so I can find a good product.
Consider me for your financial advisor when switching from growing your retirement accounts to distributing them. This transition usually means moving some money from stocks to bonds, and I am well-schooled in the economy, inflation, markets, interest rates, and the bond market. Before coming to Cambridge Investment Research Advisors in 2010, I spent 20 years with MetLife, so I am also well-versed in guaranteed retirement products such as variable and fixed annuities.
Experience and Knowledge You Can Trust
- I have been a professional financial adviser for 30+ years. I specialize in building custom portfolios for people who are saving their money for retirement or are already retired.
- I can access thousands of mutual funds, ETFs, annuities, and life and disability plans. I have all the tools that individuals, companies, and nonprofits need for their wealth management and financial planning for retirement.
- Because I am an independent financial advisor, there are no requirements to fulfill before using a specific tool. Therefore, you benefit from advice and products that are tailored to your unique financial needs.
Read More: About Tim
- Review the fees in your 401k plan or 403b
- Review the fund lineup in your 401k plan or 403b
- Check if there are enough choices to provide retirement income security
- Calculate your retirement risk-tolerance score
- Compare your retirement risk score with your current 401k or 403b allocation
- Recommend whether you should leave your 401k or 403b in your plan or roll it to an IRA
- Design your retirement portfolio in your 401k, 403b, or IRA using your retirement risk tolerance and income goals
Please be sure to speak to your advisor to carefully consider the differences between a company retirement account and an IRA investment. These factors include changes to the availability of funds, withdrawals, fund expenses, fees, and IRA-required minimum distributions.
Do I Need to Roll Over My Account for You to Provide Advice?
No. You do not need to roll over your accounts to get advice. However, I offer flexible payment options for clients. For example, you can pay an hourly fee if it costs you more to roll it over.
One of the reasons the Department of Labor created the Fiduciary Rule is their concern that financial advisors recommend clients roll their 401k or 403b when it would cost them less to keep their money in their previous employer’s plan.
Read More: Financial Planning Services for Retirees
What Was Your Inspiration for Writing Your White Paper, “Are We In Another Financial Bubble? “
The most dominant financial story after the financial crisis has been the Federal Reserve and their unconventional monetary stimulus, Quantitative Easing or QE. There was a letter written to the Wall Street Journal by 24 prominent economists, writers, and hedge fund managers warning about QE and inflation (11/15/2010). One interesting thing about my research was that the people who thought QE would cause inflation were wrong for the same reason. They believed in the so-called money multiplier that the reserves created by the Fed through QE would be multiplied into loans; however, that is not how modern banking works. Read more: Are We in Another Financial Bubble?
More About Tim
From my Boston or S. Dartmouth office, I will provide expert, highly personalized financial planning for retirees when you need an independent financial advisor in Massachusetts (Boston or Greater Boston, Salem or the North Shore, Hingham, or any other town on the South Shore, Andover, the Merrimack Valley, and the MetroWest, including Framingham, or the Southcoast, Martha’s Vineyard, Nantucket, and Newport, RI.)