Author Topic: Question about wealth management  (Read 2465 times)


  • 5 O'Clock Shadow
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Question about wealth management
« on: January 18, 2014, 01:28:37 PM »
I was talking to my mom the other day about things I learned on this site and others and she was amazed at how much money you really need to retire (she's always been a believer of the idea that you would need millions). She gave me some details of her accounts and asked me if it would be possible for her to retire on what she has. Since she has the bulk of her money invested in individual stocks (trying to pick "winners), I was extremely happy to hear this as I worry about her ability to weather another hit like we had in '08. She also mentioned in our talk that she's been nervous about that as well and is open to pulling most of it out, as long as she can keep some money to "play" with. Some details about her are that she lives in the U.S., is self-employed, has no 401k, and is 58. Here's a rough breakdown of her finances:

Debt: $0
Trad. IRA #1: $90,000 (through Dodge & Cox)
Trad. IRA #2: $180,000
Savings & Stocks: $700,000
FMI Funds: $10,000 (Don't know which fund)

I know here yearly expenses are the big ? but she's always been frugal and I can't see them being anywhere near extravagant. Most of my reading has been concerning the "wealth growing" phase and I'm not sure of the approach to take when you're in the "wealth management" phase. Can anyone give some hints/tips or links to posts/articles addressing this topic? Thanks a lot!

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  • Walrus Stache
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Re: Question about wealth management
« Reply #1 on: January 18, 2014, 01:53:05 PM »
At 58, your mom is 4 years away from qualifying for Social Security and 7 years away from qualifying for Medicare.  It would be helpful for you and her to understand how much Social Security she will qualify for and what she has for health insurance between now and age 65.  Her housing expenses are also key.  Does she own or rent?  From what I have seen, for most folks at her age, the two issues are health insurance and housing.  No mortgage (a paid off house) helps.  If she wants to move and downsize, the sale could provide additional retirement capital.  She should do a preliminary retirement budget that accounts for all expenditures.  If her expenses are $40,000 or more, her withdrawal rate will likely exceed 4 percent at least until Social Security kicks in.

Does she own a business or does she do consulting work?  If she owns a saleable business, that can be counted as an asset.

If she does continue to work for a couple of years, she has the opportunity to build up her retirement in a variety of vehicles.  She likely has access to better choices than just the $6,500 annual IRA contributions.  There are SEPs and other plans that should be investigated.

There are a number of threads here on safe withdrawal rates and retirement calculators.  She should look at a couple of the retirement calculators to see how sustainable her expenses will be.

You should be relieved that your mom is frugal and has built up this asset base.  She will not be eating cat food and living under a bridge, as may be the case for many people her age that have not saved and invested wisely.


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Re: Question about wealth management
« Reply #2 on: January 19, 2014, 07:20:52 AM »
Not sure if this is what you are after in wealth management, but you might start with the 4% SWR articles on MMM and other sites.  This theory is about withdrawal approaches for your nest egg. Also, several articles on asset mgt strategies as you near retirement. Not knowing the expense levels, seems like your Mom is in great shape to retire now especially since SS is just around the corner.


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