Where to put your money upon Retirement

Updated : Sep 11, 2019 in Articles

Where to put your money upon Retirement


Hello everybody and welcome to another episode
of Erickson TV. Curtis here with Lauren, hello Lauren. Hey Curtis, hey everybody. Hey Lauren,
article about 401K retirement plan. This was an interesting statistic, we’ve talked about
baby boomers before right? Right. Which I am one of them, but you’re not quite one
of them yet. The interesting thing is, between now and the year 2029, the statistic is that
one baby boomer is retiring every nine seconds. Okay, that makes sense. So there are 75 million
baby boomers. The gist of this article, first of all they talk about the average investment
in a 401K for these baby boomers and actually for all people is about $147,000 according
to Fidelity. Okay. The more important question is, once you’re at that moment to retire
or maybe just recently retired, should you leave the money in your employers 401k and
use that as your future retirement income withdrawal vehicle or should you roll it out
directly to an IRA that is controlled by you or perhaps another financial advisor. Right.
And usually you should roll it to an IRA. Right. Nearly always. And this article does
say that and some of the good reasons which I agree with is that typically an employer
401K plan they have much more limited investment alternatives. Right. So it’s harder to get
that global diversification. Yes that’s definitely true. And then the other reason
of course is
that they talk a lot about dealing with human relations and human resources to get access
to your money. Right. Sometimes this takes longer in a 401K versus an IRA that can happen
very quickly. Now there was an investment advisor in here that gave me pause. He said
one of the reasons I think one of the reasons you should move your money out of a 401K to
an IRA is because than you can start using variable annuities. Which I don’t like that
advice. Ya that’s pretty terrible advice. Without going into an in-depth discussion
of variable annuities, I think that reading between the lines, this gentlemen’s advisors
are going to make a large commission off that and he’s selling safety because you can
get these guaranteed income withdrawal limits which add a huge expense ratio to your portfolio.
Now the one reason they say that perhaps you would consider leaving it in your employer
401K is because your pulling your money at perhaps a big corporate plan, you may have
lower expense ratios. Do you think that would be enough reason to leave it there? Probably
not enough. Ya. The only good reason why an investor might want to keep their money in
a 401K plan, is because their 401K plan might automatically rebalance for them. Right. And
so if their not going to work with an advisor and their not going to invest their own money,
which some people don’t want to work with their advisor and cannot invest their own
money, then it might be okay to leave it. But there’s another problem that they didn’t
bring up which is that many people who retire have four or five 401K plans and it gets pretty
ridiculous to leave all your money in all these different 401K plans. You should just
put them into one IRA and keep it simple. Too many people choose complexity and confusion
when their investments should be simple and focused. Right. I’ve been doing a lot of
analysis’s of individual 401K plans and it seems like a lot of them are heading in
the direction of these target plans. Ya, and for some people that’s fine but for many
people, once you retire you basically want your asset mix to stay the same. Right. If
your into 60 percent stocks and 40 percent bonds when you retire, for many people that’s
where they want to stay and those target mixes don’t work well for a lot of people. In
a lot of 401K plans, basically what it comes down to is, they’ve got a bunch of funds
and all of them are doing the same thing. Right. So they have four large cap US funds
and then one fund of international and there’s not really diversification. Right. That’s
the biggest weakness I’ve noticed to end this episode, is lacking in international
exposure and margining markets in small cap. And then getting true value and small cap
value on the international and US fund too. Okay well thank you for watching this episode
of Erickson TV. If you know a baby boomer that’s retiring, maybe yourself soon, please
fell free to contact Lauren or myself so we can guide you with some objective strategies
so that you can seize control over your own retirement but also be diversified and put
it on auto-pilot. Yes. Thank you, bye now. Bye.

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