By Terry Savage on December 03, 2019 | Financial Planning / Retirement

Me/wife both 74. Retired 6 yrs. substantial 50/50 deeply diversified, balanced, mutual funds portfolio. Comfortably live off less than 2% withdrawals + SS. Both healthy, but signs of gradual costly dementia concerns. Trusted conservative intelligent, fairly priced mid-sized advisor firm. ‘08 dropped less than 20% thanks to diversity, balanced 50/50. Recovered 4+ yrs ago, with substantial gains since. Much to be thankful for both personal and financial, but still worried/concerned when/how deep/how long next correction? Should I continue to stay the course, which could be wise or piggish, re-balance to much heavier fixed bond/Equties portfolio (concerns equities/fixed often don’t counter perform each other), or find alternative fixed other than bond/equities, that can “guarantee” (ha) stay ahead of inflation returns, and live/sleep peacefully? Of course would love legacy to children/grandkids, but all doing very well, so don’t need. Guess I’ll always be a 1/2 empty worrier. Time to relax and meditate. Terry, have a happy, healthy, safe, hopefully family centered Thanksgiving and Holliday season.

Terry Says

OK, you can’t have everything — peace of mind about loss, protection against inflation, no extraordinary expenses (ie long term care) AND leave a legacy to your grandchildren, much as you would love to do that. You are describing the boomer retiree dilemma.

So first, you need to have a meeting with your advisory firm. If you trust them, and if they promise to put your interests first and fully disclose all fees, there is no reason to make a change. But — and I know this is a sales pitch — spend about $15 and buy my new edition of The Savage Truth on Money on Amazon (just published last month) because a I spend a lot of time addressing exactly these issues.

And you need some educating. Bonds are NOT the safe alternative to stocks. In fact, I’m guessing that in the next bear market you will lose as much money in bonds as in stocks (unless your bonds are short-term, low-yielding, government bonds). Read that chapter!
Second, there is a new way to buy Long Term CAre Insurance — by putting cash into an insurance policy that leverages the cash for long term care expenses should you need them. Investigate that now. Read the chapter or call MAGA LTC at 800-533-6242. Your worries about dementia are probably unfounded, but once you have insurance (and a death benefit if you don’t need the care benefits) you can stop worrying about the cost of care!
And, third, inflation is not a current concern — but a very long-term one. That’s why a small portion of your money at this stage should be in a diversified portfolio — the S&P 500 stock fund is fine and FREE!! You don’t have to pay a commission or management fees — so do it on your own at Vanguard or Fidelity. Remember, at only 3% inflation, the value of your money will be cut in half in 25 years.
And as a small part of your plan, consider a “deferred income annuity” — one that starts paying out at age 80 –if you are worried about longevity. Read that chapter!
See, it IS a pitch for my new book — and I can’t give you all the answers in this space!! Check my website for a direct link to it on Amazon.com. (I’ll restrain myself by not providing a link here!)

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